<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1997
REGISTRATION NO. 33-49848
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
POST EFFECTIVE
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
LASER TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
IDAHO 3699 84-0970494
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
(303) 649-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
DAN N. GROTHE
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
(303) 649-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
LEONARD E. NEILSON, P.C.
1121 EAST 3900 SOUTH, SUITE C-200
SALT LAKE CITY, UTAH 84124
TELEPHONE: (801) 288-2855
ATTN: LEONARD E. NEILSON, ESQ.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(C)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
LASER TECHNOLOGY, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-1 LOCATION IN PROSPECTUS
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<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........... Forepart of the Registration Statement and
Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges..................... Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price................... Description of Securities
6. Dilution.......................................... Risk Factors; Dilution
7. Selling Security Holders.......................... Selling Stockholders
8. Plan of Distribution.............................. Outside Front and Inside Front Cover Page;
Plan of Distribution; Selling Stockholders
9. Description of Securities to be
Registered....................................... Outside Front Cover Page;
Description of Securities
10. Interests of Named Experts and
Counsel.......................................... Legal Matters; Experts
11. Information With Respect to the Registrant........ Outside Front and Inside Cover Page;
Prospectus Summary; The
Company; Risk Factors; Use of Proceeds;
Dividend Policy; Capitalization; Selected
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business; Management;
Certain Transactions; Principal Stockholders;
Description of Securities; Shares Eligible
for Future Sale; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities...................................... *
</TABLE>
* Not Applicable
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus; (I) one
prospectus to be used in connection with an offering of 1,552,000 shares of
Common Stock underlying the Redeemable Warrants sold previously in the Company's
public offering, 138,000 Underwriter's Units, and 138,000 shares of Common Stock
underlying the Underwriter's Warrants which were previously registered in such
public offering (the "Unit Prospectus"); and (ii) one prospectus to be used in
connection with the sale of 100,000 shares of Common Stock by certain selling
stockholders, 260,000 Redeemable Warrants, and 260,000 shares of Common Stock
underlying the Redeemable Warrants (the "Common Prospectus"). The Unit
Prospectus and the Common Prospectus will be identical in all respects except
for the "alternate pages" for the Common Prospectus included herein which pages
are labeled "Alternate Page for Common Prospectus."
<PAGE>
PROSPECTUS LASER TECHNOLOGY, INC.
1,552,000 SHARES OF COMMON STOCK
$6.00 PER SHARE
_____________________________
138,000 UNDERWRITER'S UNITS
$8.25 PER UNIT
EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK AND
ONE NONREDEEMABLE WARRANT
______________________________
138,000 SHARES OF COMMON STOCK
$9.90 PER SHARE
This Prospectus relates to an offering (the "Offering") by Laser Technology,
Inc. ("LTI" or the "Company") of the following securities (the "Securities"):
(I) 1,552,000 shares of the Company's common stock, $.01 par value ("Common
Stock") issuable upon exercise of the Company's redeemable warrants ("Redeemable
Warrants"); (ii) 138,000 units ("Underwriter's Units") issuable upon exercise of
the Underwriter's Warrants, each Underwriter's Unit consisting of one share of
Common Stock and one nonredeemable Warrant; and (iii) 138,000 shares of Common
Stock issuable upon the exercise of the nonredeemable warrants included in the
Underwriter's Units ("Underwriter's Nonredeemable Warrants"). The Redeemable
Warrants were previously sold as part of Units which were sold to the public by
the Company (the "Unit Offering") through Knickerbocker Securities, Inc. (the
"Underwriter").
There are presently 1,552,000 outstanding Redeemable Warrants, each Redeemable
Warrant entitling the holder thereof to purchase an aggregate of one share of
Common Stock at a price of $6.00 per share until January 11, 1998, and is
redeemable by the Company at a redemption price of $.05 on 30 days prior written
notice, provided that the market price of the Common Stock equals or exceeds
$8.00 per share for the 30 days immediately prior to the notice of redemption.
See "Description of Securities."
The Underwriter's Warrants were issued to the Underwriter as a part of its
compensation in connection with its underwriting of the Unit Offering. Each of
the Underwriter's Units issuable under the Underwriter's Warrants consists of
one share of the Company's Common Stock and one Underwriter's Nonredeemable
Warrant entitling the holder thereof to purchase one share of Common Stock at an
exercise price of $9.90 per share, subject to adjustment in certain events, and
expires on January 11, 1998. Underwriter's Nonredeemable Warrants are not
subject to redemption by the Company.
The public offering prices for the Common Stock offered hereby are equal to
the exercise prices of the Redeemable Warrants, the Underwriter's Warrants, and
the Underwriter's Nonredeemable Warrants. The exercise prices of such
securities were determined by negotiations between the Company and the
Underwriter and are not necessarily related to the Company's asset value, net
worth, or other established criteria of value.
The Company's Common Stock and Redeemable Warrants are traded on the American
Stock Exchange ("AMEX"). On January 15, 1997, the closing prices of the Common
Stock and Redeemable Warrants as reported by the AMEX were $4.37 and $.75
respectively. See "Market Information". There is no public market for the
Underwriter's Warrants or Underwriter's Nonredeemable Warrants.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION".
____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=====================================================================================================================
UNDERWRITING PROCEEDS TO TOTAL
DISCOUNTS AND COMPANY PROCEEDS TO
PRICE TO COMMISSIONS(1) PER SHARE COMPANY(2)
PUBLIC
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share of Common Stock Underlying
Redeemable Warrants..................................... $6.00 $0.00 $6.00 $ 9,312,000
- ---------------------------------------------------------------------------------------------------------------------
Per Underwriter Unit, Consisting of One Share of
Common Stock and Underwriter's
Nonredeemable Warrant................................... $8.25 $0.00 $8.25 $ 1,138,500
- ---------------------------------------------------------------------------------------------------------------------
Per Share of Common Stock Underlying
Underwriter's Nonredeemable Warrants.................... $9.90 $0.00 $9.90 $ 1,366,200
- ---------------------------------------------------------------------------------------------------------------------
Total.................................................... $ -- $0.00 $ -- $11,816,700
=====================================================================================================================
</TABLE>
(1) Does not include additional compensation which may be received by the
Underwriter arising from the Company's agreement that it pay to the
Underwriter a Warrant solicitation fee of 5% of the aggregate gross proceeds
to the Company from exercise of the Redeemable Warrants solicited by the
Underwriter. See "Plan of Distribution."
(2) Does not include the payment of other expenses of the Offering (estimated at
$50,000), payable by the Company.
Concurrently herewith, 100,000 shares of Common Stock, 260,000 Redeemable
Warrants, and 260,000 shares of Common Stock underlying the Redeemable Warrants,
are also being offered by certain selling stockholders ("Selling Stockholders")
by a separate prospectus. Such warrants and shares are not part of this
Offering and the Company will not receive any of the proceeds from the sale of
such securities by the Selling Stockholders. See "Concurrent Registration of
Common Stock."
The date of this Prospectus is __________, 1997.
<PAGE>
The Company intends to furnish to the holders of the Common Stock annual
reports containing audited financial statements with a report thereon by
independent certified public accountants and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.
2
<PAGE>
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PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Unless otherwise indicated, all
information appearing herein has been adjusted to reflect the one for four
reverse stock split of the Common Stock (the "Stock Split") which became
effective on December 22, 1992. Unless the context indicates otherwise, all
references in this Prospectus to "LTI" or the "Company" include its predecessors
and subsidiaries.
THE COMPANY
Laser Technology, Inc. ("LTI" or the "Company") is engaged in the developing,
manufacturing and marketing of laser based measurement instruments using
proprietary technology developed by the Company. The Company's proprietary
technology permits a laser to measure to a non-cooperative, or low reflective
surface, using a very low power source. As a result, the Company's products
operate within the requirements of eye safety as promulgated by the United
States Food and Drug Administration (the "FDA"). Despite a very low power
source, the Company's laser instruments measure more rapidly and at longer
ranges than corresponding conventional devices. The Company has also developed
proprietary software and circuitry which are integral to each of the Company's
products.
Because of enhancements to the Company's existing products, new product
developments and expanding markets for the Company's technology, the Company
currently organizes and markets its products in three categories: Traffic Safety
products, Survey and Mapping products, and Ship Docking Aid Systems.
TRAFFIC SAFETY PRODUCTS
In 1991, the Company developed and commenced commercial manufacturing and
marketing of the LTI 20-20 laser speed detection system to law enforcement
agencies as a proven method of measuring the speed of motor vehicles. In
October 1993, the Company introduced an enhanced version of the LTI 20-20 called
the Marksman which incorporates increased range capability, an auto triggering
system and, as an optional feature, an in-scope display of speed and distance
data. As does its predecessor, the Marksman has several advantages over radar
speed measurement devices. As distinguished from radar measurement devices, the
Marksman can be aimed directly at a specific vehicle, thereby eliminating the
difficulty associated with radar measurement devices of distinguishing one
vehicle from another. Additionally, the Marksman measures speed in approximately
one-third of a second while producing a three foot wide beam at a distance of
1,000 feet which disperses after hitting its target vehicle. Radar guns, on the
other hand, are generally required to track vehicle speed for several seconds in
an attempt to positively identify a vehicle. Radar guns also produce a wider
beam width of approximately 200 to 400 feet at a range of 1,000 feet which can
readily be detected by the targeted vehicle as well as other oncoming vehicles
equipped with radar detectors. The Marksman's ability to determine a specific
vehicle's speed more quickly and its smaller beam which disperses after hitting
its target, does not permit vehicles other than the targeted vehicle to detect
the Marksman's laser beam and, in any event, does not provide the targeted
vehicle sufficient time to slow down in advance of being detected.
In 1995, the Company completed development and began commercial production of
the Laser DigiCam, an automatic video photo laser system which integrates a
camera and associated equipment with the Marksman. The Laser DigiCam monitors
the speed of each vehicle in a specific lane of traffic. When the Laser DigiCam
system detects a speeding vehicle, it takes a digital picture of the vehicle,
prints the speed, time and date on the picture, and the ticket is then mailed to
the violator.
In addition to measuring speed, the Marksman also measures distance. This
feature enables the Marksman to be used for a variety of applications outside of
speed enforcement. The Marksman's ranging capabilities are used by law
enforcement officials for accident investigation and reconstruction. In 1995,
the Company introduced "QuickMap," a system which enhances the use of the
Marksman for this application. QuickMap is a software module integrated to a
data collector which can be used in conjunction with the Marksman to expedite
the collection and processing of data at accident sites and crime scenes.
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3
<PAGE>
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During the latter half of fiscal 1995, the Company also introduced "DBC," a
new optional feature integrated into the Marksman's software capabilities which
is used to measure the distance and/or time between traveling vehicles. In many
parts of the world where the distance between vehicles is monitored closely to
strengthen traffic safety enforcement controls, local governments have the need
to measure the distance and/or time between vehicles. Management believes that
the DBC feature addresses this application and increases the utility and
efficiency of the Marksman.
Traffic engineers and law enforcement officials are also able to conduct and
document traffic speed surveys more efficiently using the Marksman laser speed
detection system than with conventional methods. In 1993, the Company
introduced a statistical compilation software package, "SpeedStat." This
product, when combined with the Marksman, automatically gathers and formats
traffic survey data on a portable computer via a serial cable interface.
During fiscal 1996, the Company introduced "SpeedStat DC," a companion
product to QuickMap in its Traffic Data Collection Module series. Similar to the
Company's original SpeedStat product, SpeedStat DC enables more efficient
collection and compilation of traffic engineering statistics. However, SpeedStat
DC incorporates the same hand-held data collector used in the Company's QuickMap
system replacing the need for a laptop computer, which provides traffic
engineers and law enforcement officials with a more portable and affordable
statistical compilation system.
In 1996, the Company introduced a new generation of lasers for general
distance measurement. The "Impulse" series, while marketed primarily to the
survey and mapping industry, has gained quick acceptance in the accident
investigation segment of the law enforcement community. The Impulse is smaller
in size and weight and lower in cost than the Company's Marksman laser speed
detection system for this application. The Impulse also features an electronic
tilt sensor that provides the operator with more accurate mapping measurements.
Additionally, when linked with the QuickMap traffic data collection module, the
Impulse becomes a fully electronic mapping system.
SURVEY AND MAPPING PRODUCTS
In 1992 LTI began marketing the Criterion 400 (the "Criterion"), a device
originally designed and developed by the Company in collaboration with the
United States Forest Service for use by foresters, to accurately and quickly
measure certain aspects of trees to determine board feet and to survey roads,
bridges, hiking trails and campgrounds. The Criterion is a small, portable
laser measurement system consisting of a laser range finder, an electronic
compass and an electronic inclinometer providing the capabilities of measuring
distance, azimuth and inclination and, therefore, is capable of calculating
heights and X, Y, Z coordinates. The Criterion can record these measurements in
seconds as compared to several minutes using conventional manual methods. Data
captured by the Criterion is maintained in the system in a form ready for
computer downloading, which eliminates errors associated with manually
transcribing numbers in the field for future manipulation.
During the latter half of fiscal 1993, the Company expanded its Criterion
product line to foster new markets by introducing three new models of survey
lasers. The Company's Criterion Series of Survey Lasers offers a logical
progression of measurement capabilities. This product expansion has attracted
new customers within the paper, mapping, environmental, utility and
telecommunication industries.
During fiscal 1994, the Company introduced the Criterion 100TM. Part of the
Criterion Series of Survey Lasers, this system integrates a Criterion ranging
laser with a surveying theodolite. The Criterion 100TM allows the operator to
quickly gather precise distance and angular measurements to remote targets.
The Company currently markets the Criterion 100TM primarily to mining, blasting
and aggregate management companies for gathering rock face profiles and pile
volume measurement applications. Absent the use of the Criterion 100TM, or
comparable measurement equipment, these measurements involve multiple man crews
and often place personnel in hazardous situations. Because the Criterion 100TM
does not require the placement of a reflector on the object to be measured, the
Criterion 100TM eliminates multiple personnel and allows measurements to be made
more expediently and safely.
During fiscal 1996, the Company introduced several new products within its
Survey and Mapping division. The "Criterion AutoScan" survey laser was developed
in collaboration with MDL, a European manufacturer, and is comprised of a
Criterion survey laser mounted to a motorized, computer controlled theodolite
capable of measuring vertical and
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
horizontal angles. The Company also introduced the "GeoLaser," a hand-held
mapping laser, and the "Impulse," a second generation surveying instrument
approximately one-third the size and weight of the Criterion series of survey
lasers.
The Hydro II surveying system (the "Hydro II"), was the first laser-based
measurement system developed by the Company. The Hydro II is a hydrographic
surveying and positioning system designed to survey the bottom topography of a
body of water in order to chart it in preparation for dredging ship channels and
for buoy and pier settings. During fiscal 1994, the Company introduced the
"LaserCom" system, an enhancement to its hydrographic surveying system. The
LaserCom system is designed to transmit data using pulses of light eliminating
the problems associated with radio frequency communication. As the Company
focuses on its more dominant revenue producing product lines, sales of the Hydro
II and LaserCom surveying systems are expected to continue to comprise a small
portion of the Company's overall revenues.
In the latter half of fiscal 1996, the Company also completed development of a
low cost, industrial laser distance measurement sensor. Pursuant to a sales
contract with Telemotive Industrial Controls, Inc., ("Telemotive"), a world
leading manufacturer of radio controls for material handling cranes and
industrial vehicles, the Company developed and manufactures laser sensors for
use in collision avoidance and positioning systems which Telemotive markets
under its brand name.
DAS100 Ship Docking Aid System
During fiscal 1995, the Company completed development and continued market
research activities for the "DAS100", a dock based measurement system that
assists ship captains and pilots in docking maneuvers by measuring a ship's
closing speed and distance and transmitting this data to the bridge of the ship.
Initial marketing of the DAS100 during the second half of fiscal 1995 resulted
in the Company's first order for this system, realized in fiscal 1996, to
furnish laser sensors for ship docking systems to Martin Marietta Corporation,
("MMC"), a subsidiary of Lockheed Martin Corporation.
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5
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<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Securities Offered..................... (1) 1,552,000 shares of Common Stock for $6.00
per share.
(2) 138,000 Underwriter's Units, each Unit
consisting of one share of Common Stock
and one Underwriter's Nonredeemable
Warrant, for $8.25 per Unit.
(3) 138,000 shares of Common Stock underlying
the Underwriter's Nonredeemable Warrants,
for $9.90 per share.
Shares of Common Stock Outstanding:
Before Offering (1).................. 4,999,433 shares
After Offering (2)..................... 6,827,433 shares
AMEX Symbols
Common Stock......................... "LSR"
Redeemable Warrants.................. "LSRW"
Use of Proceeds........................ Net proceeds from the Offering, to the extent
realized, will be used for expansion of
facilities, product development, expansion of
marketing and sales activities, and for working
capital and general corporate purposes. See
"Use of Proceeds."
Risk Factors........................... The Offering involves a high degree of risk as
well as immediate and substantial dilution. See
"Risk Factors" and "Dilution".
</TABLE>
(1) Does not include (a) 356,250 shares of Common Stock issuable upon exercise
of those warrants (the "PRC Warrants") held by Plaza Resources Company
("PRC") at a present exercise price per share of $3.00; (b) 138,000 shares
of Common Stock issuable upon exercise of the Underwriter's Warrants or
138,000 shares of Common Stock issuable upon exercise of the Underwriter's
Nonredeemable Warrants that are part of the Underwriter's Warrants; (C)
260,000 shares of Common Stock issuable upon exercise of Redeemable Warrants
held by the Selling Stockholder and offered by a separate prospectus; (d)
530,000 shares of Common Stock reserved for issuance pursuant to the
Company's Equity Incentive Plan or 120,000 shares of Common Stock reserved
for issuance pursuant to the Company's Non-Employee Directors Plan; (e)
120,000 shares of Common Stock reserved for issuance upon exercise of other
outstanding options granted by the Company to its employees; and (f) 88,768
treasury shares held by the Company. See "Management--Stock Incentive
Program", "--Employee Options", "Principal Stockholders".
(2) Does not include those securities described in (a), (c), (d), (e), and (f)
of Note (1) above.
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6
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SUMMARY FINANCIAL INFORMATION
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
--------------------------------------------------------------
1996 1995 1994 1993 1992(A)
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net sales................................. $9,306,777 $8,225,776 $5,303,299 $4,813,227 $3,880,512
Cost of goods sold........................ 4,241,389 3,864,473 2,527,322 2,021,884 1,761,829
Gross profit.............................. 5,065,388 4,361,303 2,775,977 2,791,343 2,118,683
Royalty and licensing income.............. 401,121 -- -- -- --
Total operating income.................... 5,466,509 4,361,303 2,775,977 2,791,343 2,118,683
Operating expenses........................ 4,058,908 3,431,694 2,766,426 1,794,332 933,220
Income from operations.................... 1,407,601 929,609 9,551 997,011 1,185,463
Interest income (expense) net............. 235,771 157,523 86,555 (83,765) (152,650)
Litigation settlement(b).................. -- -- -- -- 1,100,000
Income (loss) before taxes on income and
extraordinary item...................... 1,643,372 1,087,132 96,106 913,246 (67,187)
Taxes on income (benefit)................. 580,000 383,000 37,000 (52,000) 79,000
Income (loss) before extraordinary item... 1,063,372 704,132 59,106 965,246 (146,187)
Extraordinary item(C)..................... -- -- -- 567,000 --
Net income (loss)......................... 1,063,372 704,132 59,106 398,246 (146,187)
Net income (loss) per common share:
Before extraordinary item............... 0.20 0.14 0.01 0.20 (0.04)
Extraordinary item...................... -- -- -- (0.12) --
Net income (loss)......................... 0.20 0.14 0.01 0.08 (0.04)
Weighted average number of shares
outstanding............................ 5,209,981 4,989,600 5,008,381 4,794,749 3,709,312
</TABLE>
(a) Effective with the period ended September 30, 1992, the Company elected to
begin using a September 30 fiscal year end. Therefore, the period ended
September 30, 1992 represents a nine month short period as compared to the
twelve month fiscal years ended September 30, 1993, 1994, 1995 and 1996.
(b) The loss for the nine months ended September 30, 1992 includes the effect of
a $1,100,000 charge for the settlement of litigation which reduces earnings
by $.30 per share.
(c) As of September 30, 1993, the Company recorded a non-recurring extraordinary
charge of $567,000 as a loss related to the early extinguishment of debt,
net of applicable income tax benefit of $333,000 which reduced earnings by
$.12 per share.
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
SEPTEMBER 30, 1996
----------------------------
ACTUAL PRO FORMA(1)
---------- --------------
<S> <C> <C>
Working capital................................. $ 7,698,674 $16,960,674
Total assets.................................... 10,663,459 19,925,459
Total stockholders' equity...................... 9,692,855 18,954,855
</TABLE>
(1) Adjusted to give effect to the assumed sale of the 1,552,000 shares of
Common Stock offered hereby by the Company and initial application of the
estimated net proceeds therefrom, but does not include any proceeds from the
sale of the Underwriter's Units or the shares of Common Stock issuable upon
exercise of the Underwriter's Nonredeemable Warrants. See "Use of
Proceeds".
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7
<PAGE>
THE COMPANY
The Company was originally organized on September 19, 1950 under the laws of
the State of Idaho as Delmar Mining and Milling Company. From its inception
until 1985, the Company underwent several name changes until December 1985 when
the Company began development of the technology underlying its laser products.
On March 30, 1989, the Company changed its name to Laser Technology, Inc. The
Company has three wholly-owned subsidiaries, Laser Communications, Inc., Laser
Technology, U.S.V.I., and International Measurement and Control Company
The Company's principal executive offices are located at 7070 South Tucson
Way, Englewood, Colorado 80112, and its telephone number is (303) 649-1000.
RISK FACTORS
An investment in the Common Stock offered hereby is speculative in nature and
involves a high degree of risk. In addition to the other information in this
Prospectus, the following factors should be considered carefully in evaluating
the Company and its business.
Forward-Looking Statements. This Prospectus contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, such as the words or phrases "believes," "to be," "will depend,"
"will become" and "plans to" or similar expressions. The Company wishes to
advise readers that the forward looking statements in this prospectus are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements, including, but
not limited to, the following:
Uncertain Market Acceptance. Laser measurement instruments which are used by
law enforcement officials for monitoring vehicle speed, by the survey and
mapping industry including the mining, environmental and telecommunications
industries, and by the shipping industry to aid in ship docking, are relatively
new products which compete with more established products including radar speed
measurement devices and other manual measuring devices. Further, although the
Company has sold Laser DigiCam photo-laser systems to foreign customers, there
can be no assurance that the Laser DigiCam will be successfully marketed or that
it will become widely accepted as an alternative to other speed measurement
devices in the law enforcement community.
Risks Associated with Foreign Sales. Approximately 49% and 44% of the
Company's sales for the fiscal years ended September 30, 1996 and 1995,
respectively, were derived primarily from sales to distributors in foreign
countries. In order to reduce the impact of currency fluctuations, all of the
Company's foreign sales are made in United States dollars. The Company may
experience difficulties in collecting accounts receivable and in obtaining or
enforcing judgments with respect to receivables outside the United States.
However, the Company does use letters of credit and wire transfers in many of
its credit arrangements with its foreign distributors to reduce the risk of
uncollected accounts receivable. A strengthening in the dollar relative to the
currencies in those countries the Company does business in might require the
Company to increase the prices of its products as stated in those currencies,
adversely affecting the Company's sales in those countries. To the extent the
Company does not raise its prices to reflect a change in exchange rates, the
profitability of the Company's business in those markets would be adversely
affected. In the past, there have been significant fluctuations in the exchange
rates between the dollar and the currencies in those countries the Company does
business in. Further, foreign countries may impose limitations in the amount of
currency that may be withdrawn from such countries. Such limitations, if
imposed, could adversely affect the Company's liquidity and business. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Technological Change and Competition. The laser technology industry is
characterized by rapid and significant technological change. Many companies are
engaged in research and development with respect to laser technology. There can
be no assurance that the Company's competitors will not develop new technologies
and products that are more effective and efficient than the Company's products
or that the Company's technology and products will not be rendered obsolete by
such developments. The Company is aware of at least three other companies that
are marketing a laser speed measurement device which competes with the Marksman.
Kustom Signal, Inc. is marketing a laser speed measurement device pursuant to a
license from the developer, Laser Atlanta, Inc. An Austrian company, Riegl, and
a German company, Jenoptic, also market laser speed measurement devices. Laser
Atlanta, Inc. is also marketing a laser
8
<PAGE>
measurement device designed specifically for surveying applications. Management
believes that it may compete in international markets with instruments developed
and marketed by Riegl,, an Austrian company, and Leica, a Swiss company. In
addition, management expects that the Laser DigiCam photo laser system competes
in similar markets as photo-radar systems. Management is also aware of a proto-
type camera system similar in functionality to the Laser DigiCam being developed
by Kustom Signals, Inc. Further, the Company is aware of several companies that
provide ship docking aid systems, including Marimatech A.S., Koden Electronics
Company and Autronica A.S., that compete with the DAS100. Management also
believes that its Industrial Laser Distance Measurement Sensors will compete
with traditional measuring devices including radar and RF based systems, and in
certain international markets, primarily Europe, with laser distance
measurements instruments developed and marketed by Riegl. There can be no
assurance that other companies with greater financial and technological
resources will not develop measurement devices with better capabilities than
those of the Company's. See "Business--Technological Change and Competition".
PRC's Right to Purchase Marksman at Cost. Under a previously existing loan
agreement, the Company granted to PRC a right expiring on October 24, 2001 to
purchase in any consecutive twelve month period up to the lesser of 25% or 100
units of the finished product of the Marksman product line at cost for donation
by PRC to law enforcement agencies selected by PRC. PRC's right to purchase
Marksmans at cost, if exercised to any substantial degree, may adversely impact
the Company's profitability. Additionally, PRC's donation of such units to law
enforcement agencies may be competitive with the Company's sales efforts to such
agencies. PRC did not purchase any units under this agreement during the past
fiscal year. See "Business--Agreement with Plaza Resources Company."
Dependence on Key Personnel. The Company's future success is dependent on
certain key management and engineering personnel. The loss of key personnel or
the inability to attract and retain highly qualified personnel could adversely
affect the Company's business. The Company faces competition for such personnel
from other companies and organizations. There can be no assurance that the
Company will be successful in hiring or retaining qualified personnel. The
Company has obtained keyman insurance on the life of Jeremy Dunne, Vice
President and Chief Engineer of the Company, of which the Company is the sole
beneficiary, in the amount of $2,000,000. The Company has entered into
employment agreements with each of David Williams, President of the Company and
Mr. Dunne which include non-competition and secrecy provisions. Certain other
key personnel of the Company have entered into non-competition and secrecy
agreements with the Company. See "Management--Employment Agreements".
Uncertainty of Protection Afforded by Patents and Proprietary Rights. As of
September 30, 1996, the Company has filed sixteen patent applications related to
its various product lines in order to protect its current technology. To date,
seven of these patents have been issued. One patent relates to the Criterion
400 and provides coverage of the Criterion in forestry applications that include
height and diameter measurement of trees. Two patents have been issued on the
Marksman laser speed detection system. A fourth patent relates to a mechanical
interface between the Criterion and an electronic theodolite enabling the
instruments to remain vertically aligned while the instruments are adjusted.
During fiscal 1996, a fifth patent was issued relating to the Company's Survey
and Mapping product line which incorporates the proprietary "Walkabout" software
that enables field data collection in the G.I.S. mapping process. The Company
was also granted a patent on its technology providing the capability of
transmitting data using pulses of light generated from the Company's laser
range-finders. A seventh patent has been issued to the Company to protect its
proprietary technology related to the LyteSpeed developed for Bushnell There
can be no assurance that any remaining patent applications relating to the
Company's products or technology will result in patents being granted or that,
if granted, such patents will afford protection against competitors with similar
technology. Also there can be no assurance that the Company will have the
financial resources necessary to enforce any patent rights it may hold.
Although the Company is not aware of any infringement claim against it, in the
event that a future claim against the Company is successful, it may be necessary
for the Company to obtain licenses to such patents or to other patents or
proprietary technology. There can be no assurance that the Company will be able
to obtain any such licenses on commercially reasonable terms. Any disclosure of
such technology or development of substantially equivalent technology could
result in increased competition that might materially and adversely affect the
Company's revenues and cost of sales.
The Company attempts and will attempt to protect its proprietary technology by
relying on trade secret laws and non-disclosure and confidentiality agreements
with its employees who have access to its proprietary technology. Despite these
protections, no assurance can be given that others will not independently
develop or obtain access to such technology or that the Company's competitive
position will not be adversely affected thereby. See "Business--Patents and
Trade Secrets".
9
<PAGE>
Product Liability. The Company may be exposed to potential product liability
claims by users of the Company's products. To date, there have been no such
claims against the Company. The Company currently maintains product liability
insurance limited to $1,000,000 coverage per occurrence and $2,000,000 in the
aggregate with a $5,000,000 umbrella. Although the Company believes such
coverage is adequate, there can be no assurance that such insurance is in an
amount sufficient to cover all possible liabilities, that the present level of
coverage will be available in the future at a reasonable cost, or that a product
liability claim would not materially adversely affect the business or financial
condition of the Company.
Government Regulation. The Company's laser products emit a laser light beam
and as such are regulated by the FDA and subject to approval by foreign
governments. FDA regulations impose eye safety requirements on the Company's
products and governments of some foreign countries have similar regulations.
Although management believes that the Company is in compliance with all
applicable regulations, to the extent that these regulations change, there can
be no assurance that the Company can remain in compliance at a reasonable cost.
Failure to comply with such regulations may have a material adverse effect on
the Company. Due to FDA involvement in international standardization efforts
for laser products with the International Electrotechnical Commission ("IEC"),
Management is aware of certain changes under consideration by the FDA that may
affect current FDA regulated emission limits of Class 1 pulsed lasers.
Management does not believe that such proposed changes will impact the Company's
sales or results of operations. However, there is no assurance of this.
Further, although the Marksman has been accepted for use by numerous state,
local and foreign governments, there can be no assurance that it will continue
to be accepted in the future, or that a government or court system will not
disallow the use of laser instruments as an accurate measurement of speed. See
"Business--Government Regulation."
National Standard for Laser Speed Measurement Devices. The Company believes
that many law enforcement agencies throughout the United States are hesitant to
purchase speed enforcement products which are not listed on the International
Association of Chiefs of Police ("IACP") Approved Products List. This list
consists of those speed enforcement products which have passed a national
standard established by the National Highway Traffic Safety Administration
("NHTSA"). In 1995, the National Institute of Standards and Technology ("NIST")
in conjunction with the NHTSA, completed a national standard for performance
specifications for laser speed measurement devices, such as the Marksman, and
established a laboratory at the University of California-Davis for testing of
laser speed measurement devices. The Company submitted a Marksman unit for
testing in October 1995 and, in April 1996, the Marksman was certified by the
IACP and subsequently placed on the IACP Approved Products List. Management
believes that because the Marksman has been placed on the IACP Approved Products
List, federal funds from the United States Department of Transportation may
become more accessible for law enforcement agencies to purchase the Marksman.
However, there can be no assurance that federal funds will be available to law
enforcement agencies to purchase the Marksman.
Dependence on Significant Customers. For the fiscal year ended September 30,
1996, 24% of the Company's sales were to state and local municipalities. Sales
to the Company's domestic Survey and Mapping dealer network comprised 12% of
sales. Additionally, the Company's foreign distributors accounted for 47% of
sales, of which the Company's European and Asian distributors comprised 36%
collectively. One customer, Visi Trading (m) SDN BHD, accounted for 12% of
sales. A substantial reduction in orders from its principal customers and the
inability to attract orders from new customers could have a material adverse
effect on the Company's operations and financial condition. See "Business--
Marketing, Distribution and Customers."
Control of the Company. Immediately following completion of this Offering
and assuming all Redeemable Warrants, Underwriter's Warrants and Underwriter's
Nonredeemable Warrants are exercised and shares of Common Stock are issued, the
Company's executive officers, directors and other principal stockholders will
beneficially own approximately 21.8% of the Company's outstanding Common Stock.
These stockholders may be able to effectively control the outcome of all issues
submitted to a vote of stockholders, including the election of the Company's
directors. See "Principal Stockholders" and "Description of Securities."
Dilution. Purchasers in this Offering will incur immediate and substantial
dilution in that the net tangible book value of each outstanding share of Common
Stock immediately after the Offering will be significantly less than the public
offering price of the Common Stock. See "Dilution."
No Dividends. The Company has not paid any cash or other dividends or made
distributions on its Common Stock and the Company does not anticipate paying
cash dividends or making distributions in the foreseeable future. See "Dividend
Policy."
10
<PAGE>
Shares Eligible for Future Sale. Sale of the Common Stock in the public
market by existing stockholders after this Offering could materially adversely
affect the market price of the Company's securities. Upon completion of this
Offering, in addition to the Common Stock sold in this Offering, approximately
3,720,281 shares of the Common Stock currently outstanding will be tradeable
without restriction commencing the date at this Prospectus. An additional
1,279,152 shares of Common Stock are presently eligible to be sold subject to
the volume and other restrictions under Rule 144 ("Rule 144") of the Securities
Act of 1933, as amended (the "Act"). Actual sales or the prospect of sales by
the present stockholders of the Company, or by future holders of restricted
securities under Rule 144 or otherwise, may, in the future, have a depressive
effect upon the price of the Common Stock. See "Principal Stockholders,"
"Shares Eligible for Future Sale" and "Underwriting."
Holders of the Redeemable Warrants including those held by the Selling
Stockholders, but excluding 138,000 Nonredeemable Warrants issuable to the
Underwriter, will be entitled to purchase an aggregate of 1,812,000 additional
shares of Common Stock upon exercise of the Redeemable Warrants until January
11, 1998, provided that the Company satisfies certain securities registration
requirements with respect to the securities underlying the Redeemable Warrants.
Any and all shares of Common Stock purchased upon exercise of the Redeemable
Warrants will be freely tradeable, provided such registration requirements are
met.
Quarterly Fluctuations in Net Sales. The Company experiences quarterly
fluctuations in its net sales due to, among other factors, the placement of
typically large orders for the Company's Traffic Safety products, primarily the
Marksman laser speed detection system and the Laser DigiCam, by virtue of law
enforcement budgetary practices. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Management's Discretion Over Use of Proceeds. Management intends to apply
the majority of net proceeds from this Offering to working capital and other
general corporate purposes. Management will be permitted to use the net
proceeds for other purposes as deemed prudent and necessary by the Board of
Directors. Accordingly, the Company's management will have broad discretion as
to the application of such proceeds. See "Use of Proceeds."
11
<PAGE>
DILUTION
The net tangible book value of the Company as of September 30, 1996 was
$9,434,682 or $1.88 per share of Common Stock. "Net tangible book value" per
share of Common Stock represents the tangible assets of the Company less total
liabilities, divided by the number of shares of Common Stock outstanding prior
to this Offering. After giving effect to the exercise of the Redeemable
Warrants, and without taking into account the exercise of the Underwriter's
Warrants or the Underwriter's Nonredeemable Warrants or any other change in the
net tangible book value of the Company subsequent to September 30, 1996 and
assuming no solicitation fee is paid, the pro forma net tangible book value of
the Company at September 30, 1996 would have been $18,696,682 or $2.85 per
share. This represents an immediate increase in the net tangible book value of
$.97 per share to existing stockholders and an immediate dilution of net
tangible book value of $3.15 to those new investors exercising the Redeemable
Warrants ("New Investors"). The following table illustrates this dilution on a
per Unit basis:
<TABLE>
<CAPTION>
SHARES UNDERLYING
REDEEMABLE
WARRANTS
-----------------
<S> <C>
Public Offering Price................................. $6.00
Net tangible book value per share before exercise of
Redeemable Warrants.................................. $1.88
Increase attributable to New Investors................ .97
-----
Pro Forma net tangible book value per share after
exercise of:
Redeemable Warrants.................................. 2.85
-----
Dilution to New Investors............................. $3.15 (53%)
===== ---
</TABLE>
The following table sets forth as of September 30, 1996 the number of shares
of Common Stock purchased for cash from the Company by all persons during the
past five years, the total consideration paid and the average price per share
paid by these existing stockholders and by New Investors in this Offering and
before deduction of underwriting discounts and offering expenses.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- --------------------------------
AVERAGE
PRICE
NUMBER PERCENT(1) AMOUNT PERCENT PER SHARE
-------- ---------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders acquiring shares for
cash within past five years................ 1,711,833 25% $8,099,791 47% $4.73
New Investors............................... 1,552,000 23% 9,312,000 53% 6.00
</TABLE>
______________
(1) Percent of total shares outstanding following the Offering.
12
<PAGE>
USE OF PROCEEDS
To the extent all of the Redeemable Warrants are exercised, the Company will
receive aggregate net proceeds of approximately $9,262,000. Net proceeds assume
expenses associated with this Offering of $50,000 and further assume that no
solicitation fee is paid.
Management anticipates that all net proceeds will be added to the Company's
working capital although, depending upon the total amount of proceeds realized,
management may use a portion of the funds for expansion of manufacturing
facilities, product development, and expansion of marketing and sales
activities. If the maximum amount is realized, it is anticipated that the
estimated net proceeds will be used substantially as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT NET PROCEEDS
------------- -------------
<S> <C> <C>
Expansion of manufacturing facilities, including expanded testing
facilities and increased rents (See "Business--Facilities")............... $ 500,000 5 %
Product development, including capital equipment and additional engineering
personnel (See "Business--Employees")..................................... 2,000,000 22 %
Expansion of marketing and sales activities, including advertising,
additional sales staff and implementing telemarketing program
(See "Business--Marketing, Distribution and Customers").................... 4,000,000 43 %
Working capital, including inventory financing and other general
corporate purposes......................................................... 2,762,000 30 %
---------- ----
Total............................................................. $9,262,000 100 %
========== ====
</TABLE>
MARKET INFORMATION
LTI Common Stock ("LSR") and Redeemable Warrants ("LSRW") are traded on the
AMEX. The following table sets forth the range of high and low bid prices of
the Common Stock for each quarterly period since the first quarter of 1994 as
reported by the AMEX. All prices set forth below are based on a calendar year.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994
First Quarter..................... $6.75 $4.88
Second Quarter.................... 4.38 4.13
Third Quarter..................... 4.50 3.88
Fourth Quarter.................... 3.19 3.00
1995
First Quarter..................... $5.12 $2.56
Second Quarter.................... 6.44 4.18
Third Quarter..................... 6.25 4.75
Fourth Quarter.................... 5.75 3.25
1996
First Quarter..................... $7.62 $3.87
Second Quarter.................... 8.44 5.50
Third Quarter..................... 6.69 4.12
Fourth Quarter.................... 4.56 3.50
1997
First Quarter(1).................. $5.12 $4.37
</TABLE>
(1) Through January 15, 1997.
13
<PAGE>
As of September 30, 1996, there were approximately 641 holders of record of
the Common Stock, which figure does not take into account those shareholders
whose certificates may be held in the name of broker-dealers and/or nominees. On
January 15, 1997, the closing price of the Common Stock as quoted on the AMEX
was $4.37.
DIVIDEND POLICY
The Company has not declared or paid cash dividends or made distributions in
the past, and the Company does not anticipate that it will pay cash dividends or
make distributions in the foreseeable future. The Company currently intends to
retain earnings to finance its operations.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996, and the pro forma capitalization giving effect to the
exercise of the Redeemable Warrants and without taking into account the exercise
of the Underwriter's Warrants or the Underwriter's Nonredeemable Warrants and
the receipt of the estimated proceeds therefrom, less estimated offering
expenses payable by the Company. See "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL PRO FORMA
----------- -----------
<S> <C> <C>
Long-term debt (excluding current maturities)........................... $ -- $ --
----------- -------------
Stockholders' equity:
Common Stock, $.01 par value, 25,000,000 shares
authorized and 5,088,201 shares issued(1), and 6,640,201 issued pro
forma................................................................ 50,882 66,402
Additional paid-in capital............................................ 9,623,980 18,870,460
Less treasury stock, at cost (88,768 shares).......................... (17,535) (17,535)
Retained earnings..................................................... 35,528 35,528
---------- -----------
Total stockholders' equity............................................ 9,692,855 18,954,855
---------- -----------
Total capitalization.................................................. $9,692,855 $18,954,855
========== ===========
</TABLE>
(1) Includes 88,768 treasury shares held by the Company, but does not include
(a) 356,250 shares of Common Stock issuable upon exercise of the PRC
Warrants at a present exercise price per share of $3.00, (b) 138,000 shares
of Common Stock issuable upon exercise of the Underwriter's Warrants and
138,000 shares of Common Stock issuable upon exercise of the Underwriter's
Nonredeemable Warrants, (c) 530,000 shares of Common Stock reserved for
issuance pursuant to the Company's Equity Incentive Plan or 120,000 shares
of Common Stock reserved for issuance pursuant to the Company's Non-Employee
Directors Plan, (d) 120,000 shares of Common Stock reserved for issuance
upon exercise of other outstanding options granted by the Company to its
employees, and (e) 160,000 shares of Common Stock reserved for issuance upon
exercise of the Redeemable Warrants included in the Laser Partners Units.
See Business, "Agreement with Plaza Resources Company," "Management--Stock
Incentive Program," "--Employee Options."
14
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below have been derived
from the Company's consolidated financial statements which have been audited by
BDO Seidman, LLP, independent certified public accountants. This selected
consolidated financial data set forth below should be read in conjunction with
the Company's consolidated financial statements and notes thereto, with
Management's Discussion and Analysis of Financial Condition, and with the other
financial information of the Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEARS ENDED
------------------------------------------------------------
1996 1995 1994 1993 1992 (A)
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales............................. $9,306,777 $8,225,776 $5,303,299 $4,813,227 $3,880,512
Cost of goods sold.................... 4,241,389 3,864,473 2,527,322 2,021,884 1,761,829
Gross profit.......................... 5,065,388 4,361,303 2,775,977 2,791,343 2,118,683
Royalty and licensing income.......... 401,121 -- -- -- --
Total operating income................ 5,466,509 4,361,303 2,775,977 2,791,343 2,118,683
Operating expenses.................... 4,058,908 3,431,694 2,766,426 1,794,332 933,220
Income from operations................ 1,407,601 929,609 9,551 997,011 1,185,463
Interest income (expense) net......... 235,771 157,523 86,555 (83,765) (152,650)
Litigation settlement (b)............. -- -- -- -- 1,100,000
Income (loss) before taxes on income
and extraordinary item............... 1,643,372 1,087,132 96,106 913,246 (67,187)
Taxes on income (benefit)............. 580,000 383,000 37,000 (52,000) 79,000
Income (loss) before extraordinary.... 1,063,372 704,132 59,106 965,246 (146,187)
Extraordinary item (c)................ -- -- -- 567,000 --
Net income (loss)..................... 1,063,372 704,132 59,106 398,246 (146,187)
Net income (loss) per common share:
Before extraordinary item.......... .20 .14 .01 .20 (.04)
Extraordinary item................. -- -- -- (.12) --
Net income (loss).................. .20 .14 .01 .08 (.04)
Weighted average number of
shares outstanding................ 5,209,981 4,989,600 5,008,381 4,794,749 3,709,312
- --------------
</TABLE>
(a) Effective with the period ended September 30, 1992, the Company elected to
begin using a September 30 fiscal year end. Therefore, the period ended
September 30, 1992 represents a nine month short period as compared to the
twelve month fiscal years ended September 30, 1993, 1994, 1995 and 1996.
(b) The loss for the nine months ended September 30, 1992 includes the effect of
a $1,100,000 charge for the settlement of litigation which reduced earnings
by $.30 per share.
(c) During fiscal 1993, the Company recorded a non-recurring charge of $567,000
as a loss related to the early extinguishment of debt, net of applicable
income tax benefit of $333,000 which reduced earnings by $.12 per share.
<TABLE>
<CAPTION>
BALANCE SHEET DATA
1996 1996 1995 1994 1993 1992
----------- -------------- ----------- ----------- ----------- ------------
ACTUAL PRO FORMA(1)
<S> <C> <C> <C> <C> <C> <C>
Working capital........................... $ 7,698,674 $16,960,674 $7,834,363 $7,247,133 $7,309,987 $ 604,954
Total assets.............................. 10,663,459 19,925,459 8,998,295 8,366,463 8,011,845 3,289,372
Short-term debt, including current
maturities of long-term debt............ -- -- -- 59,517 34,481 186,425
Long-term debt less current
maturities.............................. -- -- -- 150,075 27,379 840,545
Total stockholders' equity................ 9,692,855 18,954,855 8,589,692 7,885,560 7,761,495 479,128
</TABLE>
(1) Adjusted to give effect to the assumed sale of the 1,552,000 shares of
Common Stock offered hereby by the Company and initial application of
estimated net proceeds therefrom, but does not include any proceeds from the
sale of the Underwriter's Units or the shares of Common Stock issuable upon
exercise of the Underwriter's Nonredeemable Warrants. See "Use of
Proceeds."
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets," and SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles be reported at the lower of the carrying amount or
their estimated recoverable amount and the adoption of this statement by the
Company is not expected to have an impact on the Company's financial statements.
SFAS No. 123 encourages the accounting for stock-based employee compensation
programs to be reported within the financial statements on a fair value based
method. If the fair value based method is not adopted, then the statement
requires pro-forma disclosure of net income and earnings per share as if the
fair value based method had been adopted. The Company has not yet determined
how SFAS No. 123 will be adopted nor its impact on the Company's financial
statements. Both statements are effective for years beginning after December
15, 1995.
RESULTS OF OPERATIONS
The following table sets forth, for the three most recent fiscal years, the
percentage relationship to net sales of principal items in the Company's
Statement of Operations. It should be noted that percentages discussed
throughout this analysis are stated on an approximate basis.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net sales............................................ 100 % 100 % 100 %
Cost of goods sold................................... 46 47 48
---- ---- ----
Gross profit......................................... 54 53 52
Royalty and licensing income......................... 4 -- --
---- ---- ----
Total operating income............................... 58 53 52
Operating expenses................................... 44 42 52
---- ---- ----
Income from operations............................... 14 11 --
Interest income, net................................. 3 2 2
Taxes on income...................................... 6 4 1
---- ---- ----
Net income........................................... 11 % 9% 1 %
==== ==== ====
</TABLE>
The following table provides a breakdown of the net sales and respective
percentages of net sales of the Company's various product lines. Revenues
realized from sales of the Company's less significant revenue producing product
lines are classified as "Other" for presentation purposes.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
TRAFFIC SAFETY...................................... $5,259,346 $5,087,676 $3,341,078
Percentage of revenues.............................. 57% 62% 63%
SURVEY AND MAPPING.................................. 3,175,031 2,991,549 1,697,056
Percentage of revenues.............................. 34 36 32
DAS100 SHIP DOCKING AID SYSTEM...................... 763,930 -- --
Percentage of revenues.............................. 8 -- --
OTHER............................................... 108,470 146,551 265,165
Percentage of revenues.............................. 1 2 5
Total Revenues...................................... $9,306,777 $8,225,776 $5,303,299
========== ========== ==========
</TABLE>
16
<PAGE>
Fiscal Year Ended September 30, 1996 Compared to Fiscal Year Ended September
30, 1995
Net sales for the fiscal year ended September 30, 1996 ("1996") rose
approximately 13% to $9,306,777 from $8,225,776 for the fiscal year ended
September 30, 1995 ("1995"). Initial sales of the Company's DAS100 Ship
Docking Aid System and increased volume sales of the Company's Traffic Safety
and Survey and Mapping products comprised the majority of the increase in sales
in 1996 as compared to 1995.
As a result of initial revenues realized from sales of the Company's DAS100
Ship Docking Aid Systems in fiscal 1996, sales of the Company's Traffic Safety
products, as a percentage of net sales, were 57% in 1996 as compared to 62% in
1995, and sales of the Company's Survey and Mapping products, as a percentage of
net sales, were 34% in 1996 compared to 36% in 1995. Management anticipates that
sales of its DAS100 will greatly fluctuate between financial periods due to the
specialized nature of the system.
Sales of the Company's Survey and Mapping products increased 6% in 1996 as
compared to 1995, primarily due to the introduction of the Company's Impulse
Series of Survey Lasers during the fourth quarter of fiscal 1996.
Net sales of the Company's Traffic Safety products increased 3% in 1996
compared to 1995. Increased volume sales of the Company's Laser DigiCam photo
laser system internationally offset a decrease in hand-held Marksman sales.
Domestic hand-held Marksman sales declined slightly during the third quarter of
1996 due to what Management believes is the effect of government purchasing
deferrals related to prolonged delays in the International Association of Chiefs
of Police ("IACP") standardization tests of laser-based technology for use in
speed enforcement.
In April 1996, the Company's hand-held Marksman laser speed detection system
was certified by the IACP to meet the federal standard for laser speed detection
devices. Upon receiving IACP certification, the Marksman was subsequently placed
on the IACP approved products list. This list is comprised of speed enforcement
products which have passed the national standard. Management anticipates that
placement on the IACP Approved Products List will allow federal funds from the
United States Department of Transportation to become more accessible for law
enforcement agencies to purchase the Marksman. Because the approval occurred so
late in the year, Management believes that law enforcement agencies are
deferring purchases of the Company's Marksman hand-held laser speed detection
system until their next budget cycle in order to purchase them with the aid of
federal funding, although there is no assurance of this.
International sales comprised 49% in 1996 compared to 44% in 1995 due to
increased foreign sales of the Company's Laser DigiCam photo laser system and
Criterion and Impulse survey lasers. Historically, the Company experiences
quarterly fluctuations in it's foreign sales due to the placement of typically
large orders for the Company's Marksman and Laser DigiCam Traffic Safety
products. Management anticipates that foreign sales of its Traffic Safety and
Survey and Mapping product lines will continue to comprise a significant portion
of its revenues. The Company currently requires that all international sales be
paid for with U.S. dollars.
Cost of goods sold increased 10% to $4,241,389 in 1996 from $3,864,473 in 1995
due to increased sales levels. As a percentage of net sales, cost of goods sold
decreased slightly to 46% in 1996 from 47% in 1995, thus improving the Company's
gross profit margin, as a percentage of net sales, to 54% in 1996 compared to
53% in 1995. The increase in gross profit margins in 1996 resulted primarily
from higher gross margins on initial sales of the DAS100. Management recognizes
that competitive pressure may affect the Company's gross profit margins.
However, such impact from reduced selling prices is expected to be offset by
reduced manufacturing costs through second generation instrumentation and a
better application of fixed costs as the Company's sales volumes increase. The
Company anticipates that gross profit margins from international markets will
remain consistent with those realized domestically in most international markets
for the Company's current product lines. However, management believes that gross
profit margins on high volume international sales of its Marksman laser speed
detection systems may be less than those realized domestically due to reduced
selling prices on high volume orders. The Company currently minimizes the effect
of currency fluctuations by requiring payment in U.S. funds.
During fiscal 1996, the Company began receiving royalty income related to its
agreement with Bushnell Corporation ("Bushnell") from sales of the Lytespeed
laser range finder developed by the Company in cooperation with Bushnell in
1994. Pursuant to this agreement, the Company receives running royalties on
designated net sales of the Lytespeed product developed under the agreement and
received development fees for the initial technology development as well as
17
<PAGE>
supplemental fees related to production engineering of the Lytespeed. The
Company began realizing royalty income pursuant to this agreement during the
first quarter of fiscal 1996. As of September 30, 1996, the Company has received
royalty income from Bushnell of approximately $341,000. Management believes that
Royalties received pursuant to this agreement will continue to have a positive
impact on the Company's results of operations, although there is no assurance of
this. See "Royalty and Licensing Income."
In September 1996, the Company licensed a patent to a competitor, Kustom
Signals, Inc., ("Kustom") and Kustom's supplier of its laser speed measurement
devices, LaserCraft, Inc., ("LaserCraft"). Pursuant to the Licensing
Agreement, the Company receives licensing fees on designated sales on a per unit
basis, for each device sold by Kustom and LaserCraft, excluding units sold by
LaserCraft to Kustom for subsequent resale. As of September 30, 1996, the
Company has received advanced licensing fees for an undisclosed number of units
pursuant to this agreement in the amount of $60,000. See "Royalty and Licensing
Income, and Business--Patent Licensing Agreements."
Operating expenses increased 18% to $4,058,908 in 1996 from $3,431,694 in
1995. As a percentage of net sales, 1996 operating expenses rose slightly to 44%
compared to 42% in 1995. Increased compensation expense due to increased
personnel requirements, primarily within the Company's marketing and research
and development areas, and higher marketing expenses related to increased sales
activities, including higher advertising and travel expenses, comprised the
majority of the increase in total operating expenses in 1996 as compared to
1995. The Company anticipates that operating expenses will continue to increase
to support the Company's continued growth.
As a result of increased sales and the addition of royalty and licensing
income, the Company achieved a 51% increase in income from operations to
$1,407,601 in 1996 compared to operating income of $929,609 for the same period
a year ago. Combined with income earned on investments of $235,771 and $157,523
in 1996 and 1995, respectively, the Company realized pretax income of $1,643,372
in 1996 compared to pretax income of $1,087,132 in 1995. After taxes on income,
the Company realized net income of $1,063,372, or $.20 per share, in 1996,
compared to $704,132, or $.14 per share, in 1995.
Fiscal Year Ended September 30, 1995 Compared To Fiscal Year Ended September
30, 1994
Net sales for the fiscal year ended September 30, 1995 ("1995") rose
approximately 55% to $8,225,776 from $5,303,299 for the fiscal year ended
September 30, 1994 ("1994") due to a continued overall increase in sales volumes
of the Company's Traffic Safety and Survey and Mapping product lines both
domestically and internationally. Total Survey and Mapping sales rose 76% in
1995 as compared to 1994, as a result of the Company's expansion of its domestic
dealer network and international distribution channels. Total Traffic Safety
revenues increased 52% in 1995 over 1994 due to increased sales volumes both
domestically and internationally, including initial sales of the Company's Laser
DigiCam photo laser system. Due to increased sales growth in all of the
Company's product lines, as a percentage of net sales Survey and Mapping sales
rose to 36% in 1995 as compared to 32% in 1994. The Company's Traffic Safety
sales, as a percentage of net sales, remained relatively consistent in both
fiscal years comprising approximately 62% of the Company's overall revenues.
As a result of increased sales levels, cost of goods sold increased 53% to
$3,864,473 in 1995 from $2,527,322 in 1994. Cost of goods sold as a percentage
of net sales decreased slightly from 48% in 1994 to 47% in 1995, so the
Company's gross profit margin was 52% in 1994 and 53% in 1995.
Operating expenses increased approximately 24% to $3,431,694 in 1995 from
$2,766,426 in 1994 primarily due to increased compensation expense related to
increased personnel and increased advertising and travel expense related to
increased sales levels. However, as a percentage of net sales, the Company's
overall operating expenses fell approximately 10% to 42% in 1995 from 52% in
1994 due to a better absorption of the Company's fixed costs over a larger
revenue base and the slowing of the Company's marketing expenditures centered
around building the Company's marketing infrastructure in 1995 as compared to
1994.
Income from operations was $929,609 in 1995 compared to income from operations
of $9,551 in 1994, the result of increased sales and a better application of
fixed costs over a larger revenue base. Combined with income earned on
investments net of interest expense of $157,523 in 1995 compared to $86,555 in
1994, the Company had pretax income of $1,087,132 in 1995 compared to 1994
pretax income of $96,106. After taxes on income of $383,000 and $37,000 for
18
<PAGE>
1995 and 1994, respectively, net income rose to $704,132, or $.14 per share, in
1995 from $59,106, or $.01 per share, for the comparable 1994 period.
ROYALTY AND LICENSING INCOME
In 1994, the Company entered into an agreement with Bushnell Corporation
("Bushnell"), formerly the Sports Optics Division of Bausch and Lomb, whereby
the Company agreed to develop and grant to Bushnell worldwide, exclusive
licensing rights for the manufacture and marketing of a consumer range finder
developed by the Company in cooperation with Bushnell for sporting applications.
The Company retains all ownership of copyrights, patents and trade secrets of
the technology and the right to pursue markets outside of the sports optics
area. Pursuant to the Company's agreement with Bushnell, the Company receives a
running royalty on designated net sales of each product developed under this
agreement and has received development fees for the initial technology
development as well as supplemental fees related to production engineering of
this product. The Company retains the right to terminate the agreement if the
royalties received by the Company do not equal or exceed certain effective
royalty obligations as defined by the agreement. As of September 30, 1996, the
Company received $341,000 in royalties related to this agreement.
In September 1996, the Company agreed to license to Kustom Signal, Inc.,
("Kustom"), and LaserCraft, Inc., ("LaserCraft") a patent relating to the
Company's Marksman hand-held laser speed detection system (the "Patent"). In
fiscal 1996, the Company gave notice to Kustom that it was potentially
infringing the Patent by making and selling laser-based speed measurement
devices manufactured for them by LaserCraft. While Kustom and LaserCraft have
not acknowledged infringement of the Patent, they entered into the License
Agreement, whereby the Company granted Kustom and LaserCraft the nonexclusive
rights to manufacture and sell laser-based speed measurement devices
incorporating features covered by claims of the Patent. In consideration for
the License Agreement, the Company received a prepayment of licensing fees for a
predetermined number of licensed devices sold by Kustom, and will receive
license fees for subsequent licensed devices sold by Kustom. Additionally, the
Company will receive running license fees for each licensed device sold by
LaserCraft, except for those devices that are manufactured for Kustom for
resale.
FOREIGN SALES
Foreign sales of the Company's products equaled 44% for both fiscal years
ended September 30, 1994 and 1995. For the year ended September 30, 1996, the
Company's foreign sales comprised 49% primarily due to increased sales of the
Company's Laser DigiCam system, part of the Company's Traffic Safety product
line. Management believes that foreign sales of the Company's products will
continue to comprise a significant portion of its revenues. The Company requires
that all international sales be paid for with U.S. dollars. In the event of an
increase in the value of the U.S. dollar relative to other currencies, the
Company's products could become less competitive in those markets.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs related to the continual development of the
Company's laser measurement instruments are expensed as incurred and included in
operating expenses. Research and development costs totaled approximately
$514,000, $363,000 and $273,000 for the years ended September 30, 1996, 1995 and
1994, respectively. Year to year increases in research and development
expenditures are primarily attributable to increased personnel costs related to
increased personnel requirements. Management anticipates continued increases in
research and development costs as the Company seeks to develop new products and
enhance existing ones.
INCOME TAXES AND NET OPERATING LOSSES
At September 30, 1994, a deferred tax asset totaling $303,000 was recorded,
relating primarily to net operating loss carryforwards. During the fiscal year
ended September 30, 1995, the Company generated taxable income of $1,087,132
which has fully utilized the Company's net operating loss carryforwards. Under
the provisions of SFAS No. 109, the Company's policy is to provide deferred
income taxes related to items that result in differences between the financial
reporting and tax basis of assets and liabilities. As a result, at September 30,
1996, the Company has recorded a deferred tax asset totaling $52,000. Based upon
the Company's recent history of taxable income and its projections for future
earnings, Management believes that it is more likely than not that sufficient
taxable income will be generated in the foreseeable future to realize the
deferred tax asset. See note 4 to the Company's consolidated financial
statements.
19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital needs have been satisfied primarily through the
Company's public offering consummated in January 1993 (which provided $6,313,881
in net proceeds to the Company, after deduction of underwriting discounts and
related offering expenses) and cash flow from operations. The Company's working
capital at September 30, 1996 was $7,698,674 as compared to working capital of
$7,834,363 at September 30, 1995. As of September 30, 1996, the Company had
invested in certain non-current investments which reduced the Company's working
capital in 1996 as compared to 1995. The Company's present working capital is
expected to adequately meet the Company's needs for at least the next twelve
months.
For the year ended September 30, 1996, cash provided by operating activities
was $201,674. Net income of $1,063,372 combined with an increase of $511,465 in
accounts payable and accrued expenses was used to finance an increase in
accounts receivable of $1,106,795 and $284,029 was used to expand inventory.
Cash provided by investing activities of $421,716 was primarily attributable to
proceeds, after reinvestment, from the sale of marketable securities of
$1,169,914 of which $632,437 was used for the purchase of property and equipment
and leasehold improvements related to the Company's facility expansion in
December 1995. Cash flows of $30,328 provided by financing activities, resulted
from proceeds received from the exercise of employee stock options pursuant to
the Company's Equity Incentive Plan of $39,791 less payments on long-term debt.
For the year ended September 30, 1996, cash and cash equivalents increased
$653,718.
For the year ended September 30, 1995, cash provided by operating activities
of $963,739 was primarily attributable to net income for the year of $704,132.
Additionally, the Company realized a decrease in accounts receivable of $590,934
offset by increased inventory levels of $896,209 needed to meet anticipated
sales demand. During fiscal 1995, cash used in investing activities of $470,089
related primarily to the reinvestment of unused cash reserves of $311,622 into
marketable securities and $158,467 was used for the purchases of property and
equipment and certain patent costs related to the protection of the Company's
proprietary technology. Cash used in financing activities of $200,129 was used
to extinguish the Company's debt obligations related to the Company's facility
expansion during fiscal 1994. For the year ended September 30, 1995, cash and
cash equivalents increased $293,521.
For the year ended September 30, 1994, cash used in operating activities of
$34,676 was used primarily to finance an increase in accounts receivable of
$766,563. During 1994, the Company reduced inventory levels by $254,677 and
received $108,000 in refundable income taxes. Net cash used in investing
activities was $121,708. Of this amount, $208,497 was used for the purchases of
property and equipment for enhancement of the Company's production and
development facilities, which was partially offset by net proceeds on
investments of $127,371. During 1994, the Company expanded its manufacturing and
office facilities. Pursuant to this expansion, the Company completed $202,360 in
leasehold improvements which were financed through a local commercial lender.
During 1994, cash used in financing activities of $54,628 was used primarily to
repay a portion of this obligation. For the year ended September 30, 1994, cash
and cash equivalents decreased $211,012.
OTHER
During 1994, the Company exercised its option to expand its facility in order
to relocate its main office facilities adjacent to its manufacturing
operations. In December 1995, pursuant to the Company's rights for additional
expansion space, the Company elected to further expand its facilities to provide
additional office and production space during fiscal 1996 and 1997. Management
believes that the capital invested as a result of the expansion of its
facilities will not have a material impact on the Company's working capital or
results of operations. Additionally, the Company believes that its current and
planned facilities are adequate to meet the Company's needs throughout the
foreseeable future.
In an effort to maintain minimal inventory levels, the Company purchases raw
materials and supplies as dictated by the Company's sales activity enabling the
Company to reserve cash resources and maintain reduced inventories as a
percentage of sales volume. Raw materials and supplies with long purchasing lead
times are carried as inventory on hand to avoid delays in procurement.
Because the majority of the Company's sales are to government agencies, the
Company has historically realized minimal bad debts and maintains approximately
a 30-60 day receivable collection period. In order to reduce the impact
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<PAGE>
of currency fluctuations, all of the Company's foreign sales are made in U.S.
currency. The Company generally enforces the use of letters of credit and wire
transfers in most of its credit arrangements with foreign distributors to reduce
the risk of uncollected accounts receivable. Since 1992, an allowance for
doubtful accounts of $10,000 has been recorded.
Management believes that the Company's business centered around its Traffic
Safety product line is not seasonal in nature, however, due to fiscal budgeting
practices of state and municipal law enforcement agencies, sales may vary
between financial periods. Historically, the Company has realized a small
decline in its Survey and Mapping products, in areas affected by colder weather
during the winter months. Management believes that the expansion of the
Company's Survey and Mapping product line and penetration into new markets has
mitigated seasonal effects on sales of this business segment.
EFFECT OF INFLATION
The Company believes that it will experience increased costs due to the effect
of inflation on the cost of labor, material and supplies, and equipment
acquisitions. However, such inflationary effects are not expected to have a
material impact on the Company's revenues, gross profit or results of operations
for at least the next twelve months.
BUSINESS
The Company, including its wholly-owned subsidiaries Laser Communications,
Inc., Laser Technology, U.S.V.I., and International Measurement and Control
Company, is engaged in the business of developing, manufacturing and marketing
laser based measurement instruments using proprietary technology developed by
the Company. The Company's proprietary technology permits a laser to measure to
a non-cooperative, or low reflective surface, using a very low power source. As
a result, the Company's products operate within the requirements of eye safety
as promulgated by the FDA. Despite a very low power source, the Company's laser
instruments measure more rapidly and at longer ranges than corresponding
conventional devices. The Company has also developed proprietary software and
circuitry which are integral to each of the Company's products.
PRODUCT HISTORY
Historically, the Company's primary product lines have been its Marksman Laser
Speed Detection Systems and Criterion Series of Survey Lasers. During fiscal
1995 and 1996, the Company expanded these product lines through new product
development including the introduction of second generation instrumentation.
Because of enhancements to the Company's existing products, new product
developments and expanding markets for the Company's technology, the Company
currently organizes and markets its products in three divisions: Traffic Safety
products, Survey and Mapping products, and Ship Docking Aid Systems.
In 1991, the Company developed and commenced commercial manufacturing and
marketing of the LTI 20-20/Marksman laser speed detection system to law
enforcement agencies as a proven method of measuring the speed of motor
vehicles. In 1993, the Company introduced an enhanced version of the LTI 20-20
called the Marksman which incorporates increased range capability, an auto
triggering system and, as an optional feature, an in-scope display of speed and
distance data. As does its predecessor, the Marksman has several advantages
over radar speed measurement devices. As distinguished from radar measurement
devices, the Marksman can be aimed directly at a specific vehicle, thereby
eliminating the difficulty associated with radar measurement devices of
distinguishing one vehicle from another. Additionally, the Marksman measures
speed in approximately one-third of a second while producing a three foot wide
beam at a distance of 1,000 feet which disperses after hitting its target
vehicle. Radar guns, on the other hand, are generally required to track vehicle
speed for several seconds in an attempt to positively identify a vehicle. Radar
guns also produce a wider beam width of approximately 200 to 400 feet at a range
of 1,000 feet which can readily be detected by the targeted vehicle as well as
other oncoming vehicles equipped with radar detectors. The Marksman's ability
to determine a specific vehicle's speed more quickly and its smaller beam which
disperses after hitting its target, would not permit vehicles other than the
targeted vehicle to detect the Marksman's laser beam and, in any event, would
not provide the targeted vehicle sufficient time to slow down in advance of
being detected.
In 1992, the National Aeronautics and Space Administration (NASA) purchased
two modified Marksmans for use aboard the United States Space Shuttle to
determine target distance and closing speed when the space shuttle performs
21
<PAGE>
docking procedures in space. The Marksman was first used by NASA when the
"Intelsat" satellite was retrieved and relaunched on the maiden voyage of the
"Endeavor" space shuttle. During fiscal 1993, the Marksman was used in NASA's
mission to repair the Hubble space telescope. During fiscal 1994 and 1995, NASA
used the Marksman on several missions, including the 1995 Atlantis Space Shuttle
mission that involved docking with the Russian space station MIR. To date, NASA
has purchased a total of ten modified Marksmans, including one ordered in 1996,
for use on all space shuttle missions involving docking procedures. While NASA
is a relatively small customer of the Company, Management believes that NASA's
use of the Company's technology adds to the Company's credibility as a
technology leader in the laser-based measurement industry.
During 1993, LTI introduced a statistical compilation software package,
"SpeedStat". This product when combined with the Marksman, automatically
gathers and formats traffic survey data on a portable computer via a serial
cable interface. Traffic engineers and law enforcement officials are able to
conduct and document traffic speed surveys more efficiently using the Marksman
than with conventional methods.
During fiscal 1995, the Company completed development and began commercial
production of the Laser DigiCam, an automatic video photo laser system which
integrates a camera and associated equipment with the Marksman. The Laser
DigiCam monitors the speed of each vehicle in a specific lane of traffic. When
the Laser DigiCam system detects a speeding vehicle, it takes a digital picture
of the vehicle, prints the speed, time and date on the picture, and the ticket
can then be mailed to the violator.
Also in 1995, the Company introduced "QuickMap," a system which enhances the
use of the Marksman for this application. QuickMap is a software module
integrated to a data collector which is used in conjunction with the Marksman to
expedite the collection and processing of data at accident sites and crime
scenes. Additionally in 1995, the Company introduced "DBC," a new optional
feature integrated into the Marksman's software capabilities used to measure the
distance and/or time between traveling vehicles. In fiscal 1996, the Company
introduced "SpeedStat DC," a companion product to QuickMap in its Traffic Data
Collection Module series. Similar to the Company's original SpeedStat product,
SpeedStat DC enables more efficient collection and compilation of traffic
engineering statistics.
Also during fiscal 1996, the Company introduced a new generation of lasers for
general distance measurement. The "Impulse" series, while marketed primarily
to the survey and mapping industry, has gained quick acceptance in the accident
investigation segment of the law enforcement community. The Impulse Accident
Investigation Laser is smaller in size and weight and lower in cost than the
Company's Marksman laser speed detection system for this application.
During 1992, LTI began marketing the Criterion 400 (the "Criterion"), a device
originally designed and developed by the Company in collaboration with the
United States Forest Service for use by foresters, to accurately and quickly
measure certain aspects of trees to determine board feet and to survey roads,
bridges, hiking trails and campgrounds. During the Company's first years of
commercial production, the primary user of the Criterion was the U.S. Forest
Service. However, during the latter half of fiscal 1993, the Company expanded
the Criterion product line to foster new markets by introducing three new models
of survey lasers. The Criterion is a small, portable laser measurement system
consisting of a laser range finder, an electronic compass and an electronic
inclinometer providing the capabilities of measuring distance, azimuth and
inclination and, therefore, is capable of calculating heights and X, Y, Z
coordinates. The Criterion can record these measurements in seconds as compared
to several minutes using conventional manual methods. Data captured by the
Criterion is maintained in the system in a form ready for computer downloading,
which eliminates errors associated with manually transcribing numbers in the
field for future manipulation. The Criterion product line has evolved into the
Company's Survey and Mapping division.
During fiscal 1994, the Company introduced the Criterion 100TM. Part of the
Criterion Series of Survey Lasers, this system integrates a Criterion ranging
laser with a surveying theodolite. The Criterion 100TM allows the operator to
quickly gather precise distance and angular measurements to remote targets. The
Company currently markets the Criterion 100TM primarily to mining, blasting and
aggregate management companies for gathering rock face profiles and pile volume
measurement applications.
During fiscal 1996, the Company introduced several new products under its
Survey and Mapping division. The "Criterion AutoScan" survey laser was
developed in collaboration with MDL, a European manufacturer, and is comprised
of a Criterion survey laser mounted to a motorized, computer controlled
theodolite capable of measuring vertical and
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<PAGE>
horizontal angles. The Company also introduced the "GeoLaser," a hand-held
mapping laser, and the "Impulse," a second generation surveying instrument
approximately one-third the size and weight of the Company's Criterion series of
survey lasers.
In the latter half of fiscal 1996, the Company completed development of a low
cost, industrial laser distance measurement sensor. Pursuant to a sales
contract with Telemotive Industrial Controls, Inc., ("Telemotive"), the
Company developed and manufactures laser sensors for use in collision avoidance
and positioning systems which Telemotive markets under its brand name. This
collision avoidance system allows continuously generated distance measurement
information provided by the Company's laser sensors to be transmitted to a
central processor which integrates the information with computer controls that
slow or stop the crane or vehicle within pre-determined collision or danger
zones.
The Company's third product division pertains to the Ship Docking Aid System
and systems development. During fiscal 1995, the Company completed development
and continued market research activities for the "DAS100," a dock based
measurement system that assists ship captains and pilots in docking maneuvers by
measuring a ship's closing speed and distance and transmitting this data to the
bridge of the ship. Initial marketing of the DAS100 in the second half of
fiscal 1995 resulted in the Company's first order for this system delivered in
fiscal 1996 to furnish laser sensors for ship docking systems to Martin Marietta
Corporation, ("MMC"), a subsidiary of Lockheed Martin.
PRINCIPAL PRODUCTS
The following table provides a breakdown of the percentage of net sales of the
Company's product lines. Revenues realized from sales of the Company's less
significant revenue producing products are classified as "Other" for
presentation purposes.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Traffic Safety 57% 62% 63%
Survey and Mapping......... 34 36 32
Ship Docking Aid Systems... 8 -- --
Other...................... 1 2 5
</TABLE>
The following table provides a breakdown of domestic and foreign revenues as a
percentage of net sales of the Company's products for the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Domestic .................. 51% 56% 56%
Foreign ................... 49 44 44
</TABLE>
See Note 6 to the Company's consolidated financial statements for further
discussion on customers, export sales and concentrations of credit risk.
TRAFFIC SAFETY PRODUCTS
Hand-Held Laser Speed Detection Systems
In 1991, the Company developed and commenced commercial manufacturing and
marketing of the LTI 20-20 laser speed detection system to law enforcement
agencies as a proven method of measuring the speed of motor vehicles. In 1993,
the Company introduced an enhanced version of the LTI 20-20, called the
Marksman, which incorporates increased range capability, an auto triggering
system and, as an optional feature, an in-scope display of speed and distance
data. As does its predecessor, the Marksman has several advantages over radar
speed measurement devices. As distinguished from radar devices, the Marksman can
be aimed directly at a specific vehicle, thereby eliminating the difficulty
associated with radar measurement devices of distinguishing one vehicle from
another. Additionally, the Marksman measures speed
23
<PAGE>
in one-third of a second with a laser beam that spans only three feet wide at a
distance of 1,000 feet and disperses after hitting its target vehicle. Radar
guns, on the other hand, are generally required to track vehicle speed for
several seconds in an attempt to positively identify a vehicle.
Radar guns also produce a wider beam width of approximately 200 to 400 feet at
a range of 1,000 feet which can readily be detected by the targeted vehicle as
well as other oncoming vehicles equipped with radar detectors. Conventional
radar detectors, which cannot detect the light beam generated by the Marksman,
have been effective against radar because of the wide beam width produced by
radar devices. This radar beam continues to widen as the distance from the gun
increases and can readily be picked up by a radar detector as much as a mile
away from the radar gun, giving the driver of a vehicle warning time to slow
down and thus avoid receiving a speeding ticket. The Marksman's quicker ability
to measure speed and significantly reduced beam width does not permit vehicles,
other than the targeted vehicle, to detect the Marksman's laser beam and, in any
event, does not provide the targeted vehicle sufficient time to slow down in
advance of being detected.
Consumer laser detection devices exist that will detect the Marksman only when
the vehicle equipped with such a detection device is being targeted. However,
because the measurement period of the Marksman is only one-third of a second,
there is no reaction time for the driver to reduce their speed before the police
officer obtains a positive speed reading. As laser speed enforcement has become
more widely used as an effective means of speed enforcement, a number of
consumer laser jamming devices have also entered the market. Such laser jammers
have limited effectiveness against the Marksman due to the sophisticated nature
of the Marksman's internal targeting software. In 1995, to combat the use of
laser jamming devices, the Company developed the capability within the Marksman
to detect when a jamming device is in use. This feature has proven to be a very
useful tool to speed enforcement officials in certain jurisdictions where the
use of jamming devices is prohibited.
Laser DigiCam Photo Laser System
In 1995, the Company completed development and began commercial production of
the Laser DigiCam, an automatic video photo laser system which integrates a
camera and associated equipment with the Marksman. The Laser DigiCam monitors
the speed of each vehicle in a specific lane of traffic. When the Laser DigiCam
system detects a speeding vehicle, it takes a digital picture of the vehicle,
prints the speed, time and date on the picture, and the ticket can then be
mailed to the violator. As an optional feature to this system, the Company also
developed a night illumination system enabling night use of the Laser DigiCam.
Traffic Data Collection Modules
In addition to measuring speed, the Marksman also measures distance. This
feature enables the Marksman to be used for a variety of applications outside of
speed enforcement. The Marksman's ranging capabilities are used by law
enforcement officials for accident investigation and reconstruction. In 1995,
the Company introduced "QuickMap," a system which enhances the use of the
Marksman for this application. QuickMap is a software module integrated to a
data collector which can be used in conjunction with the Marksman to expedite
the collection and processing of data at accident sites and crime scenes.
In 1995, the Company introduced "DBC," an optional feature that can be
integrated into the Marksman's firmware capabilities which is used to measure
the distance and/or time between traveling vehicles. In many parts of the world
where the distance between vehicles is monitored closely to improve traffic
safety, local governments have the need to measure the distance and/or time
between vehicles. Management believes that the DBC feature addresses this
application and increases the utility and efficiency of the Marksman.
Traffic engineers and law enforcement officials are also able to conduct and
document traffic speed surveys more efficiently using the Marksman laser speed
detection system than with conventional methods. In 1993, the Company introduced
a statistical compilation software package, "SpeedStat." This product, when
combined with the Marksman, automatically gathers and formats traffic survey
data on a portable computer via a serial cable interface.
Additionally, during fiscal 1996, the Company introduced "SpeedStat DC," a
companion product to QuickMap in its Traffic Data Collection Module series.
Similar to the Company's original SpeedStat product, SpeedStat DC enables
24
<PAGE>
more efficient collection and compilation of traffic engineering statistics.
However, SpeedStat DC incorporates the same hand-held data collector used in the
Company's QuickMap system replacing the need for a laptop computer, which
provides traffic engineers and law enforcement officials with a more portable
and affordable statistical compilation system.
Impulse Accident Investigation Laser
During fiscal 1996, the Company introduced a new generation of lasers for
general distance measurement. The "Impulse" series, while marketed primarily
to the survey and mapping industry, has gained quick acceptance in the accident
investigation segment of the law enforcement community. The Impulse is smaller
in size and weight and lower in cost than the Company's Marksman laser speed
detection system for this application. The Impulse also features an electronic
tilt sensor that provides the operator with more accurate mapping measurements.
Additionally, when linked with the QuickMap traffic data collection module, the
Impulse becomes a fully electronic mapping system.
SharpShot Series of Laser Range Finders
Late in fiscal 1996, the Company began initial marketing of a laser range
finder for tactical operations and S.W.A.T. applications. The "SharpShot" is a
light weight, user friendly range finder developed from the Company's technology
underlying its Impulse survey laser that is able to measure distances at longer
ranges than the Impulse. Additionally, optional tilt sensor capabilities exist
that can provide height and inclination data. While the Company's SharpShot
laser range finder represents a peripheral market of the Company's Traffic
Safety product line, Management believes that sufficient market potential exists
for the SharpShot for use in tactical law enforcement and military applications.
SURVEY AND MAPPING PRODUCTS
Criterion Series of Hand-Held Survey Lasers
The Criterion was originally developed in collaboration with the United States
Forest Service in 1992 for use by foresters to accurately and quickly measure
certain aspects of trees to determine board feet and to survey roads, bridges,
hiking trails and campgrounds. The Criterion is a small, portable laser
measurement system consisting of a laser range finder, an electronic compass and
an electronic inclinometer providing the capabilities of measuring distance,
azimuth and inclination and, therefore, is capable of calculating heights and
X,Y,Z coordinates. The Criterion can record these measurements in seconds as
compared to several minutes using conventional manual methods. Data captured by
the Criterion is maintained in the system in a form ready for computer
downloading, which eliminates errors associated with manually transcribing
numbers in the field for future manipulation.
During the Company's first years of commercial production, the primary user of
the Criterion had been the U.S. Forest Service. However, in fiscal 1993, the
Company expanded its Criterion product line to foster new markets by introducing
three new models of survey lasers. The Company's Criterion series of survey
lasers offers a logical progression of measurement capabilities. This product
expansion has attracted new customers within the paper, mapping, environmental,
utility and telecommunication industries.
Criterion Theodolite Mounted Survey Lasers
In fiscal 1994, the Company introduced the Criterion 100TM. Part of the
Company's Criterion Series of Survey Lasers, this system integrates a Criterion
ranging laser with a surveying theodolite. The Criterion 100TM allows the
operator to quickly gather precise distance and angular measurements to remote
targets. The Company currently markets the Criterion 100TM primarily to mining,
blasting and aggregate management companies for gathering rock face profiles and
for pile volume measurement applications. Absent the use of the Criterion 100TM,
or comparable measurement equipment, these measurements involve multiple man
crews and often place personnel in hazardous situations. Because the Criterion
100TM does not require the placement of a reflector on the object to be
measured, it eliminates the need for multiple personnel and allows measurements
to be made more expediently and safely.
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Criterion AutoScan Survey Lasers
During fiscal 1996, the Company introduced, in collaboration with MDL, a
European manufacturer, the "Criterion AutoScan" survey laser. The Criterion
AutoScan surveying system is comprised of a Criterion survey laser mounted to a
motorized, computer controlled theodolite capable of measuring vertical and
horizontal angles. The Criterion AutoScan system is operated remotely via
computer interface allowing areas to be measured and scanned continuously
without human error. Similar to the Company's Criterion 100TM, the Company's
AutoScan surveying system is used by mining, blasting and aggregate management
companies. However, Management believes that the automated operation of the
Criterion AutoScan makes this system attractive for new applications such as
slope stability monitoring, unattended topographic mapping, and surface
modeling.
GeoLaser Hand-Held Mapping Lasers
In fiscal 1996, the Company introduced the "GeoLaser" hand-held mapping
laser. Developed from the technology underlying the Company's Criterion series
of survey lasers, the GeoLaser is marketed as an ideal accessory to Global
Positioning Systems, ("GPS"). The GeoLaser was designed to capitalize on the
maturing market for the Company's Criterion products as well as the growing
demand for GPS offset measuring.
The GeoLaser features an easy-to-learn operating system. The GeoLaser's range,
inclination and azimuth sensors provide the same accuracy and range as the
Company's Criterion Series of Survey Lasers. However, the GeoLaser does not have
the extensive firmware options found in the Company's Criterion; thus, the
GeoLaser has simpler functionality as compared to the Company's Criterion survey
lasers. The GeoLaser's simpler operation allows for a lower price point which
has attracted new customers within the Geographical Information Systems
("GIS") and GPS mapping industry without deteriorating market opportunities
for the Company's higher accuracy Criterion survey lasers.
Impulse Series of Hand-Held Survey Lasers
During fiscal 1996, the Company developed its first, second generation
surveying instrument, the "Impulse." The Impulse is approximately one-third
the size and weight of the Company's Criterion series of survey lasers and also
has a lower price than that of the Company's Criterion survey lasers. Other
survey lasers on the market, including the Company's own Criterion series, weigh
approximately six pounds. The Impulse, weighing approximately two pounds, can be
carried on a belt clip and its ergonomic design allows full operation of the
instrument with only one hand. The Company's Criterion survey lasers have
numerous unique features that will continue to make the Company's Criterion a
viable product for a number of applications. However, Management believes that
the smaller size and lower price point of the Impulse make the technology more
accessible for an increased number of users and applications in the survey and
mapping industry. The Impulse is also marketed as part of the Company's Traffic
Safety product line for use in accident investigation applications.
Integrated Data Collection Solutions
Many market applications require the Criterion and Impulse series of survey
lasers to be integrated with other hardware and software to provide a complete
turn-key system. To facilitate this integration, the Company began establishing
relationships with manufacturers of complimentary hardware and software in
fiscal 1994. These relationships include the sharing of distribution channels
and new product development. During fiscal 1994, the Company and a privately
held software development firm completed the co-development of a laser based
mapping system, "Laser Walkabout." The Laser Walkabout system is comprised of
a Criterion or Impulse survey laser, a hand held data collector and
comprehensive field and office software. With this system, the locations and
attributes of remote objects can be recorded and used to generate computerized
mapping. The Company believes that the need for mapping or geographic
information systems is increasing as utility companies, foresters and
environmental firms seek more efficient ways to manage their assets.
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Hydro II and LaserCom Surveying Systems
The Hydro II surveying system was the first laser-based measurement system
developed by the Company. The Hydro II is a hydrographic surveying and
positioning system designed to survey and chart the bottom topography of a body
of water in preparation for dredging ship channels and for buoy and pier
settings. In fiscal 1994, the Company introduced the "LaserCom" system, an
enhanced version of its Hydro II hydrographic surveying system. The LaserCom
system is designed to transmit data using pulses of light, thus eliminating the
problems associated with radio frequency communication. As the Company focuses
on its more dominant revenue producing products, sales of the Company's
hydrographic surveying systems are expected to continue to comprise a very small
portion of the Company's overall revenues.
Industrial Laser Distance Measurement Sensors
During the latter half of fiscal 1996, the Company completed development of a
low cost, industrial laser distance measurement sensor. Pursuant to a sales
contract with Telemotive Industrial Controls, Inc., ("Telemotive"), a world
leading manufacturer of radio controls for material handling cranes and
industrial vehicles, the Company developed and manufactures laser sensors for
use in collision avoidance and positioning systems which Telemotive markets
under its brand name. This collision avoidance system allows continuously
generated distance measurement information provided by the Company's laser
sensors to be transmitted to a central processor which integrates the
information with computer controls that slow or stop the crane or vehicle within
pre-determined collision or danger zones. The completion of the Company's
development project pursuant to its agreement with Telemotive has resulted in a
low cost laser sensor that the Company believes has other applications in the
industrial measurement market. The Company's agreement with Telemotive requires
designated minimum purchases of the Company's industrial laser sensors scheduled
to be delivered during the Company's 1997 fiscal year. See "Backlog" for
existing customers and product lines.
DAS100 SHIP DOCKING AID SYSTEM
In fiscal 1995, the Company introduced the DAS100 Ship Docking Aid System, a
dock-based measurement system that assists ship captains and pilots in docking
maneuvers by measuring and recording a ship's closing speed and distance and
transmitting this data to the bridge of the ship. During the first half of
fiscal 1995, SeaRiver Maritime, Inc., formerly Exxon Shipping Company, completed
a favorable evaluation of the DAS100. Initial marketing of the DAS100 during the
second half of fiscal 1995 resulted in the Company's first order to furnish
laser sensors for ship docking systems to Martin Marietta Corporation,
("MMC"), a subsidiary of Lockheed Martin. Revenues realized from this order
were generated during the first half of fiscal 1996. Management believes that
significant market potential exists for the DAS100 and intends to continue
marketing this product line through its wholly-owned subsidiary, Laser
Communications, Inc.
OTHER
Other market applications exist for the Company's laser-based measurement
technology. In 1992, the National Aeronautics and Space Administration (NASA)
purchased two modified Marksmans for use aboard the United States Space Shuttle
to determine target distance and closing speed when the shuttle performs docking
procedures in space. These instruments were first used by NASA when the
"Intelsat" satellite was retrieved and re-launched on the maiden voyage of the
"Endeavour" space shuttle. In fiscal 1993, the Marksman was used in NASA's
mission to repair the Hubble space telescope. During fiscal 1994 and 1995, NASA
used the Marksman on several missions, including the mission involving docking
with the Russian space station MIR. During fiscal 1996, NASA placed an order for
one additional instrument increasing the total number of instruments to ten for
use on all space shuttle missions involving docking procedures. Although NASA is
a relatively small customer of the Company, Management believes that NASA's use
of the Company's technology adds to the Company's credibility as a technology
leader in the laser-based measurement industry.
Outside of surveying and mapping industries, the Criterion has proven to be a
useful tool in other applications. The Criterion has been used to provide
distance and bearing information between "America/ 3/," the winning yacht in the
1992 Americas Cup finals, and its competitor boat. Most recently, the Criterion
was used by the "America/ 3/" syndicate during the 1995 Americas Cup races.
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PRODUCT RESEARCH AND DEVELOPMENT
During fiscal 1996, the Company continued to direct its research and
development activities on improving its current product lines as well as
focusing on new product developments. Research and development costs related to
the Company's instrumentation and proprietary technology are expensed as
incurred and included in operating expenses. Research and development costs
totaled approximately $514,000,$363,000 and $273,000 for the fiscal years ended
September 30, 1996, 1995 and 1994, respectively. Year to year increases in
research and development expenditures are primarily attributable to increased
personnel costs.
In 1993, the Company introduced the Marksman, an upgraded version of its
former LTI 20-20 laser speed detection system. The Company also completed the
development of a statistical compilation software package, "SpeedStat," used to
collect traffic survey statistics. Additionally, the Company expanded its
surveying product line by introducing three new models of its Criterion
surveying lasers.
During the second half of fiscal 1994, the Company completed development of
the Criterion 100TM, an enhancement to the Criterion product line which
integrates a Criterion ranging laser with a theodolite. Primary users of the
Criterion 100TM include mining, blasting and aggregate management companies
where precise measurements to remote targets improve safety concerns in
hazardous situations. Additionally, in conjunction with a privately held
software development firm, the Company completed the co-development of a laser
based mapping system, "Laser Walkabout." The Laser Walkabout system is comprised
of a Criterion survey laser, a hand held data collector and comprehensive field
and office software. This system, combined with a global positioning system
("GPS") receiver, is used to record the locations and attributes of remote
objects for the generation of computerized mapping. During fiscal 1994, the
Company also completed the development of a technology which provides the
ability to transfer data using pulses of light generated by the Company's laser
ranging equipment. This capability has been integrated into a third generation
hydrographic surveying system, the "LaserCom." Using the ability to transmit
data with pulses of light, this technology eliminates the problems associated
with radio frequency communication.
During fiscal 1995, the Company completed the development of several new
functions and features developed around the Company's Marksman product line for
use within the law enforcement market. These developments include "QuickMap" for
accident reconstruction and investigation, "DBC" for time and distance
measurement between vehicles, and a laser jammer detector built into the
Marksman's software capabilities, as an optional feature provided to law
enforcement agencies to strengthen the Marksman's use in traffic speed and
safety enforcement.
Additionally, during fiscal 1995, the Company completed development of the
Laser DigiCam, built around the Company's Marksman speed detection laser. As an
optional feature to this system, the Company also completed development of a
night illumination system enabling night use of the Laser DigiCam. The Laser
DigiCam system targets a specific area on a roadway and monitors the speed of
each vehicle that passes the beam of the laser. When the Laser DigiCam detects a
speeding vehicle, it takes a picture of the vehicle and prints the time, date
and speed on a video frame and stores the information digitally on the hard disk
of its internal computer. The photo images can be printed at the sight or they
can be stored for subsequent processing. As an optional feature to this system,
the Company also completed development of a night illumination system enabling
night use of the Laser DigiCam.
During fiscal 1995, the Company also completed the development of the DAS100,
a ship docking system in conjunction with SeaRiver Maritime, Inc., formerly
Exxon Shipping Company, and a private engineering firm. The DAS100 assists ship
captains and pilots in docking maneuvers by measuring a ship's closing speed and
distance, and transmitting this data to the bridge of the ship.
Also in 1995, the Company, in conjunction with Bushnell, formerly the Sports
Optics Division of Bausch and Lomb, completed development of a consumer related
product, the "Lytespeed," which is being marketed by Bushnell to certain
sporting markets, primarily the hunting and golfing industries. In fiscal 1996,
pursuant to an amended agreement with Bushnell, the Company developed an
enhanced version of the LyteSpeed which the Company and Bushnell believe will
increase market penetration within the sporting markets currently served by
Bushnell. The Company retains all ownership of patents and trade secrets of the
technology underlying the development of the LyteSpeed. Additionally, the
Company receives running royalties on cumulative net sales of this product, has
received development costs for the initial technology and retains the right to
pursue markets outside the sports technology area. This product was the first
laser range finder
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introduced in a consumer market with the ability to measure non-cooperative
targets. As of September 30, 1996, royalty and licensing income earned related
to this agreement was approximately $341,000. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
During fiscal 1996, the Company developed the GeoLaser. The GeoLaser is a
hand-held survey laser developed from the technology underlying the Company's
Criterion Series of Survey Lasers. While similar in accuracy, the GeoLaser has
reduced firmware options as compared to the Company's Criterion which allows the
GeoLaser to be sold at a lower price. As part of the Company's Traffic Safety
product line, the Company also completed development of SpeedStat DC, a
companion product to QuickMap within the Company's Traffic Data Collection
Module Series, and the SharpShot laser ranger finder was developed from the
technology underlying the Company's Impulse for use in tactical law enforcement
applications. Also in 1996, the Company in conjunction with MDL, a European
manufacturer of surveying equipment, completed development of the Criterion
AutoScan survey and mapping system. The Criterion AutoScan features a Criterion
laser mounted on a motorized, computer controlled surveying theodolite which can
automatically scan and measure vertical and horizontal angles from remote
distances.
In fiscal 1996, the Company also completed development of two new, second
generation laser-based instruments. These second generation instruments have
several characteristics in common including smaller size, lighter weight and
substantially lower manufacturing costs than their predecessors. During the
latter half of fiscal 1996, the Company completed the design and development of
the "Impulse," part of the Company's Survey and Mapping product line. The
Impulse provides range, inclination and height measurements in an instrument
one-third of the weight and size of the Company's Criterion Series of Survey
Lasers. Also, during fiscal 1996, the Company completed development of an
industrial laser sensor for use in collision avoidance and positioning systems
in industrial applications.
MARKETING, DISTRIBUTION AND CUSTOMERS
The Company presently markets its products to three major classes of
customers. For the fiscal year ended September 30, 1996, the Company's foreign
distributors accounted for 47% of sales, of which the Company's Asian and
European distributors comprised 36% collectively. Domestically, state and local
law enforcement agencies comprised approximately 24%. Additionally, sales to the
Company's Domestic Survey and Mapping dealer network comprised 12%. For the
fiscal year ended September 30, 1996, one customer, Visi Trading (m) SDN BHD,
accounted for 12% of sales. The Company primarily markets its products using on-
site demonstrations, attendance at trade conferences, advertising in trade
magazines and direct mail. See note 6 to the Company's consolidated financial
statements for further discussion on customers, export sales and concentrations
of credit risk. See also "Risk Factors - Dependence on Significant Customers."
Traffic Safety Products
The Company primarily markets its Traffic Safety products domestically to law
enforcement agencies of state and municipal governments. The Company has
historically marketed to this segment of its business domestically through a
combination of direct sales personnel augmented by sales made through
independent manufacturer representative companies representing the Company's
Traffic Safety products. During the latter half of fiscal 1996, Management
elected to increase the number of direct sales representatives marketing the
Company's products in the U.S. This decision was based on the growing line of
products carried by the Company and the need for a specialized sales force to
properly present and support them. As a result of this decision, the Company has
reduced the number of domestic independent manufacturer's representatives
carrying the Company's products through natural attrition and termination of
non-productive firms. As of September 30, 1996, the largest domestic customer of
the Company's Marksman hand-held laser speed detection systems is the state of
Ohio. Other high volume states include Texas, New York, Michigan, Massachusetts,
Wisconsin, Oregon, Washington, and Hawaii.
Internationally, the Company markets its Traffic Safety product line through
its foreign distributors for use by agencies of foreign governments including
local law enforcement agencies and transportation ministries. The Company has
established distribution channels for its Traffic Safety products in most
industrialized countries. To date, the Company's foreign distributors in
Austria, Germany, the United Kingdom, Canada, Korea and Malaysia account for the
highest volume of hand-held Marksman laser speed detection systems and Laser
DigiCam photo-laser systems purchased
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internationally. As of September 30, 1996, the Company has established
distribution in over twenty-eight international territories.
In 1992, the National Institute of Standards and Technology ("NIST") in
conjunction with the National Highway Traffic Safety Administration ("NHTSA")
began developing a set of national minimum model performance specifications for
police traffic laser speed measurement devices such as the Marksman. The Company
believes that a number of law enforcement agencies throughout the United States
have been hesitant to purchase speed enforcement products which are not listed
on the International Association of Chiefs of Police ("IACP") Approved
Products List. This list is comprised of speed enforcement products which have
passed a national standard established by the NHTSA. This national standard was
completed in January 1995. With the standard completed, the IACP contracted with
the University of California-Davis to establish a laboratory test site. In
October 1995, when the testing facility was complete, the Company submitted the
Marksman for compliance testing in order to be placed on the IACP Approved
Products List. In April 1996, the Marksman was certified by the IACP to meet the
federal standard for laser speed measurement devices. Upon receiving IACP
certification, the Marksman was subsequently placed on the IACP approved
products list. Management anticipates that placement on the IACP approved
products list will allow federal funds from the United States Department of
Transportation to become more assessable for law enforcement agencies to
purchase the Marksman, although there is no assurance of this.
There are four states within the U.S. that have required the passage of state
legislation to enable the use of new technological developments in speed
enforcement. As of September 30, 1996, legislation has been passed approving the
Company's Marksman laser speed detection device as an acceptable means of speed
enforcement in three of the states including Florida, North Carolina and
Virginia. Management anticipates that future state legislation will be passed in
Pennsylvania. However, there is no assurance that such legislation will be
passed.
Various foreign standards have also been established for laser speed
enforcement equipment. The Marksman has been subject to foreign approvals in
certain areas where such standards exist. To date, the Marksman has been
approved in Germany, the United Kingdom, Austria, Switzerland, Sweden, the
Netherlands and France. The Marksman has also been tested and approved for use
by the Royal Canadian Mounted Police in Canada.
Laser DigiCam Photo-Laser System
In fiscal 1995, the Company completed development of the Laser DigiCam photo-
laser system and delivered its first substantial order for this system to the
Royal Malaysian Police. During fiscal 1996, The Royal Malaysian Police continued
to be a significant customer comprising approximately 19% of the Company's
overall Traffic Safety revenues. In the fourth quarter of fiscal 1996, the Royal
Malaysian Police negotiated a two-year, renewable contract for the purchase of
the Company's Laser DigiCam systems. The Company's first order pursuant to this
agreement was delivered in September 1996. Management believes that additional
sales will result pursuant to this agreement, although there is no assurance
that the contract will be renewed.
Because of Federal right to privacy laws, Management believes that primary
sales opportunities for the Laser DigiCam will be in international markets.
Management intends to continue marketing the Laser DigiCam system
internationally through its existing network of distributors currently marketing
the Company's Traffic Safety product line, and domestically, through its direct
sales force.
Survey and Mapping Products
The Company's Survey and Mapping products are primarily sold domestically
through its dealer network, and internationally through its foreign distributors
and dealers. As with the Company's Traffic Safety products, Management
continually endeavors to expand its Survey and Mapping products distribution
channels and strategic alliances. As a substantial addition to its domestic
Survey and Mapping distribution network, in 1995 the Company signed an agreement
with the surveying equipment division of Pentax U.S.A. Pursuant to this
agreement, the Company provides private labeled versions of its Criterion series
of survey lasers to Pentax, which are sold through Pentax's domestic
distribution network. For the Company's 1996 fiscal year, sales to Pentax U.S.A.
comprised approximately 13% of the Company's overall Survey and Mapping revenues
derived from the Company's domestic dealer network.
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During fiscal 1996, the Company increased the number of dealers in its
domestic distribution network supporting its Survey and Mapping product line to
approximately seventy, and internationally to approximately thirty-five. As a
result, sales of the Company's Survey and Mapping product line to dealers
comprised approximately 79% of the Company's overall revenues for this segment
of its business during fiscal 1996.
The Criterion was originally developed in collaboration with the U.S. Forest
Service and, as a result, the U.S. Forest Service initially was the primary user
of the Criterion. Even though the Company's contract with the U.S. Forest
Service expired, the U.S. Forest Service has continued to be a significant
customer of the Company, but represented only 6% of the Company's total Survey
and Mapping sales in fiscal 1996, as compared to 90% in 1993 when the U.S.
Forest Service was virtually the only user. In previous years, Criterion sales
to the U.S. Forest Service have primarily been purchased for use within the
timber sales preparation area. Due to the U.S. federal agency shift in policy to
ecosystem management, there has been a decline in timber sales within the U.S.
Forest Service and increased emphasis on other resource management areas. The
Company continues to market to the U.S. Forest Service and has responded to this
change by expanding marketing efforts into these resource areas including
archaeological mapping, road obliteration and environmental analysis.
Management believes that the introduction of the Impulse Series of Survey
Lasers in fiscal 1996 provides two immediate marketing benefits. First, the
Impulse provides an entry-level, broad use product for the Company's already
identified survey and mapping market segments, at a reduced size and weight, and
lower price. Secondly, these size, weight, and retail cost reductions allow the
Company to access broad new general measurement markets that have not previously
considered laser measurement a viable option. These markets include engineering
construction, commercial material measurement and estimation, and landscape
design. Sales of the Company's Survey and Mapping product line to other markets
include the paper, mapping, mining, environmental, telecommunication, and
utility industries. Domestically, the Company currently markets to such
industries through a combination of direct sales representatives and through its
domestic dealer network.
To date, the Company's foreign distributors in Japan, Australia, Europe and
Canada account for the highest volume of Survey and Mapping products purchased
internationally. The Company currently markets its Survey and Mapping products
overseas to similar industries through its foreign distribution channels. As of
September 30, 1996, the Company has established distributors for its Survey and
Mapping product line in twenty-seven international territories.
Sales of the Company's hydrographic surveying systems, part of the Company's
Survey and Mapping product line, have become a very small contributor to the
Company's overall revenues due to a change in the marketing focus of the Company
to its Traffic Safety and other surveying product lines and because of the
increased use of global positioning systems in hydrographic surveying
applications. However, Management intends to continue to provide service and
support to its existing customers in this market and to continue to market the
LaserCom surveying system, marketed by the Company's sales force and dealer
network currently representing its survey products. Primary customers for the
Hydro II and LaserCom systems are the United States Army Corps of Engineers and
commercial surveying contractors.
Late in fiscal 1996, the Company completed development of a low cost,
industrial laser distance measurement sensor which it will market for industrial
laser sensor applications. Pursuant to a contract with Telemotive Industrial
Controls, Inc., a world leading manufacturer of radio controls for material
handling cranes and industrial vehicles, laser sensors developed and
manufactured by the Company will be integrated into systems marketed under the
Telemotive brand name. In exchange for minimum purchase commitments of the
Company's laser sensors by Telemotive, Telemotive has received exclusive rights
to sell the Company's industrial laser sensors within the material handling
market.
The Company believes that other market opportunities exist for its industrial
laser sensors. Development of the Company's first industrial laser sensors
related to its agreement with Telemotive has resulted in a low cost, laser
distance measurement sensor that the Company believes has other applications in
the industrial measurement market including robotics monitoring, bin level
measurement and instrument control and other collision avoidance applications.
DAS100 Ship Docking Aid System
The Company currently markets its DAS100 Ship Docking Aid System domestically
through its direct sales force, and internationally through foreign dealers. The
Company is also working toward developing strategic relationships with
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key companies in the shipping industry to expand its distribution of the DAS100.
The Company began more aggressively marketing the DAS100 Ship Docking Aid System
during the second half of fiscal 1995 resulting in the award of a contract to
furnish laser sensors for ship docking systems to Martin Marietta Corporation, a
subsidiary of Lockheed Martin. Pursuant to the terms of the contract, delivery
was made during the Company's first and second quarters of fiscal 1996
contributing 8% to the Company's overall revenues. See "Backlog" for existing
customers and product lines. Management believes that primary customers for its
DAS100 Ship Docking Aid Systems include oil and liquid natural gas carriers with
ocean fleets and other bulk carriers. Because of the specialized nature of the
ship docking industry, the Company has established a wholly-owned subsidiary,
Laser Communications, Inc., to continue developing this portion of the Company's
business.
BACKLOG
As of September 30, 1995, the Company had a backlog in sales of approximately
$800,000 primarily attributable to sales of its DAS100 Ship Docking Aid System,
delivered during the first half of fiscal 1996. As of September 30, 1996, the
Company had a backlog in sales of approximately $240,000 primarily attributable
to orders for its industrial laser sensors pursuant to the Company's agreement
with Telemotive. The Company intends to continually evaluate inventory and
production demands to fill orders as received.
MANUFACTURING OPERATIONS
The Company's manufacturing operations primarily consist of assembly,
calibration and testing of its products. Currently, most of the components used
in the manufacture of the Company's products are manufactured by others to the
Company's specifications. The Company is not dependent upon any single source of
supply and has no long-term supply agreements. The Company maintains certain
supply agreements on long lead time items to purchase inventory as dictated by
product sales. In December 1995, pursuant to the Company's right for additional
expansion space, the Company elected to further expand its facilities to provide
additional office and production space during fiscal 1996 and 1997. All of the
Company's products carry a one year limited warranty against manufacturing
defects. To date, there have been no material expenditures on warranty claims.
TECHNOLOGICAL CHANGE AND COMPETITION
The laser technology industry is characterized by rapid and significant
technological change and many companies are engaged in research and development
with respect to laser technology. Certain manufacturers of radar speed
measurement devices may have substantially greater financial, production,
marketing and technological resources than the Company. See "Risk Factors--
Technological Change and Competition."
The Company's hand-held Marksman laser speed detection system competes
primarily with hand-held radar speed measurement devices. Although most of the
Company's competitors in the radar industry sell their instrumentation at prices
lower than those of the Marksman, Management believes it competes primarily
because of the greater effectiveness and accuracy of the Marksman compared to
radar speed measurement devices. The Marksman has the ability to positively
identify specific vehicles and is not detectable by conventional radar
detectors. Additionally, consumer laser speed detection devices and newly
introduced laser jamming devices have been proven to be generally ineffective
against the Marksman.
Additionally, the Marksman laser speed detection system is used by law
enforcement agencies for applications beyond those available from radar speed
measurement devices and currently marketed laser speed measurement devices. In
1993, the Company introduced "SpeedStat," a statistical compilation software
package. This product when combined with the Company's Marksman, automatically
gathers and formats traffic survey data on a portable computer allowing traffic
engineers and law enforcement officials to conduct and document traffic speed
surveys more efficiently using the Marksman than with conventional methods.
The ranging capabilities of the Marksman are also used by law enforcement
agencies to gather measurement information during accident reconstruction and
investigation. In fiscal 1995, the Company introduced "QuickMap," which
enhances the Marksman's use by law enforcement agencies for quickly collecting
and processing information at accident sites and crime scenes. During fiscal
1995, the Company also introduced "DBC," which allows the Company's
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laser speed detection systems to measure the distance and time between vehicles.
Additionally, in 1995, the Company incorporated a feature within the Marksman to
detect when a laser jamming device is in use, which has proven valuable to law
enforcement agencies in jurisdictions where the use of laser jamming devices is
prohibited. The Marksman has also been used by S.W.A.T. teams to measure target
distances, and in drug interdiction to measure truck trailers for false
compartments.
The Company is aware of three other companies that market laser speed
measurement devices. Kustom Signal, Inc. is marketing a device pursuant to a
license from the developer, Laser Atlanta, Inc. Riegl, an Austrian company, and
Jenoptic, a German company, also market laser speed measurement devices. Such
competition has not, however, had a material impact on the Company's sales of
its Traffic Safety products. The Company presently believes that its hand-held
laser speed detection systems are able to compete within this market based upon
the their accuracy in speed readings, positive vehicle identification, and the
difficulty that motorists have in detecting the laser beam generated by the
Marksman. The Company also believes that its ancillary Traffic Safety products
address applications that provide a competitive advantage over other laser speed
measurement devices.
Management believes that the Laser DigiCam photo laser system competes in
similar markets as photo-radar systems. Because the Laser DigiCam system has a
much narrower beam than to photo-radar systems on the market, the Company
believes that the Laser DigiCam system provides better target identification and
increased accuracy. Management intends to continue marketing the Laser DigiCam
system at a sales price below that of high-end radar systems. Management
believes that it can compete within this market based upon price and quality of
information derived from the Laser DigiCam system as compared to presently
available photo-radar systems.
Management is aware of a proto-type camera system similar in functionality to
the Company's Laser DigiCam developed by Kustom Signals, Inc. Additionally,
prior to the Company's development of the Laser DigiCam, two of the Company's
international distributors developed laser-based camera systems to address
specific requirements within their predetermined foreign markets currently
served by them, primarily Scandinavia and Australia. The Company and its
distributors have cooperated in development of these systems to encompass
specific customer requirements and to maximize sales of the Company's laser
speed measurement devices which are integral components of these systems.
The Company's Survey and Mapping products compete with traditional measurement
devices, and a laser measurement device developed and marketed by Laser Atlanta,
Inc., which is designed specifically for survey and mapping applications.
Management also believes that it may compete in international markets with
instruments developed and marketed by Riegl, an Austrian company, and Jena, a
German company. The Company competes within this market based upon the quality
of information generated by its Survey and Mapping products and the time saving
features provided by these systems as compared to other traditional systems.
Additionally, Management believes that the newly introduced Impulse will compete
within this market because of its reduced size and weight and lower price point
compared to competing systems.
The Company is aware of several companies that provide other ship docking aid
systems including Marimatech A.S., Koden Electronics Company and Autronica A.S.
Management believes that it can compete within this market based upon the
DAS100's effectiveness and lower cost position as compared to other systems.
Because the Company manufactures the laser sensors integrated into the DAS100,
Management believes that it will maintain lower manufacturing costs as compared
to competing systems.
The Industrial Laser Distance Sensors developed for Telemotive were developed
to replace existing radio frequency ("RF") based distance measuring devices
previously developed and marketed by Telemotive. Telemotive's RF device has
become increasingly subject to outside interference from other equipment
rendering it ineffective. This has led to Telemotive contracting with the
Company to develop and manufacture laser sensors to replace its own less
effective RF counterpart. Pursuant to the terms of the Company's contract with
Telemotive, Telemotive has exclusive rights to the industrial laser sensors
developed under this contract for the material handling market in return for
minimum guaranteed purchases of the Company's laser sensors.
The Company believes that its Industrial Laser Distance Measurement Sensors
will compete with traditional measuring devices including radar and RF based
systems, and in certain international markets, primarily Europe, with laser
distance measurements instruments developed and marketed by Riegl. Management
intends to compete in these
33
<PAGE>
markets based on the unique measurement capabilities of its industrial laser
sensors and because of their reduced size, weight and lower manufacturing costs.
PATENTS AND TRADE SECRETS
Certain processes by which the Company is able to produce its products are
largely proprietary. The Company believes that patent protection of its
technology, including the materials or processes it develops and products that
result from the Company's research and development efforts, are important to the
possible commercialization of the Company's technology. The Company continually
attempts to protect its proprietary technology by obtaining patent application
protection and relying on trade secret laws and non-disclosure and
confidentiality agreements with its employees and persons that have access to
its proprietary technology. Additionally, the Company extends most of its
domestic patent filings into foreign applications. To date, no foreign patents
have been issued.
As of September 30, 1996, the Company had filed sixteen patent applications
related to its various product lines with the United States Patent and Trademark
Office in order to protect its current technology. As of September 30, 1996,
seven of these patents have been issued. One patent, expiring in March 2011,
relates to the Company's Criterion Series of Survey Lasers providing coverage of
the Criterion in forestry applications that include height and diameter
measurement of trees. The Company has also been issued two patents expiring in
October 2011 and May 2013, on its Traffic Safety laser speed detection systems.
A fourth patent issued expiring in May 2012, relates to a mechanical interface
between one of the Company's Criterion hand-held survey lasers and an electronic
theodolite enabling the instruments to remain vertically aligned while the
instruments are adjusted.
During fiscal 1995, the Company filed patent applications related to
protecting technological developments centered around the Company's Traffic
Safety product line. These applications include the capability of detecting a
laser jammer by a laser speed detection device, the ability to measure distance
and time between vehicles with a laser speed detection device, and a system used
to collect data for accident reconstruction and investigation. The Company also
applied for patent protection of certain technological developments centered
around its Laser DigiCam photo laser system.
During fiscal 1996, a fifth patent was issued, expiring in June 2013, relating
to the Company's Survey and Mapping product line which incorporates the
Company's proprietary "Walkabout" software that enables field data collection
in the G.I.S. mapping process. Additionally, the Company was granted a patent on
its technology providing the capability of transmitting data using pulses of
light generated from the Company's laser range-finders. This patent expires in
July 2013.
The Company has filed three patent applications on its proprietary technology
related to consumer instrumentation, primarily related to the LyteSpeed
developed for Bushnell to protect certain technological developments and
production techniques that are centered around this product. As of September
30, 1996, one of these patents had been issued and will expire November 2013.
Additionally, in 1996, three patent applications were filed relating to
technological developments centered around the Company's newly introduced
Impulse product line.
There can be no assurance that the Company's remaining patent applications
will result in patents being issued or that if issued, the patents will afford
protection against competitors with similar technology. Also, there can be no
assurance that the Company will have the financial resources necessary to
enforce any patent rights it may hold. Although the Company is not aware of any
claim that it infringes or will infringe any existing patent, in the event that
in the future the Company is unsuccessful against such a claim, it may be
required to obtain licenses to such patents or to other patents or proprietary
technology in order to develop, manufacture or market its products. There can
be no assurance that the Company will be able to obtain such licenses on
commercially reasonable terms or that the patents underlying the licenses will
be valid and enforceable. Any disclosure of such technology or development of
substantially equivalent technology could result in increased competition that
might materially and adversely affect the Company's revenues and cost of sales.
There can be no assurance that the Company's rights under its patents will
afford the Company any meaningful protection from competitors developing and
marketing products competitive with those of the Company, or that the Company
will be able to afford the expense of enforcing its proprietary rights. Certain
of the processes by which the Company is able to produce its products are
largely proprietary. The Company believes that patent protection of materials
34
<PAGE>
or processes it develops and any products that may result from the Company's
research and development efforts, are important to the possible
commercialization of the Company's products.
The Company attempts and will continue to attempt to protect its
proprietary materials and processes by relying on trade secret laws and non-
disclosure and confidentiality agreements with its employees and certain other
persons that have access to its proprietary materials or processes, or who may
have licensing or research arrangements exclusive to the Company. Despite these
protections, there can be no assurance that competitors will not independently
develop substantially equivalent proprietary information and techniques, or
otherwise properly gain access to the Company's trade secrets or disclose such
technology.
PATENT LICENSING AGREEMENTS
In September 1996, the Company agreed to license to Kustom Signal, Inc.,
("Kustom"), and LaserCraft, Inc., ("LaserCraft"), a patent relating to the
Company's Marksman hand-held laser speed detection system (the "Patent").
Kustom markets a laser speed measurement device along with radar speed
measurement devices. In fiscal 1996, the Company gave notice to Kustom that it
was potentially infringing the Patent by making and selling laser-based speed
measurement devices manufactured for them by LaserCraft. Although Kustom and
LaserCraft have not acknowledged infringement of the patent, they entered into
the License Agreement, whereby the Company granted Kustom and LaserCraft the
nonexclusive rights to manufacture and sell laser-based speed measurement
devices incorporating features covered by claims of the patent. In consideration
for the license under the Patent, the Company received a prepayment of licensing
fees for a predetermined number of devices sold by Kustom and will receive
subsequent license fees for each individual licensed device sold by Kustom.
Additionally, in consideration for LaserCraft's license under the Patent, the
Company will receive running license fees for each licensed device sold by
LaserCraft commencing with the first such licensed device sold under the terms
of the License Agreement, provided, however, that no such license fee is due or
payable by LaserCraft for any licensed device supplied by LaserCraft to Kustom
for subsequent resale. LaserCraft has agreed not to compete with the Company or
Kustom through direct sales of laser-based speed measurement devices in the law
enforcement market. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Royalty and Licensing Income."
GOVERNMENT REGULATION
The Company's laser products emit a laser light beam and as such are regulated
by the FDA and subject to approval by foreign governments. FDA regulations
impose eye safety requirements on the Company's products and governments of some
foreign countries have similar regulations. Management believes that the
Company's products are in compliance with all such regulations. To the extent
that these regulations change, there can be no assurance that the Company can
comply with these regulations at a reasonable cost. Failure to comply with such
regulations could have a material adverse effect on the Company.
The Marksman complies with FDA Class 1 eyesafety regulations and has been
classified Class 1 eyesafe by laboratories in Austria, Germany and Norway. Due
to FDA involvement in international standardization efforts for laser products
with the International Electrotechnical Commission, ("IEC"), Management is aware
of certain changes under consideration by the FDA that may affect current FDA
regulated emission limits of Class 1 pulsed lasers. Management does not believe
that such proposed changes will impact the Company's sales or results of
operations. However, there is no assurance of this.
In 1995, the National Highway Traffic Safety Administration ("NHTSA")
working in conjunction with the National Institute of Standards and Technology
(''NIST''), completed a national standard for performance specifications for
laser speed measurement devices and established a laboratory testing facility at
the University of California-Davis for testing of laser speed measurement
devices. In October 1995, the Company submitted a Marksman unit for testing. In
April 1996, the Marksman was certified by the International Association of
Chiefs of Police ("IACP") to meet the federal standard for laser speed
measurement devices. Upon receiving IACP certification, the Marksman was
subsequently placed on the IACP Approved Products List. This list is comprised
of speed enforcement products which have passed the national standard.
35
<PAGE>
Historically, there were four states within the U.S. that required the passage
of specific state legislation to enable the use of new technological
developments in speed enforcement. As of September 30, 1996, legislation has
been passed approving the use of laser-based speed measurement devices as an
acceptable means of speed enforcement in Florida, North Carolina and Virginia.
Management is currently unable to ascertain when legislation will be passed in
Pennsylvania and there is no assurance that such legislation will be passed.
Management also recognizes that many foreign countries have centralized law
enforcement and purchasing regulations requiring stringent performance and
accuracy standards. Management primarily acknowledges that Western Europe
purchasing authorities adhere to such performance and accuracy standards. The
Marksman is subject to approval by certain foreign governments where regulatory
controls exist for speed enforcement equipment. The Company has received
approval for the Marksman from government agencies in Germany, the United
Kingdom, Austria, Sweden, Switzerland, the Netherlands and France. The Marksman
has also been tested and approved by the Royal Canadian Mounted police in
Canada.
EMPLOYEES
As of September 30, 1996, the Company had sixty-three employees, consisting of
seven management personnel, nineteen employees engaged in the sales and
marketing activities of the Company, nine engineering personnel, eighteen
production related personnel and ten administrative and office personnel.
Management considers the relations between the Company and its employees to be
good. In addition to its full-time employees, the Company uses the services of
one contractual marketing representative and two contract engineers who provide
mechanical design and documentation services related to the Company's research
and development activities.
FACILITIES
In December 1995, the Company exercised its right to acquire additional
expansion space by leasing approximately 8,200 additional square feet adjacent
to the Company's current facilities. Due to increased demand for the Company's
products and increased marketing and administrative activities centered around
the Company's growing product lines, the Company intends to further expand its
office and production facilities in January 1997. In total, the Company's
current and anticipated lease arrangement provides approximately 24,000 square
feet in Englewood, Colorado under a lease agreement that expires in May 2003.
The combined facilities will contain approximately 12,000 square feet of
production space, 3,000 square feet allocated for research and development and
9,000 devoted to marketing and administrative activities. The Company has also
entered into an agreement with a partnership to sub-lease back a portion of a
former facility to continue to house the Company's machine shop facility. The
Company believes that its current and planned facilities are adequate for its
needs over the foreseeable future.
AGREEMENT WITH PLAZA RESOURCES COMPANY
In 1991, PRC loaned the Company a total of $950,000 to support the Company's
development of the LTI 20-20/Marksman. Under the terms of the Promissory Note,
Secured Note and Warrant Agreement, as amended (the "PRC Agreement"), the
Company also issued to PRC warrants to purchase 356,250 shares of Common Stock
at $3.00 per share and granted PRC certain royalties for a period of ten years
on sales of the Marksman or related products. The PRC Agreement further
provides that for a period of ten years PRC has the right to purchase in any
consecutive twelve month period up to the lesser of 25% or one hundred (100)
units of the finished product of the Marksman (or any other product line the
function of which is to measure the speed of an object) at a cost per item
determined by adding the cost of the raw materials for each item and the cost of
the construction assembly of each item. PRC has agreed that any Marksman
purchased shall be acquired only for donation by it to law enforcement agencies
selected by it and shall not be resold for profit. The Company has been advised
that the purpose of this arrangement to PRC and its parent, GEICO Corporation,
the parent holding company of Government Employees Insurance Company
("GEICO"), a national automobile insurer, is to introduce the Marksman to law
enforcement agencies as part of GEICO's continuing effort to promote automobile
safety by reducing speeds on the nation's highways.
Upon consummation of the Company's Public Offering, the Company paid to PRC
the sum of $2,139,000 from the net proceeds for the repayment of the notes to
PRC ("the PRC Loan"), plus interest accrued, in satisfaction of the PRC Loan
and the extinguishment of certain royalty and other obligations owed to PRC
under the PRC Agreement. The PRC
36
<PAGE>
Warrants (including registration rights therefor) and PRC's right to purchase
the Marksman continue. See "Certain Transactions."
LITIGATION
There are no material pending legal proceedings to which the Company or its
subsidiaries is a party or to which any of their property is subject.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David Williams.......... 41 President, Chief Executive Officer and Director
Jeremy G. Dunne......... 39 Vice President and Director
Dan N. Grothe........... 59 Secretary and Director
Pamela Sevy 31 Treasurer and Chief Financial Officer
William R. Carr......... 57 Director
H. DeWorth Williams..... 61 Director
F. James Lynch.......... 66 Director
Richard B. Sayford (1).. 64 Director
</TABLE>
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. As of September
30, 1996, the Company had not compensated its directors for service on the Board
of Directors or any committee thereof. In June 1994, the Company adopted a Stock
Option Plan for Non-Employee Directors, (the "Director Plan"). The Director
Plan provides for the grant of options to purchase 30,000 shares of the
Company's common stock to each member of the Company's Board of Directors who is
not an employee of the Company, and a grant of options to purchase 30,000 shares
to each non-employee director who is newly elected to the Board after the
effective date of the plan. The exercise price in each case is the fair market
value of the Company's Common Stock at the date of grant, based on the closing
sale price of the Common Stock on the American Stock Exchange on such date.
Pursuant to the Director Plan, as of September 30, 1996, options to purchase
30,000 shares were granted and are outstanding to each of four non-employee
directors at exercise prices ranging from $3.06 to $4.94 per share. In
addition, the Company reimburses each Director's out of pocket expenses incurred
in connection with their duties as directors.
The Compensation Committee of the Board of Directors governs the Company's
stock incentive program and to the extent permitted under Idaho law, exercises
all of the power and authority of the Board of Directors in the management of
the business and affairs of the Company between meetings of the Board of
Directors. Each officer of the Company serves at the discretion of the Board of
Directors.
As of September 30, 1996, there were two committees of the Board of Directors:
the Audit Committee consisting of Mr. Carr, Mr. Grothe, Mr. Lynch and Mr.
Sayford; and the Compensation Committee consisting of Mr. H. Deworth Williams,
Mr. Lynch and Mr. Carr.
David Williams. Mr. Williams has been employed by the Company since January,
1986. He served as Vice President of marketing and finance prior to becoming
President and Chief Executive Officer in December 1986. From 1983 to 1985, Mr.
Williams was a financial consultant with Williams Investments Company, a
financial consulting and venture capital firm. From 1981 to 1983, Mr. Williams
was a financial officer and consultant for Valley Care, Inc., a health care
provider. Mr. Williams is a 1981 graduate from the University of Utah with a
B.S. Degree in Finance.
Jeremy G. Dunne. Mr. Dunne has been employed by the Company since 1986. From
1981 to 1986, Mr. Dunne was a chief engineer for Hydrographic Services,
International in Southbrough Kent, England, a company that performs software and
system design for the hydrographic surveying industry. From 1980 to 1981, Mr.
Dunne was an electrical
37
<PAGE>
engineering technician with Plessy Marine, Ltd. in Ilford Essex, England, a
manufacturer of electronic instrumentation. Mr. Dunne earned a B.A. Degree in
Electrical Engineering from the University of Cambridge, Cambridge, England.
Dan N. Grothe. In May, 1993, Mr. Grothe became a full time employee of the
Company directing certain marketing activities focused on improving marketing to
federal and municipal government agencies. From 1989 to May of 1993, Mr. Grothe
was self employed as a financial advisor to corporations doing business with
governmental entities. From 1987 to 1989, Mr. Grothe was a vice president at
Hanifen Imhoff, Inc., Denver, Colorado, working primarily as a tax-exempt bond
underwriter. Mr. Grothe also serves as President of the Company's wholly-owned
subsidiary, Laser Communications, Inc., heading marketing efforts of the
Company's DAS100 Ship Docking Aid Systems.
Pamela Sevy. Ms. Sevy has been employed by the Company since August, 1987.
Prior to September 1992, when Ms. Sevy was appointed Chief Financial Officer of
the Company, she held the position of Controller. From 1985 to 1987, Ms. Sevy
conducted accounting operations for E.O.C., a Denver based, four store retail
optical outlet. From 1981 to 1985, Ms. Sevy was employed with PTI, an Englewood,
Colorado company specializing in corporate accounting and administrative
assistance.
William R. Carr. For thirty years and until his retirement in January, 1994,
Mr. Carr has been with the Northern Region of the United States Forest Service
having responsibility for the region's timber sale valuation and measurement
programs. During the past twenty years, Mr. Carr has chaired national forestry
committees and has been the recipient of the Regional Foresters Management
Effectiveness and Improvements Honor Award, and USDA Award for Distinguished
Service. Mr. Carr holds a M.S. Degree in Forestry from the University of
Montana.
H. DeWorth Williams. Mr. Williams is the owner of Williams Investment Company
and has been a financial consultant for more than twenty years. During this
time, Mr. Williams has been instrumental in facilitating and completing several
mergers, acquisitions, business consolidations and underwritings. Mr. Williams
is the brother of the Company's President, David Williams.
F. James Lynch. From 1976 to 1994, Mr. Lynch was Chairman and CEO of
Electromedics, Inc. Electromedics was acquired by Medtronic on April 25, 1994.
Electromedics designed, manufactured and marketed blood management equipment for
use in cardiovascular, orthopedic and other medium/high blood loss surgeries.
In 1995, Mr. Lynch organized FJL Venture Group which works with high technology
start-up companies. Mr. Lynch also serves as Managing Partner of Kerr Vehicle
Resources LLC and is a Board member and treasurer of St. Joseph Hospital
Foundation located in Denver, Colorado.
Richard B. Sayford. Since 1979, Mr. Sayford has been the President of
Strategic Enterprises, Inc., a privately held consulting firm specializing in
consulting with high technology companies and venture firms. Since 1980, Mr.
Sayford has served as a member of the Board of Directors of MCI Communications
Company. Mr. Sayford also serves on the Board of VISX, a manufacturer of laser
vision correction systems in Santa Clara, California. Mr. Sayford holds an MBA
degree from the Harvard Business School.
EXECUTIVE COMPENSATION
The following table sets forth a summary of cash and non-cash compensation for
each of the last three fiscal periods ended September 30, 1996, 1995 and 1994,
with respect to the Company's Chief Executive Officer. No executive officer of
the Company has earned a salary greater than $100,000 annually for any of the
periods depicted.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- ----------------------------- --------- ------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
David Williams............... 1996 $84,600 $-- $-- $--
President and C.E.O.......... 1995 75,675 -- -- --
.......... 1994 72,000 -- -- --
</TABLE>
38
<PAGE>
The preceding table does not include any amounts for noncash compensation,
including personal benefits, paid to David Williams. The Company believes that
the value of such noncash benefits and compensation paid to David Williams
during periods presented did not exceed the lesser of $50,000 or 10% of the cash
compensation reported for him.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FISCAL YEAR END FISCAL YEAR END
EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION UNEXERCISABLE UNEXERCISABLE
- --------------------------- -------------- --------------
<S> <C> <C>
David Williams, 45,500/ $ 14,105/
President, C.E.O. (1) 22,750 $ 7,052
</TABLE>
_________
(1) On June 3, 1994, the Company granted options to purchase 68,250 shares of
the Company's common stock to David Williams, President and CEO, pursuant to
the Company's Equity Incentive Plan. The options are non-transferable and
vest annually in three equal installments over a three year period.
EMPLOYMENT AGREEMENTS
Since July 1992, the Company has had employment agreements with David Williams
and Jeremy G. Dunne, pursuant to which they receive annual base salaries subject
to increases at the discretion of the Board of Directors. Each employment
agreement prohibits the employee from directly or indirectly competing with the
Company during and for a period of three years following termination of his
employment.
EQUITY INCENTIVE PLAN
In 1994, the Company terminated its previous incentive stock option plan, with
no options having been granted under the plan, and adopted an Equity Incentive
Plan, (the "Employee Plan"). The Employee Plan provides for the issuance of
options to key employees and consultants of the Company to purchase up to an
aggregate of 530,000 shares of the Company's Common Stock at the fair market
value of the stock at the date of grant, based on the closing sale price of the
Common Stock on the American Stock Exchange on such date. The Employee Plan also
allows for the grant of awards in the form of restricted stock, stock units or
stock appreciation rights, so long as the total number of shares of Common Stock
subject to all awards under the Employee Plan does not exceed 530,000. As of
September 30, 1996, options to purchase 506,500 shares of the Company's common
stock were outstanding, at exercise prices ranging from $3.50 to $5.25 per share
of which 297,584 options were exercisable at September 30, 1996. The options are
non-transferrable and primarily vest annually in three equal installments over a
three year period. The options expire five or ten years from the date of grant
or, if sooner, three months after the holder ceases to be an employee of the
Company (subject to certain exceptions contained in the Employee Plan).
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
Additionally, in 1994, the Company adopted the Laser Technology, Inc. Stock
Option Plan for Non-Employee Directors, (the "Director Plan"). The Director Plan
provides for the grant of options to purchase 30,000 shares of the Company's
Common Stock at the effective date of the plan to each member of the Company's
Board of Directors who is not an employee of the Company, and a grant of options
to purchase 30,000 shares to each non-employee director who is newly elected to
the Board after the effective date of the Director Plan. The maximum number of
shares that may be subject to options issued under the Director Plan is 120,000.
The exercise price in each case is the fair market value of the Common Stock on
the date of grant, determined in the same manner as under the Employee Plan. As
of September 30, 1996, pursuant to the Director Plan, options to purchase 30,000
shares have been granted to each outside director at exercise prices ranging
from $3.06 to $4.94 per share. Options granted under the Director Plan vest one-
third each year for three years and expire ten years after the date of grant,
or, if sooner, three months after the holder ceases to be a
39
<PAGE>
director of the Company (subject to certain exceptions contained in the Director
Plan). At September 30, 1996, 60,000 options were exercisable pursuant to the
Director Plan.
The total number of shares and type of security subject to these plans and to
any awards under these plans are subject to adjustment in the case of stock
splits, stock dividends and similar actions by the Company.
EMPLOYEE OPTIONS
In 1992, the Company issued for services rendered to the Company, options to
purchase an aggregate of 120,000 shares of LTI Common Stock, to three employees
of the Company. Under the terms of the options, beginning April 3, 1994 the
holders may exercise their options at the price of $3.00 per share. If the
Common Stock is trading at a price greater than $3.00 per share, the Company has
the option to purchase from the option holder up to 50% of the Common Stock
acquired by exercising the options by paying the holder thereof the difference
between the existing current market price and the exercise price. The options
are exercisable until April 1997. The shares are treated as outstanding for
purposes of computing primary earnings (loss) per share for the periods shown.
CERTAIN TRANSACTIONS
On February 21, 1991, the Company entered into the PRC Agreement, as amended
on October 24, 1991, pursuant to which the Company received an aggregate of
$950,000 in exchange for two secured notes, each having a ten-year term
beginning October 24, 1991 and each bearing interest at the face rate of 10% per
annum (20% effective rate as discussed below). The PRC Agreement further
provided that the Company was required to pay PRC in one lump sum on October 24,
1992, and monthly thereafter, a sum equal to 2% of the amount of gross sales by
the Company of the Marksman, or any other product line the function of which is
to measure the speed of a moving vehicle. By agreement between PRC and the
Company, payments under the PRC Agreement was extended until the earlier of the
consummation of the Company's Public Offering or January 15, 1993. Upon the
completion of the Company's Public Offering in January 1993, it repaid to PRC
the principal and accrued interest owed pursuant to the two notes and also
extinguished certain royalty and other obligations owed to PRC under the PRC
Agreement. The PRC Agreement further provides that PRC has the right until
October 24, 2001 to purchase in any consecutive twelve month period up to the
lesser of 25% or one hundred (100) units of the finished product of the Marksman
(or any other product line the function of which is to measure the speed of an
object) at a cost per item determined by adding the cost of the raw materials
for each item and the cost of the construction assembly of each item. PRC has
agreed that any Marksman purchased shall be acquired only for donation by it to
law enforcement agencies selected by it and shall not be resold for profit. The
PRC Agreement also grants PRC warrants to purchase 356,250 shares of Common
Stock, subject to increase in the event of certain dilutive events, at an
exercise price of $3.00 for a ten year period.
40
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information, to the best knowledge of the
Company, as of December 22, 1996 and as adjusted to reflect the sale of the
securities offered hereby, with respect to each person known by the Company to
own beneficially more than 5% of the outstanding Common Stock, each director and
all directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OWNERSHIP(1)
-------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED** OFFERING OFFERING
- ---- ------------ -------- --------
<S> <C> <C> <C>
David Williams * (2)(3)............................ 391,936 7.8% 5.7%
1501 W. Dry Creek Road
Littleton, Colorado 80120
Jeremy G. Dunne *(4)............................... 390,750 7.7% 5.7%
2686 E. Otero Place
Littleton, Colorado 80122
Dan N. Grothe *(5)................................. 32,000 .64% .47%
6837 South Elizabeth Street
Littleton, Colorado 80122
H. DeWorth Williams * (2)(6)....................... 569,157 11.3% 8.3%
P.O. Box 2145
Park City, Utah 84060
William R. Carr *(7)............................... 24,500 .49% .36%
6195 Gharrett
Missoula, Montana 59803
F. James Lynch *(8)................................ 22,000 .44% .32%
27 Blue Heron Drive
Greenwood Village, Colorado 80121
Richard B. Sayford*(9)............................. 14,000 .28% .20%
89 Silver Fox Drive
Greenwood Village, Colorado 80121
Plaza Resources Company (10)....................... 356,250 6.7% 5.0%
GEICO Plaza
Washington, D.C. 20076
Directors and officers as a group (8 persons)(11).. 1,546,152 29.4% 21.8%
</TABLE>
* Director
** Unless otherwise indicated in the footnotes below, the Company has been
advised that each person has sole voting power and dispositive power over
the shares indicated above.
(1) As of September 30, 1996 there were 4,999,433 shares of Common Stock
outstanding. Additionally, certain officers and directors hold stock
options to purchase 267,000 shares of Common Stock which are currently
exercisable. Therefore, for purposes of the table above, prior to the
Offering 5,266,433 shares of Common Stock are deemed to be issued and
outstanding in accordance with Rule 13d-3 adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended,
and 7,094,433 shares of Common Stock outstanding after the Offering. See
"Prospectus Summary--The Offering." Percentage ownership is calculated
separately for each person on the basis of the actual number of outstanding
shares as of September 30, 1996 and assumes the exercise of options held by
such person (but not by anyone else) exercisable within sixty days.
41
<PAGE>
(2) David Williams disclaims beneficial ownership of the shares of Common Stock
owned by H. DeWorth Williams and H. DeWorth Williams disclaims beneficial
ownership of the shares of Common Stock owned by David Williams.
(3) Includes 45,500 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(4) Includes 45,500 shares which may be acquired by Mr. Dunne pursuant to the
exercise of stock options exercisable within sixty days.
(5) Includes 22,000 shares which may be acquired by Mr. Grothe pursuant to the
exercise of stock options exercisable within sixty days.
(6) Includes 20,000 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(7) Includes 20,000 shares which may be acquired by Mr. Carr pursuant to the
exercise of stock options exercisable within sixty days.
(8) Includes 20,000 shares which may be acquired by Mr. Lynch pursuant to the
exercise of stock options exercisable within sixty days.
(9) Includes 10,000 shares which may be acquired by Mr. Sayford pursuant to the
exercise of stock options exercisable within sixty days.
(10) Includes 356,250 shares of Common Stock issuable upon exercise of the PRC
Warrants. PRC is a wholly owned subsidiary of GEICO Corporation. See
"Business--Agreement with Plaza Resources Company", and "Certain
Transactions."
(11) Includes 267,000 shares which may be acquired by the Company's officers or
directors within sixty days pursuant to the exercise of stock options at
various prices.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 25,000,000 shares of Common Stock, par
value $.01 per share, of which 5,088,201 shares are issued and outstanding as of
the date hereof, including treasury shares and excluding the Common Stock
underlying the Units being offered by the Company hereby.
All shares of Common Stock have equal rights and privileges with respect to
voting, liquidation and dividend rights. Each share of Common Stock entitles the
holder thereof to (i) one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders; (ii) to participate equally
and to receive any and all such dividends as may be declared by the Board of
Directors out of funds legally available therefore; and (iii) to participate pro
rata in any distribution of assets available for distribution upon liquidation
of the Company.
Stockholders of the Company have no preemptive rights to acquire additional
shares of Common Stock or any other securities. The Common Stock is not subject
to redemption and carries no subscription or conversion rights. All outstanding
shares of Common Stock are, and all shares of Common Stock to be outstanding
upon completion of this Offering will be, fully paid and non-assessable.
As permitted by the provisions of the Idaho General Business Corporation Law
(the "Idaho Code"), the Company has the power to indemnify any officer or
director who, in their capacity as such, is made or threatened to be made a
party to any suit or proceeding, whether criminal, administrative or
investigative, if such officer or director acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Company. An officer or director shall be indemnified against expenses to the
extent they have been successful on the merits or otherwise in defense of any
action, suit or proceeding. Such indemnification is not exclusive of any other
rights to which those seeking indemnification may be entitled under the By-Laws,
any agreement, vote of stockholders or disinterested directors or otherwise.
Further, the Idaho Code permits a corporation to purchase and maintain liability
insurance on behalf of its officers, directors, employees and agents.
Also pursuant to the Idaho Code, a corporation may set forth in its articles
of incorporation a provision eliminating or limiting in certain circumstances
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as director. These provisions do
not eliminate or limit the liability of a director (i)
42
<PAGE>
for any breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for liability
arising under Section 30-1-48 of the Idaho Code (relating to the declaration of
dividends and purchase or redemption of shares in violation of the Idaho Code);
or (iv) for any transaction from which the director derived an improper personal
benefit. In addition, these provisions do not limit the right of the corporation
or its stockholders, in appropriate circumstances, to seek equitable remedies
such as injunctive or other forms of non-monetary relief, which remedies may not
be effective in all cases.
REDEEMABLE WARRANTS
The Redeemable Warrants have been issued in registered form pursuant to an
agreement, dated January 11, 1993 (the "Warrant Agreement"), between the Company
and Continental Stock Transfer & Trust Company (the "Warrant Agent"). The
following discussion of certain terms and provisions of the Redeemable Warrants
is qualified in its entirety by reference to the detailed provisions of the
Warrant Agreement, the form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
One Redeemable Warrant represents the right of the registered holder to
purchase one share of Common Stock at an exercise price of $6.00 per share,
subject to adjustment (the "Purchase Price"). The Redeemable Warrants will be
entitled to the benefit of adjustments in the Purchase Price and in the number
of shares of Common Stock and/or other securities deliverable upon the exercise
thereof in the event of a stock dividend, stock split, reclassification,
reorganization, consolidation or merger. The Company has the right to reduce
the Purchase Price or increase the number of shares of Common Stock issuable
upon the exercise of the Redeemable Warrants.
Unless previously redeemed, the Redeemable Warrants may be exercised at any
time commencing January 11, 1993 and prior to the close of business on January
11, 1998 (the "Expiration Date"). On and after the Expiration Date, the
Redeemable Warrants become wholly void and of no value. The Company may at any
time extend the Expiration Date of all outstanding Redeemable Warrants for such
increased period of time as it may determine. The Redeemable Warrants may be
exercised at the office of the Warrant Agent.
The Company has the right at any time after July 11, 1994 to redeem the
Redeemable Warrants in whole for cancellation at a price of $.05 each, by
written notice mailed 30 days prior to the redemption date to each Redeemable
Warrant holder at his address as it appears on the books of the Warrant Agent;
provided, however, that the Company does not have the right to call for
redemption any of the Redeemable Warrants underlying the Underwriter's Warrants.
Such notice may only be given within 10 days following any period of 30
consecutive trading days during which the closing sale price of the shares of
Common Stock (traded on the AMEX) exceeds $8.00 per share, subject to
adjustments for stock dividends, stock splits and the like. If the Redeemable
Warrants are called for redemption, they must be exercised prior to the close of
business on the date of any such redemption or the right to purchase the
applicable shares of Common Stock is forfeited.
No holder, as such, of Redeemable Warrants shall be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purpose whatsoever until such Redeemable Warrants have been duly exercised and
the Purchase Price has been paid in full.
UNDERWRITER'S UNITS
In connection with the Company's public Unit Offering, the Company sold to the
Underwriter, for nominal consideration, nonredeemable warrants ("Underwriter's
Warrants") to purchase from the Company 138,000 units ("Underwriter's Units").
Each of the Underwriter's Warrants is exercisable at a price of $8.25 per unit
for a period of four years commencing January 11, 1994. The shares of Common
Stock and the warrants comprising the Underwriter's Units and issuable upon
exercise of the Underwriter's Warrants are identical to those offered in the
Company's Unit Offering except that the warrants contained in the Underwriter's
Units cannot be redeemed and each is exercisable to purchase one share of Common
Stock at $9.90 per share ("Underwriter's Nonredeemable Warrants"). The
Underwriter's Warrants contain anti-dilution provisions providing for adjustment
of the number of warrants and exercise price under certain circumstances.
TRANSFER AGENT AND WARRANT AGENT
43
<PAGE>
The transfer agent and registrar for the Common Stock and the warrant agent
for the Redeemable Warrants is Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004.
PLAN OF DISTRIBUTION
This Offering is being made by the Company in connection with the exercise of
outstanding Redeemable Warrants to purchase shares of the Company's Common
Stock, and which Redeemable Warrants were previously sold to the public as part
of Units in the Company's public offering by the Prospectus dated January 11,
1993. There are currently issued and outstanding 1,552,000 Redeemable Warrants
(plus an additional 138,000 Underwriter's Nonredeemable Warrants that are part
of the Units underlying the Underwriter's Warrants, which Underwriter's Warrants
to date have not been exercised), all of which may be exercised to purchase the
Company's Common Stock pursuant to this Offering. There is no minimum number of
shares which must be purchased upon the exercise of the Warrants, except that
one Warrant is required to purchase one share of Common Stock and no fractional
shares will be issued. There are no arrangements to escrow any of the funds to
be paid in connection with the exercise of the Warrants. All payments made
pursuant to the exercise of the Warrants will be made directly to the Company
and may be used by the Company immediately upon receipt.
Registered holders may exercise their Redeemable Warrants by surrendering the
certificate representing the Redeemable Warrants together with the Warrant
Exercise Form on the warrant certificate, properly completed and signed, with
full payment of the exercise price payable to the Company. Redeemable Warrants
may be exercised in whole or in part. If Redeemable Warrants are exercised in
part, a new warrant certificate will be issued for the remaining number of
shares. No fractional shares will be issued upon the exercise of Redeemable
Warrants; rather, they will be settled for cash. All payments must be received
by the Company prior to the expiration date or the redemption date established
by the Company, and Warrants not exercised prior to the expiration date will
expire.
Under certain circumstance, Knickerbocker Securities, Inc. shall be entitled
to receive an aggregate of 5% of the purchase price of the underlying Common
Stock for each Redeemable Warrant solicited and exercised through the facilities
of said broker-dealer. No fee will be paid for the exercise of Redeemable
Warrants directly with the Company.
The exercise price of $6.00 per share for each Redeemable Warrant ($9.90 per
share for each Underwriter's Nonredeemable Warrant) was arbitrarily determined
by the Company and by negotiation with its Underwriter in the Company's public
offering and the price bears no relationship to the Company's assets, earnings,
book value or to any other established criteria of value. Thus, the exercise
prices of the Warrants should not be considered an indication of the actual
value of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
The shares issued pursuant to this Offering will be freely tradeable without
restriction or further registration under the Act, except for any shares
purchased by an affiliate of the Company, as such term is defined in regulations
under the Act. Upon completion of this Offering, approximately 1,279,152 shares
of Common Stock will be held by the Company's current stockholders and will be
subject to Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned restricted shares of the
Company for at least two years, including any person who may be deemed to be an
"affiliate" of the Company (as the term "affiliate" is defined under the Act),
is entitled to sell, within any three-month period, an amount of shares that
does not exceed the greater of (I) the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding such sale or
(ii) 1% of the shares then outstanding following the Offering, assuming the
Underwriters' over-allotment option is not exercised. A person who is not
deemed to be an "affiliate" of the Company and who has held restricted shares
for at least three years would be entitled to sell such shares without regard to
the resale limitations of Rule 144.
Beginning the date of this Prospectus , in addition to the shares underlying
the securities issued in this Offering and 3,720,281 tradeable shares of Common
Stock outstanding prior to the Offering, an additional 1,279,152 shares of
Common Stock deemed restricted securities will be eligible to be sold under Rule
144 of the Act subject to the volume and other restrictions of Rule 144.
44
<PAGE>
No predictions can be made of the effect, if any, that sales of the Common
Stock under Rule 144 or the availability of the Common Stock for sale will have
on the market price prevailing from time to time. Sales of substantial amounts
of the Common Stock pursuant to Rule 144 could subsequently adversely affect the
market price of the Common Stock.
CONCURRENT REGISTRATION OF COMMON STOCK
Concurrently herewith, 100,000 shares of Common Stock and 260,000 shares of
Common Stock underlying Redeemable Warrants have also been registered under the
Securities Act of 1933 for resale from time to time during the effectiveness of
the registration and are being offered by a separate prospectus. The Company
will not receive any of the proceeds from the sales by the Selling Stockholders
of the 100,000 shares of Common Stock, although the Company would realize the
proceeds from the exercise of the Redeemable Warrants.
LEGAL MATTERS
Legal matters in connection with this Offering including the validity of the
Shares, offered hereby will be passed upon for the Company by Leonard E.
Neilson, Attorney at Law, P.C., 1121 East 3900 South, Suite C-200, Salt Lake
City, Utah 84124. Mr. Neilson is also the beneficial owner of 27,019 shares of
the Company's Common Stock.
EXPERTS
The financial statements and schedule included in this Prospectus and in the
Registration Statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a post-effective amendment to its registration statement on Form
S-1 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the securities being offered by this Prospectus. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
securities offered, reference is hereby made to the Registration Statement and
the schedules and exhibits filed as a part thereof. Statements contained in
this Prospectus concerning the contents or provisions of any contract, agreement
or other document are not necessarily complete, and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement. Each such statement shall be deemed qualified in its entirety by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected, without charge, at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional
Offices located at 410 17th Street, Suite 700, Denver, Colorado 80202, 7 World
Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison Street,
Chicago, Suite 1400, Illinois 60661. Copies of all or any portion of the
Registration Statement can be obtained from the Commission, upon payment of
prescribed fees.
45
<PAGE>
LASER TECHNOLOGY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants...................... F-2
Consolidated Balance Sheets............................................. F-3
Consolidated Statements of Operations................................... F-4
Consolidated Statements of Stockholders' Equity......................... F-5
Consolidated Statements of Cash Flows................................... F-6
Summary of Accounting Policies.......................................... F-7-F-8
Notes to Consolidated Financial Statements.............................. F-9-F-14
Financial Statement Schedule--
Schedule II--Valuation and Qualifying Accounts........................ S-1
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
Laser Technology, Inc.
Englewood, Colorado
We have audited the accompanying consolidated balance sheets of Laser
Technology, Inc. and subsidiaries as of September 30, 1996 and 1995 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1996. We
have also audited the schedule listed in the accompanying index. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and schedule. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statement and schedule.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Laser
Technology, Inc. and subsidiaries at September 30, 1996 and 1995 and the
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1996 in conformity with generally accepted
accounting principles.
Also, in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
BDO Seidman, LLP
Denver, Colorado
November 13, 1996
F-2
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1996 1995
ASSETS ----------- -----------
------
<S> <C> <C>
Current:
Cash and cash equivalents.......................... $ 2,247,239 $ 1,593,521
Investments........................................ 600,000 2,381,187
Trade accounts receivable (Note 6), less allowance
of $10,000 for doubtful accounts.................. 2,764,325 1,657,530
Inventories (Note 1)............................... 2,577,635 2,293,606
Deferred income tax benefit (Note 4)............... 52,000 46,000
Prepaids and other current assets.................. 428,079 271,122
----------- -----------
Total current assets............................. 8,669,278 8,242,966
Property and equipment, net of accumulated
depreciation and amortization (Note 2)............ 1,113,274 582,714
Long-term investments.............................. 611,273 --
Other assets....................................... 269,634 172,615
----------- -----------
$10,663,459 $ 8,998,295
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current:
Accounts payable................................... $ 723,178 $ 279,490
Accrued expenses................................... 247,426 129,113
----------- -----------
Total current liabilities........................ 970,604 408,603
----------- -----------
Commitments (Note 5)
Stockholders' equity (Note 3):
Common stock, $.01 par value-shares authorized
25,000,000; shares issued 5,088,201 and 5,078,368. 50,882 50,784
Additional paid-in capital......................... 9,623,980 9,584,287
Treasury stock at cost, 88,768 shares.............. (17,535) (17,535)
Retained earnings (deficit)........................ 35,528 (1,027,844)
----------- -----------
Total stockholders' equity....................... 9,692,855 8,589,692
----------- -----------
$10,663,459 $ 8,998,295
=========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-3
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales (Note 6)............................ $9,306,777 $8,225,776 $5,303,299
Less cost of goods sold....................... 4,241,389 3,864,473 2,527,322
---------- ---------- ----------
Gross profit.................................. 5,065,388 4,361,303 2,775,977
Royalty and licensing income.................. 401,121 -- --
---------- ---------- ----------
Total operating income........................ 5,466,509 4,361,303 2,775,977
Operating expenses.......................... 4,058,908 3,431,694 2,766,426
---------- ---------- ----------
Income from operations........................ 1,407,601 929,609 9,551
Interest income, net.......................... 235,771 157,523 86,555
---------- ---------- ----------
Income before taxes on income................. 1,643,372 1,087,132 96,106
Taxes on income (Note 4)...................... 580,000 383,000 37,000
---------- ---------- ----------
Net income.................................... $1,063,372 $ 704,132 $ 59,106
========== ========== ==========
Income per common share....................... $ 0.20 $ 0.14 $ 0.01
========== ========== ==========
Weighted average shares outstanding........... 5,209,981 4,989,600 5,008,381
========== ========== ==========
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-4
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
----------------- PAID-IN TREASURY EARNINGS
SHARES AMOUNT CAPITAL STOCK (DEFICIT) TOTAL
--------- ------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1,
1993................... 5,077,650 $50,777 $9,519,489 $ (17,689) $(1,791,082) $7,761,495
Stock issued for
services primarily at
$4.00 per share...... 718 7 64,798 154 -- 64,959
Net income for the
year................. -- -- -- -- 59,106 59,106
--------- ------- ---------- --------- ----------- ----------
Balance, September 30,
1994................... 5,078,368 50,784 9,584,287 (17,535) (1,731,976) 7,885,560
Net income for the
year................. -- -- -- -- 704,132 704,132
--------- ------- ---------- --------- ----------- ----------
Balance, September 30,
1995................... 5,078,368 50,784 9,584,287 (17,535) (1,027,844) 8,589,692
Exercised stock op-
tions................ 9,833 98 39,693 -- -- 39,791
Net income for the
year................. -- -- -- -- 1,063,372 1,063,372
--------- ------- ---------- --------- ----------- ----------
Balance, September 30,
1996................... 5,088,201 $50,882 $9,623,980 $ (17,535) $ 35,528 $9,692,855
========= ======= ========== ========= =========== ==========
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-5
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Operating activities:
Net income............................... $1,063,372 $ 704,132 $ 59,106
Adjustments to reconcile net income to
cash provided by (used in) operating ac-
tivities:
Depreciation and amortization........... 184,119 179,620 141,023
Deferred income taxes................... (6,000) 257,000 7,000
Stock issued for services............... -- -- 64,959
Changes in operating assets and liabili-
ties:
Trade accounts receivable.............. (1,106,795) 590,934 (766,563)
Refundable income taxes................ -- -- 108,000
Inventories............................ (284,029) (896,209) 254,677
Other assets........................... (160,458) 433 14,301
Accounts payable and accrued expenses.. 511,465 127,829 82,821
---------- ---------- ----------
Cash provided by (used in) operating
activities................................ 201,674 963,739 (34,676)
---------- ---------- ----------
Investing activities:
Purchases of property and equipment...... (632,437) (74,894) (208,497)
Purchases of investments................. (631,117) (2,370,538) (2,684,144)
Proceeds from sale of investments........ 1,801,031 2,058,916 2,811,515
Patent costs paid........................ (115,761) (83,573) (40,582)
---------- ---------- ----------
Cash provided by (used in) investing activ-
ities..................................... 421,716 (470,089) (121,708)
---------- ---------- ----------
Financing activities:
Payments on long-term debt............... (9,463) (200,129) (54,628)
Proceeds from exercise of stock options.. 39,791 -- --
---------- ---------- ----------
Cash provided by (used in) financing activ-
ities..................................... 30,328 (200,129) (54,628)
---------- ---------- ----------
Increase (decrease) in cash and cash equiv-
alents.................................... 653,718 293,521 (211,012)
Cash and cash equivalents, beginning of
year...................................... 1,593,521 1,300,000 1,511,012
---------- ---------- ----------
Cash and cash equivalents, end of year..... $2,247,239 $1,593,521 $1,300,000
========== ========== ==========
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-6
<PAGE>
LASER TECHNOLOGY, INC.
SUMMARY OF ACCOUNTING POLICIES
PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements presented are those of Laser
Technology, Inc. (the "Company") and its wholly-owned subsidiaries, Laser
Communications, Inc., Laser Technology, U.S.V.I., and International
Measurement and Control Company. All significant intercompany transactions
have been eliminated. Laser Technology, Inc. is engaged in the business of
developing, manufacturing, and marketing laser based measurement instruments.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash and cash
equivalents, investments, trade accounts receivable, accounts payable and
accrued expenses approximated fair value because of the immediate or short-
term maturity of these instruments.
INVESTMENTS
The Company accounts for marketable securities in accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". All marketable equity and debt securities have
been categorized as available for sale as the Company does not have the
positive intent to hold to maturity or does not intend to trade actively.
These securities are stated at fair value which approximates cost.
At September 30, 1996 and 1995 investments consisted of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current:
U.S. Government Obligations...................... $ 600,000 $2,381,187
Non-current:
Municipal Bonds.................................. 611,273 --
---------- ----------
$1,211,273 $2,381,187
========== ==========
</TABLE>
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined by
the first-in, first out (FIFO) method.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost. Depreciation of property and
equipment is computed using straight-line and accelerated methods over the
estimated useful lives of the related assets, primarily from five to seven
years.
F-7
<PAGE>
LASER TECHNOLOGY, INC.
SUMMARY OF ACCOUNTING POLICIES--CONCLUDED
RESEARCH AND DEVELOPMENT COSTS
Research and development costs related to the Company's laser measurement
instruments are expensed as incurred and included in operating expenses.
Research and development costs totalled $514,000, $363,000 and $273,000 for
the years ended September 30, 1996, 1995 and 1994.
TAXES ON INCOME
Under the provisions of SFAS No. 109, the Company's policy is to provide
deferred income taxes related to property and equipment, inventories and other
items that result in differences between the financial reporting and tax basis
of assets and liabilities.
INCOME PER SHARE
Income per share is computed using the weighted average number of common and
common equivalent shares outstanding during each period. Common stock options
and warrants are included as common stock equivalents when dilutive.
REVENUE RECOGNITION
Revenue is recognized upon shipment of goods to the customer. The Company's
general sales terms allow for a 1% discount in 10 days/net 30 days. Other than
to customers deemed creditworthy, international sales primarily require
immediate payment or a letter of credit (See Note 6). Royalties and licensing
fees are recorded as earned in accordance with specific terms of each license
agreement.
STATEMENT OF CASH FLOWS
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents. At September 30, 1996 and 1995, cash and cash equivalents
included money market and mutual fund accounts of approximately $2,077,000 and
$817,000.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets" and SFAS No. 123, "Accounting for Stock Based
Compensation". SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles be reported at the lower of the carrying amount or
their estimated recoverable amount and the adoption of this statement by the
Company is not expected to have an impact on the financial statements. SFAS
No. 123 encourages the accounting for stock-based employee compensation
programs to be reported within the financial statements on a fair value based
method. If the fair value based method is not adopted, then the statement
requires pro-forma disclosure of net income and earnings per share as if the
fair value based method had been adopted. The Company has not yet determined
how SFAS No. 123 will be adopted nor its impact on the financial statements.
Both statements are effective for fiscal years beginning after December 15,
1995.
F-8
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1996 1995
---------- ----------
<S> <C> <C>
Finished goods........................................... $ 710,027 $ 499,976
Work-in-process.......................................... 785,339 822,649
Raw materials and supplies............................... 1,082,269 970,981
---------- ----------
$2,577,635 $2,293,606
========== ==========
</TABLE>
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------
1996 1995
---------- ---------
<S> <C> <C>
Shop equipment............................................ $ 691,885 $ 612,548
Office equipment.......................................... 479,843 210,371
Leasehold improvements.................................... 335,069 206,791
Automobiles............................................... 214,841 98,509
Furniture/fixtures........................................ 127,504 49,019
---------- ---------
1,849,142 1,177,238
Less accumulated depreciation and amortization............ 735,868 594,524
---------- ---------
$1,113,274 $ 582,714
========== =========
</TABLE>
Depreciation expense was $161,877, $163,610 and $130,831 for the years ended
September 30, 1996, 1995 and 1994.
3. STOCKHOLDERS' EQUITY
PUBLIC OFFERING
During January 1993, the Company completed a public offering consisting of
the sale of 1,552,000 units at an offering price of $5.00 per unit. Each unit
consisted of one share of the Company's common stock and one redeemable
warrant. Each redeemable warrant entitles the holder to purchase one share of
common stock upon the payment of $6.00, subject to adjustment, until January
11, 1998. The redeemable warrants are subject to redemption. The securities
comprising the units are currently separate and transferable.
As part of the public offering, the Company sold to the underwriter
nonredeemable warrants to purchase 138,000 units. Each nonredeemable warrant
allows for purchase of one share of common stock and one redeemable warrant,
upon the payment of $8.25, subject to adjustment, until January 11, 1998. The
redeemable warrants exercisable under these underwriter's warrants are
exercisable at $9.90 per share and are identical to the redeemable warrants
issued with the units under the public offering.
Additionally, in connection with the offering, the Company sold to an
unrelated partnership, 100,000 redeemable warrants at a price of $.10 per
warrant.
F-9
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CAPITAL STOCK
At September 30, 1996, the Company had 3,214,250 common shares reserved or
available for issuance as follows:
<TABLE>
<S> <C>
Common Shares:
Equity Incentive Plan............................................... 530,000
Non-Employee Director Stock Option Plan............................. 120,000
Unqualified stock option agreements................................. 120,000
Warrants:
Redeemable warrants................................................. 1,652,000
PRC warrants........................................................ 356,250
Underwriter's nonredeemable warrants................................ 276,000
Laser Partners' warrants............................................ 160,000
---------
3,214,250
=========
</TABLE>
PRC WARRANTS
Under a previously existing loan agreement, the Company granted Plaza
Resources Company ("PRC") the right to purchase specified quantities of
defined products at the Company's cost, as well as granting PRC warrants to
purchase shares of the Company's stock. The warrant agreement grants PRC the
right to purchase a total of 356,250 shares of common stock at $3.00 per share
for a ten year period. See summary of accounting policies for treatment of
warrants in computation of earnings per share.
EQUITY INCENTIVE PLAN
In 1994, the Company terminated its previous Employee Stock Incentive Plan
and adopted an Equity Incentive Plan (the "Employee Plan") for the purpose of
providing key employees and consultants with added incentives to continue in
the service of the Company and to create in such employees and consultants a
more direct interest in the future operations of the Company. The Employee
Plan permits the grant of stock options, restricted stock awards, stock
appreciation rights, stock units and other grants to all of the Company's
eligible employees and consultants.
The Employee Plan is administered by the Compensation Committee of the Board
of Directors. The committee has the authority to determine the employees or
consultants to whom awards will be made, the amount of the awards, and the
other terms and conditions of the awards.
The grant of stock options under the Employee Plan is intended either to
qualify as "incentive stock options" under the Internal Revenue Code or "non-
qualified options" not intended to qualify. Stock options are granted at a
price not less than 100% of the fair market value on the date the option is
granted.
Under the Employee Plan 530,000 shares of the Company's common stock are
reserved for issuance. Options granted to employees vest at the rate of one-
third per year and are fully vested after three years of continuous employment
from the date of grant. During the year ended September 30, 1996, options to
purchase 9,833 shares of common stock were exercised. As of September 30,
1996, options to purchase 506,500 shares of the Company's common stock were
outstanding, at exercise prices ranging from $3.50 to $5.25 per share of which
297,584 options were exercisable at September 30, 1996.
F-10
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
In 1994, the Company adopted a Non-Employee Director Stock Option Plan (the
"Director Plan") for the purpose of providing non-employee directors with
added incentives to continue in the service of the Company and a more direct
interest in the future operations of the Company.
Under the terms of the Director Plan, non-employee directors on the
effective date of the Director Plan and each non-employee director elected
thereafter shall receive options to purchase 30,000 shares of common stock.
Stock options are granted at a price not less than 100% of the fair market
value on the date the option is granted.
Under the Director Plan 120,000 shares of the Company's common stock are
reserved for issuance. Such options granted to non-employee directors of the
Company vest at the rate of one-third per year and are fully vested after
three years of continuous service from the date of grant. As of September 30,
1996 options to purchase 120,000 shares of the Company's common stock were
outstanding at exercise prices ranging from $3.06 to $4.94 per share of which
60,000 options were exercisable at September 30, 1996.
UNQUALIFIED STOCK OPTIONS
In April 1992 the Company granted options to purchase an aggregate of
120,000 shares of its common stock to three employees for services rendered.
Under the terms of the options, the employee may exercise his/her options at
the price of $3.00 per share over a three year period beginning April 3, 1994,
provided that he/she remain employed by the Company. If the Company's common
stock is trading at a price greater than $3.00 per share, the Company has the
option to purchase up to 50% of the Common Stock acquired by the employee
exercising his/her options at a price equal to the difference between the
current market price and the exercise price.
The following is a summary of option activity:
<TABLE>
<CAPTION>
NUMBER OPTION PRICE
OF SHARES PER SHARE EXPIRATION
--------- -------------- ----------------------
<S> <C> <C> <C>
Options outstanding at
September 30, 1994............ 696,250 $3.00 to $4.25
Options granted................ 77,250 $3.06 to $4.94 June 2005
Options canceled or expired.... (44,000) $4.25
------- --------------
Options outstanding at
September 30, 1995............ 729,500 $3.00 to $4.94
Options granted................ 37,000 $3.75 to $5.25 Nov. 2005 to Aug 2006
Options exercised.............. (9,833) $3.75 to $4.25
Options canceled or expired.... (10,167) $3.75 to $4.25
------- --------------
Options outstanding at
September 30, 1996 ........... 746,500 $3.00 to $5.25 April 1997 to Aug 2006
======= ==============
Options exercisable at
September 30, 1996............ 477,584 $3.00 to $5.25
======= ==============
</TABLE>
4. TAXES ON INCOME
For the years ended September 30, 1996, 1995 and 1994 the provision for
federal and state income taxes consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Current:
Federal............................................ $541,000 $114,000 $ --
State.............................................. 45,000 12,000 --
Deferred:
Federal............................................ (6,000) 230,000 33,000
State.............................................. -- 27,000 4,000
-------- -------- -------
$580,000 $383,000 $37,000
======== ======== =======
</TABLE>
F-11
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company believes that it is more likely than not that it will realize
the deferred tax asset. Therefore, no valuation allowance has been provided.
A reconciliation of income taxes at the federal statutory rate to the
effective tax rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Income taxes computed at the federal statutory rate. $559,000 $370,000 $32,000
State income taxes, net of federal benefit.......... 42,000 8,000 3,000
Other............................................... (21,000) 5,000 2,000
-------- -------- -------
Taxes on income..................................... $580,000 $383,000 $37,000
======== ======== =======
</TABLE>
The types of temporary differences between the tax basis of assets and
liabilities that give rise to a significant portion of the deferred tax asset
and their approximate tax effect are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------
1996 1995
------- -------
<S> <C> <C>
Future deductions:
Inventories (Uniform Capitalization Rules)................... $49,000 $31,000
Other........................................................ 3,000 15,000
------- -------
$52,000 $46,000
======= =======
</TABLE>
5. COMMITMENTS
EMPLOYMENT AGREEMENTS
The Company has employee agreements with its President and Vice-President.
The agreements which expire in 1997, provide for base salary and increases at
the discretion of the Board of Directors. Each employment agreement prohibits
the individual from directly or indirectly competing with the Company for a
period of three years following termination of employment.
FACILITY LEASES
The Company has various operating lease agreements for office and
manufacturing facilities that expire through May 31, 2003. Rent expense under
operating lease agreements was $119,000, $93,000 and $66,000 for the years
ended September 30, 1996, 1995 and 1994.
As of September 30, 1996 future minimum lease payments under operating lease
agreements are as follows:
<TABLE>
<S> <C>
1997................................................................. $120,000
1998................................................................. 111,000
1999................................................................. 107,000
2000................................................................. 114,000
2001................................................................. 122,000
Thereafter........................................................... 255,000
--------
$829,000
========
</TABLE>
F-12
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. CUSTOMERS, EXPORT SALES AND CONCENTRATIONS OF CREDIT RISK
The Company operates primarily in one industry segment which includes the
manufacturing and marketing of laser speed and distance measurement
instruments.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
investments, and trade accounts receivable.
The Company invests temporary cash in demand deposits, certificates of
deposit, money market accounts and mutual funds with quality financial
institutions and in securities backed by the United States government. Such
deposit accounts at times may exceed federally insured limits. The Company has
not experienced any losses in such accounts.
The Company markets its laser measurement instruments to three major classes
of customers. The Company's trade accounts receivable subject to credit risk
from those customers are as follows at September 30, 1996:
<TABLE>
<S> <C>
Foreign distributors (a)............................................ $1,957,903
State and local municipalities (b).................................. 493,310
U.S. government agencies (c)........................................ 156,169
Other receivables................................................... 166,943
----------
2,774,325
Less allowance for doubtful accounts................................ 10,000
----------
$2,764,325
==========
</TABLE>
- --------
(a) To date, the Company's foreign sales are transacted primarily through
distributors. Generally, foreign sales require immediate payment or
establishment of a letter of credit. As discussed below, sales to two
different foreign distributors individually accounted for 12% of sales in
1996 and 15% of sales in 1994.
(b) The Company's domestic sales of its laser speed instruments have been
primarily to state and local law enforcement agencies. These agencies are
dispersed across geographic areas.
(c) Domestically, the Company's sales of its laser distance measurement
systems have been to U.S. Governmental agencies.
For the year ended September 30, 1996, one customer accounted for 12% of
sales. For the year ended September 30, 1995, no single customer accounted for
more than 10% of sales. For the year ended September 30, 1994, sales to one
customer accounted for 15% of sales.
A summary of the Company's sales by geographic area is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Foreign sales:
Asia........................................ $2,187,000 $1,540,000 $ 329,000
Europe (primarily Austria in 1995 and 1994). 1,233,000 1,171,000 964,000
Canada...................................... 552,000 680,000 683,000
Australia................................... 326,000 124,000 114,000
Other....................................... 292,777 109,776 266,999
---------- ---------- ----------
Total foreign sales........................... 4,590,777 3,624,776 2,356,999
Domestic sales................................ 4,716,000 4,601,000 2,946,300
---------- ---------- ----------
$9,306,777 $8,225,776 $5,303,299
========== ========== ==========
</TABLE>
The Company has no foreign assets.
F-13
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest............................................ $ 860 $13,197 $13,287
Income taxes........................................ 487,161 90,000 1,510
Non-cash investing activities:
Leasehold improvements acquired in exchange for
debt............................................... -- -- 202,360
Non-cash financing activities:
Common stock and treasury stock issued for services. -- -- 64,959
</TABLE>
F-14
<PAGE>
LASER TECHNOLOGY, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO BALANCE
AT BEGINNING COSTS AND AT END
OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year Ended September 30, 1994...... $10,000 $ -- $ -- $10,000
Year Ended September 30, 1995...... 10,000 17,254 (17,254) 10,000
Year Ended September 30, 1996...... 10,000 -- -- 10,000
</TABLE>
S-1
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
___________________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................. 3
The Company........................................ 8
Risk Factors....................................... 8
Dilution........................................... 12
Use of Proceeds.................................... 13
Market Information................................. 13
Dividend Policy.................................... 14
Capitalization..................................... 14
Selected Financial Data............................ 15
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 16
Business........................................... 21
Management......................................... 37
Certain Transactions............................... 40
Principal Stockholders............................. 41
Description of Securities.......................... 42
Plan of Distribution............................... 44
Shares Eligible for Future Sale.................... 44
Concurrent Registration of Common Stock............ 45
Legal Matters...................................... 45
Experts............................................ 45
Additional Information............................. 45
Index to Consolidated Financial Statements......... F-1
</TABLE>
LASER TECHNOLOGY, INC.
1,552,000 SHARES OF
COMMON STOCK
__________
PROSPECTUS
__________
JANUARY ____, 1997
================================================================================
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
PROSPECTUS
- ----------
LASER TECHNOLOGY, INC.
100,000 SHARES OF COMMON STOCK
______________
REDEEMABLE WARRANTS TO PURCHASE
260,000 SHARES OF COMMON STOCK
______________
260,000 SHARES OF COMMON STOCK
$6.00 PER SHARE
This Prospectus relates to the sale by certain selling stockholders (the
"Selling Stockholders") of 100,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of Laser Technology, Inc. ("LTI" or the "Company"),
and 260,000 of the Company's redeemable warrants ("Redeemable Warrants"). See
"Selling Stockholders." This Prospectus also relates to the sale by the Company
of 260,000 shares of Common stock underlying the Redeemable Warrants. The
Company is not offering any shares or Redeemable Warrants hereunder and will not
receive any of the proceeds from the sale of shares of Common Stock or
Redeemable Warrants by the Selling Stockholders. The Company will receive
proceeds represented by the exercise price of the Redeemable Warrants if
exercised by the holder thereof. See "Prospectus Summary - The Offering." It is
anticipated that the Selling Stockholders will offer such shares of Common Stock
and/or Redeemable Warrants from time to time in market transactions at the then
prevailing market prices and terms, or in negotiated transactions or otherwise,
and without the payment of any underwriting discounts or commission, except for
usual and customary selling commissions paid to brokers or dealers. The Selling
Stockholders also may sell such shares of Common Stock from time to time, as
might be permitted under Rule 144 promulgated under the Securities Act of 1933
(the "Act").
The Company's Common Stock and Redeemable Warrants are traded on the
American Stock Exchange ("AMEX"). On January 15, 1997, the closing prices of
the Common Stock and Redeemable Warrants as reported by the AMEX were $4.37 and
$.75 respectively. See "Market Information." There is no public market for the
Underwriter's Warrants or Underwriter's Nonredeemable Warrants.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION."
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
___________________
Concurrently herewith, the Company is offering by separate Prospectus (I)
1,552,000 shares of Common Stock underlying outstanding Redeemable Warrants that
were issued in January 1993 in connection with the Company's public offering
offered through Knickerbocker Securities, Inc. (the "Underwriter"), (ii) 138,000
Underwriter's Units underlying Underwriter's Warrants, each Unit consisting of
one share of Common Stock and one nonredeemable warrant ("Underwriter's
Nonredeemable Warrant"), and (iii) 138,000 shares of Common Stock underlying the
Underwriter's Redeemable Warrants.
The date of this Prospectus is January 28, 1997.
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
- --------------------------------------------------------------------------------
THE OFFERING
<TABLE>
<S> <C>
Securities Offered...................... (1) 100,000 shares of Common Stock sold by
Selling Stockholder.
(2) Redeemable Warrants to purchase 260,000
shares of Common Stock.
(3) 260,000 shares of Common Stock underlying
the Redeemable Warrants.
Shares of Common Stock Outstanding:
Before Offering (1)................... 4,999,433 shares
After Offering (2).................... 5,259,433 shares
AMEX Symbols
Common Stock.......................... "LSR"
Redeemable Warrants................... "LSRW"
Use of Proceeds......................... The Company will not receive any of the
proceeds from the sale of shares of Common
Stock or Redeemable Warrants, although the
Company will receive proceeds upon the exercise
of the Redeemable Warrants. See "Use of
Proceeds."
Risk Factors............................ The Offering involves a high degree of risk as
well as immediate and substantial dilution. See
"Risk Factors" and "Dilution."
</TABLE>
__________
(1) Does not include (a) 356,250 shares of Common Stock issuable upon exercise
of those warrants (the "PRC Warrants") held by Plaza Resources Company
("PRC") at a present exercise price per share of $3.00 (b) 138,000 shares of
Common Stock issuable upon exercise of the Underwriter's Warrants or 138,000
shares of common stock issuable upon exercise of the Underwriter's
Nonredeemable Warrants that are part of the Underwriter's Warrants; (C)
1,552,000 shares of Common Stock issuable upon exercise of Redeemable
Warrants and offered by a separate prospectus; (d) 530,000 shares of Common
Stock reserved for issuance pursuant to the Company's Equity Incentive Plan
or 120,000 shares of Common Stock reserved for issuance pursuant to the
Company's Non-Employee Directors Plan; (e) 120,000 shares of Common Stock
reserved for issuance upon exercise of other outstanding options granted by
the Company to its employees; and (f) 88,768 treasury shares held by the
Company. See "Management--Stock Incentive Program", "--Employee Options",
"Principal Stockholders", and "Selling Stockholders."
(2) Does not include those securities described in (a), (b), (c), (d), (e) and
(f) of Notes (1) above.
- --------------------------------------------------------------------------------
6
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
- --------------------------------------------------------------------------------
SUMMARY FINANCIAL INFORMATION
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
--------------------------------------------------------------
1996 1995 1994 1993 1992(a)
---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net sales................................. $9,306,777 $8,225,776 $5,303,299 $4,813,227 $3,880,512
Cost of goods sold........................ 4,241,389 3,864,473 2,527,322 2,021,884 1,761,829
Gross profit.............................. 5,065,388 4,361,303 2,775,977 2,791,343 2,118,683
Royalty and licensing income.............. 401,121 -- -- -- --
Total operating income.................... 5,466,509 4,361,303 2,775,977 2,791,343 2,118,683
Operating expenses........................ 4,058,908 3,431,694 2,766,426 1,794,332 933,220
Income from operations.................... 1,407,601 929,609 9,551 997,011 1,185,463
Interest income (expense) net............. 235,771 157,523 86,555 (83,765) (152,650)
Litigation settlement(b).................. -- -- -- -- 1,100,000
Income (loss) before taxes on income and
extraordinary item...................... 1,643,372 1,087,132 96,106 913,246 (67,187)
Taxes on income (benefit)................. 580,000 383,000 37,000 (52,000) 79,000
Income (loss) before extraordinary item... 1,063,372 704,132 59,106 965,246 (146,187)
Extraordinary item(C)..................... -- -- -- 567,000 --
Net income (loss)......................... 1,063,372 704,132 59,106 398,246 (146,187)
Net income (loss) per common share:
Before extraordinary item............... 0.20 0.14 0.01 0.20 (0.04)
Extraordinary item...................... -- -- -- (0.12) --
Net income (loss)......................... 0.20 0.14 0.01 0.08 (0.04)
Weighted average number of shares
outstanding............................ 5,209,981 4,989,600 5,008,381 4,794,749 3,709,312
</TABLE>
(a) Effective with the period ended September 30, 1992, the Company elected to
begin using a September 30 fiscal year end. Therefore, the period ended
September 30, 1992 represents a nine month short period as compared to the
twelve month fiscal years ended September 30, 1993, 1994, 1995 and 1996.
(b) The loss for the nine months ended September 30, 1992 includes the effect of
a $1,100,000 charge for the settlement of litigation which reduces earnings
by $.30 per share.
(c) As of September 30, 1993, the Company has recorded a non-recurring
extraordinary charge of $567,000 as a loss related to the early
extinguishment of debt, net of applicable income tax benefit of $333,000
which reduced earnings by $.12 per share.
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL PRO FORMA(1)
----------- ------------
<S> <C> <C>
Working capital............................... $ 7,698,674 $ 9,208,674
Total assets.................................. 10,663,459 12,173,459
Total stockholders' equity.................... 9,692,855 11,202,855
</TABLE>
(1) Adjusted to give effect only to the initial application of the estimated net
proceeds from the assumed sale of the 260,000 shares of Common Stock
underlying the Redeemable Warrants held by the Selling Stockholders, that
may be exercised at any time prior to January 11, 1998. See "Use of
Proceeds."
- --------------------------------------------------------------------------------
7
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
Product Liability. The Company may be exposed to potential product
liability claims by users of the Company's products. To date, there have been no
such claims against the Company. The Company currently maintains product
liability insurance limited to $6,000,000 coverage per occurrence and in the
aggregate, $7,000,000. Although the Company believes such coverage is adequate,
there can be no assurance that such insurance is in an amount sufficient to
cover all possible liabilities, that the present level of coverage will be
available in the future at a reasonable cost, or that a product liability claim
would not materially adversely affect the business or financial condition of the
Company.
Government Regulation. The Company's laser products emit a laser light beam
and as such are regulated by the FDA and subject to approval by foreign
governments. FDA regulations impose eye safety requirements on the Company's
products and governments of some foreign countries have similar regulations.
Although management believes that the Company is in compliance with all
applicable regulations, to the extent that these regulations change, there can
be no assurance that the Company can remain in compliance at a reasonable cost.
Failure to comply with such regulations may have a material adverse effect on
the Company. Due to FDA involvement in international standardization efforts for
laser products with the International Electrotechnical Commission, ("IEC"),
Management is aware of certain changes under consideration by the FDA that may
affect current FDA regulated emission limits of Class 1 pulsed lasers.
Management does not believe that such proposed changes will impact the Company's
sales or results of operations. However, there is no assurance of this. Further,
although the Marksman has been accepted for use by numerous state, local and
foreign governments, there can be no assurance that it will continue to be
accepted in the future, or that a government or court system will not disallow
the use of laser instruments as an accurate measurement of speed. See
"Business--Government Regulation."
National Standard for Laser Speed Measurement Devices. The Company believes
that many law enforcement agencies throughout the United States are hesitant to
purchase speed enforcement products which are not listed on the International
Association of Chiefs of Police ("IACP") Approved Products List. This list
consists of those speed enforcement products which have passed a national
standard established by the National Highway Traffic Safety Administration
("NHTSA"). In 1995, the National Institute of Standards and Technology ("NIST")
in conjunction with the NHTSA, completed a national standard for performance
specifications for laser speed measurement devices, such as the Marksman, and
established a laboratory at the University of California-Davis for testing of
laser speed measurement devices. The Company submitted a Marksman unit for
testing in October 1995 and, in April 1996, the Marksman was certified by the
IACP and subsequently place on the IACP Approved Products List. Management
believes that because the Marksman has been placed on the IACP Approved Products
List, federal funds from the United States Department of Transportation may
become more accessible for law enforcement agencies to purchase the Marksman.
However, there can be no assurance that federal funds will be available to law
enforcement agencies to purchase the Marksman.
Dependence on Significant Customers. For the fiscal year ended September
30, 1996, 24% of the Company's sales were to state and local municipalities.
Sales to the Company's Domestic Survey and Mapping dealer network comprised 12%
of sales. Additionally, the Company's foreign distributors accounted for 47% of
sales, of which the Company's European and Asian distributors comprised 36%
collectively. One customer, Visi Trading (m) SDN BHD, accounted for 12% of
sales. A substantial reduction in orders from its principal customers and the
inability to attract orders from new customers could have a material adverse
effect on the Company's operations and financial condition. See "Business--
Marketing, Distribution and Customers."
Control of the Company. Immediately following completion of this Offering
and assuming all Redeemable Warrants, Underwriter's Warrants and Underwriter's
Nonredeemable Warrants are exercised and shares of Common Stock are issued, the
Company's executive officers, directors and other principal stockholders will
beneficially own approximately 28% of the Company's outstanding Common Stock.
These stockholders may be able to effectively control the outcome of all issues
submitted to a vote of stockholders, including the election of a significant
number of the Company's directors. See "Principal Stockholders" and "Description
of Securities."
Dilution. Purchasers in this Offering will incur immediate and substantial
dilution in that the net tangible book value of each outstanding share of Common
Stock immediately after the Offering will be significantly less than the public
offering price of the Common Stock. See "Dilution."
10
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
DILUTION
The net tangible book value of the Company as of September 30, 1996 was
$9,434,682 or $1.88 per share of Common Stock. "Net tangible book value" per
share of Common Stock represents the tangible assets of the Company less total
liabilities, divided by the number of shares of Common Stock outstanding prior
to this Offering. After giving effect to the exercise of the Redeemable
Warrants, and without taking into account the exercise of the Underwriter's
Warrants or the Underwriter's Nonredeemable Warrants or any other change in the
net tangible book value of the Company subsequent to September 30, 1996 and
assuming no solicitation fee is paid, the Pro Forma net tangible book value of
the Company at September 30, 1996 would have been $10,944,682, or $2.08 per
share. This represents an immediate increase in the net tangible book value of
$.20 per share to existing stockholders and an immediate dilution of net
tangible book value of $3.92 to those new investors exercising the Redeemable
Warrants ("New Investors"). The following table illustrates this dilution on a
per Unit basis:
<TABLE>
<CAPTION>
SHARES UNDERLYING
REDEEMABLE
WARRANTS
-----------------
<S> <C>
Public Offering Price....................................... $6.00
Net tangible book value per share before exercise of
Redeemable Warrants........................................ $1.88
Increase attributable to New Investors...................... .20
-----
Pro Forma net tangible book value per share after
exercise of:
Redeemable Warrants........................................ 2.08
-----
Dilution to New Investors................................... $3.92 (65 %)
=====
</TABLE>
The following table sets forth as of September 30, 1996 the number of
shares of Common Stock purchased for cash from the Company by all persons during
the past five years, the total consideration paid and the average price per
share paid by these existing stockholders and by New Investors in this Offering
and before deduction of underwriting discounts and offering expenses.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ---------------------------------
AVERAGE
PRICE
NUMBER PERCENT(1) AMOUNT PERCENT PER SHARE
--------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders acquiring shares for
cash within past five years...................... 1,711,833 33% $8,099,791 84% $4.73
New Investors..................................... 260,000 5% 1,560,000 16% 6.00
</TABLE>
__________________
(1) Percent of total shares outstanding following the Offering.
12
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock or
Redeemable Warrants by the Selling Stockholders.
With regard to the Redeemable Warrants, to the extent all of the Redeemable
Warrants are exercised, the Company will receive aggregate proceeds of
approximately $1,560,000, less estimated offering expenses of $50,000. All such
proceeds will be added to the Company's working capital.
Depending upon the total amount of proceeds realized, management may use a
portion of the funds for expansion of manufacturing facilities, product
development, and expansion of marketing and sales activities.
MARKET INFORMATION
LTI Common Stock ("LSR") and Redeemable Warrants ("LSRW") are traded on the
AMEX. The following table sets forth the range of high and low bid prices of the
Common Stock for each quarterly period since the first quarter of 1994 as
reported by the AMEX. All prices set forth below are based on a calendar year.
<TABLE>
<CAPTION>
HIGH LOW
------ -----
<S> <C> <C>
1994
First Quarter...................... $6.75 $4.88
Second Quarter..................... 4.38 4.13
Third Quarter...................... 4.50 3.88
Fourth Quarter..................... 3.19 3.00
1995
First Quarter...................... $5.12 $2.56
Second Quarter..................... 6.44 4.18
Third Quarter...................... 6.25 4.75
Fourth Quarter..................... 5.75 3.25
1996
First Quarter...................... $7.62 $3.87
Second Quarter..................... 8.44 5.50
Third Quarter...................... 6.69 4.12
Fourth Quarter..................... 4.56 3.50
1997
First Quarter(1)................... $5.12 $4.37
</TABLE>
(1) Through January 15, 1997
As of September 30, 1996, there were approximately 641 holders of record of
the Common Stock, which figure does not take into account those shareholders
whose certificates may be held in the name of broker-dealers. On January 15,
1997, the closing price of the Common Stock as quoted on the AMEX was $4.37.
13
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
DIVIDEND POLICY
The Company has not declared or paid cash dividends or made distributions
in the past, and the Company does not anticipate that it will pay cash dividends
or make distributions in the foreseeable future. The Company currently intends
to retain earnings to finance its operations.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996, and the pro forma capitalization giving effect to the sale
by the Company of all the securities offered hereby and the receipt of the
estimated proceeds therefrom, less estimated offering expenses payable by the
Company. See "Use of Proceeds."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL PRO FORMA
---------- -----------
<S> <C> <C>
Long-term debt (excluding current maturities).................................. $ -- $ --
------------------------
Stockholders' equity:
Common Stock, $.01 par value, 25,000,000 shares
authorized and 5,088,201 shares issued(1), and 5,348,201 issued pro
forma....................................................................... 50,882 53,482
Additional paid-in capital................................................... 9,623,980 11,131,380
Less treasury stock, at cost (88,768 shares).............................. (17,535) (17,535)
Retained earnings............................................................ 35,528 35,528
---------- -----------
Total stockholders' equity................................................... 9,692,855 11,202,855
---------- -----------
Total capitalization......................................................... $9,692,855 $11,202,855
========== ===========
</TABLE>
(1) Includes 88,768 treasury shares held by the Company, but does not include
(a) 356,250 shares of Common Stock issuable upon exercise of the PRC
Warrants at a present exercise price per share of $3.00, (b) 1,552,000
shares of Common Stock issuable upon exercise of outstanding Redeemable
Warrants and offered by separate prospectus, (C) 138,000 shares of Common
Stock issuable upon exercise of the Underwriter's Warrants and 138,000
shares of Common Stock issuable upon exercise of the Underwriter's
Nonredeemable Warrants and offered by separate prospectus, (d) 530,000
shares of Common Stock reserved for issuance pursuant to the Company's
Equity Incentive Plan or 120,000 shares of Common Stock reserved for
issuance pursuant to the Company's Non-Employee Directors Plan, and (e)
120,000 shares of Common Stock reserved for issuance upon exercise of other
outstanding options granted by the Company to its employees. See Business,
"Agreement with Plaza Resources Company," "Management--Stock Incentive
Program", "--Employee Options."
14
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below have been derived
from the Company's consolidated financial statements which have been audited by
BDO Seidman, LLP, independent certified public accountants. This selected
consolidated financial data set forth below should be read in conjunction with
the Company's consolidated financial statements and notes thereto, with
Management's Discussion and Analysis of Financial Condition, and with the other
financial information of the Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
YEARS ENDED
------------------------------------------------------------
1996 1995 1994 1993 1992 (A)
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales............................. $9,306,777 $8,225,776 $5,303,299 $4,813,227 $3,880,512
Cost of goods sold.................... 4,241,389 3,864,473 2,527,322 2,021,884 1,761,829
Gross profit.......................... 5,065,388 4,361,303 2,775,977 2,791,343 2,118,683
Royalty and licensing income.......... 401,121 -- -- -- --
Total operating income................ 5,466,509 4,361,303 2,775,977 2,791,343 2,118,683
Operating expenses.................... 4,058,908 3,431,694 2,766,426 1,794,332 933,220
Income from operations................ 1,407,601 929,609 9,551 997,011 1,185,463
Interest income (expense) net......... 235,771 157,523 86,555 (83,765) (152,650)
Litigation settlement (b)............. -- -- -- -- 1,100,000
Income (loss) before taxes on income
and extraordinary item............... 1,643,372 1,087,132 96,106 913,246 (67,187)
Taxes on income (benefit)............. 580,000 383,000 37,000 (52,000) 79,000
Income (loss) before extraordinary.... 1,063,372 704,132 59,106 965,246 (146,187)
Extraordinary item (C)................ -- -- -- 567,000 --
Net income (loss)..................... 1,063,372 704,132 59,106 398,246 (146,187)
Net income (loss) per common share:
Before extraordinary item............ .20 .14 .01 .20 (.04)
Extraordinary item................... -- -- -- (.12) --
Net income (loss).................. .20 .14 .01 .08 (.04)
Weighted average number of
shares outstanding................ 5,209,981 4,989,600 5,008,381 4,794,749 3,709,312
</TABLE>
______________
(a) Effective with the period ended September 30, 1992, the Company elected to
begin using a September 30 fiscal year end. Therefore, the period ended
September 30, 1992 represents a nine month short period as compared to the
twelve month fiscal years ended September 30, 1993, 1994, 1995 and 1996.
(b) The loss for the nine months ended September 30, 1992 includes the effect of
a $1,100,000 charge for the settlement of litigation which reduced earnings
by $.30 per share.
(C) During fiscal 1993, the Company recorded a non-recurring charge of $567,000
as a loss related to the early extinguishment of debt, net of applicable
income tax benefit of $333,000 which reduced earnings by $.12 per share.
<TABLE>
<CAPTION>
BALANCE SHEET DATA
1996 1996 1995 1994 1993 1992
----------- ------------ ---------- ---------- ---------- ---------
ACTUAL PRO FORMA(1)
<S> <C> <C> <C> <C> <C> <C>
Working capital............... $ 7,698,674 $ 9,208,674 $7,834,363 $7,247,133 $7,309,987 $ 604,954
Total assets.................. 10,663,459 12,173,459 8,998,295 8,366,463 8,011,845 3,289,372
Short-term debt, including
current maturities of
long-term debt.............. -- -- -- 59,517 34,481 186,425
Long-term debt less current
maturities................. -- -- -- 150,075 27,379 840,545
Total stockholders' equity.... 9,692,855 11,202,855 8,589,692 7,885,560 7,761,495 479,128
</TABLE>
(1) Adjusted to give effect to the assumed exercise of 260,000 Redeemable
Warrants held by Selling Stockholders that may be exercised at any time
prior to January 11, 1998.
15
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
PRINCIPAL STOCKHOLDERS
The following table sets forth information, to the best knowledge of the
Company, as of December 22, 1996 and as adjusted to reflect the sale of the
securities offered hereby, with respect to each person known by the Company to
own beneficially more than 5% of the outstanding Common Stock, each director and
all directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OWNERSHIP(1)
----------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED** OFFERING OFFERING
- ---- ------- -------- --------
<S> <C> <C> <C>
David Williams * (2)(3)............................ 391,936 7.8% 7.4%
1501 W. Dry Creek Road
Littleton, Colorado 80120
Jeremy G. Dunne *(4)............................... 390,750 7.7% 7.4%
2686 E. Otero Place
Littleton, Colorado 80122
Dan N. Grothe *(5)................................. 32,000 .64% .61%
6837 South Elizabeth Street
Littleton, Colorado 80122
H. DeWorth Williams * (2)(6)....................... 569,157 11.3% 10.8%
P.O. Box 2145
Park City, Utah 84060
William R. Carr *(7)............................... 24,500 .49% .46%
6195 Gharrett
Missoula, Montana 59803
F. James Lynch *(8)................................ 22,000 .44% .42%
27 Blue Heron Drive
Greenwood Village, Colorado 80121
Richard B. Sayford*(9)............................. 14,000 .28% .27%
89 Silver Fox Drive
Greenwood Village, Colorado 80121
Plaza Resources Company (10)....................... 356,250 6.7% 6.3%
GEICO Plaza
Washington, D.C. 20076
Directors and officers as a group (8 persons)(11).. 1,546,152 29.4% 28.0%
</TABLE>
* Director
** Unless otherwise indicated in the footnotes below, the Company has been
advised that each person has sole voting power and dispositive power over
the shares indicated above.
(1) As of September 30, 1996 there were 4,999,433 shares of Common Stock
outstanding. Additionally, certain officers and directors hold stock
options to purchase 267,000 shares of Common Stock which are currently
exercisable. Therefore, for purposes of the table above, prior to the
Offering 5,266,433 shares of Common Stock are deemed to be issued and
outstanding in accordance with Rule 13d-3 adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended,
and 5,526,433 shares of Common Stock outstanding after the Offering. See
"Prospectus Summary--The Offering." Percentage ownership is calculated
separately for each person on the basis of the actual number of outstanding
shares as of September 30, 1996 and assumes the exercise of options held by
such person (but not by anyone else) exercisable within sixty days.
(2) David Williams disclaims beneficial ownership of the shares of Common Stock
owned by H. DeWorth Williams and H. DeWorth Williams disclaims beneficial
ownership of the shares of Common Stock owned by David Williams.
42
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
(3) Includes 45,500 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(4) Includes 45,500 shares which may be acquired by Mr. Dunne pursuant to the
exercise of stock options exercisable within sixty days.
(5) Includes 22,000 shares which may be acquired by Mr. Grothe pursuant to the
exercise of stock options exercisable within sixty days.
(6) Includes 20,000 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(7) Includes 20,000 shares which may be acquired by Mr. Carr pursuant to the
exercise of stock options exercisable within sixty days.
(8) Includes 20,000 shares which may be acquired by Mr. Lynch pursuant to the
exercise of stock options exercisable within sixty days.
(9) Includes 10,000 shares which may be acquired by Mr. Sayford pursuant to the
exercise of stock options exercisable within sixty days.
(10) Includes 356,250 shares of Common Stock issuable upon exercise of the PRC
Warrants. PRC is a wholly owned subsidiary of GEICO Corporation. See
"Business--Agreement with Plaza Resources Company", and "Certain
Transactions."
(11) Includes 267,000 shares which may be acquired by the Company's officers or
directors within sixty days pursuant to the exercise of stock options at
various prices.
SELLING STOCKHOLDERS
The following table set forth as of September 30, 1996, certain information
regarding the beneficial ownership of the Company's Common Stock and Redeemable
Warrants by each Selling Stockholder. Except as otherwise noted, the
stockholders shown in the table have sole voting and investment power with
respect to the securities. These Selling Stockholders are presented together in
this table for convenience of presentation only.
<TABLE>
<CAPTION>
SECURITIES SECURITIES TO BE
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING(1)
---------------------- -------------------------
SECURITIES
NAME NUMBER PERCENTAGE OFFERED NUMBER PERCENTAGE
------- -------------- ----------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Ballater, Ltd.(2)........... 100,000 Shares 1.9% 100,000 Units 0 0%
Laser Partners(3)........... 500 Shares .01% 160,000 Wts.(4) 500 Shares .01%
</TABLE>
(1) Computations of percentages (I) do not give effect to 138,000 Units
issuable upon exercise of the Underwriter's Warrants and (ii) are based
upon 4,999,433 shares of Common Stock outstanding prior to the Offering and
5,259,433 shares of Common Stock outstanding after the Offering. See
"Prospectus Summary--The Offering." Assumes maximum amount of securities
offered are sold.
(2) Excludes 100,000 shares of Common Stock issuable upon exercise of the
Ballater Redeemable Warrants.
(3) Gives effect to the acquisition by Laser Partners of the Laser Partners
Units pursuant to the Laser Partners Settlement but excludes 160,000 shares
of Common Stock issuable upon exercise of the Redeemable Warrants included
in the Laser Partners Units. Includes an aggregate 500 shares of Common
Stock held in equal amounts by Jean Rosow and Victor C. Braun, Jr., each a
partner in Laser Partners. See "Business--Litigation" and "Certain
Transactions."
(4) Represents 160,000 Redeemable Warrants.
43
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 25,000,000 shares of Common Stock, par
value $.01 per share, of which 5,088,201 shares are issued and 4,999,433 shares
are outstanding as of the date hereof excluding the Common Stock underlying the
Units being offered by the Company hereby.
All shares of Common Stock have equal rights and privileges with respect to
voting, liquidation and dividend rights. Each share of Common Stock entitles the
holder thereof to (I) one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders; (ii) to participate equally
and to receive any and all such dividends as may be declared by the Board of
Directors out of funds legally available therefore; and (iii) to participate pro
rata in any distribution of assets available for distribution upon liquidation
of the Company.
Stockholders of the Company have no preemptive rights to acquire additional
shares of Common Stock or any other securities. The Common Stock is not subject
to redemption and carries no subscription or conversion rights. All outstanding
shares of Common Stock are, and all shares of Common Stock to be outstanding
upon completion of this Offering will be, fully paid and non-assessable.
As permitted by the provisions of the Idaho General Business Corporation
Law (the "Idaho Code"), the Company has the power to indemnify any officer or
director who, in their capacity as such, is made or threatened to be made a
party to any suit or proceeding, whether criminal, administrative or
investigative, if such officer or director acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Company. An officer or director shall be indemnified against expenses to the
extent they have been successful on the merits or otherwise in defense of any
action, suit or proceeding. Such indemnification is not exclusive of any other
rights to which those seeking indemnification may be entitled under the By-Laws,
any agreement, vote of stockholders or disinterested directors or otherwise.
Further, the Idaho Code permits a corporation to purchase and maintain liability
insurance on behalf of its officers, directors, employees and agents.
Also pursuant to the Idaho Code, a corporation may set forth in its
articles of incorporation a provision eliminating or limiting in certain
circumstances the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as director.
These provisions do not eliminate or limit the liability of a director (I) for
any breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for liability
arising under Section 30-1-48 of the Idaho Code (relating to the declaration of
dividends and purchase or redemption of shares in violation of the Idaho Code);
or (iv) for any transaction from which the director derived an improper personal
benefit. In addition, these provisions do not limit the right of the corporation
or its stockholders, in appropriate circumstances, to seek equitable remedies
such as injunctive or other forms of non-monetary relief, which remedies may not
be effective in all cases.
REDEEMABLE WARRANTS
The Redeemable Warrants have been issued in registered form pursuant to an
agreement, dated January 11, 1993 (the "Warrant Agreement"), between the Company
and Continental Stock Transfer & Trust Company (the "Warrant Agent"). The
following discussion of certain terms and provisions of the Redeemable Warrants
is qualified in its entirety by reference to the detailed provisions of the
Warrant Agreement, the form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
One Redeemable Warrant represents the right of the registered holder to
purchase one share of Common Stock at an exercise price of $6.00 per share,
subject to adjustment (the "Purchase Price"). The Redeemable Warrants will be
entitled to the benefit of adjustments in the Purchase Price and in the number
of shares of Common Stock and/or other securities deliverable upon the exercise
thereof in the event of a stock dividend, stock split, reclassification,
reorganization, consolidation or merger. The Company has the right to reduce
the Purchase Price or increase the number of shares of Common Stock issuable
upon the exercise of the Redeemable Warrants.
44
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
Unless previously redeemed, the Redeemable Warrants may be exercised at any
time commencing January 11, 1993 and prior to the close of business on January
11, 1998 (the "Expiration Date"). On and after the Expiration Date, the
Redeemable Warrants become wholly void and of no value. The Company may at any
time extend the Expiration Date of all outstanding Redeemable Warrants for such
increased period of time as it may determine. The Redeemable Warrants may be
exercised at the office of the Warrant Agent.
The Company has the right at any time after July 11, 1994 to redeem the
Redeemable Warrants in whole for cancellation at a price of $.05 each, by
written notice mailed 30 days prior to the redemption date to each Redeemable
Warrant holder at his address as it appears on the books of the Warrant Agent;
provided, however, that the Company does not have the right to call for
redemption any of the Redeemable Warrants underlying the Underwriter's Warrants.
Such notice may only be given within 10 days following any period of 30
consecutive trading days during which the closing sale price of the shares of
Common Stock (traded on the AMEX) exceeds $8.00 per share, subject to
adjustments for stock dividends, stock splits and the like. If the Redeemable
Warrants are called for redemption, they must be exercised prior to the close of
business on the date of any such redemption or the right to purchase the
applicable shares of Common Stock is forfeited.
No holder, as such, of Redeemable Warrants shall be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purpose whatsoever until such Redeemable Warrants have been duly exercised and
the Purchase Price has been paid in full.
The Company will file an amendment to its registration statement with the
Commission with respect to the securities underlying the Redeemable Warrants
prior to the exercise of the Redeemable Warrants and deliver a prospectus with
respect to such securities to all Redeemable Warrant holders as required by
Section 10(a)(3) of the Securities Act.
UNDERWRITER'S UNITS
In connection with the Company's public Unit Offering, the Company sold to
the Underwriter, for nominal consideration, nonredeemable warrants
("Underwriter's Warrants") to purchase from the Company 138,000 units
("Underwriter's Units"). Each of the Underwriter's Warrants is exercisable at a
price of $8.25 per unit for a period of four years commencing January 11, 1994.
The shares of Common Stock and the warrants comprising the Underwriter's Units
and issuable upon exercise of the Underwriter's Warrants are identical to those
offered in the Company's Unit Offering except that the warrants contained in the
Underwriter's Units cannot be redeemed and each is exercisable to purchase one
share of Common Stock at $9.90 per share ("Underwriter's Nonredeemable
Warrants"). The Underwriter's Warrants contain anti-dilution provisions
providing for adjustment of the number of warrants and exercise price under
certain circumstances.
TRANSFER AGENT AND WARRANT AGENT
The transfer agent and registrar for the Units and the Common Stock and the
warrant agent for the Redeemable Warrants is Continental Stock Transfer & Trust
Company, 2 Broadway, New York, New York 10004.
45
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
PLAN OF DISTRIBUTION
Following the date of this Prospectus, the Selling Stockholders will be
able to sell Common Stock and Redeemable Warrants covered hereunder from time to
time in one or more transaction in market transaction at the then prevailing
market prices and terms, or in negotiated transactions or otherwise, and without
the payment of any underwriting discounts or commissions, except for usual and
customary selling commissions paid to brokers or dealers. The Selling
Stockholders also may sell such shares of Common Stock from time to time, as
might be permitted under Rule 144 promulgated under the Act. As of the date
hereof, the Company has not been advised when, or even whether the Selling
Stockholders intend to sell such securities.
CONCURRENT REGISTRATION OF SECURITIES
Concurrently herewith, 1,552,000 shares of Common Stock underlying
Redeemable Warrants, 138,000 Underwriter's Units each consisting of one share of
Common Stock and one Underwriter's Nonredeemable Warrant, and 138,000 shares of
Common Stock issuable upon exercise of the Underwriter's Nonredeemable Warrants,
have also been registered under the Securities Act of 1933 for sale pursuant to
a separate prospectus.
SHARES ELIGIBLE FOR FUTURE SALE
The shares issued pursuant to this Offering will be freely tradeable
without restriction or further registration under the Act, except for any shares
purchased by an affiliate of the Company, as such term is defined in regulations
under the Act. Upon completion of this Offering, approximately 1,279,152 shares
of Common Stock will be held by the Company's current stockholders and will
constitute restricted securities as defined by Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of the
Company for at least two years, including any person who may be deemed to be an
"affiliate" of the Company (as the term "affiliate" is defined under the Act),
is entitled to sell, within any three-month period, an amount of shares that
does not exceed the greater of (I) the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding such sale or
(ii) 1% of the shares then outstanding following the Offering, assuming the
Underwriters' over-allotment option is not exercised. A person who is not deemed
to be an "affiliate" of the Company and who has held restricted shares for at
least three years would be entitled to sell such shares without regard to the
resale limitations of Rule 144.
Beginning the date of this Prospectus and during the 6 months immediately
thereafter, in addition to the shares underlying the securities issued in this
Offering and 3,720,281 tradeable shares of Common Stock outstanding prior to the
Offering, an additional 1,279,152 shares of Common Stock deemed restricted
securities will be eligible to be sold under Rule 144 of the Act subject to the
volume and other restrictions of Rule 144.
No predictions can be made of the effect, if any, that sales of the Common
Stock under Rule 144 or the availability of the Common Stock for sale will have
on the market price prevailing from time to time. Sales of substantial amounts
of the Common Stock pursuant to Rule 144 could subsequently adversely affect the
market price of the Common Stock.
46
<PAGE>
[ALTERNATE PAGE FOR COMMON PROSPECTUS]
LEGAL MATTERS
Legal matters in connection with this Offering including the validity of
the Shares, offered hereby will be passed upon for the Company by Leonard E.
Neilson, Attorney at Law, P.C., 1121 East 3900 South, Suite C-200, Salt Lake
City, Utah 84124. Mr. Neilson is also the beneficial owner of 27,019 shares of
the Company's Common Stock.
EXPERTS
The financial statements and schedule included in this Prospectus and in
the Registration Statement have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein and in the Registration Statement, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a post-effective amendment to its registration statement on Form
S-1 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the securities being offered by this Prospectus. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
securities offered, reference is hereby made to the Registration Statement and
the schedules and exhibits filed as a part thereof. Statements contained in
this Prospectus concerning the contents or provisions of any contract, agreement
or other document are not necessarily complete, and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement. Each such statement shall be deemed qualified in its entirety by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected, without charge, at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's Regional
Offices located at 410 17th Street, Suite 700, Denver, Colorado 80202, 75 Park
Place, 14th Floor, New York, New York 10007 and 500 West Madison Street,
Chicago, Illinois 60661. Copies of all or any portion of the Registration
Statement can be obtained from the Commission, upon payment of prescribed fees.
47
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
_________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................. 3
The Company........................................ 8
Risk Factors....................................... 8
Dilution........................................... 12
Use of Proceeds.................................... 13
Market Information................................. 13
Dividend Policy.................................... 14
Capitalization..................................... 14
Selected Financial Data............................ 15
Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 16
Business........................................... 23
Management......................................... 36
Certain Transactions............................... 39
Principal Stockholders............................. 41
Selling Stockholders............................... 42
Description of Securities.......................... 43
Plan of Distribution............................... 45
Concurrent Registration of Securities.............. 45
Shares Eligible for Future Sale.................... 45
Legal Matters...................................... 46
Experts............................................ 46
Additional Information............................. 46
Index to Consolidated Financial Statements......... F-1
</TABLE>
LASER TECHNOLOGY, INC.
260,000 SHARES OF
COMMON STOCK
----------
PROSPECTUS
----------
JANUARY ____, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that expenses in connection with the Offering, other
than underwriter discounts and commissions, described in this Registration
Statement will be as follows:
<TABLE>
<CAPTION>
<S> <C>
Accountants' fees and expenses.................. $ 2,500
Legal fees and expenses......................... 10,000
Printing........................................ 10,000
Transfer agent and registrar fees and expenses.. 5,000
Miscellaneous................................... 22,500
-------
Total....................................... $50,000
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Idaho and Section
30-1-5 of the Idaho Code provides authority for broad indemnification of
officers, directors, employees and agents of a corporation. Under the Idaho
Code, a corporation has the power to indemnify an officer or director who is or
was a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative. An officer or director will be indemnified against expenses to
the extent they have been successful on the merits or otherwise in defense of
any action, suit or proceeding. The Idaho Code also permits a corporation to
purchase and maintain liability insurance on behalf of any such officer,
director, employee or agent of a corporation.
Article VII of the Company's Restated Articles of Incorporation provides that
the Company shall have the power both to indemnify its directors, officers,
agents and other persons to the full extent permitted by the laws of Idaho, and
to purchase and maintain liability insurance on behalf of such persons.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following table sets forth information relating to all previous sales of
securities by the Registrant within the past three years that were not
registered under the Securities Act of 1933, as amended (the "Act").
<TABLE>
<CAPTION>
DATE OF SALE NAME OF PURCHASER NO. OF SHARES CONSIDERATION
- -------------- -------------------------------- ------------- ---------------------
<S> <C> <C> <C>
1/3/94 Seventeen employees for services 15,740 Services rendered valued by the
rendered to the Company Company at $47,220
</TABLE>
With respect to the issuance and/or sale of the aforementioned shares, the
Registrant relied on the exemption from registration provided by Section 4(2) of
the Act. Issuances of Common Stock for services were made in consideration for
services rendered to the Company by employees or services performed for the
Company by persons not otherwise affiliated with the Company. The Company has
also made available to purchasers of its Common Stock its business plan and/or
Private Placement Memorandum. All of the shares issued to the aforementioned
persons bore restrictive legends preventing their transfer except in accordance
with the Act and the regulations promulgated thereunder. In addition, stop
transfer instructions pertaining to these shares will be lodged with the
Registrant's transfer agent.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
(a) The following exhibits are filed with this Registration Statement:
EXHIBIT NO. EXHIBIT NAME
- ----------- ------------
*3.1 Amended and Restated Articles of Incorporation and all amendments
pertaining thereto.
*3.2 Restated By-Laws of Registrant.
*4.1 Specimen Common Stock Certificates of Registrant.
*4.2 Underwriter's Warrant Agreement including form of Underwriter's
Warrant Certificate.
*4.3 Form of Public Warrant Agreement between the Company and the
Warrant Agent, including form of Warrant Certificate.
*4.4 Specimen Warrant Certificate of Registrant.
5.1 Opinion of Leonard E. Neilson, P.C.
*10.1 Promissory Note, Secured Note and Warrant Agreement dated as of
February 21, 1991 between Registrant and Plaza Resources Company.
*10.2 Amendment to the Promissory Note, Secured Note and Warrant
Agreement dated as of October 24, 1991 between the Registrant and
Plaza Resources Company.
*10.3 Letter Agreement dated July 17, 1992 between Registrant and Plaza
Resources Company including amendments dated September 23, 1992,
December 1, 1992, December 22, 1992, and January 7, 1993.
10.4 Lease Agreement for Registrant's principal place of business.
*10.5 Non-Competition and Secrecy Agreement dated July 15, 1990 between
Registrant and David Williams, President of Registrant.
*10.6 Non-Competition and Secrecy Agreement dated July 15, 1990 between
Registrant and Jeremy Dunne, Vice President of Registrant.
*10.7 Employment Agreement between Registrant and David Williams.
*10.8 Employment Agreement between Registrant and Jeremy Dunne.
*10.9 Non-Disclosure/Confidentiality Agreement between Registrant and
certain other key employees.
***10.15 Employee Stock Option Plan.
***10.16 Non-Employee Director Plan.
**10.20 Amendment to Lease to Include New Facility.
22.1 Subsidiaries of Registrant
24.1 Consent of BDO Seidman, LLP, Independent Certified Public
Accountants.
24.2 Consent of Leonard E. Neilson, P.C. (included in Exhibit 5.1).
*25.1 Power of Attorney.
* Previously filed.
** Incorporated by reference to the Company's Form 10-K for the fiscal
year ended September 30, 1993
*** Incorporated by reference to the Company's Form 10-Q for the period
ended June 30, 1994
(b) Financial Statement Schedules for Registrant.
Schedule II Valuation and Qualifying Accounts, page F-15
Schedules other than those listed above are omitted for the reason
that they are not required or are not applicable, or the required
information is shown in the financial statements or notes therein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offer or sales are being
made, a post-effective amendment to this Registration Statement:
(I) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement;
II-2
<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
Provided, however, that paragraphs (1)(I) and (1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions,
the Registrant's Certificate of Incorporation or provisions of Idaho law,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of a Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933
shall be deemed to be part of the Registration Statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS
DULY CAUSED THIS POST EFFECTIVE AMENDMENT NO. 4 TO REGISTRATION STATEMENT NO.
33-49848 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ENGLEWOOD, STATE OF COLORADO, ON THIS 28TH DAY OF
JANUARY, 1997.
LASER TECHNOLOGY, INC. (REGISTRANT)
By: /S/ David Williams
--------------------------------
DAVID WILLIAMS, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST
EFFECTIVE AMENDMENT NO. 5 TO REGISTRATION STATEMENT NO. 33-49848 HAS BEEN SIGNED
BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ David Williams President, Chief Executive January 28, 1997
- ---------------------------- Officer and Director
DAVID WILLIAMS
Jeremy G. Dunne Vice President and Director January 28, 1997
- ----------------------------
JEREMY G. DUNNE
/S/ Dan N. Grothe Secretary and Director January 28, 1997
- -----------------------------
DAN N. GROTHE
/S/ H. DeWorth Williams Director January 28, 1997
- ------------------------------
H. DEWORTH WILLIAMS
/S/ Pamela Sevy Controller, Treasurer and January 28, 1997
- ------------------------------
PAMELA SEVY Chief Financial Officer and
Principal Accounting Officer
/S/ Richard B. Sayford Director January 28, 1997
- ------------------------------
RICHARD B. SAYFORD
/S/ William R. Carr Director January 28, 1997
- ------------------------------
WILLIAM R. CARR
</TABLE>
II-4
<PAGE>
EXHIBIT 22.1
SUBSIDIARIES OF REGISTRANT
The following are subsidiaries of Laser Technology, Inc.:
1. International Measurement and Control Company, a Colorado
corporation, 100% owned by Laser Technology, Inc.
2. Laser Communications, Inc., a Colorado corporation, 100% owned by
Laser Technology, Inc.
3. Laser Technology, U.S.V.I., a Virgin Islands corporation 100% owned
by Laser Technology, Inc.
<PAGE>
EXHIBIT 24.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Laser Technology, Inc.
Englewood, Colorado
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated November 13, 1996, relating to the
consolidated financial statements and schedule of Laser Technology, Inc. which
is contained in that Prospectus.
We also consent to the references to us under the captions "Selected Financial
Data" and "Experts" in the Prospectus.
BDO SEIDMAN, LLP
Denver, Colorado
January 28, 1997
<PAGE>
Exhibit 24.2
[LETTERHEAD OF LEONARD E. NEILSON]
January 27, 1997
Laser Technology, Inc.
7070 South Tucson Way
Englewood, CO 80112
Re: Post Effective Amendment No. 5 to the
S-1 Registration Statement of
Laser Technology, Inc.
File No. 33-49848
To the Board of Directors:
I have acted as counsel to Laser Technology, Inc., an Idaho corporation
(the "Company"), in connection with its Registration Statement on Form S-1 and
its completed public offering by the Company of the following: 1,380,000 units
of securities (the "Units"), each Unit consisting of one share of authorized but
previously unissued common stock, par value One Cent ($.01) per share (the
"Common Stock"), and one redeemable stock purchase warrant entitling the holder
to purchase one additional share of Common Stock ("Redeemable Warrants"); and
172,000 additional Units, also previously unissued, for the purpose of covering
over-allotments (collectively referred to as the "Offering"). In addition,
260,000 shares of Common Stock, of which 160,000 have been sold, and 260,000
Redeemable Warrants to be offered by selling stockholders are included in the
Registration Statement and post Effective Amendment No.5 thereto, although not
as part of the underwritten Offering, as well as 260,00 shares of Common Stock
underlying the Redeemable Warrants., Also, 138,000 Underwriter's Warrants,
138,000 Units into which the Underwriter's Warrants are convertible
("Underwriter's Units"), 138,000 shares of Common Stock and 138,000
nonredeemable warrants ("Underwriter's Nonredeemable Warrants") underlying the
Undewriter's Units, and 138,000 shares of Common Stock into which the
Underwriter's Nonredeemable Warrants are convertible, have been registered.
Collectively, all Units, shares of the Company's Common Stock, Redeemable
Warrants, Underwriter's Warrants, Underwriter's Units, Nonredeemable
Underwriter's Warrants, and shares of Common Stock into which the Redeemable
Warrants and Nonredeemable Underwriter's Warrants are convertible that are
referred to above and subject of the Registration Statement and Post Effective
Amendment No. 5, shall hereinafter be referred to as the "Registered
Securities". All Common Stock share amounts are post split giving effect to the
one share for four shares reverse stock split effective December 22, 1992, and
pursuant to fulfillment of the terms and conditions set forth in the
Registration Statement filed on Form S-1 in accordance with the registration
provisions of the Securities Act of 1933, as amended, and Post Effective
Amendment No. 5 to the Registration Statement.
<PAGE>
Laser Technology, Inc.
January 27, 1997
Page 2
I have examined the Articles of Incorporation and all amendments thereto,
By-Laws, minutes of corporate proceedings and other corporate documents with
respect to this issuance of the Shares. I have been furnished with originals, or
copies certified to my satisfaction, of all such corporate or other records of
the Company (the "Corporate Records") and I have made such other legal and
factual examinations and inquiries as I have considered necessary as a basis for
the opinions expressed herein. In the examination of the Corporate Records, I
have presumed the authenticity of all signatures which existed on the Corporate
Records and have presumed the veracity and regularity of all Corporate Records.
As to the question of fact material to this opinion letter, I have relied
upon the representations and warranties, certificates of and conversations and
correspondences with, officers and representatives of the Company. Based upon
the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Idaho.
2. The Registered Securities have been legally and validly authorized
under the Articles of Incorporation and Board of Directors of the
Company and when issued and paid for in accordance with the terms set
forth in the Registration Statement, the Registered Securities will be
duly and validly issued and outstanding, fully paid and nonassessable.
3. The shares of Common Stock for which the Redeemable Warrants,
Underwriter's Warrants and Underwriter's Nonredeemable Warrants are
exercisable, and the Underwriter's Units for which the Underwriter's
Warrants are exercisable, have been validly authorized and reserved
for issuance and, when issued in accordance with the terms of the
Warrant Agreement and the Underwriter's Warrant Agreement, as the case
may be, will be validly issued and outstanding, fully paid and
nonassessable.
I hereby consent to the reference to myself in the Registration Statement
and Post Effective Amendment No.5 thereto covering the offering of the
Registered Securities and the use of my name beneath the caption "Legal Matters"
in the each of the Unit Prospectus and Common Prospectus forming a part thereof,
and to the filing of a copy of this opinion as Exhibit 5.1 thereof.
Yours truly,
Leonard E. Neilson
:ac
