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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 March 31, 1999
or
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the transition period from to
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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
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(State of Incorporation) (I.R.S. Employer
Identification No.)
2417 South 3850 West
Salt Lake City, UT 84120
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(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
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State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
The number of shares outstanding of Registrant's Common Stock, par
value $0.05 as of May 13, 1999 was 1,387,538 shares.
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LASER CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1999 and December
31, 1998.
Consolidated Statements of Operations - Three months ended
March 31, 1999 and 1998.
Consolidated Statements of Cash Flows - Three months ended
March 31, 1999 and 1998.
Notes to Consolidated Financial Statements - March 31, 1999.
Item 2. Management's Discussion and Analysis.
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
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PART I. FINANCIAL INFORMATION
Item 1.
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
ASSETS 1999 1998
Unaudited
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CURRENT ASSETS
Cash and cash equivalents $ 216,664 $ 531,734
Net Receivables 428,447 319,091
Total Inventories 1,021,983 967,722
Other current assets 101,870 72,733
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Total Current Assets 1,768,964 1,891,280
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EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment 1,606,117 1,591,972
Leasehold improvements 641,692 641,692
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2,247,809 2,233,664
Less accumulated depreciation
and amortization (2,056,591) (2,020,863)
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191,218 212,801
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OTHER ASSETS 130,203 130,203
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$ 2,090,385 $ 2,234,284
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See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
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CURRENT LIABILITIES
Trade accounts payable $ 867,445 $ 756,078
Accrued expenses 231,106 201,599
Accrued warranty expense 115,000 115,000
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Total Current Liabilities 1,213,551 1,072,677
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $.05 par value,
Shares authorized - 10,000,000
Issued & Outstanding-1,400,038 shares
at March 31, 1999 and December 31,
1998 respectively 70,003 70,003
Additional paid-in capital 1,327,583 1,327,583
Retained earnings (deficit) (420,752) (135,979)
Treasury stock, at cost (100,000) (100,000)
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Total Stockholders' Equity 876,834 1,161,607
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$2,090,385 $2,234,284
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See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
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March 31, March 31,
1999 1998
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REVENUES:
Net sales $ 930,276 $ 858,393
Interest and other income 4,927 7,041
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935,203 865,434
COSTS AND EXPENSES:
Cost of products sold 831,464 802,838
Selling, general,
and administrative 247,654 211,516
Research and development 128,293 108,942
Royalties 12,565 10,672
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1,219,976 1,133,968
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INCOME (LOSS) BEFORE
INCOME TAXES (284,773) (268,534)
INCOME TAX BENEFIT
(EXPENSE) - CURRENT --- ---
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NET INCOME (LOSS) $ (284,773) $ (268,534)
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NET INCOME (LOSS) PER SHR $ (.21) $ (.31)
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Ave. number of shares of
Common Stock outstanding 1,388,000 867,000
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See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (284,773) $(268,534)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 35,728 31,157
(Increase) Decrease in assets:
Net receivables (109,356) 505,277
Inventories (54,261) 122,059
Other current assets (29,137) 14,563
Increase (decrease) in liabilities:
Trade accounts payable and accrued expenses 140,874 (515,259)
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Net Cash Used in Operating Activities (300,925) (110,737)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (14,145) (3,344)
Payments received on long term notes 0 534,308
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Net Cash Provided from Investing Activities (14,145) 530,964
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CASH FLOWS FROM FINANCING ACTIVITIES: --- ---
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DECREASE IN CASH AND CASH EQUIVALENTS (315,070) 420,227
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 531,734 164,479
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 216,664 $ 584,706
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See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto for the year ended
December 31, 1998 included in the Company's Annual Report on Form 10-KSB
(file number 0-13316).
NOTE B - RECLASSIFICATIONS
Certain 1999 financial statement amounts have been reclassified to
conform to 1998 presentations. These amounts were not material
reclassifications.
NOTE C - WEIGHTED AVERAGE SHARES
Loss per common share is computed using the weighted average number
of common shares outstanding. Common equivalent shares consist of the
Company's stock options and are considered to be antidilutive common stock
eqivalents, determined using the treasury stock method.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well
as assumptions made by, and information currently available to management.
Such statements reflect the current view of the Company respecting future
events and are subject to certain risks, uncertainties, and assumptions,
including the risks and uncertainties noted throughout the document.
Although the Company has attempted to identify important factors that could
cause the actual results to differ materially, there may be other factors
that cause the forward-looking statements not to come true as anticipated,
believed, projected, expected, or intended. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may differ materially from those described herein
as anticipated, believed, projected, estimated, expected, or intended.
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere
herein.
RESULTS OF OPERATIONS
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Three months ended March 31, 1999.
Net sales for the three months ended March 31, 1999 were $930,276
as compared to $858,393 for the same period in 1998, an increase of
$71,883 or 8%. This increase was a result of an increase in demand for
the Company's laser products and services.
Historically, the Company has experienced fluctuations in the demand
for its laser product and service sales due in part to (i) changes in the
quantity of Company products held in inventory by its customers, (ii)
changes in demand for customer products which use the Company's products
as a component part, (iii) the competitiveness, cost and customer use of
alternative products, technologies or suppliers, and (iv) other factors.
Laser product and service sales to two of the Company's three
principal customers increased in the three month period ended March 31,
1999, as compared to the same period in 1998. Sales to (i) Company A
totaled $499,646 and $332,671 in 1999 and 1998, respectively, (ii) Company
B totaled $86,136 and $78,470 in 1999 and 1998 respectively, and (iii)
Company C totaled $58,750 and $246,511 in 1999 and 1998, respectively.
Laser product and service sales to all other customers for the three
month period ending March 31, 1999 increased by $88,525 over the previous
quarter. Medical laser system sales were $46,478 and $50,000 for the
three months ended March 31, 1999 and 1998 respectively.
Cost of products sold increased from $802,838 for the three month
period ending March 31, 1998 to $831,464 for the same period in 1999, an
increase of $28,626 or 4%. However, as a percentage of Company net sales,
cost of products sold were 89% for the three months ended March 31, 1999
as compared to 94% for the same period in 1998, a decrease of 5%.
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Selling, general, and administrative expenses for the three months
ended March 31, 1999 were $247,654 as compared to $211,516 for the same
period in 1998, an increase of $36,138 or 17%. This was primarily the
result of increased marketing, consulting, legal, and FDA compliance
activities relating to medical laser systems during the three months ended
March 31, 1999 as compared to the same period in 1998.
Research and development expenditures for the three months ended
March 31, 1999 were $128,293 as compared to $108,942 for the same period
in 1998, an increase of $19,351 or 18%. This increase was the result of
the Company's continuing efforts focusing on laser based ophthalmic and
dermatological medical systems, and to a lessor extent the product needs
of certain of the Company's OEM customers.
Royalty expenses increased from $10,672 for the three months ended
March 31, 1998 to $12,565 for the same period in 1999, an increase of
$1,893 or 18%. This increase was primarily the result of the increase in
the volume of products sold.
The Company recognized a net loss for the three months ended March
31, 1999 of $284,773 or $.21 per share compared to a net loss of $268,534
or $.31 per share for the same period in 1998. This difference was
primarily a result of an increase in marketing, consulting, FDA
compliance, and research and development activities relating to medical
laser systems during the three months ended March 31, 1999 as compared to
the same period in 1998, which was partially offset by a decrease in the
cost of goods sold as a percentage of sales.
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 1999, the Company had working capital of $555,412 as
compared to $818,603 at December 31, 1998, a decrease of $263,191 or 32%.
This decrease in working capital was primarily a result of the operating
losses incurred by the Company during the three months ended March 31,
1999. Cash equivalents at March 31, 1999 were $216,664 compared to
$531,734 on December 31, 1998, a decrease of $315,070 or 59%.
During the quarter ending March 31, 1999 the Company entered into
an agreement to lease a telephone system for 60 months with payments over
the life of the lease totaling $33,217. The Company has no other material
commitments for capital expenditures, and has not entered into any
agreements for additional sources of borrowing or capital.
YEAR 2000 ISSUE
The Company is aware of the issues associated with programming codes
in existing computer systems as the millennium (year 2000) approaches.
The Company has completed the upgrading of its design engineering software
and believes, but can give no assurance, that this software is Year 2000
compliant. However, the accounting and material management system is not
compliant. The Company has conducted preliminary research into a
replacement accounting and material management system. The Company plans
to acquire and implement a new system in the third quarter 1999. If the
new accounting and material management system is not implemented as
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planned, the Company could be adversely affected beginning in the year
2000 since many computer applications could fail.
The Company has requested or will request confirmations from the
Company's principal vendors stating whether their systems are year 2000
compliant or what plans are being developed to address the issue.
Management has not yet fully assessed the year 2000 compliance expense and
related potential effect on the Company's earnings.
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
Not applicable.
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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: May 14, 1999 /s/ B. Joyce Wickham
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B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: May 14, 1999 /s/ Todd G. Loosle
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Todd G. Loosle
Controller
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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: May 14, 1999
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B. Joyce Wickham
President and Chief Executive Officer
Treasurer and Director
Date: May 14, 1999
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Todd G. Loosle
Controller
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