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 PERIOD ENDED SEPTEMBER 30, 2000.
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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, 2000
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
----- -----
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 -- 1,628,609 shares as of Nov. 7, 2000
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INDEX
LASER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 2000 and December 31,
1999.
Consolidated Statements of Operations - Three months ended September
30, 2000 and 1999; Nine months ended September 30, 2000 and 1999
Consolidated Statements of Cash Flows - Nine months ended September
30, 2000 and 1999.
Notes to Consolidated Financial Statements - September 30, 2000.
Item 2. Management's Discussion and Analysis.
PART II. OTHER INFORMATION
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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 2000 1999
Unaudited
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 108,317 $ 113,337
Receivables, net 670,305 635,417
Inventories 648,058 749,411
Other current assets 36,656 16,887
------------ ------------
Total Current Assets 1,463,336 1,515,052
NON-CURRENT ASSETS
Equipment and leasehold improvements, net 237,525 284,771
Other assets 51,774 43,068
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$ 1,752,635 $ 1,842,891
============ ============
LIABILITIES AND STOCKHOLDERS'(DEFICIT) EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 822,501 $ 1,058,042
Accrued expenses 276,297 291,689
Accrued warranty expense 150,000 150,000
Current portion - capital leases 12,761 11,373
------------ ------------
Total Current Liabilities 1,261,559 1,511,104
LONG-TERM LIABILITIES
Long-Term capital leases 22,307 32,050
Convertible notes payable 500,000 ---
------------ ------------
Total Liabilities 1,783,866 1,543,154
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS'(DEFICIT) EQUITY
Common Stock, $.05 par value; 10,000,000 shares
authorized; 1,628,609 and 1,590,038 shares
issued, respectively 81,430 79,503
Additional paid-in capital 1,778,877 1,617,718
Retained earnings (1,791,538) (1,297,484)
Treasury stock, at cost (100,000) (100,000)
------------ ------------
Total Stockholders'(Deficit) Equity (31,231) 299,737
------------ ------------
$ 1,752,635 $ 1,842,891
============ ============
See accompanying notes to consolidated financial statements
Page 3 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,
2000 1999 2000 1999
---------- ---------- ---------- ----------
REVENUES:
Net sales $1,374,265 $1,178.851 $2,812,160 $3,025,502
Interest and other income 986 1,289 4,634 10,167
---------- ---------- ---------- ----------
1,375,251 1,180,140 2,816,794 3,035,669
COSTS AND EXPENSES:
Cost of products sold 998,135 964,747 2,323,276 2,646,937
Selling, general
and administrative 271,194 228,406 756,469 821,971
Research and development 72,043 102,911 194,880 373,331
Royalties 7,618 11,576 22,966 34,380
Interest 10,086 2.825 13,257 4,160
---------- ---------- ---------- ----------
1,359,076 1,310,465 3,310,848 3,880,779
---------- ---------- ---------- ----------
EARNINGS (LOSS) BEFORE
INCOME TAXES 16,175 (130,325) (494,054) (845,110)
INCOME TAX BENEFIT
(EXPENSE) - CURRENT --- --- --- ---
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) $ 16,175 $ (130,325) $ (494,054) $ (845,110)
========== ========== ========== ==========
NET EARNINGS (LOSS) PER SHARE $ .01 $ (.09) $ ( .30) $ (.59)
========== ========== ========== ==========
Average number of shares of
Common Stock outstanding 1,629,000 1,465,000 1,629,000 1,422,000
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
Page 4 of 11
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (494,054) $ (845,110)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 53,909 100,110
Provision for losses on accounts receivable 54,003 ---
Issuance of stock for compensation 39,047 ---
(Increase) decrease in assets:
Receivables (88,891) (381,118)
Inventories 101,353 386,625
Other assets (28,475) (29,101)
Increase (decrease) in liabilities:
Trade accounts payable and accrued expenses (250,933) 231,680
------------ ------------
Net Cash Used in Operating Activities (614,041) (536,914)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,663) (117,508)
------------ ------------
Net Cash Used in Investing Activities (6,663) (117,508)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 500,000 ---
Payments on Capital Leases (8,355) ---
Proceeds from Sale of Stock 124,039 282,009
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Net Cash Provided from Financing Activities 615,684 282,009
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DECREASE IN CASH AND CASH EQUIVALENTS (5,020) (372,413)
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 113,337 531,734
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 108,317 $ 159,321
============ ============
See accompanying notes to consolidated financial statements
Page 5 of 11
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LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
SEPTEMBER 30, 2000
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, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000. For further information,
refer to the consolidated financial statements and footnotes thereto for the
year ended December 31, 1999 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 2000 presentations.
NOTE C - WEIGHTED AVERAGE SHARES
Earnings (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
equivalents, determined using the treasury stock method.
NOTE D - Supplemental Cash Flow Information
Actual cash paid for interest and income taxes are as follows:
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2000 1999 2000 1999
-------- -------- -------- --------
Interest $ 10,086 $ 2,825 $ 13,257 $ 4,160
Income Taxes $ --- $ --- $ --- $ ---
Page 6 of 11
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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
---------------------
Three months ended September 30, 2000.
Net sales for the three months ended September 30, 2000 were $1,374,265 as
compared to $1,178,851 for the same period in 1999, an increase of $195,414 or
17%. This increase was primarily the result of an increased demand for medical
products totaling $369,563 which was partially offset by decreased demand for
laser products and services totaling $174,149 for the three months ended
September 30, 2000 as compared to the same period of 1999.
Cost of products sold for the three months ended September 30, 2000 was
$998,135 as compared to $964,747 for the same period in 1999, an increase of
$33,388 or 3%. As a percentage of Company net sales, cost of products sold was
73% for the three months ended September 30, 2000 as compared to 82% for the
same period in 1999. The change in the cost of products sold was primarily the
result of increased medical sales. The decrease as a percentage of net sales
was primarily the result of the increase in medical sales and its effect on
product mix and to an increase in the sales price of one of the Company's OEM
laser product lines during the third quarter of 2000.
Selling, general, and administrative expenses for the three months ended
September 30, 2000 were $271,194 as compared to $228,406 for the same period in
1999, an increase of $42,788 or 19%. This increase in selling, general, and
administrative expenses was primarily the result of increases in sales
commission expenses associated with medical product sales.
Page 7 of 11
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Research and development expenditures for the three months ended September
30, 2000 were $72,043 as compared to $102,911 for the same period in 1999, a
decrease of $30,868 or 30%. This decrease was primarily a result of the Company
narrowing its product development focus to medical laser systems and to the
product needs of certain of its OEM laser product customers.
Royalty expenses decreased from $11,576 for the three months ended
September 30, 1999 to $7,618 for the same period in 2000, a decrease of $3,958
or 34%.
Interest income and other revenue decreased from $1,289 for the three
months ended September 30, 1999 to $986 for the same period of 2000, a decrease
of $303 or 24%.
Interest expenses increased from $2,825 for the three months ended
September 30, 1999 to $10,086 for the same period of 2000, an increase of $7,261
or 257%. This increase was primarily the result of interest expenses accrued on
the two convertible notes payable that the Company entered into during the
second quarter of this year.
The Company recognized a net profit for the three months ended September
30, 2000 of $16,175 or $.01 per share compared to a net loss of $130,325 or $.09
per share for the same period in 1999, an improvement of $146,500 or $.10 per
share. This improvement was primarily a result of the increased medical sales,
and improved gross profit margins on third quarter sales and to an increase in
the sales price of one of the Company's OEM laser product lines.
Nine months ended September 30, 2000.
Net sales for the nine months ended September 30, 2000 were $2,812,160 as
compared to $3,025,502 for the same period in 1999, a decrease of $213,342 or
7%. This decrease was the result of decreased product demand for laser products
and service sales totaling $418,212 for the nine months ended September 30, 2000
as compared with the same period of 1999. This decrease was partially offset by
increased medical sales totaling $204,870 for the nine months ended September
30, 2000 as compared to the same period of 1999.
Cost of products sold for the nine months ended September 30, 2000 was
$2,323,276 as compared to $2,646,937 for the same period in 1999, a decrease of
$323,661 or 12%. As a percentage of Company net sales, cost of products sold
was 83% for the nine months ended September 30, 2000 as compared to 87% for the
same period in 1999. The change in the cost of products sold was primarily the
result of decreased laser product and service sales. The decrease as a
percentage of net sales was primarily the result of the increase in medical
sales and its effect on product mix and to an increase in the sales price of one
of the Company's OEM laser product lines during the third quarter of 2000.
Page 8 of 11
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Selling, general, and administrative expenses for the nine months ended
September 30, 2000 were $756,469 as compared to $821,971 for the same period in
1999, a decrease of $65,502 or 8%. This decrease was the result of reduced
accounting costs during 2000 as compared to 1999 as well as to non-recurring
moving expenses associated with the move to the Company's new facility during
1999.
Research and development expenditures for the nine months ended September
30, 2000 were $194,880 as compared to $373,331 for the same period in 1999, a
decrease of $178,451 or 48%. This decrease was primarily a result of the Company
narrowing its product development focus to medical laser systems and to the
product needs of certain of its OEM laser product customers.
Royalty expenses decreased from $34,380 for the nine months ended September
30, 1999 to $22,966 for the same period in 2000, a decrease of $11,414 or 33%.
Interest income and other revenue decreased from $10,167 for the nine
months ended September 30, 1999 to $4,634 for the same period of 2000, a
decrease of $5,533 or 54%.
Interest expenses increased from $4,160 for the nine months ended September
30, 1999 to $13,257 for the same period of 2000, an increase of $9,097 or 219%.
This increase was primarily the result of interest expenses accrued on two
convertible notes payable that the Company entered into during this period.
The Company recognized a net loss for the nine months ended September 30,
2000 of $494,054 or $.30 per share compared to a net loss of $845,110 or $.59
per share for the same period in 1999, an improvement of $351,056 or $.29 per
share. This improvement was primarily a result of the reduced research and
development expenditures, to a reduction in general and administrative costs,
to improved gross margins on sales and to an increase in the sales price of one
of the Company's OEM laser product lines.
LIQUIDITY AND CAPITAL RESOURCES
On September 30, 2000, the Company had working capital of $201,777 as
compared to $3,948 at December 31, 1999, an increase of $197,829. This increase
in working capital was primarily a result of cash proceeds received from two
convertible notes payable totaling $500,000 and by the sale of the Company's
stock in the amount of $124,039 which was partially offset by the Company's net
loss from operations for the nine months ended September 30, 2000.
Cash equivalents at September 30, 2000 were $108,317 as compared to
$113,337 on December 31, 1999, a decrease of $5,020 or 4%. This decrease in
cash equivalents was primarily a result of the Company's net loss from
operations for the nine months ended September 30, 2000 and to decreases in
accounts payable and accrued expenses. These decreases in cash equivalents were
Page 9 of 11
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almost totally offset by the cash proceeds received from two convertible notes
payable totaling $500,000 and by the sale of the Company's stock in the amount
of $124,039. The Company is continuing to explore other sources for additional
capital but has not entered into any agreements for additional sources of
borrowing or capital other than that which has already been received through the
convertible notes and the sale of the Company's stock.
PART II. OTHER INFORMATION
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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 10, 2000 /s/ B. Joyce Wickham
---------------------- ------------------------------------
B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: November 10, 2000 /s/ Reo K Larsen
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Reo K Larsen
General Accounting Manager
Page 11 of 11
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