<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 March 31, 1998
-------------------------------
( ) 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 May 11, 1998:
Common Stock, $0.01 par value 97,470,687
- --------------------------------- -----------------------------
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 Nine Months
Ended March 31, Ended March 31,
---------------- ---------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Display $ 4,534,835 $ 3,661,333 $ 14,969,835 $ 6,427,972
Engineering 23,059 255,328 577,745 1,777,581
Sensor and other 551,461 64,130 1,704,458 182,738
------------ ------------ ------------ ------------
TOTAL REVENUES 5,109,355 3,980,791 17,252,038 8,388,291
COST OF SALES
Display 8,444,414 10,645,680 28,993,402 22,992,660
Engineering 240,219 710,005 1,467,673 5,663,645
Sensor and other 797,040 182,000 2,266,773 710,923
------------ ------------ ------------ ------------
TOTAL COST OF SALES 9,481,673 11,537,685 32,727,848 29,367,228
GROSS MARGIN (4,372,318) (7,556,894) (15,475,810) (20,978,937)
OPERATING EXPENSES
Internal research and development 309,517 500,224 1,037,301 1,615,663
Selling, general and administrative 1,558,450 1,316,553 4,826,073 4,301,373
------------ ------------ ------------ ------------
TOTAL OPERATING EXPENSES 1,867,967 1,816,777 5,863,374 5,917,036
OPERATING LOSS (6,240,285) (9,373,671) (21,339,184) (26,895,973)
OTHER INCOME AND (EXPENSE)
Interest expense, net of interest income (1,036,295) (911,889) (3,290,940) (3,088,734)
Licensing and royalties 244,852 251,056 422,056 377,428
Other 33,400 38,303 121,660 306,981
------------ ------------ ------------ ------------
TOTAL OTHER INCOME AND
(EXPENSE) (758,043) (622,530) (2,747,224) (2,404,325)
------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAX BENEFIT (6,998,328) (9,996,201) (24,086,408) (29,300,298)
Income Tax Benefit 2,585,000 3,501,690 8,566,000 6,356,038
------------ ------------ ------------ ------------
NET LOSS $ (4,413,328) $ (6,494,511) $(15,520,408) $(22,944,260)
------------ ------------ ------------ ------------
Preferred stock dividends 1,588,675 1,321,922 4,561,433 3,072,926
------------ ------------ ------------ ------------
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $ (6,002,003) $ (7,816,433) $(20,081,841) $(26,017,186)
============ ============ ============ ============
NET LOSS PER COMMON SHARE (Note B) $ (.06) $ (.08) $ (.21) $ (.27)
============ ============ ============ ============
</TABLE>
See notes to financial statements.
-2-
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,680,016 $ 960,042
Accounts receivable
(Net of reserve for doubtful accounts of $60,000) 3,933,185 4,222,508
Inventories 11,375,907 9,525,136
Income Tax Receivable from Affiliate 2,207,756 4,755,490
Prepaid expenses and other current assets 907,506 746,199
------------ ------------
TOTAL CURRENT ASSETS 20,104,370 20,209,375
PROPERTY AND EQUIPMENT
Land 3,000,000 3,000,000
Building 32,949,219 32,891,009
Machinery and other equipment 32,093,747 31,371,764
Construction in process 280,896 60,192
------------ ------------
TOTAL PROPERTY AND EQUIPMENT 68,323,862 67,322,965
Less accumulated depreciation (15,180,408) (10,359,551)
------------ ------------
NET TOTAL PROPERTY AND EQUIPMENT 53,143,454 56,963,414
------------ ------------
TOTAL ASSETS $ 73,247,824 $ 77,172,789
============ ============
</TABLE>
See notes to financial statements.
-3-
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
---- ----
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Subordinated note payable to affiliate $ 12,000,000 $ 3,000,000
Current installment on long-term debt 11,375,000 10,500,000
Accounts payable 1,396,492 2,817,068
Accrued interest 909,161 578,166
Deferred revenue -- 112,204
Other accrued liabilities 610,420 297,852
------------- -------------
TOTAL CURRENT LIABILITIES 26,291,073 17,305,290
LONG-TERM DEBT 33,125,000 42,000,000
LOCAL GOVERNMENT SUBSIDY 2,825,000 2,900,000
------------- -------------
TOTAL LIABILITIES 62,241,073 62,205,290
STOCKHOLDERS' EQUITY
Preferred Stock, par value $0.01 per share:
Series B, 8% cumulative, non-convertible and voting
Authorized - 100,000 shares
Issued and outstanding - 84,637 shares at March 31,
1998 and 73,637 shares at June 30, 1997 846 736
Common Stock, par value $0.01 per share:
Authorized - 125,000,000 shares
Issued and outstanding - 97,460,687 shares
at March 31, 1998 and 97,467,920 at June 30, 1997 974,607 974,679
Additional paid-in capital 152,663,476 141,375,527
Accumulated deficit (142,085,727) (126,565,319)
Deferred compensation (546,451) (818,124)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 11,006,751 14,967,499
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 73,247,824 $ 77,172,789
============= =============
</TABLE>
See notes to financial statements.
-4-
<PAGE> 5
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
MARCH 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(15,520,408) $(22,944,260)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 4,745,857 4,647,000
Deferred compensation expense 550,115 447,789
Impact on cash flows from changes in assets and liabilities:
Accounts receivable 2,837,057 1,383,604
Prepaid expenses and other assets (161,307) (579,510)
Inventory (1,850,771) (4,005,232)
Accounts payable and accrued expenses (777,013) (2,008,332)
Deferred revenues (112,204) (123,389)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (10,288,674) (23,182,330)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,000,897) (6,899,100)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (1,000,897) (6,899,100)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long term debt -- (125,454)
Net proceeds (repayments) from issuance of debt and
notes 1,000,000 (500,000)
Net proceeds from issuance of common stock 9,545 201,186
Net proceeds from issuance of preferred stock 11,000,000 32,516,000
------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 12,009,545 32,091,732
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 719,974 2,010,302
NET CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 960,042 516
------------ ------------
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,680,016 $ 2,010,818
============ ============
</TABLE>
See notes to financial statements.
-5-
<PAGE> 6
OIS OPTICAL IMAGING SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
MARCH 31,
1998 1997
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for interest $2,981,038 $2,993,278
</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>
NINE MONTHS ENDED
-----------------
MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Common stock issued in exchange for
deferred compensation, net of terminations $ 278,442 $ 346,191
Common stock issued in exchange for
deferred compensation adjustment to market 754,800
</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 March 31, 1998, the
results of operations for the three months and nine months ended March 31, 1998
and 1997 and cash flows for the nine months ended March 31, 1998 and 1997.
NOTE B - Net Loss Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement On Financial Accounting Standards (SFAS) No. 128, Earnings Per Share.
SFAS No. 128 replaces Accounting Principles Board Opinion No. 15 and modifies
the required calculations for earnings per share. The Company must adopt this
statement in fiscal 1998 and early adoption is not permitted. If SFAS No. 128
had been adopted for the periods presented, the net loss per common share would
not have been materially different from the amounts presented currently. The
weighted average number of shares used in the computation for the three months
ended March 31, 1998 and 1997 was 97,470,563 and 97,369,785, respectively. The
weighted average number of shares used in the computation for the nine months
ended March 31, 1998 and 1997 was 97,468,830 and 97,213,153, respectively.
NOTE C - Financing Transactions
On January 30, 1998, the Company repaid a total of $8 million of principal on
its $52.5 million commercial credit facility under its Credit Agreement dated as
of December 14, 1993, as amended, with NBD Bank N.A. and Bank of America NT&SA
(the "Credit Agreement"). $5.5 million of this principal repayment was
originally due on December 31, 1997, but the Company obtained a waiver from the
banks to delay such payment until January 30, 1998. The Company funded the $8
million principal repayment through the receipt of a $6 million payment from
Guardian Industries Corp. ("Guardian") on account of the Tax Sharing Agreement
between
-7-
<PAGE> 8
Guardian and the Company and the sale of 2,000 shares of Series B Preferred
Stock at a price of $1,000 per share to GD Investments Corp. ("GDIC"), an
affiliate of Guardian. On January 30, 1998, the banks also waived compliance
with certain financial covenants set forth in the Credit Agreement for the
period ending June 29, 1998. Absent a waiver, the Company would have been unable
to satisfy these financial covenants and, therefore, would have been in default
under the Credit Agreement. This waiver was given in consideration of the
Company making the principal repayment mentioned above and the Company agreeing
to grant a first priority lien and security interest in all tangible and
intangible assets of the Company, including its intellectual property, to secure
repayment of the commercial credit facility. The banks already had the right,
under the original Credit Agreement, to request and receive a security interest
in all assets of the Company, excluding intellectual property. On March 31,
1998, the Company executed and delivered to the banks a mortgage and a security
agreement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATION
Summary
The operating results for the first nine months of fiscal 1998 continue to
reflect substantial operating losses. Revenues have continued to rise
significantly during the first nine months of fiscal 1998 compared to the same
period during fiscal 1997. However, the Company's cost of sales continued to
exceed revenue due to the relatively high costs of the Company's overhead, scrap
rates and depreciation expense for the period.
While the Company has been able to achieve higher production volumes, the
Company will be unable to significantly reduce both the cost of sales as a
percentage of revenue and operating losses unless it can expand markets for its
products beyond its existing markets and generate a substantial increase in
production orders to fill excess plant capacity.
Three months and nine months ended March 31, 1998 and 1997
Revenues
Total revenue for the first nine months of fiscal 1998 of $17,252,038 was 106%
higher than total revenue for the same period in the preceding fiscal year of
$8,388,291. Total revenue for the third quarter of fiscal 1998 of $5,109,355 was
28% higher than total revenue for the same period in the preceding fiscal year.
These increases are attributable to a substantial increase in revenue from the
sale of displays and x-ray sensors, which was partially offset by a decrease in
revenue from customer funded engineering.
Revenue from the sale of displays and sensors for the first nine months and
third quarter of fiscal 1998 of $16,674,293 and $5,086,296 was 152% and 37%
higher, respectively when compared to
-8-
<PAGE> 9
$6,610,710 and $3,725,463 for the same periods in the preceding fiscal year.
This increase is the result of more displays and sensors being manufactured and
shipped during the current fiscal year when compared to fiscal 1997. During the
remainder of fiscal 1998 and throughout fiscal 1999, management believes that
the Company should be able to continue to increase the number of displays and
sensors manufactured and shipped pursuant to existing orders. As of April 30,
1998, the Company has a customer order backlog of approximately $40 million with
the majority of the backlog scheduled for delivery in fiscal 1999 and fiscal
2000. While the Company is working aggressively to expand the markets for its
displays, x-ray sensors and other products, the sales volume required to achieve
profitability exceeds the existing markets for the Company's products. There can
be no assurance that the Company's efforts to expand the markets for its
products and increase sales orders will be successful or sufficient to achieve
profitability.
Revenue from customer-funded engineering during the first nine months and third
quarter of fiscal 1998 of $577,745 and $23,059 was 67% and 91% lower,
respectively than revenue from customer-funded engineering of $1,777,581 and
$255,328 for the same periods in the preceding fiscal year. This decrease is the
result of the Company's strategic decision to reduce customer-funded engineering
activity as the Company continues to concentrate on its manufacturing
operations.
Cost of Sales
Cost of sales for the first nine months of fiscal 1998 of $32,727,848 was 11%
higher when compared to $29,367,228 for the same period in the preceding fiscal
year. Cost of sales for the third quarter of fiscal 1998 of $9,481,673 was 18%
lower when compared to $11,537,685 for the third quarter of fiscal 1997. Cost of
sales as a percentage of revenue decreased substantially for the first nine
months and third quarter of fiscal 1998 to 190% and 186%, respectively from 350%
and 290%, when compared to the same periods in fiscal 1997. The percentage
decreases were primarily the result of leveraging fixed overhead expenses across
a higher base of revenues and, to a lesser extent, improved manufacturing
efficiencies and reduced scrap rates. The Company expects cost of sales to
continue to increase in absolute dollars as the Company increases the volume of
products sold. The Company anticipates cost of sales as a percentage of revenue
to continue to decrease as long as its revenues continue to increase.
Direct material for the first nine months of fiscal 1998 increased approximately
$2.0 million when compared to the first nine months of fiscal 1997. This
increase is due to the increased plant activity experienced to build and sell
significantly more products during the first nine months of fiscal 1998 than was
experienced during the same period in the preceding fiscal year. Direct labor,
however, decreased approximately $275,000 for the first nine months of fiscal
1998 when compared to the first nine months of fiscal 1997. Direct material and
direct labor, on a per unit basis, decreased approximately 62% during the first
nine months of fiscal 1998 when compared to the same period during fiscal 1997.
This decrease is mainly attributable to a reduction in scrap rates during the
first nine months of fiscal 1998. The Company's improvement in production
efficiencies on a per unit basis for the third quarter of fiscal 1998 is
evidenced by the fact that direct labor and material costs decreased
approximately $5,000 per unit. This represents a 53% decrease when compared to
the same period during fiscal 1997. Management
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<PAGE> 10
anticipates that the Company will continue to reduce scrap and lower direct
costs, on a per unit basis, during the remainder of fiscal 1998 and in fiscal
1999 provided that sales volumes continue to increase.
Overhead for the first nine months and third quarter of fiscal 1998 increased by
approximately $1.4 million (10%) and $341,000 (7%), respectively, when compared
to the same periods during fiscal 1997. The increase is attributable in large
part to increases in the costs of indirect supplies and materials and equipment
maintenance resulting from the increase in production activity. Management does
not expect a significant change in overhead costs during the remainder of fiscal
1998. However, until the Company is able to sell more products, overhead costs
will continue to be a major component of cost of sales in future periods.
Other Costs
The Company's operating expenses, which consist of Internal Research and
Development and General Selling and Administrative expenses, decreased
approximately $54,000 or 1% during the first nine months of fiscal 1998 and
increased approximately $51,000 or 3% during the third quarter of fiscal 1998
when compared to the same periods during fiscal 1997. This decrease results
principally from the timing of expenses and not from any known trends.
Management does not expect any significant changes in other operating expenses
during fiscal 1998.
Other expenses, which consists mainly of interest expense, increased
approximately $343,000 or 14% during the first nine months of fiscal 1998 and
approximately $135,500 or 22% during the third quarter of fiscal 1998 when
compared to the same period during the preceding fiscal year. This comparative
increase is attributable to the one-time realization of income from the sale of
personal property from the old Troy facility which lowered expenses in fiscal
1997. Also contributing to the increase in other expenses are higher average
debt balances during the first nine months of the current fiscal year.
Liquidity and Capital Resources
LIQUIDITY
The Company's Cash and Cash Equivalents at March 31, 1998 was $1,680,016. The
Company is attempting to manage its cash to minimize borrowings under its
various debt instruments. However, the Company's cash is decreasing and there is
a need for significant additional financing during fiscal 1998 and into fiscal
1999.
OPERATING ACTIVITIES
During the first nine months of fiscal 1998, the Company incurred a net loss of
$15,520,408. Inventory increased approximately $1.8 million, $527,000 in the
area of spare equipment parts to minimize the down time of equipment and
$726,000 in the area of raw material to support the substantial increase in
production volume. Furthermore, the Company incurred approximately $4.8 million
in depreciation costs, which contributed to net loss but had no effect on cash.
-10-
<PAGE> 11
INVESTING ACTIVITIES
During the first nine months of fiscal 1998 the Company spent approximately $1
million for machinery and equipment to improve production efficiency.
FINANCING ACTIVITIES
During the first nine months of fiscal 1998 the Company borrowed $9 million
under its $20 million Promissory Note (the "Promissory note") with GD Investment
Corp. (GDIC), an affiliate of Guardian Industries Corp. ("Guardian"). The
Promissory Note accrues interest at a rate of 6% per annum, and all principal
and interest is payable on demand of GDIC. As of March 31, 1998, the outstanding
principal balance under the Promissory Note was $12 million.
During the first nine months of fiscal 1998 the Company sold 11,000 shares of
Series B Preferred Stock to GDIC for a total purchase price of $11 million (see
Capital Resources).
Capital Resources
During fiscal 1997, 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.
During the first nine months of fiscal 1998, the Company sold 11,000 shares of
Series B Preferred Stock to GDIC at a price of $1,000 per share. As of March 31,
1998, GDIC owned 84, 637 shares of Series B Preferred Stock. The Company sold an
additional 2,000 shares of Series B Preferred Stock to GDIC in April 1998 for a
total purchase price of $2 million. As of April 30, 1998, GDIC owned 86,637
shares of Series B Preferred Stock.
As previously reported, during fiscal 1997, the Company became eligible, and
elected, to be a member of Guardian's affiliated tax group ("Affiliated Group")
which allows the Company's tax losses, credits and/or income to be included in
the single consolidated federal tax return of the Affiliated Group. Guardian and
the Company entered into a Tax Sharing Agreement (the "Tax Sharing Agreement")
during fiscal 1997 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.
During the first nine months of fiscal 1998 the Company had received $11,113,734
from Guardian under the Tax Sharing Agreement. As of March 31, 1998, the Company
had an estimated receivable from Guardian of $2,207,756 under the Tax Sharing
agreement.
On January 30, 1998, the Company repaid a total of $8 million of principal on
its $52.5 million commercial credit facility under its Credit Agreement dated as
of December 14, 1993, as
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<PAGE> 12
amended, with NBD Bank N.A. and Bank of America NT&SA. $5.5 million of this
principle repayment was originally due on December 31, 1997, but the Company
obtained a waiver from the banks to delay such payment until January 30, 1998.
On January 30, 1998, the banks also waived compliance with certain financial
covenants set forth in the Credit Agreement for the period ending June 29, 1998.
Absent a waiver, the Company would have been unable to satisfy these financial
covenants and therefore, would have been in default under the Credit Agreement.
This waiver was given in consideration of the Company making the principal
repayment mentioned above and the Company agreeing to grant a first priority
lien and security interest in all tangible and intangible assets of the Company,
including its intellectual property, to secure repayment of the commercial
credit facility. The banks already had the right, under the original Credit
Agreement, to request and receive a security interest in all assets of the
Company, excluding intellectual property. On March 31, 1998, the Company
executed and delivered to the banks a mortgage and a security agreement.
The Company is exploring the potential of licensing certain of its patented
technology to third parties for use in connection with the manufacture of
display products for the broader consumer markets. While there may be some
opportunity to generate additional revenues in the future from licensing
royalties, the potential benefits are yet to be determined.
Due to the level of current and anticipated losses, significant additional
capital resources will be needed to support the Company's operations and to
repay debt. At this time, Guardian is financing the Company. The Company, with
the encouragement and cooperation of Guardian, is seeking to obtain alternative
sources of financing to meet such needs, and is exploring a full range of
strategic alternatives. There can be no assurance that any such efforts will be
successful. If Guardian were to discontinue financing the Company and the
Company is unable to acquire other financing, the Company would be unable to
meet its credit obligations and fund its operations; and it would be materially
adversely affected.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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
None.
-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: May 14, 1998 By: /s/ Rex Tapp
-------------------------------
Rex Tapp
President and Chief Executive
Officer
Date: May 14, 1998 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
<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 MARCH 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,680,016
<SECURITIES> 0
<RECEIVABLES> 3,993,185
<ALLOWANCES> 60,000
<INVENTORY> 11,375,907
<CURRENT-ASSETS> 20,104,370
<PP&E> 68,323,862
<DEPRECIATION> 15,180,408
<TOTAL-ASSETS> 73,247,824
<CURRENT-LIABILITIES> 26,291,073
<BONDS> 0
0
846
<COMMON> 974,607
<OTHER-SE> 10,031,298
<TOTAL-LIABILITY-AND-EQUITY> 73,247,824
<SALES> 5,086,296
<TOTAL-REVENUES> 5,109,355
<CGS> 9,241,454
<TOTAL-COSTS> 2,108,186
<OTHER-EXPENSES> 758,043
<LOSS-PROVISION> 60,000
<INTEREST-EXPENSE> 1,036,295
<INCOME-PRETAX> (6,998,328)
<INCOME-TAX> (2,585,000)
<INCOME-CONTINUING> (4,413,328)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,413,328)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
