<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------ ------
Commission File Number 0-16343
OIS OPTICAL IMAGING SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-2544320
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
47050 Five Mile Road, Northville, Michigan 48167
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 454-5560
------------------
Indicate by check mark whether the registrant (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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of November 11, 1996:
Common Stock, $0.01 par value 97,137,140
----------------------------- ----------------
Class Number of shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
Financial Statements
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended September 30,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
REVENUES
Display $ 1,022,416 $ 1,071,125
Engineering 1,271,195 1,027,844
Sensor 51,072 42,924
----------- -----------
TOTAL REVENUES 2,344,683 2,141,893
COST OF SALES
Display 3,163,618 2,502,098
Engineering 3,540,662 2,743,775
Sensor 157,300 97,679
----------- -----------
TOTAL COST OF SALES 6,861,580 5,343,552
GROSS MARGIN (4,516,897) (3,201,659)
OPERATING EXPENSES
Internal research and development 669,350 529,370
Selling, general and administrative 1,498,375 1,141,531
----------- -----------
TOTAL OPERATING EXPENSES 2,167,725 1,670,901
OPERATING LOSS (6,684,622) (4,872,560)
OTHER INCOME AND (EXPENSE)
Interest expense (1,112,797) (288,532)
Interest income 257 10,969
Licensing and royalties 1,135 41,696
Other 224,744 832
----------- -----------
TOTAL OTHER INCOME AND (EXPENSE) (886,661) (235,035)
----------- -----------
NET LOSS $(7,571,283) $(5,107,595)
----------- -----------
Preferred stock dividends 705,753 267,123
----------- -----------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS $(8,277,036) $(5,374,718)
=========== ===========
NET LOSS PER COMMON SHARE (Note B) $ (.09) $ (.06)
=========== ===========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ -0- $ 516
Accounts receivable
(Net of reserve for doubtful accounts of
$60,000 at September 30, 1996 and June 30,
1996) 4,182,704 3,232,486
Receivable from U.S. Government 144,150 131,705
Inventories 9,452,922 5,847,250
Insurance receivable 4,438,482 6,085,263
Prepaid expenses and other current assets 782,340 485,251
------------- -------------
TOTAL CURRENT ASSETS 19,000,598 15,782,471
PROPERTY AND EQUIPMENT
Land 3,000,000 3,000,000
Building 33,962,033 32,232,265
Machinery and other equipment 31,080,797 28,670,855
Construction in process 236,815 129,074
------------- -------------
TOTAL PROPERTY AND EQUIPMENT 68,279,645 64,032,194
Less accumulated depreciation (10,722,731) (9,300,731)
------------- -------------
NET TOTAL PROPERTY AND EQUIPMENT 57,556,914 54,731,463
------------- -------------
TOTAL ASSETS $ 76,557,512 $ 70,513,934
============= =============
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Current installments on capital lease obligation $ 94,451 $ 125,454
Subordinated note payable to affiliate 15,000,000 2,000,000
Current installment on long-term debt 4,250,000 3,000,000
Accounts payable 3,448,026 5,599,266
Accrued interest 1,442,493 951,103
Deferred revenue 118,818 236,845
Other accrued liabilities 1,111,636 437,562
------------- ------------
TOTAL CURRENT LIABILITIES 25,465,424 12,350,230
LONG-TERM DEBT 48,250,000 48,000,000
LOCAL GOVERNMENT SUBSIDY 2,975,000 3,000,000
------------- ------------
TOTAL LIABILITIES 76,690,424 63,350,230
STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.01 per share:
Series A, 8% cumulative, non-convertible
and non-voting
Authorized - 50,000 shares
Issued and outstanding - 35,000 shares
at September 30, 1996 and at June 30, 1996 350 350
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 97,137,140 shares
at September 30, 1996 and 97,103,790 shares at
June 30, 1996 971,371 971,038
Additional paid-in capital 105,214,493 105,457,517
Accumulated deficit (105,626,708) (98,055,426)
Deferred compensation (692,418) (1,209,775)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY (132,912) 7,163,704
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 76,557,512 $ 70,513,934
============= ============
</TABLE>
See notes to financial statements.
-4-
<PAGE> 5
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
SEPTEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(7,571,283) $(5,107,595)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,397,000 335,400
Deferred compensation expense 171,166 61,657
Impact on cash flows from changes in assets
and liabilities:
Accounts receivable 684,118 (1,028,267)
Prepaid expenses and other assets (297,089) (40,637)
Inventory (3,605,672) 41,483
Accounts payable and accrued liabilities (985,775) (2,208,865)
Deferred revenues (118,027) (44,620)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (10,325,562) (7,991,444)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,247,451) (1,975,179)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (4,247,451) (1,975,179)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long term debt (31,003) (30,055)
Net proceeds from issuance of debt and notes 14,500,000 3,500,000
Net proceeds from issuance of common stock 103,500 29,316
Net proceeds from issuance of preferred stock -- 6,250,000
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 14,572,497 9,749,261
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (516) (217,362)
NET CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 516 830,081
----------- -----------
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ -0- $ 612,719
=========== ===========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
OIS OPTICAL IMAGING SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
SEPTEMBER 30,
1996 1995
--------- ---------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $621,407 $288,532
</TABLE>
Cash equivalents:
Cash equivalents consist of investments in short-term, highly-liquid
securities having maturity of three months or less, made as a part of OIS'
cash management activity.
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTIONS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
SEPTEMBER 30,
1996 1995
--------- ---------
<S> <C> <C>
Common stock issued in exchange for deferred
compensation, net of terminations $346,191 --
</TABLE>
See statements of cash flows.
-6-
<PAGE> 7
OIS OPTICAL IMAGING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - Financial Statement Presentation
The condensed financial statements included herein have been prepared by OIS
Optical Imaging Systems, Inc. ("the Company") without audit pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statement be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's latest annual report on Form 10-K.
There have been no significant changes in such information since the date of
such financial statements except as noted below.
In the opinion of the Company, the accompanying unaudited condensed financial
statements include all adjustments consisting only of normal recurring items,
required to present fairly its financial position as of September 30, 1996, the
results of operations for the three months ended September 30, 1996 and 1995
and cash flows for the three months ended September 30, 1996 and 1995.
NOTE B - Net Loss Per Share
Net loss per share is based on the weighted average number of shares of Common
Stock outstanding during the periods. The weighted average number of shares
used in the computation for the three months ended September 30, 1996 and 1995
was 97,137,140 and 96,718,181, respectively.
NOTE C - Reclassification
Certain amounts in the prior year financial statements have been reclassified
to conform with the current financial presentation.
NOTE D - Subsequent Events
On October 29, 1996 the Company's Board of Directors created and authorized for
issuance 100,000 shares of Series B Cumulative Preferred Stock, par value $.01,
with an original issuance price of $1,000 per share. The Series B Preferred
Stock bears a cumulative dividend rate of 8% for the first three years and a
floating rate, subject to a 16.5% cap, thereafter. Each share of Series B
Preferred Stock entitles the holder to 350 votes on each and every matter
submitted to a vote of the Company's shareholders. The Series B Preferred
Stock is non-convertible.
-7-
<PAGE> 8
On October 30, 1996, the Company exchanged the 35,000 shares of Series A
Preferred Stock held by Guardian Industries Corp. ("Guardian") and all
dividends in arrears for 38,137 shares of Series B Preferred Stock. Guardian
and William Davidson contributed common stock of the Company and other property
to GD Investments Corp. ("GDIC"), a Guardian affiliate. On October 31, 1996
the Company sold 21,000 shares of Series B Preferred Stock to GDIC at a price
of $1,000 per share. OIS used the proceeds to retire its subordinated note
payable (Bridge Loan) and all accrued interest to Guardian, which amounted to
approximately $18.9 million.
As a result of the above transactions, the Company is eligible to be a member
of Guardian's affiliated tax group ("Affiliated Group"). This allows the
Company's tax losses, credits and/or income generated after October 31, 1996 to
be included in the single consolidated federal income tax return filed by the
Affiliated Group. Guardian and the Company entered into a Tax Sharing
Agreement dated November 1, 1996 pursuant to which the Company will receive or
make tax sharing payments based on the amount by which the federal income tax
liability of the Affiliated Group is reduced or increased by inclusion of the
Company in the Affiliated Group.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATION
Summary
The operating results for the first quarter of fiscal 1997 continue to reflect
substantial operating losses. Although the Northville plant is now on line,
volume of production was low during the quarter as the process of plant ramp-up
was beginning. As a result of low production of saleable product, costs
continue to be disproportionately high compared to revenues. Contributing to
the increased costs are higher depreciation expense associated with the plant
being placed into service and higher interest costs associated with the
Company's debt.
The Company's ability to improve its financial performance will depend on
whether the Company is able to increase productivity and achieve higher volumes
of production. Demand for the Company's products has continued to exceed the
Company's ability to produce.
While management is optimistic about the Company's ability to efficiently
manufacture higher volumes of saleable product at the Northville plant, the
manufacturing ramp-up is a complex process which, given the Company's lengthy
production cycles, is expected to be ongoing through the fiscal year.
-8-
<PAGE> 9
Three Months ended September 30, 1996 and 1995
Revenue
Total revenue for the first three months of fiscal 1997 of $2,344,683 was 9%
higher than total revenue for the same period in the preceding fiscal year of
$2,141,893. Revenues from the sale of displays and sensors for the first
quarter of fiscal 1997 of $1,073,488 approximated revenues from the sale of
displays and sensors for the first quarter of fiscal 1996 of approximately
$1,114,049. Revenue from customer-funded engineering of $1,271,195 for the
first quarter of fiscal 1997 was 24% higher than customer funded engineering
revenue of $1,027,844 for the first quarter of fiscal 1996.
Although revenue increased during the first quarter of fiscal 1997, the rate of
growth, specifically in the sale of displays, was constrained by low production
volumes. Significant additional display revenue will be necessary if the
Company is to achieve profitability. Until the plant ramp-up is completed and
the Company achieves greater plant utilization, revenue growth from the sale of
displays will continue to be constrained. If the ramp-up of the baseline
process proceeds as anticipated, management expects a gradual increase in
revenues from the sale of displays during fiscal 1997.
Cost of Sales
Cost of sales for the first quarter of fiscal 1997 of $6,861,580 was 28% higher
than cost of sales for the first quarter of fiscal 1996 of $5,343,552.
Furthermore, the cost of sales as a percentage of revenue increased to 293% in
the first quarter of fiscal 1997 from 250% for the same period in the preceding
fiscal year.
While the Company's direct labor and material costs during the first quarter of
fiscal 1997 decreased significantly as a percentage of revenue compared to the
same period during fiscal 1996, the Company's overhead costs during the same
period increased significantly both in absolute dollars and as a percentage of
revenue when compared to the first quarter of fiscal 1996.
The increase in overhead costs for the first quarter of fiscal 1997 is
attributable in large part to an increase of over $1 million in depreciation
expense when compared to the same period during fiscal 1996. The increase is
attributable to the facility and related process equipment being placed in
service subsequent to the first quarter of fiscal 1996. The Company also
incurred approximately $850,000 in increased costs in the area of contractor
labor, manufacturing supplies, tooling and property taxes during the first
quarter of fiscal 1997 due to the completion of the Northville facility and
related ramp-up of the manufacturing process.
Reducing cost of sales to more acceptable levels depends on the Company's
ability to improve efficiencies and increase yields. As the Company's
manufacturing process becomes more efficient, direct labor and material costs
will decrease on a per unit basis. Because most of the Company's overhead
costs are fixed, management does not expect a significant increase in overhead
costs as production volumes increase. However, until the Company is able to
produce more saleable
-9-
<PAGE> 10
product, overhead costs will continue to be a large component of cost of sales
on both a per unit and percentage of revenue basis.
Other Costs
The Company's internal research and development costs of $669,350 for the first
quarter of fiscal 1997 were 26% higher than the internal research and
development costs of $529,370 incurred during the first quarter of fiscal 1996.
The Company continues to invest resources in order to increase and improve its
line of products. Management considers it imperative to maintain a strong
research and development program. Research and development spending for fiscal
1997 is expected to increase slightly from fiscal 1996.
The Company's Selling, General and Administrative costs of $1,498,375 for the
first three months of fiscal 1997 were 31% higher than the Selling, General and
Administrative costs of $1,141,531 incurred during the same period in the
preceding fiscal year. The majority of the increase is attributable to an
increase in legal and patent fees relating to the protection of the Company's
intellectual rights and an increase in general business activity. Furthermore,
the Company experienced substantial increases in the area of employee
recruitment and relocation and franchise taxes. Management does not expect its
Selling, General and Administrative costs to increase significantly during
fiscal 1997.
Interest expense during the first quarter of fiscal 1997 increased by
approximately $824,000 due to the Northville plant being placed into service
subsequent to the first quarter in fiscal 1996. Therefore, a proportionate
amount of the interest incurred on the debt to finance construction of the
Northville facility is no longer being capitalized as part of the cost of the
Northville facility. The Company also incurred additional interest on higher
debt levels to finance ongoing operations when compared to the first quarter of
fiscal 1996. Interest expense is expected to continue to increase until
operations generate enough profits to begin retiring the outstanding debt.
Liquidity and Capital Resources
LIQUIDITY
The Company did not have any cash or cash equivalents at September 30, 1996.
The Company is attempting to manage its cash to minimize borrowings under its
various debt instruments.
OPERATING ACTIVITIES
During the first three months of fiscal 1997, the Company incurred a net loss
of $7,571,283. Inventory increased approximately $3,600,000 million as the
Company increased levels of raw materials and spare equipment parts to sustain
the increase in manufacturing activity.
-10-
<PAGE> 11
INVESTING ACTIVITIES
During the first quarter of fiscal 1997, the Company spent approximately
$4,200,000 for sensor production equipment and cleanroom improvements.
FINANCING ACTIVITIES
During the first quarter of fiscal 1997, the Company borrowed $13,000,000 under
its $20,000,000 bridge loan with Guardian Industries Corp. ("Guardian"). The
bridge loan accrued interest at 5.7% per annum, and all principal and accrued
interest was paid on November 1, 1996. As of September 30, 1996, the Company
had $15 million outstanding under the bridge loan. (See Capital Resources).
Capital Resources
On October 29, 1996 the Company's Board of Directors created and authorized for
issuance 100,000 shares of Series B Cumulative Preferred Stock, par value $.01,
with an original issuance price of $1,000 per share. The Series B Preferred
Stock bears a cumulative dividend rate of 8% for the first three years and a
floating rate, subject to a 16.5% cap, thereafter. Each share of Series B
Preferred Stock entitles the holder to 350 votes on each and every matter
submitted to a vote of the Company's shareholders. The Series B Preferred
Stock is non-convertible.
On October 30, 1996, the Company exchanged the 35,000 shares of Series A
Preferred Stock held by Guardian and all dividends in arrears for 38,137 shares
of Series B Preferred Stock. Guardian and William Davidson contributed common
stock of the Company and other property to GD Investments Corp. ("GDIC"), a
Guardian affiliate. On October 31, 1996 the Company sold 21,000 shares of
Series B Preferred Stock to GDIC at a price of $1,000 per share. If these
Preferred Stock transactions had occurred as of September 30, 1996, the total
stockholder's equity would have been $20,867,088 as of that date. See Proforma
Balance Sheet attached as Exhibit 99.1. OIS used the proceeds to retire its
subordinated note payable (Bridge Loan) and all accrued interest to Guardian,
which amounted to approximately $18.9 million.
As a result of the above transactions, the Company is eligible to be a member
of Guardian's affiliated tax group ("Affiliated Group"). This allows the
Company's tax losses, credits and/or income generated after October 31, 1996 to
be included in the single consolidated federal income tax return filed by the
Affiliated Group. Guardian and the Company entered into a Tax Sharing
Agreement dated November 1, 1996 pursuant to which the Company will receive or
make tax sharing payments based on the amount by which the federal income tax
liability of the Affiliated Group is reduced or increased by inclusion of the
Company in the Affiliated Group.
The Company is in the process of completing the acquisition of an additional 80
acres of land adjacent to the existing property. The agreement with Wayne
County provides a conditional purchase price of $800,000. The price is
contingent on the Company beginning construction on a large scale facility
within five years and employing 500 employees within eight years. If the
Company does not meet these conditions, it will have the option of either (i)
paying approximately $3,000,000 to the County as additional consideration for
the land or (ii) conveying the land back to the County and receiving a refund
of the original $800,000 purchase price (without interest).
-11-
<PAGE> 12
Wayne County is currently addressing certain zoning issues which must be
resolved before the Company will purchase the additional land.
Due to the level of current and anticipated losses, management expects the
financing discussed above will be sufficient to meet the Company's cash needs
through December 1996. Management expects that additional capital resources
will be needed to support the Company's operations after December 1996. At
this time, Guardian has not indicated any intention to discontinue funding the
Company. If Guardian were to discontinue funding the Company or offer funding
to the Company on terms that were not satisfactory to the Company's
disinterested directors, then the Company would have to seek alternative
sources of funding. There is no assurance that such alternative sources of
funding would be available. The Company's Board of Directors has authorized
the issuance of an additional 19,000 shares of Series B Preferred Stock (on the
same terms as that previously issued to GDIC) to facilitate additional equity
investments by Guardian and their affiliates.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit 27 Financial Data Schedule (EDGAR Version only)
Exhibit 99.1 September 30, 1996 Proforma Balance Sheet
B. REPORTS ON FORM 8-K
Report on Form 8-K filed by the Company on November 5, 1996.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OIS Optical Imaging Systems, Inc.
(Registrant)
Date: November 14, 1996 By: /s/Rex Tapp
-------------------------------
Rex Tapp
President and Chief Executive
Officer
Date: November 14, 1996 By: /s/Charles C. Wilson
-------------------------------
Charles C. Wilson
Executive Vice President
(Principal Financial and
Accounting Officer
-14-
<PAGE> 15
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 FINANCIAL DATA SCHEDULE
99.1 SEPTEMBER 30, 1996 PROFORMA BALANCE SHEETS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 4,242,704
<ALLOWANCES> 60,000
<INVENTORY> 9,452,922
<CURRENT-ASSETS> 19,000,598
<PP&E> 68,279,645
<DEPRECIATION> 10,722,731
<TOTAL-ASSETS> 76,557,512
<CURRENT-LIABILITIES> 25,465,424
<BONDS> 0
0
350
<COMMON> 971,371
<OTHER-SE> (1,104,633)
<TOTAL-LIABILITY-AND-EQUITY> 76,557,512
<SALES> 2,344,683
<TOTAL-REVENUES> 2,344,683
<CGS> 6,861,580
<TOTAL-COSTS> 9,029,305
<OTHER-EXPENSES> 886,661
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 1,112,797
<INCOME-PRETAX> (7,571,283)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,571,283)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,571,283)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
OIS OPTICAL IMAGING SYSTEMS, INC.
PROFORMA BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30,
1996
-------------
(Unaudited)
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $21,000,000
Accounts receivable
(Net of reserve for doubtful accounts of
$60,000 at September 30, 1996) 4,182,704
Receivable from U.S. Government 144,150
Inventories 9,452,922
Insurance receivable 4,438,482
Prepaid expenses and other current assets 782,340
-----------
TOTAL CURRENT ASSETS 40,000,598
PROPERTY AND EQUIPMENT
Land 3,000,000
Building 33,962,033
Machinery and other equipment 31,080,797
Construction in process 236,815
-----------
TOTAL PROPERTY AND EQUIPMENT 68,279,645
Less accumulated depreciation (10,722,731)
-----------
NET TOTAL PROPERTY AND EQUIPMENT 57,556,914
-----------
TOTAL ASSETS $97,557,512
===========
</TABLE>
<PAGE> 2
OIS OPTICAL IMAGING SYSTEMS, INC.
PROFORMA BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30,
1996
-------------
(Unaudited)
<S> <C>
CURRENT LIABILITIES
Current installments on capital lease obligation $ 94,451
Subordinated note payable to affiliate 15,000,000
Current installment on long-term debt 4,250,000
Accounts payable 3,448,026
Accrued interest 1,442,493
Deferred revenue 118,818
Other accrued liabilities 1,111,636
-------------
TOTAL CURRENT LIABILITIES 25,465,424
LONG-TERM DEBT 48,250,000
LOCAL GOVERNMENT SUBSIDY 2,975,000
-------------
TOTAL LIABILITIES 76,690,424
STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.01 per share:
Series B, 8% cumulative, non-convertible
Authorized - 100,000 shares
Issued and outstanding - 59,137 shares
at September 30, 1996 591
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 97,137,140 shares
at September 30, 1996 971,371
Additional paid-in capital 126,214,252
Accumulated deficit (105,626,708)
Deferred compensation (692,418)
-------------
TOTAL STOCKHOLDERS' EQUITY 20,867,088
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,557,512
=============
</TABLE>
