<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 December 31, 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 February 14, 1997:
Common Stock, $0.01 par value 97,180,853
- ----------------------------- ----------------------------
Class Number of shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
Financial Statements
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
--------------------------- ----------------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES
Display $ 1,744,223 $ 1,164,394 $ 2,766,639 $ 2,235,519
Engineering 251,058 891,120 1,522,253 1,923,388
Sensor 67,536 10,317 118,608 48,818
------------ ----------- ------------ ------------
TOTAL REVENUES 2,062,817 2,065,831 4,407,500 4,207,725
COST OF SALES
Display 9,102,773 3,573,952 12,169,355 6,052,448
Engineering 1,484,403 2,619,060 5,124,696 5,382,174
Sensor 380,787 30,903 535,492 132,846
------------ ----------- ------------ ------------
TOTAL COST OF SALES 10,967,963 6,223,915 17,829,543 11,567,468
GROSS MARGIN (8,905,146) (4,158,084) (13,422,043) (7,359,743)
OPERATING EXPENSES
Internal research and development 446,088 386,870 1,115,439 916,240
Selling, general and administrative 1,486,446 1,384,645 2,984,820 2,526,176
------------ ----------- ------------ ------------
TOTAL OPERATING EXPENSES 1,932,534 1,771,515 4,100,259 3,442,416
OPERATING LOSS (10,837,680) (5,929,599) (17,522,302) (10,802,159)
OTHER INCOME AND (EXPENSE)
Interest expense (1,066,497) (432,456) (2,179,294) (720,989)
Interest income 2,192 8,023 2,449 18,993
Licensing and royalties 125,237 -- 126,372 41,696
Other 43,934 344 268,679 1,176
------------ ----------- ------------ ------------
TOTAL OTHER INCOME AND
(EXPENSE) (895,134) (424,089) (1,781,794) (659,124)
------------ ----------- ------------ ------------
LOSS BEFORE INCOME TAX BENEFIT (11,732,814) (6,353,688) (19,304,096) (11,461,283)
Income Tax Benefit 2,854,348 -- 2,854,348 --
------------ ----------- ------------ ------------
NET LOSS $ (8,878,466) $(6,353,688) $(16,449,748) $(11,461,283)
------------ ----------- ------------ ------------
Preferred stock dividends 1,045,251 435,616 1,751,004 702,739
------------ ----------- ------------ ------------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $(9,923,717) $(6,789,304) $(18,200,752) $(12,164,022)
============ =========== ============ ============
NET LOSS PER COMMON SHARE (Note B) $ (.10) $ (.07) $ (.19) $ (.13)
============ =========== ============ ============
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 144,185 $ 516
Accounts receivable
(Net of reserve for doubtful accounts of $60,000) 2,593,922 3,232,486
Receivable from U.S. Government 1,000,000 131,705
Inventories 9,905,534 5,847,250
Insurance receivable 997,177 6,085,263
Income tax receivable from affiliate 2,854,348 --
Prepaid expenses and other current assets 1,319,438 485,251
------------ ------------
TOTAL CURRENT ASSETS 18,814,604 15,782,471
PROPERTY AND EQUIPMENT
Land 3,000,000 3,000,000
Building 32,232,265 32,232,265
Machinery and other equipment 34,104,109 28,670,855
Construction in process 267,540 129,074
------------ ------------
TOTAL PROPERTY AND EQUIPMENT 69,603,914 64,032,194
Less accumulated depreciation (12,447,731) (9,300,731)
------------ ------------
NET TOTAL PROPERTY AND EQUIPMENT 57,156,183 54,731,463
TOTAL ASSETS $75,970,787 $70,513,934
============ ============
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
-------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Current installments on capital lease obligation $ 63,206 $ 125,454
Subordinated note payable to affiliate -- 2,000,000
Current installment on long-term debt 5,500,000 3,000,000
Accounts payable 3,334,641 5,599,266
Accrued interest 685,394 951,103
Deferred revenue 114,512 236,845
Other accrued liabilities 1,117,134 437,562
------------- ------------
TOTAL CURRENT LIABILITIES 10,814,887 12,350,230
LONG-TERM DEBT 47,000,000 48,000,000
LOCAL GOVERNMENT SUBSIDY 2,950,000 3,000,000
------------- ------------
TOTAL LIABILITIES 60,764,887 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 June 30, 1996 -- 350
Series B, 8% cumulative, non-convertible and voting
Authorized - 100,000 shares
Issued and outstanding - 62,153 shares at December 31,
1996 622 --
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 97,143,728 shares
at December 31, 1996 and 97,137,140 at June 30, 1996 971,437 971,038
Additional paid-in capital 129,302,043 105,457,517
Accumulated deficit (114,505,174) (98,055,426)
Deferred compensation (563,028) (1,209,775)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY 15,205,900 7,163,704
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $75,970,787 $70,513,934
============= ============
</TABLE>
See notes to financial statements.
-4-
<PAGE> 5
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
DECEMBER 31,
1996 1995
------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(16,449,748) $(11,461,283)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 3,097,000 1,419,300
Deferred compensation expense 300,556 89,522
Impact on cash flows from changes in assets and
liabilities:
Receivables 2,004,007 (1,701,905)
Prepaid expenses and other assets (834,187) (153,123)
Inventory (4,058,284) (622,355)
Accounts payable and accrued expenses (1,850,762) (1,660,131)
Deferred revenues (122,333) 210,076
------------ --------------
NET CASH USED IN OPERATING ACTIVITIES (17,913,751) (13,879,899)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,571,720) (4,176,426)
------------ --------------
NET CASH USED IN INVESTING ACTIVITIES (5,571,720) (4,176,426)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long term debt (62,248) (60,344)
Net proceeds (repayments) from issuance of debt and
notes (500,000) 5,000,000
Net proceeds from issuance of common stock 175,387 98,422
Net proceeds from issuance of preferred stock 24,016,001 12,500,000
------------ --------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 23,629,140 17,538,078
------------ --------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 143,669 (518,247)
NET CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 516 830,081
------------ --------------
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 144,185 $ 311,834
============ ==============
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
DECEMBER 31,
1996 1995
---------- --------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for interest $2,445,003 $737,857
</TABLE>
Cash equivalents:
Cash equivalents consist of investments in short-term, highly-liquid securities
having a maturity of three months or less, made as a part of OIS' cash
management activity.
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTIONS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------
DECEMBER 31,
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
statements 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 December 31, 1996, the
results of operations for the three months and six months ended December 31,
1996 and 1995 and cash flows for the six months ended December 31, 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 December 31, 1996 and 1995
was 97,137,213 and 96,724,556, respectively. The weighted average number of
shares used in the computation for the six months ended December 31, 1996 and
1995 was 97,134,837 and 96,721,392, respectively.
NOTE C - Reclassifications
Certain amounts in the prior year financial statements have been reclassified
to conform with the current financial presentation.
NOTE D - Related Party Transactions
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 21,016 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 these 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. As of December 31, 1996, the Company had
recorded an estimated receivable from Guardian of $2,854,348 in accordance with
the Tax Sharing Agreement.
On December 13, 1996, the Company sold 3,000 shares of Series B Preferred Stock
and on January 15, 1997 the Company sold an additional 3,000 shares of Series B
Preferred Stock to GDIC for a total of $6 million. OIS used the proceeds to
fund ongoing operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATION
Summary
The operating results for the first six months of fiscal 1997 continue to
reflect substantial operating losses. Although the Company's volume of
production has steadily increased during the first six months of fiscal 1997,
ramping-up to greater production volumes and efficiencies will be required in
order to begin showing improved financial results. As a result of low
production of saleable product, costs continue to be disproportionately high
compared to revenues. (see Cost of Sales.) Contributing to the increased
costs are substantially higher depreciation expense associated with the plant
being placed in 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. While management is optimistic about the Company's ability to
efficiently manufacture higher volumes of saleable product, the manufacturing
ramp-up is a complex process which, given the Company's lengthy production
cycles, is expected to be ongoing throughout the fiscal year.
-8-
<PAGE> 9
Three months and six months ended December 31, 1996 and 1995
Revenue
Total revenue for the first six months of fiscal 1997 of $4,407,500 was 5%
higher than total revenue for the same period in the preceding fiscal year of
$4,207,725. Total revenue for the second quarter of fiscal 1997 of $2,062,817
was comparable with total revenue of $2,065,831 for the second quarter in the
preceding fiscal year. Although total revenue for the first six months of
fiscal 1997 was not significantly different when compared to the same period in
the preceding fiscal year, as expected, revenue from customer funded engineering
activity decreased while revenue from the sale of displays and sensors
increased.
Revenues from the sale of displays and sensors for the first six months and
second quarter of fiscal 1997 of $2,885,247 and $1,811,759 was 26% and 54%
higher, respectively when compared to $2,284,337 and $1,174,711 for the same
period in the preceding fiscal year. Revenue from customer-funded engineering
for the first six months and second quarter of fiscal 1997 of $1,522,253 and
$251,058 was 21% and 72% lower, respectively, when compared to $1,923,388 and
$891,120 for the same period in the preceding fiscal year.
Although display revenue increased during the first six months and second
quarter of fiscal 1997, the rate of growth 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, display revenue growth will
continue to be constrained. At this time, orders for the Company's products
exceed the Company's ability to produce. If the ramp-up of the baseline
process proceeds as anticipated, management expects an increase in revenues
from the sale of displays during fiscal 1997 as existing orders for the
Company's products are satisfied. However, current orders for the Company's
products will not support the production volumes required to achieve
profitability. Therefore, the Company is working hard to expand the market for
its products.
Cost of Sales
Cost of sales for the first six months and second quarter of fiscal 1997 of
$17,829,543 and $10,967,963 was 54% and 76% higher, respectively than cost of
sales when compared to $11,567,468 and $6,223,915 for the same periods in the
preceding fiscal year. Furthermore, the cost of sales as a percentage of
revenue increased for the first six months and second quarter of fiscal 1997 to
405% and 532%, respectively from 275% and 301% when compared to the same
periods in fiscal 1996.
Direct labor and material for the first six months and second quarter of fiscal
1997 increased approximately $2.4 million and $3 million, respectively when
compared to the same periods in fiscal 1996. Increased activity of the plant
ramp-up have resulted in significantly higher direct material and labor costs
during the second quarter of fiscal 1997 and, although to a lesser degree, for
the first six months of fiscal 1997. Although yields have improved slightly
during the period,
-9-
<PAGE> 10
production activity has increased substantially thereby increasing the amount
of displays which were scrapped.
The increase in overhead costs for the first six months of fiscal 1997 is
attributable in large part to an increase of approximately $1.6 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 six months of fiscal 1996. The
Company also incurred approximately $2.1 million in increased costs in the
areas of repair and maintenance, utilities, contractor labor, manufacturing
supplies, tooling and property taxes during the first six months of fiscal 1997
due to the completion of the Northville facility and related ramp-up of the
manufacturing process.
Reducing costs of sales to an acceptable level depends on the Company's ability
to improve efficiencies, increase yields and increase production volumes of
saleable units. 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 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 for the first six months
and second quarter of fiscal 1997 of $1,115,439 and $446,088 were 22% and 15%
higher, respectively, than $916,240 and $386,870 which was incurred in the same
periods during 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. Internal
research and development spending for fiscal 1997 is expected to increase
slightly from fiscal 1996.
The Company's Selling, General and Administrative costs for the first six
months and second quarter of fiscal 1997 of $2,984,820 and $1,486,446 were 18%
and 7% higher when compared to $2,526,176 and $1,384,645 for the same periods
in fiscal 1996. The increase is in large part attributable to an increase in
legal and patent fees relating to the protection of the Company's intellectual
rights. Furthermore, the Company experienced 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 six months and second quarter of fiscal 1997
increased by approximately $1,458,000 and $634,000 when compared to the same
periods in fiscal 1996 due to the new plant being placed into service
subsequent to the first six months 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
-10-
<PAGE> 11
operations when compared to fiscal 1996. Interest expense is expected to
continue to increase until operations generate enough profits to begin retiring
the outstanding debt.
Other differences between the first six months and second quarter of fiscal
year 1997 and 1996 are not discussed because management believes they result
principally from differences in timing of revenue and expenses, and not from
any known trends.
Liquidity and Capital Resources
LIQUIDITY
The Company's cash or cash equivalents were $144,185 at December 31, 1996. The
Company is attempting to manage its cash to minimize borrowings under its
various financing instruments.
OPERATING ACTIVITIES
During the first six months of fiscal 1997, the Company incurred a net loss of
$16,449,748. Inventory increased approximately $4.1 million as the Company
increased levels of raw materials and spare equipment parts to sustain the
increase in manufacturing activity. Accounts receivable decreased by a net
amount of $2 million due to the receipt from insurance of approximately $5
million of expenses incurred in connection with the March 1995 fire. This
decrease was partially offset by a $2.9 million increase in amounts due the
Company under its Tax sharing agreement with Guardian Industries Corp.
("Guardian").
INVESTING ACTIVITIES
During the first six months of fiscal 1997, the Company spent approximately
$5.6 million for production equipment and manufacturing improvements.
FINANCING ACTIVITIES
During the first six months of fiscal 1997, the Company received approximately
$24 million from the sale of preferred stock to GD Investments Corp. ("GDIC"),
a Guardian affiliate.
CAPITAL RESOURCES
On October 29, 1996, the Company's Board of Directors created and authorized
for issuance 100,000 shares of Series B Preferred Stock, par value $.01, with
an original issuance price of $1,000 per share. The Series B Preferred Stock
bears a 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 per share 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.
-11-
<PAGE> 12
Guardian and William Davidson contributed common stock of the Company and other
property to GDIC. On October 31, 1996, the Company sold 21,016 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 and all accrued interest to
Guardian, which amounted to approximately $18.9 million.
As a result of the above transaction, 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 tax return 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. As of December 31, 1996, the Company had recorded an
estimated receivable from Guardian of $2,854,348 in accordance with the Tax
Sharing Agreement.
On January 15, 1997, the Company sold 3,000 shares of Series B Preferred Stock
to GDIC at a price of $1,000 per share and on February 10, 1997 the Company
sold 2,500 shares of Series B Preferred Stock to GDIC at a price of $1,000 per
share. Management expects that additional capital resources will be needed to
support the Company's operations before the end of the current fiscal year. The
Company has no agreement with any parties with respect to financing any such
additional capital, and no parties, including Guardian, have any obligation to
provide financing to the Company. 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 13,000 shares of Series
B Preferred Stock (on the same terms as that previously issued) to facilitate
additional equity investments by Guardian and their affiliates.
The Company had entered into an agreement with Wayne County for the purchase of
approximately 80 acres of land adjacent to the Company's existing facility for
a conditional purchase price of $800,000 (the "Purchase Agreement"). Due to
the time involved in having the site re-zoned to allow for the Company's
intended use, the Purchase Agreement expired. At this time, management of the
Company has determined that the Company should not appropriate the financial
resources to revive the Purchase Agreement in order to acquire and develop the
site in accordance with the Purchase Agreement. However, Guardian has
expressed a willingness to pursue acquisition of the site from Wayne County on
substantially the same terms as the Purchase Agreement. In addition, Guardian
has indicated that if Guardian successfully acquires the site and, within five
years, the Company presents an acceptable plan to develop a new manufacturing
facility on the site, and is capable of financing such a plan, Guardian would
be willing to sell the site to the Company on substantially the same terms as
the Purchase Agreement.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 20, 1996, at the Company's Annual Meeting of Stockholders,
the following matters were submitted to votes of the Company's stockholders:
The stockholders elected Ralph J. Gerson, Jeffrey A. Knight, C.K.
Prahalad, Rex Tapp, Robert M. Teeter, Charles C. Wilson, Mark S. Wrighton and
Peter Joel C. Young as directors.
The stockholders approved the appointment of Arthur Andersen LLP as
independent public accountants for the fiscal year ending June 30, 1997.
The number of votes cast for each of the above is summarized in the
table below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
For Withheld Total
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
DIRECTORS:
Ralph J. Gerson 94,805,295 208,828 95,014,123
- ------------------------------------------------------------------------------
Jeffrey A. Knight 94,838,466 205,657 95,014,123
- ------------------------------------------------------------------------------
C.K. Prahalad 94,793,879 220,244 95.014,123
- ------------------------------------------------------------------------------
Rex Tapp 94,798,943 215,180 95.014,123
- ------------------------------------------------------------------------------
Robert M. Teeter 94,803,445 210,678 95,014,123
- ------------------------------------------------------------------------------
Charles C. Wilson 94,806,738 207,385 95,014,123
- ------------------------------------------------------------------------------
Mark S. Wrighton 94,796,360 217,763 95,014,123
- ------------------------------------------------------------------------------
Peter Joel C. Young 94,792,716 221,407 95,014,123
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
For Against Abstain Total
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
APPOINTMENT OF ARTHUR ANDERSEN 94,840,772 113,502 59,849 95,014,123
- ----------------------------------------------------------------------------------------
</TABLE>
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit 27. Financial Data Schedule (EDGAR version only)
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 caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OIS Optical Imaging Systems, Inc.
(Registrant)
Date: February 12, 1997 By: /s/ Rex Tapp
-------------------------------
Rex Tapp
President and Chief Executive
Officer
Date: February 12, 1997 By: /s/ Charles C. Wilson
-------------------------------
Executive Vice President
(Principal Financial and
Accounting Officer)
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<PAGE> 15
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
-15-
<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 DECEMBER
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 144,185
<SECURITIES> 0
<RECEIVABLES> 2,653,922
<ALLOWANCES> 60,000
<INVENTORY> 9,905,534
<CURRENT-ASSETS> 18,814,604
<PP&E> 69,603,914
<DEPRECIATION> 12,447,731
<TOTAL-ASSETS> 75,970,787
<CURRENT-LIABILITIES> 10,814,887
<BONDS> 0
0
622
<COMMON> 971,437
<OTHER-SE> 14,233,841
<TOTAL-LIABILITY-AND-EQUITY> 75,970,787
<SALES> 2,062,817
<TOTAL-REVENUES> 2,062,817
<CGS> 10,967,963
<TOTAL-COSTS> 12,900,497
<OTHER-EXPENSES> 895,134
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 1,066,479
<INCOME-PRETAX> (11,732,814)
<INCOME-TAX> (2,854,348)
<INCOME-CONTINUING> (8,878,466)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,878,466)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
