<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File No. 1-11642
LASER TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0970494
- -------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
-------------------------------------------------
(Address of principal executive offices)
(303) 649-1000
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____.
-----
At February 13, 1998, 4,998,351 shares of common stock of the Registrant were
issued and outstanding.
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<PAGE>
INDEX
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PART I: FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. FINANCIAL STATEMENTS..................................... 1
Consolidated Balance Sheets............................ 1
Consolidated Statements of Operations.................. 3
Consolidated Statements of Cash Flows.................. 4
Notes to Consolidated Financial Statements............. 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...................... 6
Results of Operations.................................. 6
Liquidity and Capital Resources........................ 7
PART II: OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS..................................... 8
Item 2. CHANGES IN SECURITIES................................. 8
Item 3. DEFAULTS UPON SENIOR SECURITIES....................... 8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS... 8
Item 5. OTHER INFORMATION..................................... 8
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LASER TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1997
------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $1,399,943 $ 951,945
Investments 1,027,600 1,023,431
Trade accounts receivable, less allowance
of $10,000 for doubtful accounts 2,564,525 3,334,479
Royalties receivable 344,497 415,648
Inventories 3,031,360 2,798,903
Deferred income tax benefit 81,000 81,000
Prepaids and other current assets 265,452 188,824
------------- -------------
Total Current Assets 8,714,377 8,794,230
------------- -------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,284,499 1,291,899
------------- -------------
LONG-TERM INVESTMENTS 642,697 617,427
------------- -------------
OTHER ASSETS 462,869 441,070
------------- -------------
TOTAL ASSETS $11,104,442 $11,144,626
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements
1
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LASER TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1997
------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 417,532 $ 660,736
Accrued expenses 297,474 329,529
----------- -----------
Total Current Liabilities 715,006 990,265
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value--shares authorized
2,000,000; shares issued--none - -
Common stock, $.01 par value--shares
authorized 25,000,000; shares issued 5,208,201 52,082 52,082
Additional paid-in capital 9,622,780 9,622,780
Treasury stock at cost, 209,850 shares (141,459) (141,459)
Retained earnings 856,033 620,958
----------- -----------
Total Stockholders' Equity 10,389,436 10,154,361
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,104,442 $11,144,626
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements
2
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
NET SALES $2,412,351 $2,003,356
LESS COST OF GOODS SOLD 1,068,823 873,413
---------- ----------
Gross Profit 1,343,528 1,129,943
ROYALTY AND LICENSING INCOME 346,946 180,660
---------- ----------
TOTAL OPERATING INCOME 1,690,474 1,310,603
OPERATING EXPENSES 1,377,671 1,180,525
---------- ----------
INCOME FROM OPERATIONS 312,803 130,078
INTEREST INCOME (NET) 43,272 38,546
---------- ----------
INCOME BEFORE TAXES ON INCOME 356,075 168,624
TAXES ON INCOME 121,000 59,000
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NET INCOME $ 235,075 $ 109,624
========== ==========
INCOME PER COMMON SHARE $ .05 $ .02
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 4,998,351 4,999,433
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
AND DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 235,075 $ 109,624
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 72,175 42,900
Changes in operating assets and liabilities:
Trade accounts receivable 769,954 934,894
Inventories (232,457) (1,573)
Other assets (5,477) (100,448)
Accounts payable and accrued expenses (275,259) (90,877)
---------- -----------
Net cash provided by operating activities 564,011 894,520
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CASH FLOWS FROM INVESTING ACTIVITIES
Increase in investments (29,439) (1,111,919)
Patent costs paid (25,224) (16,289)
Purchases of property and equipment (61,350) (72,555)
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Net cash used in investing activities (116,013) (1,200,763)
---------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 447,998 (306,243)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 951,945 2,247,239
---------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $1,399,943 $ 1,940,996
========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements
4
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three months ended December 31, 1997 is unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION
The consolidated financial statements presented are those of Laser
Technology, Inc. and its wholly-owned subsidiaries, Laser Communications, Inc.,
Laser Technology, U.S.V.I., and International Measurement and Control Company.
Laser Technology, Inc. is presently engaged in the business of developing,
manufacturing and marketing laser based measurement instruments.
In the opinion of Management, the unaudited financial statements reflect
all adjustments, consisting only of normal recurring accruals necessary for a
fair presentation of (a) the consolidated results of operations for the three
month periods ended December 31, 1997 and 1996, (b) the consolidated financial
position at December 31, 1997 and September 30, 1997, and (c) the consolidated
statement of cash flows for the three month periods ended December 31, 1997 and
1996. The accounting policies followed by the Company are set forth in the
Notes to the Consolidated Financial Statements of the Company for the fiscal
year ended September 30, 1997. The results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year.
B. RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and Statement of
Financial Accounting Standards No. 129 "Disclosures of Information About an
Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance with APB
Opinion No. 15, "Earnings Per Share." SFAS No. 128 provides for the calculation
of "Basic" and "Dilutive" earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income available to common shareholders
by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully diluted earnings per
share. SFAS No. 129 establishes standards for disclosing information about an
entity's capital structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15, 1997. Their
implementation is not expected to have a material effect on the financial
statements.
The Financial Accounting Standards Board has also issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that displays with the
same prominence as other financial statements. SFAS No. 131 supersedes SFAS No.
14 "Financial Reporting for Segments of a Business Enterprise, "SFAS No. 131
establishes standards on the way that public companies report financial
information about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for disclosure
regarding products and services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Because of the recent issuance of the standard,
management has been unable to fully evaluate the impact, if any, the standard
may have on future financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation of these
standards.
5
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND THREE
MONTHS ENDED DECEMBER 31, 1996
The following table sets forth, for the three month fiscal periods ended
December 31, 1997 and 1996, 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>
THREE MONTHS ENDED
DECEMBER 31,
---------------------------
1997 1996
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<S> <C> <C>
Net sales...................................................................................... 100% 100%
Cost of goods sold............................................................................. 44 44
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Gross profit................................................................................... 56 56
Royalty and licensing income................................................................... 14 9
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Total operating income......................................................................... 70 65
Operating expenses............................................................................. 57 59
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Income from operations......................................................................... 13 6
Interest income, net........................................................................... 2 2
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Income before taxes on income.................................................................. 15 8
Taxes on income................................................................................ 5 3
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Net income..................................................................................... 10% 5%
========== ==========
</TABLE>
REVENUES
The following table provides a breakdown of the percentage of net sales of
the Company's primary product lines.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
TRAFFIC SAFETY SYSTEMS........................................................................... $1,417,141 $ 965,058
Percentage of revenues........................................................................... 59% 48%
SURVEY AND MAPPING SYSTEMS....................................................................... 723,780 940,831
Percentage of revenues........................................................................... 30% 47%
OTHER............................................................................................ 271,430 97,467
Percentage of revenues........................................................................... 11% 5%
---------- ----------
Total Revenues........................................................................... $2,412,351 $2,003,356
========== ==========
</TABLE>
Net sales for the first quarter ended December 31, 1997 ("1997") rose 20%
to $2,412,351 from $2,003,356 for the first quarter ended December 31, 1996
("1996"). Traffic Safety sales increased 47% in 1997 as compared to 1996 due to
the growing popularity of the Company's second generation UltraLyte hand-held
laser speed detection system. Survey and Mapping sales were 23% lower in 1997
compared to the 1996 period, primarily the result of first quarter backorders
for the Company's Survey and Mapping products which were not filled until
January. Additionally, sales of the Company's Ship Docking Aid sensors
contributed 9% to the Company's overall revenues during the 1997 first quarter.
International sales comprised 46% of sales in both 1997 and 1996. The Company
generally experiences quarterly fluctuations in international revenues due to
the placement of typically large orders for the Company's Traffic Safety
products. Management anticipates that foreign sales of the Company's products
will continue to comprise a significant portion of its revenues.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONCLUDED)
Gross profit margins equalled 56% in fiscal 1997 and 1996. The Company
anticipates that gross profit margins in most international markets will
continue to remain consistent with those realized domestically for the Company's
current product lines. However, the Company believes that gross profit margins
on certain international sales may be less than those realized domestically due
to pricing structures on large volume orders. The Company continues to minimize
the effect of currency fluctuations by requiring payment in U.S. funds.
Royalty and licensing income from the Company's licensees rose 92% in 1997
to $346,946 over 1996 first quarter royalties of $180,660. Management believes
that royalty income related to the Company's various licensing agreements will
continue to have a positive impact on the Company's results of operations.
Total operating expenses rose approximately 17% in 1997 to $1,377,671 from
$1,180,525 realized in the comparable 1996 period. The year to year increase in
total operating expenses primarily relates to increased compensation expense due
to increased personnel. As a result of a larger revenue base, as a percentage
of net sales, the Company's total operating expenses were 57% in 1997 compared
to 59% in 1996.
The Company realized income from operations of $312,803 in 1997 as compared
to $130,078 in 1996, representing a 140% increase in income from operations from
the previous year. Increased sales and royalty and licensing income partially
offset the increase in operating expenses in 1997. Combined with interest
income earned on investments, the Company had pretax income of $356,075 in 1997
as compared to pretax income of $168,624 in 1996. Net income rose 114% in 1997
to $235,075, or $.05 per share, from $109,624, or $.02 per share, realized in
1996.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had working capital of $7,999,371. The
Company's present working capital is expected to adequately meet the Company's
needs for at least the next twelve months.
For the three month period ended December 31, 1997, cash provided by
operating activities was $564,011. Net income of $235,075 combined with a
decrease in accounts receivable of $769,954 financed an increase in inventories
of $232,457 and reduced accounts payable and accrued expenses by $275,259. Of
the net cash used in investing activities of $116,013, $86,574 was used for
equipment acquisitions and certain patent costs. For the three month period
ended December 31, 1997, cash and cash equivalents increased $447,998.
Cash provided by operating activities of $894,520 for the three month
period ended December 31, 1996 resulted from a decrease of $934,894 in trade
accounts receivable combined with net income of $109,624 for the period less
$100,448 expended to increase other assets. Cash used in investing activities
of $1,200,763 related primarily to the purchase of investments and property and
equipment. For the three month period ended December 31, 1996, cash and cash
equivalents decreased $306,243.
YEAR 2000 COMPLIANT
During the year ended September 30, 1997, the Company converted its
computer systems to be year 2000 compliant (e.g., to recognize the difference
between '99 and '00 as one year instead of negative 99 years). The Company
believes all of its computer systems are currently in compliance and does not
anticipate any additional expenditures related to the year 2000 conversion.
RISK FACTORS AND CAUTIONARY STATEMENTS
Forward-looking statements within this report are made pursuant to the
"safe harbor" provisions of the Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, continued acceptance of the
Company's products in the market place, competitive factors, potential changes
in the budgets of federal and state agencies, compliance with current and
possible future FDA or environmental regulations, and other risks and
uncertainties detailed in the Company's Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission.
7
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
This Item is not applicable to the Company.
ITEM 2. CHANGES IN SECURITIES
This Item is not applicable to the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
This Item is not applicable to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the three months ended December 31, 1997.
ITEM 5. OTHER INFORMATION
This Item is not applicable to the Company.
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
----------------------
7070 SOUTH TUCSON WAY
ENGLEWOOD, COLORADO 80112
Date:February 13, 1998 By /s/ Pamela Sevy
----------------- ----------------------
Pamela Sevy
Chief Financial Officer
Date:February 13, 1998 By /s/ David Williams
----------------- -----------------------
David Williams
President and Chief Executive Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,399,943
<SECURITIES> 0
<RECEIVABLES> 2,574,525
<ALLOWANCES> 10,000
<INVENTORY> 3,031,360
<CURRENT-ASSETS> 8,714,377
<PP&E> 2,298,721
<DEPRECIATION> 1,014,222
<TOTAL-ASSETS> 11,104,442
<CURRENT-LIABILITIES> 715,006
<BONDS> 0
0
0
<COMMON> 5,208,201
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,104,442
<SALES> 2,412,351
<TOTAL-REVENUES> 2,412,351
<CGS> 1,068,823
<TOTAL-COSTS> 1,823,851
<OTHER-EXPENSES> 622,643
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 356,075
<INCOME-TAX> 121,000
<INCOME-CONTINUING> 235,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,075
<EPS-PRIMARY> .05
<EPS-DILUTED> 0
</TABLE>
