U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 1996
[ ] 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 small business issuer 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
................................
(Issuer's telephone number)
.......................................................
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
December 31, 1996 was 5,280,830.
Transitional Small Business Disclosure Format
(Check One)
Yes [ ] No [X]
<PAGE>
Item 1. Financial Statements
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
-------------- --------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 894,444 $ 5,081,912
Accounts receivable, less allowance
of $33,000 and $40,000 at December 31, 1996
and March 31, 1996 respectively 1,873,845 1,253,458
Inventories 2,976,615 1,348,861
Prepaid expenses 195,460 125,997
Income tax refund receivable 20,515 19,564
-------------- --------------
Total current assets 5,960,879 7,829,792
Property, plant and equipment, net 2,619,375 1,617,769
Investment in joint venture 197,917 197,917
Goodwill, net 1,159,600 1,209,051
Patent costs, net 452,071 129,582
Receivable from joint venture 232,945 220,656
Other assets 3,286 44,114
-------------- --------------
Total assets $ 10,626,073 $ 11,248,881
============== ==============
</TABLE>
See accompanying notes.
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Balance Sheets (continued)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
-------------- --------------
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Notes payable $ 67,588 $ 676,340
Accounts payable 534,343 329,037
Accrued expenses 162,539 665,642
Accrued warranty costs 79,742 97,497
Current portion of long-term debt 31,216 16,864
-------------- --------------
Total current liabilities 875,428 1,785,380
Long-term debt less current portion 831,971 819,890
Redeemable common stock; 150,000 shares issued
& Outstanding at March 31, 1996 - 338,540
Shareholders' Equity:
Common stock, $.001 par value:
Authorized shares - 50,000,000 5,281 4,934
Issued and outstanding shares -
December 31, 1996 - 5,280,830
March 31, 1996 - 4,933,630
Additional paid-in capital 9,176,772 8,469,829
Less: Cost of 118,875 shares treasury stock (400,000) -
Retained earnings (deficit) 186,952 (119,361)
Cumulative translation adjustment (50,331) (50,331)
-------------- --------------
Total shareholders' equity 8,918,674 8,305,071
-------------- --------------
Total liabilities and shareholders' equity $ 10,626,073 $ 11,248,881
============== ==============
</TABLE>
See accompanying notes.
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Statements of Operations
<TABLE>
<CAPTION>
For nine months ended For three months ended
-------------------------------- --------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 5,458,871 $ 2,844,697 $ 2,097,646 $ 1,009,046
Cost of products sold 2,690,320 1,919,628 984,337 686,278
Selling and administrative expenses 2,346,831 818,158 924,749 260,174
Research and development expenses 193,936 79,868 93,901 28,634
-------------- -------------- -------------- --------------
227,784 27,043 94,659 33,960
Other income (expense) 78,528 (85,323) (3,558) (24,422)
-------------- -------------- -------------- --------------
Income (loss) before income taxes 306,312 (58,280) 91,101 9,538
Income tax (expense) benefit - - - -
-------------- -------------- -------------- --------------
Net income (loss) $ 306,312 $ ($58,280) $ 91,101 $ 9,538
============== ============== ============== ==============
Earnings (loss) per common share $ 0.06 $ (0.01) $ 0.02 $ 0.01
============== ============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
Ion Laser Technology, Inc.
Unaudited Consolidated Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended:
--------------------------------
December 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Operating activities
Net income (loss) $ 306,313 $ (58,280)
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization 162,139 108,091
Provision for losses on accounts receivable 7,004 7,974
Changes in operating assets and liabilities:
Accounts receivable (639,680) (33,346)
Inventories (1,627,754) 89,564
Prepaid expenses (69,463) (48,380)
Other assets 40,828 11,989
Accounts payable and accrued liabilities (297,797) (379,833)
Accrued warranty costs (17,755) 759
Income taxes payable (951) -
-------------- --------------
Net cash provided by (used in) operating activities (2,137,116) (301,462)
-------------- --------------
Investing activities
Patent costs (325,724) (11,220)
Additions to property, plant and equipment (1,111,059) (56,250)
-------------- --------------
Net cash (used in) investing activities (1,436,783) (67,470)
-------------- --------------
Financing activities
Payments on debt (582,319) (167,259)
Proceeds from sale of common stock 368,750 631,252
Payments for purchase of common stock (400,000) -
-------------- --------------
Net cash provided by (used in) financing activities (613,569) 463,993
-------------- --------------
Net increase (decrease) in cash and cash equivalents (4,187,468) 95,061
Cash and cash equivalents at beginning of period 5,081,912 82,440
-------------- --------------
Cash and cash equivalents at end of period $ 894,444 $ 177,501
============== ==============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
December 31, 1996
1. Accounting Policies
Basis of Presentation
The unaudited, consolidated, condensed financial statements of Ion Laser
Technology, Inc. (the "Company") as of December 31, 1996 and March 31, 1996
and for the nine months and three months ended December 31, 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 the notes 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
period. 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 5,564,330 and 3,867,966 at
December 31, 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 presentation.
2. Inventories
Inventories consist of the following:
December 31, March 31,
1996 1995
------------ ------------
Raw materials $1,258,950 $ 512,604
Work in progress 1,137,165 445,726
Finished goods 580,500 390,531
------------ ------------
$2,976,615 $1,348,861
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Sales for the quarter ended December 31, 1996 totaled $2,097,646. This
is an increase from the quarter ended December 31, 1995 of $1,088,600 or
107%. Sales for the nine months ended December 31, 1996 were $5,458,871
compared to $2,844,697 one year ago. This is a change in year to date sales
for the nine month period of $2,614,174 or a 92% increase over the same
nine-month period during the previous fiscal year. The increase in sales for
the third quarter and the nine months is due to increased laser tooth
whitening sales which accounted for $1,286,331 during the quarter and
$3,520,897 for the nine month period ending December 31, 1996. The Company
had no sales of tooth whitening products in fiscal 1995. The increase in
laser tooth whitening sales accounts for 61% and 64%, respectively, of the
Company's sales for the three and nine month periods. This is a direct
reflection of the Company's shift from the industrial laser market to the
dental and tooth whitening market for its products. Management of the Company
believes there are significant growth opportunities in this and other dental
cosmetic markets and an effort has been made to focus the resources of the
Company to increase sales in these market areas. Although the Company had
significant increases in sales during the third quarter and the nine month
period ending December 31, 1996, performance for these periods is not
necessarily indicative of performance that may be expected or achieved in
future periods. In addition, the Company has noticed increasing competition
in the laser tooth whitening industry and may be required to seek to enforce
and protect its proprietary rights in its technology at great expense as
competition increases. This would adversely affect results of operations.
See "Forward-looking Statements and Certain Risk Factors," below.
The Company's gross margin percentage rose from 32% to 53% for the third
fiscal quarter and from 33% to 51% for the nine month period. The increase is
due primarily to increased margins associated with the sale of laser tooth
whitening products as opposed to the lower profit margins of the Company's
previously emphasized industrial laser manufacturing business.
Selling and administrative expenses increased $664,575 during the third
quarter due to an increase in marketing costs associated with the preparation
and roll-out of marketing campaigns for the Company's laser tooth whitening
products. During the nine months ended December 31, 1996 selling, general and
administrative expenses were $2,346,831 compared to $818,158 for the same
period in 1995. This increase is attributable primarily to the increased cost
of advertising and promotion of the Company's laser tooth whitening business
launched during the fourth quarter of fiscal 1995 and continuing throughout
the first three quarters of fiscal 1996. Management expects the Company will
continue to spend significant sums on advertising and promotional expenses
over the next several months as it makes an effort to increase its market
share of the laser tooth whitening business. The Company's objective in such
advertising campaign is to promote its BriteSmile products and brand names to
both dentists and consumers as superior to competitive products. A large part
of this marketing campaign is aimed at advertising in specific geographic
markets where the Company's sales efforts are being directed.
Research and development within the Company and under its Technology
Development Agreement with United Technologies continues to be important to
the Company. During the third quarter the Company filed for FDA clearance of
a new dental composite curing device. Further development efforts will
continue in future periods.
The Company had a net profit during the fiscal quarter ended December 31,
1996 of $91,101. The profit for the nine month period ending December 31,
1996 was $306,312. This compares to a net loss of ($9,538) during the third
quarter of 1995 and a net profit of $58,280 for the nine months ending
December 31, 1995. The Company expects profits to continue to increase in
future periods provided that the Company is able to overcome certain quality
control and warranty problems discussed below, and, provided, further, that
the Company continues to compete effectively with the increasing competition
in the laser tooth whitening industry. There can be no assurance, however,
that such trends in profitability will continue. The Company's business, its
results of operations, and its profitability are affected by risks and hazards
outside the control of management (see "Forward Looking Statements" and "Risk
Factors" below).
Liquidity and Capital Resources
The Company used $4,187,468 in cash during the nine months ended December
31, 1996 compared to providing cash during the same period in 1995 totaling
$463,993. The cash provided during the first nine months of fiscal 1995 was
obtained primarily from the sale of stock. During fiscal 1996, the Company
also redeemed $400,000 worth of its own stock. Of the cash used in the first
nine months of fiscal 1996, a total of $2,137,116 was used in operating
activities. An increase of $639,680 in accounts receivable for the
nine-months was due to increased sales volume during the period and represents
credit sales booked but not yet collected at December 31, 1996. Inventory
increased during the nine-month period by $1,627,754. This increase in
inventory was largely due to increased demand for and manufacture of inventory
related to the Company's laser tooth whitening products. The decrease in
accounts payable and accrued liabilities is the result of payment of expenses
accrued as of March 31, 1996 in connection with capital raising activities of
the Company, which were paid during the nine months ended December 31, 1996.
Investing activities of the Company used $1,436,783 during the period. Of
this sum, $1,111,059 was used for the purchase of new manufacturing equipment
to increase manufacturing capacity, as well as the purchase of computer
equipment and software, updating work stations, and the Company's network
system. The Company is also presently remodeling its facilities in Salt Lake
City to increase production capacity and to construct a laser tooth whitening
training center at its headquarters facility. It is anticipated that the
remodeling will be completed during the fourth quarter of this fiscal year.
Financing activities used $613,569 in the nine months ending December 31, 1996
compared to cash provided from financing activities during the same fiscal
period in 1995 totaling $463,993 which resulted primarily from the sale of
stock upon exercise of option agreements and from payments made by United
Technologies under a Technology Development Agreement. The Company
repurchased $150,000 of stock during the third quarter of fiscal 1996 under
that agreement.
During the nine months ending December 31, 1996 the Company paid off
$582,319 in short-term debt. Most of the reduction in debt was the pay-down
of the Company's line of credit. The Company is presently negotiating with a
bank to obtain a new line of credit which would permit the Company to
refinance its mortgage and other long-term debt and provide the Company with
an additional source of financing for future operations.
The Company's working capital (current assets minus current liabilities)
at December 31, 1996 was $5,085,451. Its current ratio (current assets
divided by current liabilities) improved from 4.38 at December 31, 1995 to
6.81 as of December 31, 1996. The Company believes cash provided by
operations, current cash reserves and bank borrowings or other forms of debt
or equity financing will be adequate for at least the next twelve months.
Forward Looking Statements and Certain Risk Factors
Statements contained in this report on Form 10-QSB that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements include statements regarding the Company's
expectations, beliefs, hopes, intentions or strategies regarding the future.
All forward looking statements included in this report are based on
information available to the Company on the date hereof and the Company
assumes no obligation to update any such statements. The Company cautions
that actual results could differ materially from those in such forward looking
statements. Among other things, the Company's business and its results of
operations may be affected by factors which could cause actual results to
differ materially from those described in the forward looking statements
contained in this report. Such factors include, but are not limited to, the
following:
Government Regulation. The Company's products are subject to the
provisions of the Federal Food, Drug and Cosmetic Act (the "Act") and the Safe
Medical Devices Amendment of the Act. The Act is administered by the Food and
Drug Administration ("FDA") and similar laws are administered by similar
agencies in other countries. The Act generally classifies medical devices
into categories, and establishes varying degrees of labeling and marketing
clearance procedures. The Company is subject to FDA standards and procedures
governing the manufacture of medical devices and to FDA inspection for
compliance with such standards. The Company has obtained FDA clearance for
the use of its lasers in the tooth whitening process. The Company is
required to manufacture its regulated products in accordance with Good
Manufacturing Procedures ("GMP") and is subject to periodic audits by the
FDA. In addition, the use of the Company's products may be regulated by
various state agencies. Although the Company believes it has been and is now
in compliance with the FDA's rules and GMP, there can be no assurance that the
Company's products will be able to comply successfully with any such
requirements or regulations.
Federal and state regulations regarding the manufacture and sale of
medical devices are subject to future change. The Company cannot predict what
material impact, if any, such changes might have on its business. In
addition, the introduction of the Company's products in foreign markets will
require obtaining foreign regulatory clearances. There can be no assurance
that the Company will be able to obtain regulatory clearances for all of its
products in the U.S. or in foreign markets. Although the Company believes
that it will continue to be able to comply with all applicable regulations of
the FDA, including GMP guidelines, current regulations depend heavily on
administrative interpretations, and there can be no assurance that future
interpretations made by the FDA or other regulatory bodies, with possible
retroactive effect, will not adversely affect the Company.
Many dentists who have acquired and who desire to acquire the Company's
laser tooth whitening system also desire to utilize a dental hygienist and/or
dental technician to perform many aspects of the laser tooth whitening
procedure. The dental licensing boards or similar regulatory bodies in
several states of the United States have recently promulgated or proposed
rules which prohibit dental hygienists and/or dental technicians from
operating or using lasers in connection with dental procedures, including
tooth whitening procedures. Dental licensing boards or similar regulatory
bodies in other states and countries can and may adopt similar rules, the
effect of which is to discourage some dentists from acquiring the Company's
laser tooth whitening system because they are not able to utilize less
expensive employees and staff (dental hygienists and/or dental technicians)
for a significant portion of the laser tooth whitening procedure. The Company
has determined to challenge rules adopted by states prohibiting dental
hygienists and/or dental technicians from operating laser equipment in tooth
whitening procedures. Further, the Company has determined to initiate
rulemaking procedures in other states which would expressly allow dental
hygienists, and in some cases, dental technicians, to utilize lasers in tooth
whitening procedures. However, there can be no assurance that the Company's
efforts opposing rules prohibiting dental hygienists and/or dental technicians
from operating lasers in tooth whitening procedures or advancing rules
allowing such will be successful. To the extent that state licensing boards
or similar regulatory bodies in a majority of the states of the United States
and/or in foreign countries adopt rules prohibiting dental hygienists and/or
dental technicians from operating lasers in tooth whitening procedures, the
Company believes that the appeal of its laser tooth whitening products as a
significant profit center for dentists engaged in cosmetic dentistry practices
will be reduced.
Technological Obsolescence. The business of designing and manufacturing
technical products such as lasers is characterized by rapid technological
change. In addition, there is increasing competition in the creation and
manufacture of tooth whitening compounds used in the tooth whitening
process. Although the Company has obtained or applied for patents on certain
aspects of its technology and processes used by it, there can be no assurance
that the Company's competitors will not develop or manufacture products
technologically superior to those of the Company. The Company also relies
upon trade secrets and no assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its rights to
unpatented trade secrets. The Company requires its key employees, consultants
and advisors to execute confidentiality agreements upon the commencement of an
employment or consulting relationship with the Company.
Competition. The Company operates in a highly competitive industry and
competes with firms which may have greater financial resources, broader
experience and more substantial marketing operations than the Company. Other
laser manufacturers have also begun to market and use lasers in the tooth
whitening process. Although the Company believes its process to be superior
to those of its competitors, there can be no assurance that the Company will
be able to effectively compete with larger, better financed companies in the
same industry.
Product Liability. Manufacturers and distributors of products used in
the medical industry are from time to time subject to lawsuits alleging
product liability, negligence or related theories of recovery, which have
become an increasingly frequent risk of doing business in these industries.
Although lawsuits may arise or claims may be asserted based on product
liability or other legal theories against the Company, all such actions have
been insured against and there are no such actions pending. While the Company
does not anticipate any such lawsuits, there can be no assurance that the
Company will not be subjected to claims for and suffer substantial losses
arising out of the use of any of its products which may be defective. Such
claims and losses, and the expense of defending against such claims, would be
costly and could have a materially adverse effect on the Company's results of
operations. Although the Company presently maintains product liability
insurance coverage, there can be no assurance that such coverage will be
available for such risks in the future or that, if available, it would prove
sufficient to cover potential claims or that the present amount of insurance
can be maintained in force at an acceptable cost. Furthermore, the assertion
of such claims, regardless of their merit or eventual outcome, also may have a
material adverse effect on the Company, its business reputation and its
operations.
Dependence Upon Market Acceptance of Company's Products. The Company's
ability to expand its product line and market its new products and processes
(including the BriteSmile process) will depend upon the willingness of
potential customers to purchase the products, in many instances to replace
products presently purchased from the Company's competitors. In addition,
there can be no assurance that any new products or technologies developed or
acquired by the Company, including those currently being developed by the
Company, will be accepted by the industry. The Company currently has limited
marketing capabilities and will need to hire additional sales and marketing
personnel for the new products. There can be no assurance that any sales and
marketing effort undertaken by the Company will be successful. Furthermore,
marketing is expensive and amounts spent to promote the products and processes
of the Company will affect its results of operations.
Dependence on Patents and Proprietary Rights. The Company has several
United States patents and has filed additional patent applications in the U.S.
Patent and Trademark Office. These patents and pending applications relate to
the Company's multiplexer, collinated beam delivery system for composite
curing, laser resonator, krypton or "mixed gas" ion laser device, and the
BriteSmile process. The Company believes patents and proprietary rights have
been and will continue to be important in enabling the Company to compete.
However, there can be no assurance that the pending patents will issue or, if
they do issue, that they and the other patents of the Company will not be
challenged or circumvented or will provide the Company with any competitive
advantages or that any patents will issue from pending patent applications.
Failure to obtain patents in certain foreign countries may materially
adversely affect the ability of the Company to compete effectively in certain
international markets. The Company also relies on trade secrets that it seeks
to protect, in part, through confidentiality agreements with employees and
other parties. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known to or
independently developed by competitors. The Company may become involved from
time to time in litigation to determine the enforceability, scope and validity
of proprietary rights. Any such litigation could result in substantial cost
to the Company and divert the efforts of its management and technical
personnel and adversely affect results of operations.
Risks of Foreign Sales; Foreign Operations. The Company's expanded
marketing strategy includes increased marketing of its products in foreign
countries. Accordingly, the Company's business is subject to many of the
risks of international operations, including tariff restrictions, foreign
currency fluctuations, currency control regulations, competing or conflicting
manufacturing standards, government regulation and approval policies for
medical testing and therapy devices and licensing requirements. In addition
to the foreign sales activity of the Company, since 1989 the Company has been
engaged in manufacturing operations in Shanghai, China, through its
wholly-owned subsidiary, Ion Laser Technology Development Company and its
ownership in Shanghai Laser Technology Company, a Chinese joint venture. The
joint venture manufactures and sells lasers to markets in China and other
parts of the world. In recent years, the political and economic climate in
China has been subject to volatile change. Political and economic changes in
the future could adversely affect the Company's investment in the joint
venture.
Recent Net Loss; Possible Future Losses. Although the Company realized a
modest net profit in its last fiscal year, the Company realized net losses in
prior years. The Company's operations continue to use significant amounts of
cash as the Company endeavors to promote its BriteSmile tooth whitening
products and services. Although the Company has experienced revenue growth
since its inception, there can be no assurance that such growth will continue
or that net losses will not be incurred in future operating periods.
Backlog; Quality Assurance. The Company has recently increased its
production capacity and is in the process of adding to that capacity at its
Salt Lake City facility. The increased demand for its lasers and for the
chemical reagents used in the tooth whitening process resulting from increased
sales activity in this industry has resulted in an increase in orders for the
Company's products. Inventories of finished products and work in progress
have increased substantially. In the past nine months the Company has
experienced delays in delivering some finished products to customers. In some
cases there have also been an unusually high number of warranty claims related
to delivered product. While some quality assurance problems may reasonably be
expected as a new product line is started or as new personnel are hired and
trained to meet increasing demand, warranty claims are a significant expense
to the Company and the delays caused by backlogs or by quality assurance
problems adversely affect operating results. The Company constantly works to
improve quality and to reduce backlog, but there can be no assurance that
these trends will not continue in the foreseeable future.
Change in Business Focus. The Company is currently transitioning its
business to rely more heavily on the sale of laser tooth whitening chemicals
and lasers used in the cosmetic dental market. In addition to the foregoing,
factors that may affect the Company's results of operations include the volume
and timing of orders received, changes in the mix of product sold, market
acceptance of the Company's products, competitive pricing pressures, the
Company's ability to meet increasing demand, the Company's ability to
introduce new products on a timely basis, the timing of new product
announcements and introductions by the Company or its competitors, changing
customer requirements, delays in meeting new product qualifications, the time
of research and development, and the timing and extent of expenses related to
such research and development.
As a result of the foregoing or other factors, there can be no assurance
that the Company will not experience material fluctuations in future operating
results on a quarterly or annual basis, which would materially and adversely
affect the Company's business, financial condition and results of operations.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
There are no legal proceedings involving the Company or any of its
directors, officers or affiliates which are required to be discussed in this
Report.
Item 2. Changes in Securities. None.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information.
On February 11, 1997, the Company announced that Lynn B. Barney,
President and Chief Executive Officer of the Company, would become
Vice-Chairman of the Board of Directors and that E. Wyatt Cannady would become
President and Chief Executive Officer of the Company, effective the week of
February 24, 1997. The Company anticipates that it will enter into a written
employment agreement with Mr. Cannady on or before the commencement of his
employment with the Company, which employment agreement shall have a term
through March 31, 2000. Under the terms of that contract, the Company will pay
Mr. Cannady a salary commensurate with his position and with the industry and
his compensation package will include incentives such as a cash bonus and stock
options, based on performance and term of service. The Company has also agreed
that within three (3) months after his employment commences, Mr. Cannady will
be named as a member of the Board of Directors of the Company.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ION LASER TECHNOLOGY, INC.
Date: February 11, 1996 /s/ Dean E. Hutchings
----------------- --------------------------
Dean E. Hutchings,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ION
LASER TECHNOLOGY, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS,
STATEMENTS OF OPERATIONS AND STATEMENTS OF CASH FLOWS FOR THE NINE AND THREE
MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> $894,444
<SECURITIES> 0
<RECEIVABLES> $1,906,845
<ALLOWANCES> $33,000
<INVENTORY> $2,976,615
<CURRENT-ASSETS> $5,960,879
<PP&E> $3,531,008
<DEPRECIATION> $911,633
<TOTAL-ASSETS> $10,626,073
<CURRENT-LIABILITIES> $875,428
<BONDS> 0
0
0
<COMMON> $5,281
<OTHER-SE> $8,913,393
<TOTAL-LIABILITY-AND-EQUITY> $10,626,073
<SALES> $5,458,871
<TOTAL-REVENUES> $5,458,871
<CGS> $2,690,320
<TOTAL-COSTS> $5,231,087
<OTHER-EXPENSES> $78,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $62,420
<INCOME-PRETAX> $306,312
<INCOME-TAX> 0
<INCOME-CONTINUING> $227,785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $306,312
<EPS-PRIMARY> $0.06
<EPS-DILUTED> $0.06
</TABLE>
