SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Quarterly Period Ended September 30, 1998
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 0-19407
LASER-PACIFIC MEDIA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-3824617
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
809 N. Cahuenga Blvd.
Hollywood, California 90038
(323) 462-6266
(Address, including zip code and telephone number, including area code of
principal executive offices)
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 outstanding of each of the registrant's classes of common
stock, as of October 1, 1998 was 7,184,172 shares of Common Stock, $.0001 par
value.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
AND SUBSIDIARIES
Table of Contents
Page
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
Part II - Other Information
Item 3. Submission of Matters to a Vote of Security Holders 11
Item 4. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Audited (Unaudited)
<TABLE>
<S> <C> <C>
December 31, September 30
1997 1998
---------------- ----------------
Assets
Current assets $ 5,722,821 5,117,534
Net property and equipment 16,194,498 13,665,514
Other assets 570,472 418,427
--------------- ----------------
22,487,791 19,201,475
================ ================
Liabilities and Stockholders' Equity
Current liabilities 8,054,970 4,428,563
Notes payable to bank and long-term debt, less current installments 8,139,042 8,259,204
Minority Interest 521,440 0
Stockholders' equity:
Common stock, $.0001 par value. Authorized 25,000,000 shares; issued and
Outstanding 7,128,172 shares at December 31, 1997 and 713 718
7,184,172 shares at September 30, 1998.
Additional paid-in capital 19,772,440 19,784,755
Accumulated deficit (14,000,814) (13,271,765)
---------------- ----------------
Net stockholders' equity 5,772,339 6,513,708
---------------- ----------------
$ 22,487,791 19,201,475
================ ================
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- --------------------------------
1997 1998 1997 1998
-------------- ---------------- -------------- -------------
Revenues $ 6,885,113 6,579,393 19,335,729 21,207,725
Operating costs 5,444,128 5,121,127 16,566,800 16,734,974
-------------- ---------------- -------------- -------------
Gross profit 1,440,985 1,458,266 2,768,929 4,472,751
Selling, general and administrative
and other expenses 1,125,037 1,064,316 3,349,729 3,575,203
-------------- ---------------- -------------- -------------
Income (loss) from operations 315,948 393,950 (580,800) 897,547
Interest expense 438,412 298,223 1,170,078 1,027,975
Other Income (expense) --- 23,406 24,955 39,441
Gain on sale of Subsidiary --- 874,578
-------------- ---------------- -------------- -------------
Income before income taxes (122,464) 119,133 (1,725,923) 783,591
Provision for income taxes --- --- --- 54,544
-------------- ---------------- -------------- -------------
Net income (loss) $ (122,464) 119,133 (1,725,923) 729,047
============== ================ ============== =============
Net Income (loss) Per Share
Basic (0.02) 0.02 (0.24) 0.10
-------------- ---------------- -------------- -------------
Diluted (0.02) 0.02 (0.24) 0.10
-------------- ---------------- -------------- -------------
Weighted average shares outstanding (basic) 7,128,172 7,184,172 7,128,172 7,184,172
============== ================ ============== =============
Weighted average shares outstanding (diluted) 7,128,172 7,539,830 7,128,172 7,539,830
============== ================ ============== =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<S> <C> <C>
Nine Month ended September 30
------------------------------------
1997 1998
--------------- ---------------
Cash flows from operating activities
Net income (loss) (1,725,923) 729,047
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 3,180,473 2,399,901
Gain on sale of subsidiary --- (874,578)
Gain on sale of Property and equipment --- (63,185)
Provision for doubtful accounts receivable 193,415 79,120
Other (2,409) 811
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (142,725) (585,908)
Inventory 41,624 36,912
Prepaid expenses and other current assets (119,952) (137,309)
Other assets 9,853 (30,955)
Increase (decrease) in:
Accounts payable and accrued expenses (161,551) 554,090
--------------- ---------------
Net cash provided by operating activities 1,272,805 2,107,947
=============== ===============
Cash flows from investing activities:
Purchases of property and equipment (2,628,542) (4,196,002)
Net proceeds from disposal of property and equipment 30,995 64,458
Net effect of sale of subsidiary --- 3,402,091
--------------- ---------------
Net cash (used in) investing activities (2,597,547) (729,453)
=============== ===============
Cash flows from financing activities :
Proceeds borrowed under notes payable to bank and long-term debt 5,018,600 2,122,844
Net (repayment) proceeds of notes payable to bank and long- term debt (3,245,616) (2,917,273)
(Repayments) borrowing of notes payable to related parties --- (900,000)
Proceeds from issuance of common stock --- 12,320
--------------- ---------------
Net cash provided by (used in) financing activities 1,772,984 (1,682,109)
=============== ===============
Net increase (decrease) in cash 448,242 (303,615)
Cash at beginning of period 283,082 367,363
--------------- ---------------
Cash at end of period 731,324 63,748
=============== ===============
Supplementary disclosure of cash flow information:
Cash paid during the period for interest 1,170,000 1,028,000
=============== ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring items) necessary to present fairly the financial position of
Laser-Pacific Media Corporation (the Company) and its subsidiaries as of
September 30, 1998; the results of operations for the three and nine month
periods ended September 30, 1997 and 1998; and the statements of cash flows for
the nine month periods ended September 30, 1997 and 1998. Included in the
Condensed Consolidated Financial Statements is the activity of the Company's
consolidated subsidiary, Pacific Video Canada, Ltd. ("PVC"). On May 15, 1998 the
Company sold all of its investment in PVC. Accordingly, revenue and expense of
PVC through May 15, 1998 is included in the results of operations for the nine
month period ended September 30, 1998 but are excluded from the results of
operations for the three months ended September 30, 1998. The assets and
liabilities of PVC are included in the Condensed Consolidated Balance Sheets at
December 31, 1997 and excluded from the Condensed Consolidated Balance Sheets at
September 30, 1998. The Company's business is subject to the prime time
television industry's typical seasonality. Historically, revenues and income
from operations have been highest during the first and fourth quarters, when
production of television programs and demand for the Company's services is at
its highest. The net income or loss of any interim quarter is seasonally
disproportionate to revenues because selling, general and administrative
expenses and certain operating expenses remain relatively constant during the
year. Therefore, interim results are not indicative of results to be expected
for the entire fiscal year.
In accordance with the directives of the Securities and Exchange Commission
under Rule 10-01 of Regulation S-X, the accompanying consolidated financial
statements and footnotes have been condensed and do not contain certain
information included in the Company's annual consolidated financial statements
and notes thereto.
(2) Income Taxes
The provision for income tax expense for the nine months ended September
30, 1998 was $54,000, which represents the foreign income tax expense relating
to Canadian income. Federal income tax expense of $19,700 and state income tax
expense of $5,600 related to the sale of the subsidiary (see Note 6) were offset
against the gain on the sale of subsidiary. Income tax expense for the nine
months ended September 30 1998 was computed using the estimated effective tax
rate to apply for 1998 after considering the impact of net operating loss
carry-forwards. The estimated effective tax rate is subject to ongoing review
and evaluation by management.
(3) Reporting Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". This statement which establishes standards for reporting and disclosure
of comprehensive income, is effective for interim and annual periods beginning
after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS 130. As this statement only requires
additional disclosure in the Company's consolidated financial statements, its
adoption will not have any impact on the Company's consolidated financial
position or results of operations. The Company has adopted SFAS No. 130
effective January 1, 1998 and its adoption has not had any impact on the
Company's consolidated financial position or results of operations.
(4) Disclosures about Segments of an Enterprise
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise." This statement, which establishes standards for reporting and
disclosures of certain information about operating segments in complete sets of
financial statements, is effective for interim and annual periods beginning
after December 15, 1997, although earlier adoption is permitted.
Reclassifications of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 131 if it is practical to do so.
The Company has adopted SFAS No. 130 effective January 1, 1998 and its adoption
has not had any impact on the Company's consolidated financial position or
results of operations.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
(5) Earnings per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No 128, "Earnings per Share" (SFAS 128). SFAS
128 requires dual presentation of basic earnings per share ("EPS") and diluted
EPS on the face of all statements of earnings for all entities with complex
capital structures. Basic EPS is computed as net earnings divided by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares issuable
through stock-based compensation plans including stock options, restricted stock
awards, warrants and other convertible securities using the treasury stock
method. The following summarizes the computation of Basic EPS and Diluted EPS:
<TABLE>
<S> <C> <C> <C> <C>
Three Months ended Nine Months ended
9/30/97 9/30/98 9/30/97 9/30/98
Numerator for basic and diluted per share computations:
Net income (loss) available to common shareholders $ (122,464) 119,133 (1,725,923) 729,047
============= ============ ============= =============
Denominator:
Shares used for basic per share computations
weighted average shares outstanding 7,128,172 7,184,172 7,128,172 7,184,172
Effect of dilutive securities - stock options & warrants 355,658 355,658
----------- ------------ ----------- -------------
Shares used for dilutive per share computations 7,128,172 7,539,830 7,128,172 7,539,830
Net income (loss) per share:
Basic $ (0.02) 0.02 (0.24) 0.10
Diluted (0.02) 0.02 (0.24) 0.10
</TABLE>
(6) Sale of Subsidiary
On May 15, 1998 the Company sold all of its investment in PVC to Command
Post and Transfer Corporation. The Company realized cash consideration of
$3,810,000 and a gain on sale of $874,000, net of applicable taxes.
The balance sheet of PVC presented below reflects the amounts attributable
to PVC, on a gross basis, which are included in the condensed consolidated
financial statements of the Company, as of December 31, 1997. The Company owned
approx. 77% of the outstanding shares of PVC as of December 31, 1997 and April
30, 1998.
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
(6) Sale of Subsidiary (cont.)
PACIFIC VIDEO CANADA, Ltd.
Condensed Balance Sheet
<TABLE>
<S> <C> <C>
Included as of
December 31, 1997 (1) April 30, 1998
Assets
Current Assets $ 1,496,757 1,225,429
Capital Assets 4,020,572 4,052,391
----------------------- ------------------------
Total Assets 5,517,329 5,277,820
======================= ========================
Liabilities
Current Liabilities 1,264,224 1,395,072
Long Term Debt and other liabilities 1,985,991 1,576,666
Equity
Share Capital 1,722,072 1,706,996
Retained Earnings 545,042 599,086
----------------------- ------------------------
Total Liabilities & Equity $ 5,517,329 5,277,820
======================= ========================
</TABLE>
(1) The balance sheet of PVC as of April 30, 1998 is included as it was the
last interim balance sheet available prior to the sale, and materially
represents the value of the assets underlying the stock of PVC sold.
The statement of operations for PVC presented below reflects the amounts
attributable to PVC, which are included in the condensed consolidated financial
statements of the Company, as of the nine month period ended September 30, 1998,
but are not reflected in the quarter ended September 30, 1998.
PACIFIC VIDEO CANADA, Ltd.
Condensed Statement of Operations
<TABLE>
<S> <C>
9 Months ended
September 30, 1998
--------------------------
Sales $ 2,894,972
Direct expenses 2,079,822
--------------------------
Gross Profit 815,151
SG&A expenses 606,257
--------------------------
Earnings from Operations 208,893
Interest and Other expenses 71,166
--------------------------
Earnings before income taxes 137,727
Income taxes 54,544
--------------------------
Net earnings $ 83,183
==========================
</TABLE>
<PAGE>
LASER-PACIFIC MEDIA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the nine months ended September 30, 1998 increased to
$21,208,000 from $19,336,000 for the same year-ago period, an increase of
$1,872,000 or 9.7%. The overall increase in revenues was offset by a decline in
revenues from International Operations which is the result of the sale of our
Canadian subsidiary Pacific Video Canada Ltd. (PVC) on May 15, 1998. All of
Laser Pacific's International Operations are attributable to PVC. The revenues
for the nine months ended September 30, 1998 at the Company's U.S. facilities
increased $2,555,000 or 16.0% versus the year-ago period, while revenues from
International Operations decreased $683,000 versus the year-ago period. The
increase in revenues at U.S. facilities is comprised of an increase of
$2,648,000 in Production Services, a decrease of $53,000 in Film Production
Services and a decrease of $40,000 in Post Production Services. The increase in
revenues at our U.S. Facilities from Post-Production Services is attributable to
an increased demand for the Company's services with significant increases in
digital compression services; including digital video discs, and revenues from
feature film mastering, a service the Company began offering in November 1997.
The increase in revenues from Compression Services and the additional revenue
from Film Mastering amounted to $1,388,000 for the period. The revenue decrease
in Film Production Services is the result of the elimination of positive film
services in 1997. Negative film services increased $296,000 or 15.3% during the
period.
Revenues for the quarter ended September 30, 1998 decreased to $6,579,000
from $6,885,000 for the same year-ago period, a decrease of $306,000 or 4.4%.
The decline in revenues for the quarter is attributable to the elimination of
the revenue from International Operations which is the result of the sale of our
Canadian subsidiary Pacific Video Canada Ltd. (PVC) on May 15, 1998. All of the
Laser Pacific's International Operations are attributable to PVC. The revenues
for the quarter ended September 30, 1998 at the Company's U.S. facilities
increased $1,058,000 or 18.8% versus the year-ago period, while revenues from
International Operations decreased $1,364,000 versus the year-ago period. The
increase in revenues at U.S. facilities is comprised of an increase of
$1,085,000 in Production Services, an increase of $52,000 in Film Production
Services and a decrease of $79,000 in Post Production Services. The increase in
revenues at our U.S. Facilities from Post-Production Services is attributable to
increased demand for the Company's services with significant increases in
digital compression services; including digital video discs, and revenues from
feature film mastering, a service the Company began offering in November 1997.
The increase in revenues from Compression Services and the additional revenue
from Film Mastering amounted to $420,000 for the period. Although revenue from
Film Production Services has increased, this increase was offset by the impact
of the elimination of positive film services in 1997. Negative film services
increased $165,000 or 21.8% during the period.
For the nine months ended September 30, 1998, the Company recorded a gross
profit of $4,473,000 compared with $2,769,000 for the same year ago period, an
increase of $1,704,000 or 61.5%. The gross profit for the nine months ended
September 30, 1998 at the Company's U.S. facilities increased $1,669,000 or
83.9% versus the year-ago period, while gross profit from Canada increased
$35,000 versus the year-ago period. The increase in gross profit at U.S.
facilities is the result of increased sales volume, discussed above, offset by
increased operating costs, as explained below.
For the quarter ended September 30, 1998 the Company recorded a gross
profit of $1,458,000 compared to a gross profit of $1,441,000 for the same year
ago period, an increase of $17,000 or 1.2%. The over all increase in gross
profit was offset by a decline in gross profit from International Operations
which is the result of the sale PVC. The gross profit for the three months ended
September 30, 1998 at the Company's U.S. facilities increased $371,000 or 34.2%
versus the year-ago period, while gross profit from Canada decreased $354,000
versus the year-ago period. The increase in gross profit at U.S. facilities is
the result of increased sales volume, discussed above, offset by increased
operating costs, as explained below.
<PAGE>
Operating costs for the nine months ended September 30, 1998 were
$16,735,000 versus $16,567,000 for the year-ago period, an increase of $168,000
or 1.0%. There was an increase in operating cost at our U.S. facilities which
was partially offset by a decline in operating costs from International
Operations, which is the result of the sale PVC. The operating costs for the
nine months ended September 30, 1998 at the Company's U.S. facilities increased
$886,000 or 6.4% versus the year-ago period, while operating costs from Canada
decreased $718,000 versus the year-ago period. The increase in operating costs
from our US operations is attributable primarily to an increase in labor costs
of $1,170,000 which is a result of the increased level of sales. These increases
were partially offset by a reduction in depreciation expense of $258,000.
Operating costs as a percentage of revenues of our U.S. Operations for the nine
months ended September 30, 1998 were 80.0% compared with 87.4% for the same
year-ago period.
Operating costs for the quarter ended September 30, 1998 were 5,121,000
versus $5,444,000 for the year-ago period, a decrease of $323,000 or 5.9%. There
was an increase in operating costs at our U.S. facilities which was offset by a
decline in operating costs from International Operations which is the result of
the sale of PVC. The operating costs for the three months ended September 30,
1998 at the Company's U.S. facilities increased $682,000 or 15.4% versus the
year-ago period, while operating costs from Canada decreased $1,005,000 versus
the year-ago period. The increase in operating costs from our US operations is
attributable primarily to an increase in labor costs of $702,000 which is a
result of the increased level of sales. These increases were partially offset by
a reduction in depreciation expense of $66,000. Operating costs, as a percentage
of revenues of our U.S. Operations for the three months ended September 30, 1998
were 77.8% compared with 80.3% for the same year-ago period.
Selling, general and administrative (SG&A), and other expenses for the nine
months ended September 30, 1998 were $3,575,000 as compared to $3,350,000 during
the same year-ago period, an increase of $225,000 or 6.7%. There was an increase
in SG&A of $272,000 at our U.S. facilities while SG&A for our international
operations decreased $47,000 as the result of the sale of PVC discussed above.
The increase of SG&A in the U.S. is primarily attributable to increases in
advertising and promotion, and higher audit, appraisal and loan costs.
SG&A and other expenses for the three months ended September 30, 1998 were
$1,064,000 as compared to $1,125,000 during the same year-ago period, a decrease
of $61,000 or 5.4%. There was an increase in SG&A of $130,000 at our U.S.
facilities while SG&A for our international operations decreased $191,000 as the
result of the sale of PVC discussed above. The increase is primarily
attributable to increases in advertising and promotion, and higher audit,
appraisal and loan costs.
Interest expense for the nine months ended September 30, 1998 was
$1,028,000 compared to $1,170,000 for the same year-ago period, a decrease of
$142,000 or 12.1%. The decrease in interest expense is the result of lower
borrowing in the U.S. and the elimination of the related debt at PVC (discussed
above). Interest expense decreased $100,000 in the U.S. Total U.S. debt was
reduced significantly after May 15, 1998 with the proceeds from the sale of PVC.
Interest expense for the three months ended September 30, 1998 was $298,000
compared to $438,000 for the same year-ago period, a decrease of $140,000 or
32.0%. The decrease in interest expense is the result of lower borrowing in the
U.S. and the elimination of the related debt at PVC (discussed above). Interest
expense decreased $78,000 in the U.S. Total U.S. debt was reduced significantly
after May 15, 1998 with the proceeds from the sale of PVC.
Depreciation expense for the nine months ended September 30, 1998 was
2,760,000 compared to $3,158,000 for the same year-ago period, a decrease of
$398,000 or 12.6%. The depreciation expense reductions were the result of the
sale of PVC (discussed above), and the Company acquiring less equipment than the
amount of equipment that became fully depreciated during the nine months ended
September 30, 1998. The decrease in depreciation expense in the U.S. was
$158,000 for the period.
Depreciation expense for the three months ended September 30, 1998 was
$836,000 compared to $1,201,000 for the same year-ago period, a reduction of
$365,000 or 30.4%. The depreciation expense reductions were the result of the
sale of PVC (discussed above), and the company acquiring less equipment than the
amount of equipment that became fully depreciated during the three months ended
September 30, 1998. The decrease in depreciation expense in the U.S. was $66,000
for the period.
<PAGE>
Liquidity and Capital Resources
The Company and its subsidiaries are operating under a loan agreement with
The CIT Group/Credit Finance, which has been amended and extended to August 3,
2001. The maximum credit under the agreement is $9 million. The amended loan
agreement provides for borrowings up to $5.4 million under the term loan
(limited to 100% of the appraisal value of eligible equipment) and $3.6 million
under the revolving loan (limited to 85% of eligible accounts receivable). At
September 30, 1998 $2,907,000 was available under the revolving loan agreement.
The revolving loan had an outstanding balance of $113,000 at September 30, 1998.
It bears interest at the prime rate plus 1 1/2%, which is payable monthly. The
outstanding balance of the term loan was $2,604,000 at September 30, 1998. The
term loan is payable in monthly installments of $59,000 plus interest at a fixed
annual rate of 10.5% through August 3, 2001. Principal payments are not required
in June, July or August. Future principal payments may be increased if
additional amounts are borrowed under the term facility. The loan agreement
contains automatic renewal provisions for successive terms of two years after
maturity unless terminated as of August 3, 2001, or as of the end of any renewal
period by either party upon at least 60 days written notice.
The Company has an outstanding real estate loan with Bank of America. The
loan is secured by the building where the Company provides film processing and
sound services. The loan agreement matures December 31, 1998 with an option to
extend the maturity an additional year upon payment, to Bank of America, of a
$25,000 loan extension fee prior to December 31, 1998. The outstanding loan
balance as of September 30, 1998 was $1,107,000. The Company anticipates
extending the loan agreement prior to December 31, 1998.
The $1,000,000 of short-term Installment (Fixed Rate) Line of Credit Notes
issued to 35 Lake Avenue, a California limited partnership in July 1997, were
paid in full as of May 15, 1998. James R. Parks, the Company's Chief Executive
Officer, is a partner in 35 Lake Avenue.
The Company's principal source of funds is cash generated by operations.
The Company anticipates that existing cash balances and availability under
existing loan agreements and cash generated from operations will be sufficient
to service existing debt.
Forward-looking statements and comments in this press release are made
pursuant to the Safe-Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements relating to, among other things, the
prospect for the Company to continue to achieve growth in sales, the ability to
reduce overhead and the ability to achieve positive operating results and to
fund existing debt are necessarily subject to risks and uncertainties, some of
which are significant in scope and nature, including risks related to
competition, availability of capital and continuation of sales levels. These
risks and uncertainties are significant in scope and nature, including risks
related to competition, continuation of sales levels and the risks related to
the cost and availability of capital.
Year 2000
The Company has reviewed its systems and communicated with all of its
significant suppliers and equipment and software providers. All of the systems
tested and the majority reviewed with third parties to date are year 2000
compliant. Year 2000 costs are not expected to have a material impact on the
Company's operations. There is no guarantee that the systems of other companies
on which the Company's systems rely will be timely converted and would not have
an adverse effect on the Company's systems.
Item 3. Submission of Matters to a Vote of Security Holders
None
Item 4. Exhibits and Reports on Form 8-K
None
<PAGE>
Signatures
LASER-PACIFIC MEDIA CORPORATION
(Registrant)
Dated: October 29, 1998 /s/James R. Parks
Chairman of the Board
and Chief Executive Officer
Dated: October 29, 1998 /s/Robert McClain
Secretary and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1,000
<CASH> 39
<SECURITIES> 0
<RECEIVABLES> 4,579
<ALLOWANCES> (809)
<INVENTORY> 236
<CURRENT-ASSETS> 4,451
<PP&E> 34,785
<DEPRECIATION> (22,561)
<TOTAL-ASSETS> 19,832
<CURRENT-LIABILITIES> 8,063
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 4,393
<TOTAL-LIABILITY-AND-EQUITY> 19,832
<SALES> 6,579
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<NET-INCOME> 119
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
