UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended June 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for transition period from __________ to__________ .
Commission file number 1-11064
ION LASER TECHNOLOGY, INC.
...............................................................................
(Exact name of registrant as specified in its charter)
UTAH 87-0410364
............................. ..........................
(State or other jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3828 South Main Street
Salt Lake City, Utah 84115
........................................................
(Address of principal executive offices with Zip Code)
(801) 262-5555
................................
(Registrant's telephone number including area code)
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 [ ]
The number of shares of common stock of the Registrant outstanding as of
June 30, 1996 was 5,185,830.
<PAGE>
ION LASER TECHNOLOGY, INC.
INDEX TO FORM 10-QSB
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Condensed Balance Sheets
as of June 30, 1996 and March 31, 1996. 1-2
Unaudited Consolidated Condensed Statements of
Operations for the three months ended June 30,
1996 and June 30, 1995. 3
Unaudited Consolidated Condensed Statements of
Cash Flows for the three months ended June 30,
1996 and June 30, 1995. 4
Notes to Unaudited Consolidated Condensed
Financial Statements. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 6
PART II.OTHER INFORMATION 6
Signature Page 7
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,516,523 $ 5,081,912
Accounts receivable, less allowance of $44,304
and $39,688 at June 30, 1996 and March 31, 1996
respectively 1,436,373 1,253,458
Inventories 1,783,704 1,348,861
Prepaid expenses 204,443 125,997
Income tax refund receivable 19,138 19,564
-------------- --------------
Total current assets 6,960,181 7,829,792
Property, plant and equipment, net 1,886,266 1,617,769
Investment in joint venture 197,917 197,917
Goodwill, net 1,199,560 1,209,051
Patent costs, net 130,329 129,582
Receivable from joint venture 202,492 220,656
Other assets 49,114 44,114
-------------- --------------
Total assets $ 10,625,859 $ 11,248,881
============== ==============
</TABLE>
See accompanying notes.
Page 1
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Balance Sheets (continued)
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
-------------- --------------
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Notes payable $ 5,451 $ 676,340
Accounts payable 258,146 329,037
Accrued expenses 329,127 665,642
Accrued warranty costs 94,596 97,497
Current portion of long-term debt 17,204 16,864
-------------- --------------
Total current liabilities 704,524 1,785,380
Long-term debt less current portion 815,529 819,890
Redeemable common stock; 150,000 shares issued and
outstanding at March 31, 1996 338,540 338,540
Shareholders' Equity:
Common stock, $.001 par value:
Authorized shares - 50,000,000
Issued and outstanding shares - 5,185,830 5,073 4,934
Additional paid-in capital 8,797,815 8,469,829
Retained earnings (deficit) 14,709 (119,361)
Cumulative translation adjustment (50,331) (50,331)
-------------- --------------
Total shareholders' equity 8,767,266 8,305,071
-------------- --------------
Total liabilities and shareholders' equity $ 10,625,859 $ 11,248,881
============== ==============
</TABLE>
See accompanying notes.
Page 2
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Statements of Operations
Three Months Ended
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
-------------- --------------
<S> <C> <C>
Net sales $ 1,398,492 $ 1,029,701
Cost of products sold 572,441 660,044
-------------- --------------
Gross margin 826,051 369,657
Selling and administrative expenses 701,158 298,569
Research and development expenses 33,106 28,341
-------------- --------------
91,787 42,747
Other income (expense) 42,283 (32,041)
-------------- --------------
Income before income taxes 134,070 10,706
Income tax (expense) benefit - -
-------------- --------------
Net income $ 134,070 $ 10,706
============== ==============
Earnings (loss) per common share $ .03 $ .01
============== ==============
</TABLE>
See accompanying notes
Page 3
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Statements of Cash Flows
Three months ended
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
-------------- --------------
<S> <C> <C>
Operating activities
Net income (loss) $ 134,070 $ 10,706
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 48,906 39,380
Provision for losses on accounts receivable 4,616 -
Changes in operating assets and liabilities
Accounts receivable (169,369) (100,803)
Inventories (434,843) (17,579)
Prepaid expenses (78,446) 36,088
Other assets (5,000) (1,034)
Accounts payable and accrued liabilities (407,406) (5,015)
Accrued warranty costs (2,901) 12,596
Income taxes payable 426 -
-------------- --------------
Net cash provided (used) by operating activities (909,945) (25,661)
Investing activities
Patent costs (1,365) -
Additions to property, plant and equipment (307,294) (16,591)
-------------- ---------------
Net cash used in investing activities (308,659) (16,591)
Financing activities
Proceeds from issuance of debt 4,402
Payments on debt (674,910) (5,109)
Proceeds from sale of common stock 328,125 -
-------------- --------------
Net cash provided (used) by financing activities (346,785) (707)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (1,565,389) (42,959)
Cash and cash equivalents at beginning of period 5,081,912 82,440
-------------- --------------
Cash and cash equivalents at end of period $ 3,516,523 $ 39,481
============== ==============
</TABLE>
See accompanying notes.
Page 4
<PAGE>
Ion Laser Technology, Inc.
Notes to Unaudited Consolidated Condensed Financial Statements
March 31, 1996
1. Accounting Policies
Basis of Presentation
The unaudited, consolidated, condensed financial statements of Ion Laser
Technology, Inc. (the "Company"), as of June 30, 1996 and March 31, 1996
and for the three months ended June 30, 1996 and 1995 were prepared by the
Company without audit in accordance with generally accepted accounting
principles for interim financial information and in accordance with the
instructions to Form 10-QSB and Article 10 of Regulation S-X 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. In the
opinion of management, all necessary adjustments to the financial
statements have been made to present fairly the financial position and
results of operations and cash flows of the Company. The results of
operations for the periods presented are not necessarily indicative of the
results for the respective complete years. For further information, refer
to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended March 31,
1996.
Earnings Per Share
Earnings per share is computed based on the weighted average number of
shares of common stock and common stock equivalent shares outstanding
during each fiscal year. Common stock equivalent shares consist primarily
of stock options that have a dilutive effect when applying the treasury
stock method. The weighted average number of shares outstanding were
3,949,695 and 5,282,660 at June 30, 1996 and 1995, respectively.
Reclassifications
Certain reclassifications, none of which affect net income, have been made
to the prior periods' amounts in order to conform to the current period
presentation.
2. Inventories
Inventories consist of the following:
June 30, March 31,
1996 1996
------------ ------------
Raw materials $ 467,417 $ 512,604
Work in progress 796,461 445,726
Finished goods 519,826 390,531
------------ ------------
$ 1,783,704 $ 1,348,861
Page 5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Sales for the three months ended June 30, 1996, exceeded those for the
same quarter of the previous year by $369,000 or 36%. This increase is
due to sales related to the introduction of the Brite Smile Laser
Whitening product line during the fourth quarter of fiscal 1996. Total
dental sales accounted for approximately $942,000 for the quarter or 67%
of total sales. This compares to $454,000 or 44% for the quarter ended
June 30, 1995.
The Company's gross margin increased from 36% in the prior period to 59%
in the quarter ended June 30, 1996, as margins on both the laser whitening
systems and whitening chemicals have exceeded those on other products sold
by the Company.
Selling and administrative expenses increased from 28% of net sales to 50%
of net sales during the quarter. This increase is due largely to expenses
incurred in the initial marketing of the new laser tooth whitening
systems. The Company also incurred significant expenses associated with
the move of its tooth whitening chemical division during the quarter.
Although Management plans to continue to invest heavily in marketing and
advertising, management does not anticipate long-term expenditures of
selling and administrative expenses at rates equal to 50% of revenues.
Research and Development expenses increased slightly, although much of the
Company's research and development is being done in conjunction with
United Technologies and much of this does not translate to an expense on
the income statement.
Other Income increased, as other expenses decreased, due to the payoff of
the Company's line of credit and the interest received on the Company's
cash reserves.
Liquidity and Capital Resources
The Company's cash position declined during the quarter in the amount of
$1,565,389. The Company used $909,945 in its operations. Amounts spent
in operations included an increase in receivables as sales increased, and
increase in inventory for the purpose of increasing production capability
and a reduction in accounts payable.
Investing activities used $308,659. The Company invested in computer and
production equipment, a trade show booth, and furniture and facilities
during the quarter.
Financing activities used $346,785. This was due to the payoff of the
Company's line of credit. The Company received cash from certain
individuals who exercised options to purchase the Company's common stock
during the quarter.
Part II. Other Information
No material matter occurred during the three months ended June 30, 1996
that requires disclosure in Part II of this filing.
Page 6
<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.
ION LASER TECHNOLOGY, INC.
Date: August 18, 1996
---------------------------
/s/ Dean E. Hutchings
- -----------------------------
Dean E. Hutchings
Chief Financial Officer
Page 7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> $3,516,523
<SECURITIES> 0
<RECEIVABLES> $1,436,373
<ALLOWANCES> $44,304
<INVENTORY> $1,783,704
<CURRENT-ASSETS> $6,960,181
<PP&E> $2,722,521
<DEPRECIATION> $(836,255)
<TOTAL-ASSETS> $10,625,859
<CURRENT-LIABILITIES> $704,524
<BONDS> 0
0
0
<COMMON> $5,073
<OTHER-SE> $8,762,193
<TOTAL-LIABILITY-AND-EQUITY> $10,625,859
<SALES> $1,398,492
<TOTAL-REVENUES> $1,398,492
<CGS> $572,441
<TOTAL-COSTS> $1,306,705
<OTHER-EXPENSES> $42,283
<LOSS-PROVISION> $4,616
<INTEREST-EXPENSE> $31,016
<INCOME-PRETAX> $134,070
<INCOME-TAX> 0
<INCOME-CONTINUING> $91,787
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $134,070
<EPS-PRIMARY> $0.03
<EPS-DILUTED> $0.03
</TABLE>
