THIS DOCUMENT IS THE SUBMISSION OF FORM 10QSB AND CONTAINS THE QUARTERLY
REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997.
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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 September 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
------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0395567
------------------------ ------------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1832 South 3850 West
Salt Lake City, UT 84104
------------------------ ------------------------
(Address of principal (Zip Code)
executive office)
(801) 972-1311
------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Not Applicable
------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ----
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, .05 Par Value -- 682,088 shares as of September 30,
1997.
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INDEX
LASER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1997 and December 31,
1996
Consolidated Statements of Operations - Three months ended September
30, 1997 and 1996; Nine months ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows - Nine months ended September
30, 1997 and 1996
Notes to Consolidated Financial Statements - September 30, 1997
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
- -------- -----------------
SIGNATURES
- ----------
Page 2 of 11
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PART I. FINANCIAL INFORMATION
Item 1.
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS 1997 1996
Unaudited
------------- -------------
CURRENT ASSETS [C] [C]
Cash and cash equivalents $ 259,026 $ 555,204
Receivables:
Trade receivables, net 641,694 568,819
Other 2,581 3,319
------------- -------------
644,275 572,138
Inventories:
Raw materials 975,299 756,930
Work in process 466,684 468,573
Finished Goods 142,761 63,500
------------- -------------
1,584,744 1,289,003
Notes Receivable - current portion 592,455 176,284
Other current assets 37,902 34,829
------------- -------------
Total Current Assets 3,118,402 2,627,458
NOTES RECEIVABLE LESS CURRENT PORTION --- 534,308
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment 1,449,383 1,389,535
Leasehold improvements 617,656 612,260
------------- -------------
2,067,039 2,001,795
Less accumulated depreciation
and amortization (1,847,582) (1,779,865)
------------- -------------
219,457 221,930
OTHER ASSETS 132,061 62,996
------------- -------------
$ 3,469,920 $ 3,446,692
============= =============
See accompanying notes to consolidated financial statement
Page 3 of 11
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
------------- -------------
CURRENT LIABILITIES [C] [C]
Trade accounts payable $ 708,792 $ 696,133
Accrued expenses 216,640 177,363
Accrued warranty expense 130,000 100,000
------------- -------------
Total Current Liabilities 1,055,432 973,496
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $.05 par value;
Authorized Shares - 10,000,000
Issued Shares - 682,088
Outstanding Shares - 682,088 34,105 34,105
Additional paid-in capital 701,537 701,537
Retained earnings 1,778,846 1,837,554
Treasury stock, at cost (100,000) (100,000)
------------- -------------
Total Stockholders' Equity 2,414,488 2,473,196
------------- -------------
$ 3,469,920 $ 3,446,692
============= =============
See accompanying notes to consolidated financial statements
Page 4 of 11
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
------------------------ ------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUES: [C] [C] [C] [C]
Net sales $1,261,847 $ 807,992 $3,682,432 $2,555,629
Interest and other income 12,092 21,656 41,392 69,426
----------- ----------- ----------- -----------
1,273,939 829,648 3,723,824 2,625,055
COSTS AND EXPENSES:
Cost of products sold 942,430 682,917 2,771,446 2,102,097
Selling, general
and administrative 181,604 170,718 564,291 449,140
Research and development 104,103 150,457 373,487 463,374
Royalties 29,561 16,308 72,732 47,056
Interest - 1,176 76 2,526
----------- ----------- ----------- -----------
1,257,698 1,021,576 3,782,032 3,064,193
----------- ----------- ----------- -----------
INCOME (LOSS)
BEFORE INCOME TAXES 16,241 (191,928) (58,208) (439,138)
INCOME TAX BENEFIT
(EXPENSE) - CURRENT - 555 (500) 555
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 16,241 $ (191,373) $ (58,708) $ (438,583)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE $ .02 $ (.28) $ ( .09) $ (.64)
=========== =========== =========== ===========
Average number of shares of
Common Stock outstanding 710,000 682,000 682,000 682,000
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements
Page 5 of 11
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
[C] [C]
Net loss $ (58,708) $ (438,583)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 67,717 81,377
(Increase) decrease in assets:
Net receivables (72,137) (108,132)
Inventories (295,741) (13,632)
Other current assets (3,073) (11,415)
Other assets (69,065) 1,302
Increase in liabilities:
Trade accounts payable and accrued expenses 81,936 21,072
----------- -----------
Net Cash Used in Operating Activities (349,071) (468,011)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (65,244) (12,018)
Payments received on long term notes 118,137 117,375
----------- -----------
Net Cash Provided from Investing Activities 52,893 105,357
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and
capital lease obligations --- (23,410)
----------- -----------
Net Cash Used in Financing Activities --- (23,410)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (296,178) (386,064)
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 555,204 936,370
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 259,026 $ 550,306
=========== ===========
See accompanying notes to consolidated financial statements
Page 6 of 11
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LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 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 nine months
ended September 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 September 30, 1997. For all other accounting periods, fully
diluted earnings are antidilutive, and accordingly, are not presented.
Page 7 of 11
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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 September 30, 1997.
Net sales for the three months ended September 30, 1997 were $1,261,847 as
compared to $807,992 for the same period in 1996, an increase of $453,855 or
56%. 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 $504,853 or 110% 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 $50,998 or 15%.
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.
The Company's cost of products sold as a percent of net sales were 75% for
the three months ended September 30, 1997 as compared to 85% for the same period
in 1996, a decrease of 10%. This decrease was primarily a result of the 56%
increase in sales while labor and overhead costs increased by only 15%
Selling, general, and administrative expenses for the three months ended
September 30, 1997 were $181,604 as compared to $170,718 for the same period in
1996, an increase of $10,886 or 6%. This increase was primarily the result of
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 September
30, 1997 were $104,103 as compared to $150,457 for the same period in 1996, a
decrease of $46,354 or 31%. 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.
The Company recognized net income for the three months ended September 30,
1997 of $16,241 or $.02 per share. This compares to a net loss of $191,373 or
$.28 per share for the same period of 1996, an improvement of $207,614. This
improvement was a result of the increase in net sales, a decrease in research
and development expenditures and a decrease in the cost of goods sold
percentage. These factors were partially offset by increased start-up costs
relating to the introduction of the Company's medical products.
Page 8 of 11
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Nine months ended September 30, 1997.
Net sales for the nine months ended September 30, 1997 were $3,682,432 as
compared to $2,555,629 for the same period in 1996, an increase of $1,126,803 or
44%. 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 $1,303,916 or 84% when
compared to the same nine month period in 1996. This increase was partially
offset by a $177,113 or 18% 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.
The Company's cost of products sold as a percent of net sales were 75% for
the nine months ended September 30, 1997 as compared to 82% for the same period
in 1996, a decrease of 7%. This decrease was primarily a result of the 44%
increase in sales while labor and overhead costs increased by only 12%
Selling, general, and administrative expenses for the nine months ended
September 30,1997 were $564,291 as compared to $449,140 for the same period in
1996, an increase of $115,151 or 26%. This increase was primarily the result of
market advertising and other start-up related costs of the Company's new
dermatologic and ophthalmic medical products.
Research and development expenditures for the nine months ended September
30, 1997 were $373,487 as compared to $463,374 for the same period in 1996, a
decrease of $89,887 or 19%. 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.
The Company recognized a net loss for the nine months ended September 30,
1997 of $58,708 or $.09 per share. This compares to a net loss of $438,583 or
$.64 per share for the same period of 1996, an improvement of $379,875. This
improvement was a result of the increase in net sales, a decrease in research
and development expenditures and to a decrease in the cost of goods sold
percentage. These factors were partially offset by increased start-up costs
relating to the introduction of the Company's medical products.
Page 9 of 11
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On September 30, 1997, the Company had working capital of $2,062,970 as
compared to $1,653,962 at December 31, 1996, an increase of $409,008 or 25%.
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 September 30, 1997. Essentially all of the
Company's working capital requirements have been financed by internally
generated funds.
Cash equivalents at September 30, 1997 were $259,026 compared to $555,204
on December 31, 1996, a decrease of $296,178 or 53%. This decrease in the cash
equivalent balance was primarily the result of the Company's net loss for the
period ended September 30, 1997 and to increases in inventory balances. These
factors are both primarily the result of costs associated with the development
of the Company's new medical products.
PART II. OTHER INFORMATION
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Page 10 of 11
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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: November 14, 1997 /s/ B. Joyce Wickham
----------------------- -----------------------------------
B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: November 14, 1997 /s/ Reo K Larsen
----------------------- -----------------------------------
Reo K Larsen
General Accounting Manager
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 SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 259,026
<SECURITIES> 0
<RECEIVABLES> 1,274,828
<ALLOWANCES> 38,098
<INVENTORY> 1,584,744
<CURRENT-ASSETS> 3,118,402
<PP&E> 2,067,039
<DEPRECIATION> 1,847,582
<TOTAL-ASSETS> 3,469,920
<CURRENT-LIABILITIES> 1,055,432
<BONDS> 0
0
0
<COMMON> 34,105
<OTHER-SE> 2,380,383
<TOTAL-LIABILITY-AND-EQUITY> 3,469,920
<SALES> 3,682,432
<TOTAL-REVENUES> 3,723,824
<CGS> 2,771,446
<TOTAL-COSTS> 3,781,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76
<INCOME-PRETAX> (58,208)
<INCOME-TAX> 500
<INCOME-CONTINUING> (58,708)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,708)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
