UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
(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, 1995
OR
[ ] 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 1-10013
Larson Davis Incorporated
(Exact name of small business issuer as specified in charter)
Nevada 87-0429944
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1681 West 820 North, Provo, Utah 84601
(Address of principal executive offices) (Zip Code)
(801) 375-0177
(Issuer's Telephone number, including area code)
N/A
(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 during
the past 12 months (or for such shorter period that the Issuer was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Issuer filed all documents and reports required
to be filed by Section 12, 13, or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of November 10, 1995, the Issuer had 8,204,448 shares of its
common stock, par value $0.001 per share, issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
Page 1 of 15 consecutively numbered pages.
Larson Davis Incorporated hereby amends its report on form 10-QSB
for the quarter ended September 30, 1995, as set forth in its
entirety below:
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Larson Davis Incorporated (the "Registrant") files herewith
unaudited condensed consolidated balance sheets of the Registrant
and its subsidiaries as of September 30, 1995 and June 30, 1995
(the Registrant's most recent fiscal year), unaudited condensed
consolidated statements of operations for the three months ended
September 30, 1995 and 1994, and unaudited condensed consolidated
statements of cash flows for the three months ended September 30,
1995 and 1994, together with unaudited condensed notes thereto.
In the opinion of management of the Registrant, the financial
statements reflect all adjustments, all of which are normal
recurring adjustments, necessary to fairly present the financial
condition of the Registrant for the interim periods presented.
The financial statements included in this report on form 10-QSB
should be read in conjunction with the audited financial statements
of the Registrant and the notes thereto included in the annual
report of the Registrant on form 10-KSB for the year ended June 30,
1995.
<PAGE>
LARSON DAVIS INCORPORATED
<TABLE>
<CAPTION>
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
1995 1995
CURRENT ASSETS
<S> <C> <C>
Cash $ 172,251 $ 83,334
Trade accounts receivable, net 2,137,614 2,130,835
Inventories 2,528,657 2,152,768
Other current assets 120,849 135,348
Unbilled contract receivables 98,750 200,318
Total Current Assets 5,058,121 4,702,603
PROPERTY, PLANT AND EQUIPMENT
Net of accumulated depreciation 1,339,887 1,337,574
ASSETS UNDER CAPITAL LEASE
Net of accumulated amortization 272,232 303,522
NET ASSETS OF DISCONTINUED OPERATIONS 3,170,831 3,135,776
OTHER ASSETS
Product technology and license
costs net of amortization 2,041,967 1,975,699
Goodwill 124,493 124,493
$12,007,531 $11,579,667
<FN>
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
<TABLE>
<CAPTION>
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, June 30,
1995 1995
CURRENT LIABILITIES
<S> <C> <C>
Bank overdraft $ - $ 40,039
Short-term notes payable 1,593,867 2,219,187
Accounts payable 543,061 886,489
Accrued liabilities 437,761 469,003
Current maturities of long-term debt 206,409 206,409
Current maturities of capital lease
obligation 133,719 133,719
Total Current Liabilities 2,914,817 3,954,846
LONG-TERM DEBT
less current maturities 1,145,271 958,251
CAPITAL LEASE OBLIGATIONS
less current maturities 217,753 255,080
Total Liabilities 4,277,841 5,168,177
STOCKHOLDERS' EQUITY
Preferred Stock 200 200
Common stock 7,097 6,559
Additional paid-in capital 8,597,241 7,406,114
Retained earnings (873,665) (997,362)
Foreign currency translation (1,183) (4,021)
Total Stockholders' Equity 7,729,690 6,411,490
$12,007,531 $11,579,667
<FN>
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
<TABLE>
<CAPTION>
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the 3 Months Ended
September 30,
1995 1994
<S> <C> <C>
SALES, net $1,892,248 $ 975,755
COSTS AND OPERATING EXPENSES:
Costs of sales and operating
expenses 685,342 389,142
Research and development 402,370 106,126
Selling, general and
administrative 565,161 366,856
Total costs and
operating expenses 1,652,873 862,124
INCOME (LOSS) FROM CONTINUING
OPERATIONS 239,375 113,631
OTHER INCOME (EXPENSE) (100,678) (44,969)
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES AND DISCONTINUED
OPERATIONS 138,697 68,662
PROVISION (BENEFIT) FOR
INCOME TAXES - 27,653
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE DISCONTINUED
OPERATIONS 138,697 41,009
INCOME (LOSS) FROM OPERATIONS OF
DISCONTINUED OPERATIONS - 116,493
NET INCOME (LOSS) $ 138,697 $ 157,502
NET INCOME (LOSS) PER COMMON
SHARE:
Income (loss) from continuing
operations $ 0.02 $ 0.01
Income (loss) from discontinued
operations $ - $ 0.02
$ 0.02 $ 0.03
<FN>
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
<TABLE>
<CAPTION>
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 3 Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM (TO) OPERATIONS:
Net Income (Loss) $ 138,697 $ 157,502
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation 83,861 55,901
Amortization 94,808 91,304
Changes in assets and liabilities:
Accounts receivable (6,779) (370,226)
Inventories (375,889) (363,270)
Prepaid expenses and other 14,499 (62,125)
Due from related parties - 2,896
Other current receivable 101,568 (93,693)
Accounts payable (343,428) 137,408
Accrued liabilities (31,242) (56,405)
Current deferred taxes - 26,853
Total Adjustments (462,602) 631,357
Net Cash Provided (Used) by Operations (323,905) (473,855)
CASH FLOWS TO INVESTING:
Foreign currency transactions 2,838 (9,200)
Net change in assets of discontinued
operations (35,055) -
Preferred stock dividends paid (15,000) -
Payments for software development
cost and technology (129,786) (209,918)
Purchase of instruments and equipment (86,174) (5,212)
Purchase of capital equipment - (45,739)
Net Cash (Used) in Investing Activities (263,177) (270,069)
<FN>
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
<TABLE>
<CAPTION>
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
For the 3 Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM (TO) FINANCING:
Net borrowings (repayments) under
short-term debt (625,320) 414,017
Increases (decreases) in capital lease
obligation (37,327) 37,031
Borrowings (repayments) on long-term
debt 187,020 1,789
Proceeds from capital stock 1,191,665 -
Increase (decrease) in deferred taxes - -
Net Cash Provided (Used) by Financing 716,038 452,837
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 128,956 (291,087)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 43,295 432,261
CASH EQUIVALENT AT END OF PERIOD $ 172,251 $ 141,174
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the current quarter for:
Interest $ 100,678 $ 93,628
Income taxes $ - $ -
<FN>
The accompanying notes are an integral part of these
financial statements
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the
Registrant without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations, and changes in financial position at September 30,
1995 and for all periods presented have been made.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally
accepted accounting principles has been condensed or omitted.
It is suggested that these condensed financial statements be
read in conjunction with the Registrant's June 30, 1995 audited
financial statements and the notes thereto. The results of the
operations for the periods ended September 30, 1995 may not
necessarily be indicative of the operating results for the full
year.
Business Presentation. The accompanying consolidated financial
statements of Larson Davis Incorporated include the accounts of
the Registrant and its wholly-owned subsidiaries Larson Davis
Laboratories, Advantage Software, Inc., LD Info, Inc. and Larson
Davis Limited (a UK Corporation). All significant intercompany
transactions and accounts have been eliminated in consolidation.
Inventories. Inventories are valued at the lower of cost (using
average cost method) or market.
Plant and Equipment. Equipment is carried at cost less related
accumulated depreciation. Depreciation, including amortization
of capitalized leases, is computed using the straight-line method
over useful lives ranging from 3 to 5 years. Real estate is
being depreciated over a useful life of 25 years using the
straight-line method.
Preferred Stock Dividend. During the period ended September 30,
1995, the Registrant recognized preferred stock dividends payable
on 200,000 shares of issued and outstanding shares in the amount
of $15,000. The amount of dividend in arrears was $3,750:
<TABLE>
<CAPTION>
<S> <C>
Retained earnings balance 7/1/95 $ (997,362)
Add: Net income 38,697
Deduct: Preferred stock dividend (15,000)
$ (873,665)
</TABLE>
Earnings Per Share. The computation of earnings per share of
common stock is based on the weighted average number of shares
and common stock equivalents outstanding during the period. The
weighted average number of shares outstanding for the periods
ended September 30, 1995 and 1994, is 6,722,120 and 6,148,469,
respectively.
<PAGE>
LARSON DAVIS INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition. The Registrant recognizes revenues on the
bulk of its product sales and services at the time of product
delivery or the rendering of services. With respect to
recognizing long-term contract revenues and charging expenses to
operations, the Registrant has adopted a "percentage-of-completion"
method of accruing revenues related to long-term contracts.
Revenues are accrued and a current, non-trade receivable is
created based on "progress toward completion" of the particular
contract. Progress is determined by comparing actual time
incurred and materials used with expected estimates of total
contract costs. In short, revenues are accrued as services are
performed by the Registrant. Losses on long-term contracts are
recognized when they become apparent. Billings to the customer
are made according to the payment terms of the contract. When a
billing is created, the amount of the billing is transferred into
the regular trade receivable account to await receipt of payment.
Software Development Costs. Pursuant to FAS No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed", the Registrant capitalizes all costs incurred
to develop software after technological feasibility has been
established. Amortization of these development costs is computed
using the straight-line method over estimated useful lives ranging
from 10 to 17 years.
Product Technology and License Rights. The Registrant capitalizes
costs incurred to acquire product technology and license rights.
These costs are being amortized over estimated useful lives
ranging from 10 to 17 years by the straight-line method.
Cash and Cash Equivalents. For purpose of the statement of cash
flows, the Registrant considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents.
NOTE 2 - INVENTORIES
The composition of inventories at September 30, 1995, and June 30,
1995, consists of the following:
<TABLE>
<CAPTION>
September 30, 1995 June 30, 1995
<S> <C> <C>
Raw materials $ 719,761 $ 669,433
Work in process 790,710 765,617
Finished goods 1,018,186 717,718
$2,528,657 $2,152,768
</TABLE>
<PAGE>
LARSON DAVIS INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - CONTRACTS IN PROGRESS
The unbilled contract receivable represents amounts of contract
revenues accrued and recognized that have not yet been billed to
the customer. Billings on the contracts are made according to
payment terms and do not necessarily coincide with the "earning"
process.
<TABLE>
<CAPTION>
September 30, 1995 June 30, 1995
<S> <C> <C>
Total costs incurred
to date $2,416,110 $2,416,110
Estimated contribution
to date (40,465) (40,465)
Revenues recognized
to date 2,375,645 2,375,645
Progress billings to date (1,789,842 (1,688,274)
Reclass net assets;
discontinued (585,803) (585,803)
Massport balance 98,750 98,750
Unbilled contracts
receivable $ 98,750 $ 200,318
</TABLE>
NOTE 4 - EXPORT SALES
During the quarters ended September 30, 1995 and 1994, the
Registrant had export sales totaling approximately $593,289
and $1,435,700, respectively.
NOTE 5 - DISCONTINUED OPERATION
The Registrant entered into a definitive agreement, effective
August 15, 1995, to license proprietary technology and transfer
management and implementation of its airport noise monitoring
contracts to an established airport consulting firm. As part of
this agreement, the Registrant has discontinued its operations in
this area and will not compete in the industry. In return, the
consulting firm will use its best efforts to utilize the
Registrant's instrumentation in any future airport noise
monitoring system installed.
Operations in the airport monitoring industry for the three
months ended September 30, 1994, are included under the caption
"Discontinued Operations" in the financial statements of the
Registrant.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
SIGNIFICANT FINANCIAL CHANGES - STATEMENTS OF OPERATIONS
Total Revenue
Total revenues from continuing operations for the three months
ended September 30, 1995 and 1994, are $1,892,248 and $975,755,
respectively. Revenues from discontinued operations for the
period ended September 30, 1994, supplemented the continuing
operations revenues and, if the financial statement was expressed
without discontinued operation, the revenues would be $1,932,524.
Core instrumentation sales have grown dramatically. A decrease in
foreign sales between the two quarters is related to a decrease in
airport revenues since a large portion of these revenues in the
1994 quarter were foreign sales.
Costs of Sales and Operating Expenses
The Registrant's costs of sales and operating expenses as a
percentage of total revenue for the quarters ended September 30,
1995 and 1994, are 36% and 40%, respectively.
Fluctuations in costs of sales and operating expenses are caused
by variances in product sales mix from period to period and normal
production cycles. The Registrant anticipates that cost of sales
and operating expenses will be approximately 40% to 45% over time.
The Registrant does not expect a significant change in the cost of
sales and operating expenses as a percentage of revenue as a result
of the recent acquisition of Sensar Corporation. (See the
Registrant's report on form 8-K dated October 27, 1995, for
additional information concerning this acquisition.)
<PAGE>
Research and Development
As a percentage of total revenues, the Registrant's research and
development costs for the three month periods ended September 30,
1995 and 1994, are 21% and 11%, respectively. The increase is a
result of new product development and research and development
costs related to the Registrant's CrossCheck technology. It is
anticipated that the level of research and development expenses
will stabilize at approximately 10% to 15% over time.
Selling, General and Administrative
For the quarters ended September 30, 1995 and 1994, the percentage
of selling, general, and administrative expenses to total revenues
is 30% and 38%, respectively.
Other Expenses
The significant on-going element in other expenses is interest.
As indicated by the supplemental disclosure included in the
statements of cash flow, interest expense for the three month
period ended September 30, 1995 and 1994, is $100,678 and
$93,606, respectively.
SIGNIFICANT FINANCIAL CHANGES - BALANCE SHEETS
As of September 30, 1995, and June 30, 1995, total assets are
$12,007,531 and $11,539,667, respectively.
Trade Accounts Receivable
Accounts receivable remained approximately the same between
June 30, 1995, and September 30, 1995. The $6,779 increase is
insignificant as a percentage change and indicated that the
Registrant is maintaining adequate collections of its trade
accounts receivable. Management feels the level of accounts
receivable is within reason and represents an acceptable
collection cycle of its trade invoices.
Inventories
As a continuation of its business plan, the Registrant continues
to stock finished goods to reduce the delivery lead time for its
instrumentation products. The approximately $300,000 increase in
finished goods and the approximately $25,000 increase in work in
process between June 30, 1995, and September 30, 1995, reflects
this commitment.
Short-term Notes Payable
There was a decrease of appropriately $625,000 in the Registrant's
short-term notes payable from June 30, 1995, to September 30,
1995. Proceeds from the sale of common stock have been applied
in part to reducing short-term debt.
CAPITAL AND LIQUIDITY
At September 30, 1995, the Registrant's working capital ratio was
1.7:1 ($5,058,121 in current assets as compared to $2,914,817 in
current liabilities). Approximately $1,594,000 of the current
liabilities is represented by the Registrant's revolving line of
credit. The limit on this line is $2,100,000 and is adjusted from
time to time based on ratios of inventories and accounts receivable
levels. This line is reviewed annually and the Registrant
anticipates it will continue to remain available to it.
The Registrant entered into an agreement with a third party to
license its proprietary Airport Noise and Operations Monitoring
Software ("ANOMS") and transfer management and implementation of
substantially all of its airport monitoring contract business.
(See the Registrant's report on form 8-K dated June 30, 1995, as
amended, for additional information concerning this transaction.)
The Registrant was paid a one-time fee, will receive guaranteed
annual royalties, and will be paid a varying royalty based on the
gross sales by the third party within the airports noise monitoring
industry. Cash payments received from this agreement will have
little or no corresponding expenditures. As a result, the royalty
payments will improve the Registrant's cash flow situation.
Because a portion of the payment is based on a royalty from
revenues, the Registrant has elected to use the "Cost Recovery"
method to recognize revenues and amortize costs. This means that
there will be a dollar for dollar matching of amounts received
against the $3,170,831 in net assets of discontinued operations
until all of this amount is expensed; only after this will the
Registrant realize any gain from this agreement.
The Registrant received net proceeds of approximately $1,200,000
from the sale of common stock during the three months ended
September 30, 1995. The Registrant has relied in the past on
capital infusion to sustain its operations. It is anticipated
that there will be further sales of common stock during this
fiscal year to provide capital and liquidity. Proceeds from
these anticipated sales will be used to supplement operating
cash, fund research and development efforts, and to acquire
companies with technologies and/or product lines compatible
with the Registrant's growth plan.
The Registrant considers its current liquidity position to be
favorable and anticipates sufficient cash from operations,
available short-term borrowing capabilities, and projected
capital funding to sustain normal operations.
SUBSEQUENT EVENT
The Registrant entered in to an agreement to acquire Sensar
Corporation, a privately-held Utah corporation, in exchange for
issuance of restricted common stock, the payment of cash to
redeem certain shares of Sensar Corporation, and the assumption
or payment of the liabilities of Sensar Corporation. (See the
Registrant's report on form 8-K dated October 27, 1995, for
additional information concerning this acquisition).
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The following exhibits are included with this report on form 10-QSB
for the quarter ended September 30, 1995.
Exhibit SEC
No. Reference No. Description Location
1 (10) Semiconductor Industry TOF This Filing
Marketing Agreement between Page 16
Sensar Corporation
(subsidiary of Larson Davis
Incorporated) and SAES
Getters S.p.A.
Reports on Form 8-K
The Registrant did not file any reports on form 8-K during the
quarter ended September 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Larson Davis Incorporated
Dated: May 29, 1996 By /s/ Dan J. Johnson
Dan J. Johnson
(Duly Authorized Officer
and Principal Financial
and Accounting Officer)
