SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 33-26467-D
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CELL ROBOTICS INTERNATIONAL, INC.
---------------------------------
(Exact Name of small business issuer as Specified in its Charter)
Colorado 84-1153295
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(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
2715 Broadbent Parkway N.E., Albuquerque, New Mexico 87107
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(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (505) 343-1131
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the last 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
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As of September 30, 1996, 4,993,414 shares of Common Stock of the Registrant
were outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
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<PAGE>
<TABLE>
CELL ROBOTICS INTERNATIONAL, INC.
Balance Sheets
<CAPTION>
As of As of
9-30-96 12-31-95
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(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 2,133,098 $ 739,952
Restricted cash 0 425,000
Accounts receivable, net of
allowance for doubtful
accounts of $1,841 95,624 389,608
Inventory 294,150 169,076
Other 30,804 29,067
------------ ------------
Total current assets 2,553,676 1,752,703
Property and equipment, net 256,615 213,447
Other assets, net 121,892 33,963
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$ 2,932,183 $ 2,000,113
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 96,414 $ 129,483
Payroll related liabilities 116,749 99,226
Royalties payable 60,950 56,587
Other current liabilities 5,908 24,871
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Total current liabilities 280,021 310,167
Continued on following page
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
Balance Sheets (continued from previous page)
Stockholders equity:
Preferred stock, $.04 par value,
Authorized 2,500,000 shares,
no shares issued and outstanding
in 1996 and 1995 0 0
Common stock, $.004 par value,
Authorized 12,500,000 shares,
4,993,414 and 3,825,914 shares
issued and outstanding in 1996
and 1995, respectively 19,974 15,304
Additional paid in capital 13,310,211 11,271,008
Accumulated deficit (10,678,023) (9,596,366)
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Total stockholders' equity 2,652,162 1,689,946
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$ 2,932,183 $ 2,000,113
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
CELL ROBOTICS INTERNATIONAL, INC.
Statements of Operations
<CAPTION>
UNAUDITED
Three months ended
Sept. 30, 1996 Sept. 30, 1995
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<S> <C> <C>
Sales $ 129,682 $ 75,367
Cost of goods sold (94,187) (74,005)
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Gross profit 35,495 1,362
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Operating expenses:
Salaries 148,009 99,012
Payroll taxes and benefits 17,638 11,924
Rent and utilities 29,669 30,907
Travel 22,420 16,909
Depreciation and amortization 28,922 24,274
Professional fees 45,279 8,012
Other operating expenses 175,406 57,959
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Total operating expenses 467,343 248,997
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Loss from operations $ (431,848) $ (247,635)
Other income (deductions):
Rental income 5,400 4,900
Interest income 3,197 17
Interest expense (466) (99,764)
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Total other 8,131 (94,847)
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Net Loss $ (423,717) $ (342,482)
============ ============
Net Loss per common share $ (0.10) $ (0.19)
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Weighted average shares outstanding 4,100,697 1,799,916
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
CELL ROBOTICS INTERNATIONAL, INC.
Statements of Operations
<CAPTION>
UNAUDITED
Nine months ended
Sept. 30, 1996 Sept. 30, 1995
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<S> <C> <C>
Sales $ 523,612 $ 457,664
Cost of goods sold (351,807) (371,406)
----------- ----------
Gross profit 171,805 86,258
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Operating expenses:
Salaries 415,599 307,207
Payroll taxes and benefits 56,220 40,023
Rent and utilities 88,553 94,804
Travel 51,854 66,572
Depreciation and amortization 79,893 76,849
Professional fees 184,245 64,614
Other operating expenses 479,667 206,450
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Total operating expenses 1,356,031 856,519
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Loss from operations $ (1,184,226) $ (770,261)
Other income (deductions):
Rental income 16,650 14,960
Grant revenue 69,190 0
Interest income 18,032 26
Interest expense (1,303) (348,129)
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Total other 102,569 (333,143)
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Net Loss $ (1,081,657) $ (1,103,404)
============ ============
Net Loss per common share $ (0.28) $ (0.80)
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Weighted average shares outstanding 3,926,416 1,371,246
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
CELL ROBOTICS INTERNATIONAL, INC.
Statements of Cash Flows
<CAPTION>
UNAUDITED
Nine months ended
Sept. 30, 1996 Sept. 30, 1995
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<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (1,081,657) $ (1,103,404)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and amortization 88,893 76,849
Accrued interest contributed to capital 0 358,338
Increase in restricted cash 0 (425,000)
Decrease (Increase) in accounts
receivable 293,984 (4,849)
Increase in inventory (125,074) (12,872)
Increase in other current assets (1,737) (469,587)
Increase (Decrease) in accounts
payable and accrued expenses (30,146) (154,752)
Increase in accrued interest
payable 0 (28,830)
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Net cash used by operating
activities (855,737) (1,339,107)
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CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of fixed assets (115,728) (24,153)
Cash paid for the development or
purchase of intangible assets (62,701) 0
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Net cash used by investing
activities (178,429) (24,153)
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Continued on following page
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
Statements of Cash Flows (Continued from previous page)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from loans, net of
capitalized financing fees 0 70,010
Repayments of loans 0 (172,400)
Sale of common stock, net 0 2,731,168
Payment to shareholder 0 (250,000)
Proceeds from the exercise
of warrants, net 2,002,312 0
Release of formerly restricted
proceeds from a previous sale
of common stock 425,000 0
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Net cash provided by financing
activities 2,427,312 2,378,778
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,393,146 1,015,518
Cash and cash equivalents:
Beginning of period 739,952 138,753
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End of period $ 2,133,098 $ 1,154,271
============ ============
SUPPLEMENTAL INFORMATION:
Short term borrowings repaid
with common stock 0 160,000
Notes payable and accrued
interest contributed to capital 0 5,508,338
Fair market value of common stock
issued for the acquisition of
intangible assets 41,561 0
Interest paid 1,303 12,244
See accompanying notes to financial statements.
</TABLE>
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(1) Presentation of Unaudited Financial Statements
The unaudited financial statements have been prepared in accordance with
the rules of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes otherwise necessary for a fair
presentation of financial position, results of operations and cash flows, in
conformity with generally accepted accounting principles. However, the
information furnished, in the opinion of management, reflects all adjustments
necessary to present fairly the financial position, results of operations and
cash flows on a consistent basis. The results of operation are not necessarily
indicative of results which may be expected for any other interim period or for
the year as a whole.
(2) Purchase of Certain Intangible Assets
On January 9, 1996, the Company entered into a Purchase Agreement
("Agreement") with Tecnal Products, Inc. ("Tecnal"). The Agreement provides
for the acquisition of certain technological assets, primarily the rights under
two patents and a patent application. These patents and patent application
relate to an innovative laser design, and a medical device incorporating this
laser design. In exchange for these technological assets, the company issued
to Tecnal, and its shareholders, an aggregate of 17,500 shares of the Company's
common stock, made cash payments on behalf of Tecnal in the amount of $14,800,
and granted a one percent (1%) royalty on future sales of products
incorporating the acquired technology, with a lifetime maximum of $20,000.
(3) Exercise of Class A Common Stock Purchase Warrants
By September 30, 1996, the Company had realized net proceeds of $2,002,312
from the exercise of 100% of its 1,150,000 outstanding Class A Common Stock
Purchase Warrants. Each warrant entitled the holder to purchase one share of
the Company's common stock at $1.75.
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF CELL ROBOTICS INTERNATIONAL, INC.
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES - SEPTEMBER 30, 1996 COMPARED TO DECEMBER 31,
1995
During the nine month period ending September 30, 1996, the Company's
liquidity and capital resources were significantly enhanced by the proceeds
generated through the exercise of all 1,150,000 outstanding Class A Common
Stock Purchase Warrants. During this same nine month period, the Company's
operating loss served to somewhat diminish its liquidity and capital resources.
Total assets increased from $2,000,113 at December 31, 1995 to $2,932,183 at
September 30, 1996, an increase of $932,070, or 46.6%. Total liabilities
decreased 9.7% from $310,167 to $280,021.
The increase in total assets was primarily the result of a $800,973, or
45.7% increase in the Company's current assets from $1,752,703 to $2,553,676.
An increase in the Company's cash and restricted cash were the primary factors
driving the increase in total assets. Cash and restricted cash increased 83.1%
from $1,164,952 to $2,133,098. The exercise of 100% of the Company's Class A
Common Stock Purchase Warrants generated net proceeds of $2,002,312, which was
the major element of this increase. Also contributing to the increase in total
assets was a $125,074, or 74.0%, increase in inventory and a $87,929, or
258.9%, increase in other assets, net. The increase in other assets, net, was a
result of the acquisition of certain intangible assets from Tecnal Products,
Inc, and the capitalization of costs related to internally developed software.
Capitalized software development costs are amortized as an element of cost of
goods sold, based on units sold which incorporate the software. Slightly
offsetting the increase in total assets was a decrease of $293,984, or 75.5%,
in net accounts receivable.
The net result of fixed assets acquisitions on the one hand, and
depreciation on the other, led to a $43,168 increase in net property and
equipment.
During the nine month period ending September 30, 1996, the Company's
total liabilities decreased $30,146 from $310,167 in 1995 to $280,021 in 1996.
Decreases in accounts payable of $33,069, or 25.5%, and other current
liabilities of $18,963, or 76.2%, were slightly offset by small increases in
payroll related liabilities and royalties payable. The Company did not have
any long term liabilities on December 31, 1995 or September 30, 1996.
As a result of the foregoing, the Company's working capital increased from
$1,442,536 at December 31, 1995 to $2,273,655 at September 30, 1996, an
increase of $831,119, or 57.6%, due largely to the exercise of the Company's
Class A Common Stock Purchase Warrants.
Other than the foregoing, management knows of no trends, or other demands,
commitments, events or uncertainties that will result in, or that are
reasonably likely to result in, a material impact on the liquidity and capital
resources of the Company.
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
The Company's gross revenues increased 72.1% to $129,682 during the three
month period ending September 30, 1996, from $75,367 during the same period in
1995. Cost of sales increased from $74,005 in 1995 to $94,187 in 1996. As a
result, the Company's gross margin increased from $1,362 to $35,495.
Total operating expenses increased $218,346 or 87.7%, from $248,997 during
the three month period ending September 30, 1995, to $467,343 during the
comparable period in 1996. Salaries, professional fees and other operating
expenses accounted for the majority of this increase. Salaries increased
$48,997, or 49.5%, from $99,012 to $148,009, reflecting increased pay rates,
and the addition of personnel. During the three months ended September 30,
1996, other operating expenses increased $117,447, or 202.6%, to $175,406 from
$57,959 during the comparable period in 1995. Other operating expenses increase
primarily due to expenditures related to the development of the Company's new
laser based medical products. Professional fees increased from $8,012 in 1995
to $45,279 during the 1996 period. Much of the increase in professional fees
was due to legal fees associated with the filing of international patents on
the Company's new proprietary technology and products.
The foregoing resulted in the Company's incurring a loss from operations
of $431,848 during the three month period ending September 30, 1996, an
increase of $184,213 over the $247,635 loss from operations incurred during the
comparable period of 1995.
During the three months ended September 30, other income and expenses
increased from a $94,847 net deduction during the period in 1995, to an $8,131
net contribution to income during the period in 1996. Primarily driving this
was interest expense, which was significantly reduced from the 1995 to the 1996
period, having gone from $99,764 in 1995 to $466 in 1996. This reduction
reflects the conversion to equity of a shareholders' note payable in September,
1995, substantially reducing the Company's outstanding debt. In addition,
during the second quarter of 1996, the company realized $3,197 in interest
income, primarily the result of interest on funds raised during the Company's
recent private offering of its securities, and, to a limited extent, interest
on the Company's warrant proceeds.
The Company's net loss for the three months ended September 30, 1996 was
$423,717, an increase of $81,235 over the net loss of $342,482 incurred during
the comparable period of 1995. On a per share basis, this amounts to a $(0.10)
loss per share during the third quarter 1996, compared to a $(0.19) loss per
share during the third quarter of 1995. As a result of the Company's private
placement of its securities in September, 1995, and the exercise of all
outstanding Class A Common Stock Purchase Warrants, the weighted average common
shares outstanding increased from 1,799,916 for the three months ended
September 30, 1995 to 4,100,697 for the three months ended September 30, 1996.
Other than the foregoing, management knows of no trends, or other demands,
commitments, events or uncertainties that will result in, or are reasonably
likely to result in, a material impact on the Company's results of operations.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
During the nine months ending September 30, 1996, the Company generated
$523,612 in gross revenues, an increase of $65,948, or 14.4% over the $457,664
in revenues generated during the same period in 1995.
<PAGE>
During the nine month period ending September 30, cost of sales decreased
from $371,406 in 1995 to $351,807 in 1996. Additionally, gross profits
increased from $86,258 to $171,805. The Company's gross margin as a percent of
sales increased from 18.8% during the 1995 period, to 32.8% during the
comparable period in 1996. The increase in gross profit percentage stems from
the Company's ongoing re-design of it's core optical trapping, cutting, and
manipulating products, and manufacturing processes, the result of which is a
more efficient design.
Total operating expenses increased $499,512, or 58.3%, from $856,519
during the nine month period ending September 30, 1995, to $1,356,031 during
the comparable period in 1996. Salaries, professional fees, and other
operating expenses accounted for the majority of the increase in operating
expenses. During this period, salaries increased from $307,207 in 1995 to
$415,599 in 1996. This 35.3% increase results from an increase in salaries and
the hiring of additional employees. Professional fees increased 185.1% from
$64,614 during the 1995 period to $184,245 during the 1996 period. This
increase was driven by expenditures related to the testing of the Company's
core optical trapping products to ensure compliance with certain federal
regulations, and legal fees related to the filings of international patents on
the Company's new proprietary technology and new products. Other operating
expenses increased from $206,450 in the 1995 period to $479,667 during the 1996
period. This represents an increase of $273,217, or 132.3%. This increase is
a result of sub-contracted research and other expenses incurred in relation to
the Company's two grants under the Small Business Innovation Research Program,
funded by the federal government. Expenditures by the Company related to these
grants are reimbursable by the federal government, and such reimbursements are
reflected in grant revenue. Also contributing to the increase were
expenditures related to the re-design of the Company's core products, the
testing of the re-designed products to ensure compliance with certain federal
regulations, and the design and development of new products incorporating the
technology acquired from Tecnal Products, Inc.
During the nine months ended September 30, other income and expenses
increased from a $333,143 net deduction during the 1995 period, to an $102,569
net contribution to income during the 1996 period. Interest expense was
significantly reduced from the 1995 to the 1996 period, having gone from
$348,129 in 1995 to $1,303 in 1996. This reduction reflects the conversion to
equity of a shareholders' note payable in September, 1995, substantially
reducing the Company's outstanding debt. During the first six months of 1996,
the Company realized $69,190 in grant revenue, resulting from the reimbursement
for expenditures related to work performed under its two Small Business
Innovation Research grants. Additionally, during the first nine months of 1996
the Company realized $18,032 in interest income, primarily the result of
interest on funds raised during the Company's recent private offering of its
securities, and, to a limited extent, interest on the Company's warrant
proceeds.
The foregoing resulted in the Company's slightly narrowing its net loss
for the nine months ended September 30, 1996 to $1,081,657, an improvement of
$21,747 over the net loss of $1,103,404 incurred during the comparable period
of 1995. On a per share basis, this amounts to a $(0.28) loss per share during
the first nine months of 1996, compared to a $(0.80) loss per share during the
first nine months of 1995. As a result of the Company's private placement of
its securities in September, 1995, and the exercise of all outstanding Class A
Common Stock Purchase Warrants, the weighted average common shares outstanding
increased from 1,371,246 for the nine months ended September 30, 1995 to
3,926,416 for the comparable period in 1996.
Other than the foregoing, management knows of no trends, or other demands,
commitments, events or uncertainties that will result in, or are reasonably
likely to result in, a material impact on the Company's results of operations.
<PAGE>
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.
CELL ROBOTICS INTERNATIONAL, INC.
Dated: November 18, 1996 By: /s/ Ronald K. Lohrding
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Ronald K. Lohrding, President
Dated: November 18, 1996 By: /s/ Craig T. Rogers
------------------- ------------------------
Craig T. Rogers
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,133,098
<SECURITIES> 0
<RECEIVABLES> 97,465
<ALLOWANCES> 1,841
<INVENTORY> 294,150
<CURRENT-ASSETS> 2,553,676
<PP&E> 694,309
<DEPRECIATION> 437,694
<TOTAL-ASSETS> 2,932,183
<CURRENT-LIABILITIES> 280,021
<BONDS> 0
0
0
<COMMON> 19,974
<OTHER-SE> 2,632,188
<TOTAL-LIABILITY-AND-EQUITY> 2,932,183
<SALES> 129,682
<TOTAL-REVENUES> 129,682
<CGS> 94,187
<TOTAL-COSTS> 467,343
<OTHER-EXPENSES> (8,597)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 466
<INCOME-PRETAX> (423,717)
<INCOME-TAX> 0
<INCOME-CONTINUING> (423,717)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (423,717)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> 0
</TABLE>
