<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
COMMISSION FILE NUMBER 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
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(303) 649-1000
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
- ----------------------------------------------------------------------------------------
<S> <C>
Common Stock, $.01 par value American Stock Exchange
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
As of December 31, 1997, the aggregate market value of the registrant's
Common Stock held by non-affiliates of the registrant (using American Stock
Exchange closing prices) was $10,648,422.
At December 31, 1997, 4,998,351 shares of common stock of the registrant
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: Part III, certain exhibits filed as
part of registrant's S-1 registration statement.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
LASER TECHNOLOGY, INC.
FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I.
<C> <S> <C>
Item 1. Business................................................... 1
Item 2. Properties................................................. 16
Item 3. Legal Proceedings.......................................... 16
Item 4. Submission of Matters to a Vote of Security Holders........ 16
PART II.
Market for Registrant's Common Equity and Related
Item 5. Stockholder Matters....................................... 16
Item 6. Selected Financial Data.................................... 18
Management's Discussion and Analysis of Financial Condition
Item 7. and Results of Operations................................. 19
Item 8. Financial Statements and Supplementary Data................ 25
Changes in and Disagreements with Accountants on Accounting
Item 9. and Financial Disclosure.................................. 25
PART III.
Item 10. Directors and Executive Officers of the Registrant......... 26
Item 11. Executive Compensation..................................... 27
Security Ownership of Certain Beneficial Owners and
Item 12. Management................................................ 29
Item 13. Certain Relationships and Related Transactions............. 30
PART IV.
Exhibits, Financial Statement Schedules and Reports on Form
Item 14. 8-K....................................................... 30
SIGNATURES........................................................... 32
</TABLE>
<PAGE>
PART I.
ITEM I. BUSINESS
RISK FACTORS AND CAUTIONARY STATEMENTS
This report contains "forward-looking statements." Forward-looking
statements in this report are made pursuant to the "safe harbor" provisions of
the Private Securities 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 marketplace, 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 detailed in the Company's
Registration Statement on Form S-1 as filed with the Securities and Exchange
Commission.
RECENT DEVELOPMENTS
Effective May 30, 1997, Laser Technology, Inc., (the Company) effected a
merger with a newly formed subsidiary, Laser Technology, Inc., a Delaware
corporation ("Laser Technology-Delaware"), for the principal purpose of
changing the corporate domicile of the Company from the State of Idaho to
Delaware. Under the terms of the Merger, the Company's Idaho corporate entity
("Laser Technology, Inc.-Idaho") merged with and into Laser Technology-
Delaware, which became the surviving corporation, and Laser Technology, Inc.-
Idaho ceased to exist. The transaction was accounted for as a recapitalization
similar to a pooling of interests and the merger did not involve any change in
the business, properties, management or capital structure of the Company.
Laser Technology- Delaware had no operations prior to the merger. Stockholders
of Laser Technology-Idaho received the same number of shares of common stock
of Laser Technology-Delaware as previously held in Laser Technology-Idaho and
are entitled to the same stockholder rights and preferences as they held with
the Idaho corporation.
INTRODUCTION
The Company and 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 was originally organized in September 1950.
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. The Company's executive offices
are located at 7070 South Tucson Way, Englewood, Colorado 80112, and its
telephone number is (303) 649-1000.
PRINCIPAL PRODUCTS
REVENUES
Historically, the Company's primary product lines have been its Marksman
Laser Speed Detection Systems and Criterion Series of Survey Lasers. Since
fiscal 1995, the Company has 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 categories: Traffic
Safety products, Survey and Mapping products, and Ship Docking Aid Systems.
1
<PAGE>
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,
--------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Traffic Safety................................. 51% 57% 62%
Survey and Mapping............................. 43 34 36
Ship Docking Aid Systems....................... 3 8 --
Other.......................................... 3 1 2
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:
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Domestic....................................... 53% 51% 56%
Foreign........................................ 47 49 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
Initially 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. In fiscal 1997, the Company introduced the "UltraLyte
100 and 200," second generation laser speed detection devices.
During the fourth quarter of fiscal 1997, the Company initiated production
and marketing of the UltraLyte 100. Based on the same pulse laser measurement
technology as the Marksman, the UltraLyte represents the Company's second
generation technology and was re-engineered in fiscal 1997 to reduce the size,
weight and manufacturing cost of the Company's Marksman. The UltraLyte also
incorporates an internal power source. Concurrent with the development of the
UltraLyte 100, the Company developed the UltraLyte 200, which expands the
capabilities of the UltraLyte 100 by incorporating a tilt sensor enhancing the
surveying capabilities of the UltraLyte for use in accident reconstruction and
investigation.
The Company's hand-held laser speed measurement devices have several
advantages over radar speed measurement devices. As distinguished from radar
devices, the Marksman and UltraLyte 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
and UltraLyte measure speed 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
or UltraLyte, 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
2
<PAGE>
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.
However, the shorter acquisition time to measure vehicle speeds and
significantly reduced beam width of the Company's hand-held laser speed
detection devices does not permit vehicles, other than the targeted vehicle,
to detect the Marksman or UltraLyte'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 detectors exist that will detect the Marksman or UltraLyte
only when the vehicle equipped with such a detection device is being targeted.
However, because the measurement period of the Marksman and UltraLyte 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
Company's products due to the sophisticated nature of the Marksman and
UltraLyte's internal targeting software. In 1995, to combat the use of laser
jamming devices, the Company developed the capability within its products 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 began commercial production of the Laser DigiCam photo
laser system which integrates a video 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 and UltraLyte also measure
distance. This feature enables the Marksman and UltraLyte to be used for a
variety of applications outside of speed enforcement. These 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 and UltraLyte for this application. QuickMap
is a software module integrated to a data collector which can be used in
conjunction with the Company's hand-held laser devices to expedite the
collection and processing of data at accident sites and crime scenes. The
surveying capabilities of the Company's newly introduced UltraLyte 200 which
includes an inclinometer enhances the UltraLytes use for accident
investigation applications.
In 1995, the Company introduced "DBC," an optional feature that can be
integrated into the Marksman and UltraLyte'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 Company's hand-held laser speed measurement products.
Traffic engineers and law enforcement officials are also able to conduct and
document traffic speed surveys more efficiently using the Marksman and
UltraLyte laser speed detection systems than with conventional methods. In
1993, the Company introduced a statistical compilation software package,
"SpeedStat." This product, when combined with the Marksman or UltraLyte,
gathers and formats traffic survey data on a portable computer via a serial
cable interface.
In 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
3
<PAGE>
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
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.
SpeedAlert Trailer
While the Company primarily markets pulse-laser products produced by the
Company, to expand distribution of its products and to further market
penetration, the Company has added complementary products manufactured by
others. During fiscal 1997, to augment the Company's Traffic Safety business,
the Company began selling an automated speed measurement trailer, "Speed
Alert." Designed for unattended operation to encourage voluntary speed
compliance, the Company's SpeedAlert trailer measures and displays vehicle
speeds for use within school, heavy traffic or other critical traffic zones.
Additionally, the Company's SpeedStat DC can be interfaced with the SpeedAlert
allowing improved statistics compilation.
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
4
<PAGE>
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.
Without the use of the Criterion 100TM, or comparable measurement equipment,
these measurements involve multiple man crews and often place personnel in
hazardous situations. Since 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 safely and
expediently.
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 point 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.
During fiscal 1997, the Company expanded the Impulse product line to include
four new models. The "Impulse 100," is identical to the flagship Impulse model
but without a tilt sensor. While unable to compute heights or inclination
measurements, the Impulse 100 offers a more affordable alternative to
customers who solely require distance measurement. The "Impulse 100 and 200
LR" models were engineered with the ability to measure longer distances than
that of the Company's standard Impulse model to low reflective targets. In
1997, the Company also introduced the "Impulse XL" for military applications.
The Impulse XL has the ability to measure distances in excess of 2,000 meters.
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 complementary 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
5
<PAGE>
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.
SHIP DOCKING AID SYSTEMS
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 fiscal 1997, the
Company expanded its Ship Docking Aid Systems product line by adding a hand-
held laser measurement system, the "Mariner." Management believes that
significant market potential exists for docking aid systems and intends to
continue marketing this product line through its wholly-owned subsidiary,
Laser Communications, Inc.
OTHER
Industrial Laser Distance Measurement Sensors
In 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.
Other market applications exist for the Company's pulse laser technology.
The National Aeronautics and Space Administration (NASA) uses modified
versions of the Marksman for use on space shuttle missions involved in docking
procedures to determine target distance and closing speed when shuttle
missions perform 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.
SEASONALITY
Management believes that seasonal effects on sales of its Traffic Safety
products are non-existent. Although the Company's Traffic Safety business is
not of a seasonal nature, sales of its Traffic Safety products may continue to
vary between financial periods based on the capital procurement processes and
fiscal year budgeting cycles of state and municipal law enforcement agencies.
Historically, the Company has realized a small decline in sales of its Survey
and Mapping products in areas affected by colder weather during the winter
months.
MANUFACTURING OPERATIONS
The Company's manufacturing operations primarily consist of the 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. Additionally, the Company believes that there are
adequate alternative suppliers for its foreseeable needs. 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.
During fiscal 1997, pursuant to the Company's rights for additional
expansion space under its existing lease arrangements, the Company expanded
its manufacturing facility to meet anticipated production demand.
6
<PAGE>
Additionally, in fiscal 1997, the Company enhanced its manufacturing
operations by installing a fully integrated manufacturing software package
which Management believes will improve production efficiencies. Management
believes that the Company's manufacturing facilities are adequate to meet the
Company's needs throughout the foreseeable future.
PRODUCT RESEARCH AND DEVELOPMENT
Research and development costs related to the Company's instrumentation and
proprietary technology are expensed as incurred and included in operating
expenses. During fiscal 1997, 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 totalled
approximately $664,000, $514,000 and $363,000 for the fiscal years ended
September 30, 1997, 1996 and 1995, respectively. Year to year increases in
research and development expenditures are primarily related to increased
compensation expense attributable to increased personnel.
In 1993, the Company completed development of 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. The Company also
expanded its surveying product line by introducing three new models of its
Criterion survey lasers.
In 1994, the Company completed development of the Criterion 100TM, an
enhancement to the Criterion product line which integrates a Criterion ranging
laser with a surveying theodolite. 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. Using the ability to
transmit data with pulses of light, this technology eliminates the problems
associated with radio frequency communication.
During 1995, the Company completed the development of several new functions
and features centered around the Company's Traffic Safety 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. These features are also inherent in the Company's second
generation UltraLyte introduced in fiscal 1997.
In 1995, the Company also completed development of the Laser DigiCam photo
laser system, built around the Company's Marksman speed detection laser. The
Laser DigiCam system targets a specific area on a roadway and monitors the
speed of each vehicle that passes through 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 site 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. Additionally in 1995, the Company completed the development of the
DAS100 Ship Docking Aid System in cooperation 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 to the dock, and transmitting this data to the
bridge of the ship.
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," subsequently renamed the
7
<PAGE>
"Yardage Pro 400," which is being produced and marketed by Bushnell to certain
sporting markets, primarily the hunting and golfing industries. During fiscal
1997, the Company completed development of the "Yardage Pro 800" providing
increased ranging capabilities surpassing that of the Yardage Pro 400. The
Company receives running royalties on cumulative net sales of this product,
has received development costs for the initial development and design and
retains the right to pursue markets outside the sports technology area.
This product was the first laser range finder introduced in a consumer
market with the ability to measure to non-cooperative targets. The Company
retains all ownership of patents and trade secrets of the technology
underlying the development of the Yardage Pro. During Fiscal 1997, royalty and
licensing income earned related to this agreement was approximately $854,000.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
In 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 point. 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 range finder was
developed from the technology underlying the Company's Impulse for use in
tactical law enforcement applications.
In fiscal 1996, the Company completed the 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.
During fiscal 1997, the Company completed development of enhanced Impulse
models which use specialized hardware and firmware that offer varying levels
of maximum range and accuracy. During fiscal 1997, the Company also completed
development of the UltraLyte, a second generation laser speed detection device
introduced during the 1997 fourth quarter as part of its Traffic Safety
product line. Similar to the Impulse, the UltraLyte is smaller in size and
weight and has been engineered to lower manufacturing costs. Additionally, the
UltraLyte was designed to incorporate an internal power source, in-scope data
display similar to the Marksman, and, as an optional feature, an inclinometer
for enhanced accident investigation capabilities. During fiscal 1997, the
Company also completed development of the Mariner, a laser measurement device
designed to serve customers within the ship docking industry.
MARKETING, DISTRIBUTION AND CUSTOMERS
The Company presently markets its products to three major classes of
customers. For the fiscal year ended September 30, 1997, the Company's foreign
distributors accounted for 43% of sales, of which the Company's Asian and
European distributors comprised 32% collectively. Domestically, state and
local law enforcement agencies comprised approximately 23%. Additionally,
sales to the Company's Domestic Survey and Mapping dealer network comprised
24%. For the fiscal year ended September 30, 1997, one customer, Visi Trading
(m) SDN BHD, accounted for 11% 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.
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
8
<PAGE>
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. To date, the
Company's sales force serving this market includes seven direct sales
representatives, three inside sales support personnel and a national sales
manager. 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, during fiscal 1996 and 1997, 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. Distribution of domestic Traffic Safety
Products is accomplished almost exclusively by direct representation. As of
September 30, 1997, 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, France, 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 internationally. As of
September 30, 1997, the Company has established distribution in over thirty
international territories.
In 1995, the National Institute of Standards and Technology ("NIST") in
conjunction with the National Highway Traffic Safety Administration ("NHTSA")
completed a national minimum model for performance specifications related to
police traffic laser speed measurement devices such as the Marksman. Once the
standard was 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.
Products listed on the IACP approved products list allow easier access to
federal funds from the United States Department of Transportation to become
more accessible for law enforcement agencies to purchase laser speed detection
devices. Because of the budgeting process intrinsic to the municipal and state
purchasing process, Management anticipates that IACP certification will better
impact sales once agencies have completed a full year budget cycle, although
there is no assurance of this. Late in fiscal 1997, the Company submitted the
UltraLyte for inclusion on the IACP Approved Products List. Compliance testing
of the Company's UltraLyte is expected to be achieved at a much faster rate
than seen previously with the Marksman since the national standard now exists.
Four states within the U.S. including Florida, North Carolina, Virginia and
Pennsylvania require the passage of state legislation to enable the use of new
technological developments in speed enforcement. To date, legislation has been
passed approving the use of laser speed detection as an acceptable means of
speed enforcement in three of the states including Florida, North Carolina and
Virginia. To date, legislation has not been passed in Pennsylvania and
Management is unaware when 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, France and Italy. The Marksman has also been tested and approved
for use by the Royal Canadian Mounted Police in Canada (the "RCMP"). In the
latter half of fiscal 1997, the Company's second generation UltraLyte was also
approved by the RCMP. The UltraLyte is currently undergoing testing in
Germany, Austria and the United Kingdom. Similar to the domestic market, the
UltraLyte is expected to quickly achieve foreign acceptance based on
previously set performance standards.
9
<PAGE>
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
was 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. During fiscal
1997, a second order was delivered pursuant to the Company's two-year contract
with this agency comprising 11% of the Company's Traffic Safety revenues in
1997.
The Company believes that primary sales opportunities for the Laser DigiCam
are 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.
The Company continues to assess the potential of the U.S. market, and during
fiscal 1997, assigned one full-time representative to focus on researching the
domestic potential for its automated laser speed enforcement systems. The
Company intends to incrementally match its marketing efforts domestically as
the potential of this business segment rises within the U.S. market.
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 provided private labeled versions of
its Criterion series of survey lasers to Pentax, which were 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. In 1997, the Company and Pentax mutually agreed to end its
distribution agreement enabling the Company to more aggressively build its own
distribution network. Therefore, Pentax did not substantially contribute to
the Company's overall Survey and Mapping sales in 1997.
During fiscal 1997, the Company increased the number of dealers in its
domestic distribution network supporting its Survey and Mapping product line
to approximately one hundred-twenty, and internationally to approximately
fifty-four.
Management believes that the introduction of the Impulse Series of Survey
Lasers late in fiscal 1996 provided 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 point. 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 its domestic dealer
network which is managed by the Company's National Sales Manager and four
direct sales managers. Management expects that as sales of its Impulse Series
of Survey lasers increase that Criterion sales should slow as the Company's
second generation Impulse gains wider market acceptance.
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, 1997, the Company has established distributors for its Survey
and Mapping product line in forty-five international territories.
10
<PAGE>
In the latter half of fiscal 1996, the Company completed development of a
low cost, industrial laser distance measurement sensor which the Company
currently markets for industrial laser sensor applications. Pursuant to a
contract with Telemotive Industrial Controls, Inc., ("Telemotive"), a world
leading manufacturer of radio controls for material handling cranes and
industrial vehicles, laser sensors developed and manufactured by the Company
are 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. Due to
Telemotive's successful introduction of its systems in fiscal 1997, Telemotive
has increased its minimum purchase commitment which is expected to positively
impact the Company's fiscal 1998 Industrial Laser Sensor sales.
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.
Ship Docking Aid Systems
The Company currently markets its Ship Docking Aid Systems domestically
through direct sales, and internationally through foreign dealers. In 1995,
SeaRiver Maritime, Inc., formerly Exxon Shipping Company, completed a
favorable evaluation of the DAS100. The Company began more aggressively
marketing its Ship Docking Aid Systems during the latter half of fiscal 1995
resulting in the award of a contract to furnish laser sensors for ship docking
systems to Martin Marietta Corporation ("MMC"), 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 fiscal 1996 revenues. Because of the specialized nature of
the ship docking industry, management expects sales of Ship Docking Aid
Systems to greatly fluctuate between financial periods.
During fiscal 1997, the Company developed strategic relationships with key
companies in the shipping industry to expand distribution of this business
segment. Management believes that primary customers for its Ship Docking Aid
Systems include oil and liquid natural gas carriers with ocean fleets and
other bulk carriers.
BACKLOG
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. As of
September 30, 1997, the Company had a backlog in sales of approximately
$160,000 attributable to sales of its Traffic Safety products, primarily the
UltraLyte laser speed detection system. Such orders were delivered during the
first quarter of fiscal 1998. The Company intends to continually evaluate
inventory and production demands to fill orders as received.
COMPETITION
The Company's hand-held Marksman and UltraLyte laser speed detection systems
compete 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 that the Marksman and UltraLyte compete primarily because of their
greater effectiveness and accuracy compared to radar speed measurement
devices.
Management believes that the 1997 fourth quarter introduction of the
UltraLyte will enable the Company to better penetrate the radar market due to
its lower price point. The UltraLyte, re-designed in fiscal 1997, is half the
size and weight of the Company's Marksman, has an internal power source, and,
as an optional feature, an integrated inclinometer enhancing the UltraLyte's
surveying functions.
The Company's hand-held laser speed detection devices have the ability to
positively identify specific vehicles and are not detectable by conventional
radar detectors. Additionally, consumer laser speed detectors and marketed
laser jamming devices are generally ineffective against the Marksman and newly
introduced UltraLyte.
11
<PAGE>
The ranging capabilities of the Company's hand-held laser speed detection
systems are also used by law enforcement agencies to gather measurement
information during accident reconstruction and investigation. In 1995, the
Company introduced QuickMap, which enhanced the Marksman's use by law
enforcement agencies for quickly collecting and processing information at
accident sites and crime scenes. During fiscal 1997, the Company enhanced the
surveying capabilities of the Company's laser speed detection device by
integrating an inclinometer into the Ultralyte. With the inclination
capability, the Ultralyte becomes both a speed measurement and mapping
instrument, when used in conjunction with the Company's QuickMap.
The Company's Marksman and UltraLyte also provide other capabilities
distinct from its competitors. SpeedStat, a statistical compilation software
package introduced in 1993, when combined with the Company's Marksman or
UltraLyte, 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 or
UltraLyte than with conventional methods. DBC, introduced in 1995, allows the
Company's laser speed detection systems to measure the distance and time
between vehicles. Additionally, the Company's Marksman and UltraLyte
incorporate features 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 ranging capabilities of the
Marksman and UltraLyte are also used by SWAT teams to measure target
distances, and in drug interdiction to measure truck trailers for false
compartments.
The Company is aware of four other companies that market laser speed
measurement devices. Kustom Signal, Inc. markets a device pursuant to a
license from the developer, Laser Atlanta, Inc. Applied Concepts, a Texas
based company, is in the initial stages of introducing a laser speed
measurement device. Additionally, Riegl, an Austrian company, and Jenoptic, a
German company, also market laser speed measurement devices in Europe. Such
competition has not, however, had a material impact on the Company's sales of
its Traffic Safety products. See "Patent Licensing Agreements."
The Company presently believes that its hand-held laser speed detection
systems are able to compete within this market based upon 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. The Company also believes that its second generation
technology provides a significant competitive advantage to the Company by
providing lower cost and more ergonomically designed instrumentation.
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
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 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 the foreign markets currently served by them,
primarily Scandanavia 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
12
<PAGE>
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 Company's Impulse series of Survey
and Mapping lasers compete within this market because of their reduced size
and weight and lower price point 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. 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 sensors will continue to compete
with traditional measuring devices including radar and RF based systems, and
in certain international markets, primarily Europe, with laser distance
measurement instruments developed and marketed by Riegl, an Austrian company.
Management intends to compete in these markets based on the unique measurement
capabilities of its industrial laser sensors and because of their reduced
size, weight and lower manufacturing costs.
The Company is aware of several companies that provide other ship docking
aid systems including Marimatech A.S., Koden Electronics Company and Tokimec.
Management believes that it can compete within this market based upon the
Company's advanced technology and lower cost position as compared to other
systems. Since the Company manufactures the laser sensors integrated into its
docking systems, Management believes that it will maintain lower manufacturing
costs as compared to competing systems.
PATENTS
Certain processes by which the Company is able to produce its products are
largely proprietary. The Company believes that patent protection of its
technology 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.
To date, the Company has filed twenty-four patent applications related to
its various product lines with the United States Patent and Trademark Office
in order to protect its current technology. This includes three applications
which are continuations of previous applications. To date, eleven 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, on its
laser speed detection instrument. 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 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. A seventh patent was issued, expiring in
November 2013, related to the consumer instrumentation developed for Bushnell.
13
<PAGE>
During fiscal 1997, two patents were issued on the Company's proprietary
technology related to consumer range-finding instrumentation developed for
Bushnell. These patents expire in March 2014 and July 2014. Additionally, the
Company was issued a patent, expiring in April 2014, related to its Traffic
Safety product line associated with the method for measuring distance and time
between traveling vehicles. The company was also granted a patent, expiring in
December 2014, related to the Company's QuickMap accident investigation
system.
To date, an additional thirteen patent applications have been filed. Two
patent continuations were filed on existing patents related to the Company's
consumer range-finder's. Three additional applications have been filed related
to the Company's Traffic Safety products. The Company has also filed five
patents related to the Company's second generation Survey and Mapping
products, one patent has been filed related to the Company's Ship Docking Aid
systems, and two additional patents were filed to protect the Company's
industrial laser sensor products.
PATENT LICENSING AGREEMENTS
In September 1996, the Company agreed to license to Kustom Signals, Inc.
("Kustom") and LaserCraft, Inc., ("LaserCraft"), a patent relating to the
Company's hand-held laser speed detection system (the "Patent"). Kustom
markets a laser speed measurement device along with radar speed measurement
devices and other traffic safety equipment. 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
individual 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. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Royalty and Licensing Income."
1n 1995, the Company, in conjunction with Bushnell, formerly the Sports
Optics Division of Bausch and Lomb, completed development of the Yardage Pro
laser range finder, formerly the Lytespeed, which is marketed and produced by
Bushnell to certain sporting markets, primarily the hunting and golfing
industries. In fiscal 1996, the Company completed development of an enhanced
model of the Yardage Pro providing extended range. The Company retains all
ownership of patents and trade secrets of the technology underlying the
development of these products and has been issued three patents related to
this technology.
In November 1997, the Company and Bushnell entered into a licensing
agreement with Tasco Sales, Inc., ("Tasco"), whereby the Company and Bushnell
agreed to license certain patents related to the Yardage Pro. Tasco desires to
begin marketing a laser range-finder, developed by Asia Optical, a Taiwanese
Company, that would compete with the Yardage Pro series of range-finders. The
Company and Bushnell have agreed to provide Tasco with the nonexclusive rights
to market a laser range-finder incorporating certain features covered by
claims of patents held by the Company and Bushnell. Pursuant to this
agreement, the Company and Bushnell will receive licensing fees based on a
percentage of Tasco's gross sales.
In June 1997, the Company agreed to license to Applied Concepts, Inc.,
("ACI"), a patent relating to the Company's hand-held laser speed detection
system. ACI intends to add a laser speed measurement device to their current
line of radar instruments. Pursuant to the agreement, the Company granted ACI
the nonexclusive rights to manufacture and sell laser-based speed measurement
devices incorporating features covered by the claims of the patent. In
consideration for the license agreement, the Company will receive license fees
as a percentage of sales on each licensed device sold by ACI. To date, no
licensing fees have been received by the Company.
GOVERNMENT REGULATION
The Company's laser products emit a laser light beam and are regulated by
the FDA and subject to approval by certain foreign governments. FDA
regulations impose eye safety requirements on the Company's products
14
<PAGE>
and governments of some foreign countries have similar regulations. The
Marksman complies with FDA Class 1 eyesafety regulations and has been rated
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"), the
Company is aware of certain changes under consideration by the FDA that may
affect current FDA regulated emission limits of Class 1 pulsed lasers.
Although there is no assurance of this, management does not believe that such
proposed changes will impact the Company's sales or results of operations.
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. During
the latter half of fiscal 1997, the UltraLyte, the Company's second generation
Marksman, was submitted for compliance testing. Inclusion on the IACP Approved
Products List is expected by the Spring of 1998.
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, 1997, 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
Company's laser speed detection products are 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 and Italy. The Marksman and UltraLyte have also been
tested and approved by the Royal Canadian Mounted police in Canada.
Historically, the Company's laser speed measurement devices have been
subject to court acceptance as a viable means of speed measurement in
jurisdictions where they are used. To date, the Marksman has been accepted by
courts in over forty states and in over fifteen foreign countries. In June
1996, a state court judge in New Jersey ruled in a specific case that
insufficient test data had been presented to the court and ruled to not allow
the instrument to be used in that court's jurisdiction. As a result, new
testing was subsequently completed by the New Jersey State Police and the New
Jersey Department of Transportation which was submitted to the court at a
second hearing held in New Jersey in October 1997. The results of the hearing
are expected in the near future.
EMPLOYEES
Management considers the relations between the Company and its employees to
be good. As of September 30, 1997, the Company employed seventy-two employees,
consisting of seven management personnel, twenty-five employees engaged in the
sales and marketing activities of the Company, ten engineering personnel,
twenty-one production related personnel and nine administrative and office
personnel. In addition to its full-time employees, the Company uses the
services of two contractual marketing representatives and also uses the
services of two contract engineers providing mechanical design and
documentation services related to the Company's research and development
activities.
15
<PAGE>
ITEM 2. PROPERTIES
During the 1997 fiscal year, the Company expanded its facilities pursuant to
the Company's rights for additional expansion space under its current lease
agreements to provide additional production and office space. The Company's
combined facilities in Englewood, Colorado provide approximately 24,000 square
feet under a lease agreement expiring in May 2003. In total, the Company's
facilities comprise 12,000 square feet of production space, 3,000 square feet
allocated for research and development and 9,000 is devoted to marketing and
administrative activities. The Company believes that its current facilities
are adequate to meet its needs throughout the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or its
subsidiaries are a party or to which any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter ended
September 30, 1997.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
On August 6, 1997, the Company announced that it would not extend the
expiration date of its outstanding Redeemable Warrants, which are due to
expire on January 11, 1998. Under the terms of the Redeemable Warrants, each
Redeemable Warrant represents the right of the holder to purchase one share of
the Company's Common Stock at an exercise price of $6.00 per share, subject to
adjustments, at any time prior to the close of business on January 11, 1998.
The Company has the right to redeem the Redeemable Warrants in whole for
cancellation at a price of $0.05 each, by written notice mailed to each holder
thirty (30) days prior to the redemption date. Such notice of redemption may
only be given within ten (10) days following any period of thirty (30)
consecutive trading days during which the closing sale price of the Company's
shares of Common Stock exceeds $8.00 per share.
Because of the Company's announcement, in the event Redeemable Warrants have
not been exercised by the holders thereof or redeemed by the Company prior to
January 11, 1998, the Redeemable Warrants shall expire by their terms and the
holders shall have no further exercise rights. The Company is not obligated to
extend the expiration date.
Following the Company's change of corporate domicile from the State of Idaho
to the State of Delaware, the Company has authorized 2,000,000 shares of
Preferred Stock, par value $.01 per share, which shares of Preferred Stock may
be issued in various series and shall have preference as to dividends and to
liquidation of the Company. The Board of Directors of the Company shall
establish the specific rights, preferences, voting privileges and restrictions
of such Preferred Stock, or any series thereof. To date, no shares of
Preferred Stock have been issued.
The Company's common stock is listed on the American Stock Exchange ("LSR").
As of September 30, 1997, 4,998,351 common shares were outstanding and the
Company had approximately 372 shareholders of record which figure does not
take into account those shareholders whose certificates are held by nominees.
The following table sets forth the range of high and low sale prices of the
common stock for each calendar quarterly period as reported on the American
Stock Exchange.
16
<PAGE>
STOCK PRICES
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1997
First Quarter..................................................... $5.38 $3.62
Second Quarter.................................................... 4.00 3.25
Third Quarter..................................................... 4.00 3.19
Fourth Quarter*................................................... 4.00 2.75
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
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
</TABLE>
- --------
* The 1997 fourth quarter reflects the high and low sale prices of the
Company's common stock reported by the American Stock Exchange through
December 31, 1997.
DIVIDENDS
The Company currently intends to retain earnings to finance its operations,
therefore, the Company has not declared or paid cash dividends in the past,
nor does the Company anticipate that it will distribute cash dividends in the
foreseeable future.
17
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data of the Company should be read in
conjunction with the financial statements and notes thereto and the following
Management's Discussion and Analysis of Financial Condition and Results of
Operations. The financial data set forth below has been derived from the
audited financial statements of the Company.
<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............. $9,292,637 $9,306,777 $8,225,776 $5,303,299 $4,813,227
Cost of goods sold.... 4,086,026 4,241,389 3,864,473 2,527,322 2,021,884
Gross profit.......... 5,206,611 5,065,388 4,361,303 2,775,977 2,791,343
Royalty and licensing
income............... 868,931 401,121 -- -- --
Total operating
income............... 6,075,542 5,466,509 4,361,303 2,775,977 2,791,343
Operating expenses.... 5,342,067 4,058,908 3,431,694 2,766,426 1,794,332
Income from
operations........... 733,475 1,407,601 929,609 9,551 997,011
Interest income
(expense) net........ 163,955 235,771 157,523 86,555 (83,765)
Income before taxes on
income and
extraordinary item... 897,430 1,643,372 1,087,132 96,106 913,246
Taxes on income
(benefit)............ 312,000 580,000 383,000 37,000 (52,000)
Income before
extraordinary........ 585,430 1,063,372 704,132 59,106 965,246
Extraordinary item
(a).................. -- -- -- -- 567,000
Net income............ 585,430 1,063,372 704,132 59,106 398,246
Net income per common
share:
Before extraordinary
item............... .12 .20 .14 .01 .20
Extraordinary item.. -- -- -- -- (.12)
Net income.......... .12 .20 .14 .01 .08
Weighted average
number of shares
outstanding........ 4,998,351 5,209,981 4,989,600 5,008,381 4,794,749
</TABLE>
- --------
(a) 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>
SEPTEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....... $ 7,803,965 $ 7,698,674 $7,834,363 $7,247,133 $7,309,987
Total assets.......... 11,144,626 10,663,459 8,998,295 8,366,463 8,011,845
Short-term debt,
including current
maturities of long-
term debt............ -- -- -- 59,517 34,481
Long-term debt less
current maturities... -- -- -- 150,075 27,379
Total stockholders'
equity............... 10,154,361 9,692,855 8,589,692 7,885,560 7,761,495
</TABLE>
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
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,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales............................. 100% 100% 100%
Cost of goods sold.................... 44 46 47
---------- ---------- ----------
Gross profit.......................... 56 54 53
Royalty and licensing income.......... 9 4 --
Total operating income................ 65 58 53
Operating expenses.................... 57 44 42
Income from operations................ 8 14 11
Interest income, net.................. 2 3 2
Taxes on income....................... 3 6 4
---------- ---------- ----------
Net income............................ 7% 11% 9%
========== ========== ==========
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
products are classified as "Other" for presentation purposes.
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
TRAFFIC SAFETY........................ $4,772,272 $5,259,346 $5,087,676
Percentage of revenues................ 51% 57% 62%
SURVEY AND MAPPING.................... 4,006,730 3,175,031 2,991,549
Percentage of revenues................ 43 34 36
DAS100 SHIP DOCKING AID SYSTEM........ 261,876 763,930 --
Percentage of revenues................ 3 8
OTHER................................. 251,759 108,470 146,551
Percentage of revenues................ 3 1 2
---------- ---------- ----------
Total Revenues........................ $9,292,637 $9,306,777 $8,225,776
========== ========== ==========
</TABLE>
Fiscal Year Ended September 30, 1997 Compared to Fiscal Year Ended September
30, 1996
Net Sales for the fiscal year ended September 30, 1997 ("1997") were
$9,292,637 compared to $9,306,777 realized during the fiscal year ended
September 30, 1996 ("1996"). Decreased volume sales of the Company's Ship
Docking aid sensors were offset by increased Survey and Mapping sales. Larger
sales of the Company's ship docking systems were realized in 1996 as compared
to 1997, due to the Company's completion of its contract with Lockheed Martin
in 1996. Management expects that sales of its Ship Docking Aid Systems will
greatly fluctuate between financial periods due to the specialized nature of
the business.
The decline in sales of the Company's Ship Docking Aid systems was offset by
increased Survey and Mapping sales of the Company's products. Survey and
Mapping sales rose 26% to $4,006,730 in 1997 from $3,175,031 in 1996 due to
increased volume sales of the second generation Impulse series of survey
lasers. As market penetration of the Company's second generation Impulse
expanded, sales of the Company's Criterion
19
<PAGE>
slowed as the Impulse replaced first generation technology. 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.
Traffic Safety sales in 1997 were $4,772,272 compared to $5,259,346 realized
in 1996 representing a 9% decrease in the Company's overall Traffic Safety
revenues. The decline in Traffic Safety sales in 1997 compared to 1996 was
primarily related to lower international sales of the Company's Traffic Safety
products. Despite lower international revenues, domestic sales of Traffic
Safety products rose 5% to $2,375,111 in 1997 compared to 1996 domestic
Traffic Safety sales of $2,270,931 due to the fourth quarter introduction of
the UltraLyte. During the 1997 fourth quarter, the Company introduced the
UltraLyte, a second generation successor of its Marksman laser speed detection
device. Management believes that Traffic Safety sales are beginning to benefit
from second generation products such as the UltraLyte and believes that sales
of the Company's Traffic Safety products should improve as this new product is
fully introduced into the market.
International sales comprised 47% of net sales in 1997 compared to 49% in
1996. Historically, the Company experiences quarterly fluctuations in its
foreign sales due to the placement of typically large orders for the Company's
Marksman and Laser DigiCam Traffic Safety products. Foreign sales of the
Company's products are expected to 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 decreased 4% to $4,086,026 in 1997 from $4,241,389 in
1996. During 1997, the Company benefitted from manufacturing cost reductions
related to its second generation Impulse and UltraLyte, designed to reduce
manufacturing costs and improve production efficiency. As a result, gross
profit as a percentage of net sales was 56% in 1997 compared to 54% realized
in 1996. Management recognizes that competitive pressure may affect the
Company's gross profit margins. Such impact from reduced selling prices is
expected to be offset by reduced manufacturing costs on second generation
products. Such price reductions were not a significant factor effecting the
Company's 1997 revenues. As second generation products become a larger
percentage of overall sales, Management expects gross margins to continue to
improve. 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 laser speed detection systems may be less than those realized
domestically due to reduced selling prices on high volume orders. The Company
minimizes the effect of currency fluctuations by requiring payment in U.S.
funds.
Total operating expenses increased approximately 32% to $5,342,067 in 1997
from $4,058,908 for the comparable 1996 period. As a percentage of net sales,
total operating expenses rose to 57% in 1997 from 44% in 1996. Increased
operating expenses realized in 1997 primarily relate to the Company's
increased distribution efforts and consultant fees related to the
implementation of the Company's newly integrated JD Edwards business software
package. During fiscal 1997, the Company continued to invest in building its
direct sales force for its domestic Traffic Safety and Survey and Mapping
business segments. As a result, the Company incurred increased operating
expenses including increased compensation expense due to increased personnel,
and higher advertising and travel expenses related to accelerated marketing
efforts over the previous year. The Company anticipates that operating
expenses will continue to increase to support the Company's continued growth
as the Company's sales increase. However, Management believes that operating
expenses will increase at a slower rate, now that the Company's investment in
infrastructure is substantially complete.
Royalty income primarily related to the Company's agreement with Bushnell on
sales of the Yardage Pro series of laser range finders marketed by Bushnell
rose 117% to $868,931 in 1997 from $401,121 realized in 1996. Management
believes that royalty income received from its current licensing arrangements
related to the Company's proprietary technology will continue to positively
impact the Company's results of operations. See "Royalty and Licensing
Income."
20
<PAGE>
Improved Royalty income partially offset the increase in operating expenses
in 1997. Combined with income earned on investments of $163,955 and $235,771
in 1997 and 1996, respectively, the Company realized income before taxes on
income of $897,430 in 1997 compared to income before taxes on income of
$1,643,372 for the comparable 1996 period. After taxes on income, the Company
realized net income of $585,430, or $.12 per share, in 1997 compared to
$1,063,372, or $.20 per share, in 1996.
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.
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. In
April 1996, the Company's hand-held Marksman laser speed detection system was
certified by the International Association of Chiefs of Police ("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. Because the approval occurred so late in the
year, Management believes that law enforcement agencies deferred purchases of
the Company's Marksman hand-held laser speed detection system in order to
purchase the Marksman with federal funds.
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.
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.
During fiscal 1996, the Company began receiving royalty income related to
its agreement with Bushnell Corporation ("Bushnell") from sales of the Yardage
Pro, a laser range finder developed by the Company in cooperation with
Bushnell. The Company receives running royalties on designated net sales of
the Yardage Pro product developed under the agreement and received development
fees for the initial technology development as well as supplemental fees
related to production engineering of the Yardage Pro. During fiscal 1996,
royalty income received from Bushnell was $341,000.
In September 1996, the Company licensed a patent to a competitor within its
Traffic Safety business, Kustom Signals, Inc., ("Kustom") and to Kustom's
supplier of its laser speed measurement devices, LaserCraft, Inc.
("LaserCraft"). Pursuant to the license agreement, the Company receives
licensing fees on designated sales on a per unit basis, for each licensed
device sold by Kustom and LaserCraft, excluding those sold by LaserCraft to
Kustom for subsequent resale. During 1996 the Company received licensing fees
for an undisclosed number of units pursuant to this agreement in the amount of
$60,000.
21
<PAGE>
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 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.
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 in 1995. 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.
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.
In September 1996, the Company agreed to license to Kustom Signals, Inc.,
("Kustom") and LaserCraft, Inc., ("LaserCraft"), a patent relating to the
Company's 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 receives
license fees for each licensed device sold by Kustom. Additionally, the
Company may receive license fees for each licensed device sold by LaserCraft,
except for those devices that are manufactured for Kustom for resale.
During fiscal 1997, the Company entered into a license agreement with
Bushnell and Tasco Sales, Inc., ("Tasco") whereby the Company and Bushnell
agreed to license certain patents related to the Yardage Pro which will enable
Tasco to introduce a competitive product into the consumer sporting market.
Together, the Company and Bushnell will receive running royalties on net sales
of Tasco products.
Also in fiscal 1997, the Company agreed to license to Applied Concepts,
Inc., ("ACI"), a patent relating to the Company's hand-held laser speed
detection system. Under this agreement, the Company granted ACI the
nonexclusive right to manufacture and sell laser-based speed measurement
devices incorporating features covered by the claims of the patent. In
consideration of the license agreement, the Company will receive licensing
fees as a percentage of net sales on each licensed device sold by ACI. To
date, no licensing fees have been received from Tasco or ACI.
22
<PAGE>
FOREIGN SALES
Foreign sales of the Company's products were 47%, 49% and 44% the fiscal
years ended September 30, 1997, 1996 and 1995, respectively. 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. An increase in the value of
the U.S. dollar relative to other currencies could make the Company's products
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 totalled approximately
$664,000, $514,000 and $363,000 for the years ended September 30, 1997, 1996
and 1995, 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
Under the provisions of SFAS No. 109, the Company's policy is to provide
deferred income taxes related to inventories and other items that result in
differences between the financial reporting and tax basis of assets and
liabilities. As a result, at September 30, 1997, the Company has recorded a
deferred tax asset totalling $81,000. Based upon the Company's 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.
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, 1997 was $7,803,965 as compared to
working capital of $7,698,674 at September 30, 1996. 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, 1997, cash used in operating activities of
$102,577 was primarily used to finance an increase of $570,154 in trade
accounts receivable. Additionally, $221,268 was used to expand inventories to
meet anticipated production demand. Cash used in investing activities of
$1,068,793 primarily related to the reinvestment of unused cash reserves of
$429,585 and $435,851 was used for the purchase of property and equipment and
leasehold improvements related to the expansion of the Company's facilities.
Cash used in financing activities of $123,924 related primarily to the
purchase of shares of the Company's common stock, recorded at cost. For the
year ended September 30, 1997 cash and cash equivalents decreased $1,295,294.
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
trade accounts receivable of $1,028,760 and $284,029 was used to expand
inventories. Cash provided by investing activities of $421,716 was primarily
attributable to proceeds, after reinvestment, from the sale of investments 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.
23
<PAGE>
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.
OTHER
During the 1997 fiscal year, the Company expanded its facilities pursuant to
the Company's rights for additional expansion space under its current lease
agreements to provide additional office and production space. Additionally, in
1997, the Company expended capital to fully integrate and automate its
information systems management and accounting software in preparation of
future growth. The Company believes that its current and planned facilities
are adequate to meet the Company's needs throughout the foreseeable future,
and, that the capital invested to expand its facilities and resources did not
have a material impact on the Company's current working capital. However, the
Company's 1997 results of operations were impacted by consulting fees related
to the Company's new systems implementation.
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 foreign and domestic law enforcement agencies, sales of
the Company's Traffic Safety products may vary between financial periods.
Historically, the Company has realized a small decline in sales of its Survey
and Mapping products in areas affected by colder weather in the winter months.
Additionally, due to the sophisticated nature of the Company's DAS100 Ship
Docking Aid Systems, Management expects sales of these systems to greatly
fluctuate between financial periods.
Since 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 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.
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.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("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
Accounting Principles Board 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.
24
<PAGE>
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 distributors 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 the standard.
RISK FACTORS AND CAUTIONARY STATEMENTS
This report contains "forward-looking statements." Forward-looking statements
in this report are made pursuant to the "safe harbor" provisions of the Private
Securities 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 marketplace, 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 detailed in the Company's
Registration Statement on Form S-1 as filed the Securities and Exchange
Commission.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to this item is contained in the consolidated
financial statements appearing in Item 14 of this report. Such information is
incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
25
<PAGE>
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
David Williams.............. 42 President, Chief Executive Officer and Director
Jeremy G. Dunne............. 40 Vice President and Director
Dan N. Grothe............... 60 Secretary and Director
Pamela Sevy................. 32 Treasurer and Chief Financial Officer
William Carr................ 58 Director
F. James Lynch.............. 67 Director
Richard B. Sayford.......... 65 Director
H. DeWorth Williams......... 62 Director
</TABLE>
The Company's directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
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, 1997, 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.
Each officer of the Company serves at the discretion of the Board of
Directors. As of September 30, 1997, there were two committees of the Board of
Directors: the Audit Committee consisting of Mr. Carr, Mr. Lynch and Mr.
Sayford; and the Compensation Committee consisting of Mr. H. Deworth Williams,
Mr. Lynch and Mr. Sayford.
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 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 government agencies. 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.
26
<PAGE>
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 worked with PTI, an
Englewood, Colorado company specializing in corporate accounting and
administrative assistance.
William Carr. For thirty years and until his retirement in January 1994, Mr.
Carr was 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.
F. James Lynch. From 1976 to 1994, Mr. Lynch was Chairman and CEO of
Electromedics, Inc. Electromedics was acquired by Medtronic in April 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 and also serves on the
Board of Medtrac Technologies, a medical devices manufacturer in Denver,
Colorado. Mr. Sayford holds an MBA degree from the Harvard Business School.
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.
ITEM 11. EXECUTIVE COMPENSATION
EMPLOYMENT AGREEMENTS
In July 1992, the Company entered into employment agreements with David
Williams and Jeremy Dunne, pursuant to which they receive annual base salaries
subject to increases at the discretion of the Board of Directors. In 1997,
these agreements were renewed. Each employment agreement prohibits the
employee from directly or indirectly competing with the Company for a period
of three years following termination of their employment.
CASH 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, 1997, 1996 and
1995, 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>
NAME AND PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
------------------ ---- ------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
David Williams, 1997 $90,525 $-- $-- $--
President, C.E.O. 1996 84,600 -- -- --
1995 75,675 -- -- --
</TABLE>
27
<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 the 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
NAME AND PRINCIPAL
POSITION EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------ ------------------------- -------------------------
<S> <C> <C>
David Williams, 68,250/none $0/none
President, C.E.O. (1)
</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.
Equity Incentive Plan
In 1994, the Company adopted an equity incentive plan, the "Employee Plan"
which 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, 1997, options to purchase
505,750 shares of the Company's common stock were outstanding, at exercise
prices ranging from $3.35 to $5.25 per share of which 471,000 options were
exercisable at September 30, 1997. 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
In 1994, the Company also adopted a stock option program 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, 1997, 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 director of
the Company (subject to certain exceptions contained in the Director Plan). At
September 30, 1997, 100,000 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.
28
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, to the best knowledge of the
Company, as of December 31, 1997 with respect to each person known by the
Company to beneficially own more than 5% of the Company's outstanding Common
Stock, each director and all directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE
BENEFICIALLY OWNERSHIP
NAME OWNED (1)
- ---- ------------ ----------
<S> <C> <C>
David Williams (2)...................................... 402,686 8.0%
1501 W. Dry Creek Road
Littleton, Colorado 80210
Jeremy G. Dunne (3)..................................... 414,500 8.2%
2686 E. Otero Place
Littleton, Colorado 80122
Dan N. Grothe (4)....................................... 43,000 .9%
6837 South Elizabeth Street
Littleton, Colorado 80122
William Carr (5)........................................ 35,200 .7%
6195 Gharrett
Missoula, Montana 59803
F. James Lynch (6)...................................... 32,000 .7%
27 Blue Heron Drive
Greenwood Village, Colorado 80121
Richard B. Sayford (7).................................. 24,000 .5%
89 Silver Fox Drive
Greenwood Village, Colorado 80121
H. DeWorth Williams (8)................................. 579,157 11.6%
P.O. Box 2148
Park City, Utah 84060
Directors and officers as a group (8 persons)(9) 1,625,052 33.0%
</TABLE>
- --------
(1) Percentage ownership is calculated separately for each person on the basis
of the actual number of outstanding shares as of December 31, 1997 and
assumes the exercise of options held by such person (but not by anyone
else) exercisable within sixty days.
(2) Includes 68,250 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(3) Includes 68,250 shares which may be acquired by Mr. Dunne pursuant to the
exercise of stock options exercisable within sixty days.
(4) Includes 33,000 shares which may be acquired by Mr. Grothe pursuant to the
exercise of stock options exercisable within sixty days.
(5) Includes 30,000 shares which may be acquired by Mr. Carr pursuant to the
exercise of stock options exercisable within sixty days.
(6) Includes 30,000 shares which may be acquired by Mr. Lynch pursuant to the
exercise of stock options exercisable within sixty days.
(7) Includes 20,000 shares which may be acquired by Mr. Sayford pursuant to
the exercise of stock options exercisable within sixty days.
(8) Includes 30,000 shares which may be acquired by Mr. Williams pursuant to
the exercise of stock options exercisable within sixty days.
(9) Includes 330,500 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.
29
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
1. FINANCIAL STATEMENTS.
The consolidated financial statements included in this item are indexed on
page F-1 "Index to Consolidated Financial Statements."
2. FINANCIAL STATEMENT SCHEDULES AND SUPPLEMENTARY INFORMATION REQUIRED TO
BE SUBMITTED.
<TABLE>
<C> <S> <C>
Schedule II Valuation and Qualifying Accounts...................... S-1
</TABLE>
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 thereto.
30
<PAGE>
3. EXHIBIT LIST
The following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Securities Exchange Commission. The Company
shall furnish copies of exhibits for a reasonable fee (covering the expense of
furnishing copies) upon request.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT NAME
----------- ------------
<C> <S>
3.3 Articles of Incorporation for the State of Delaware
3.4 By-Laws of Registrant
3.5 Certificate of Merger
*4.1 Specimen Common Stock Certificates of Registrant
*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
**10.14 Amendment to Lease to Include New Facility
***10.15 Employee Stock Option Plan
***10.16 Non-Employee Director Plan
27.1 Financial Data Schedule
</TABLE>
- --------
* Incorporated by reference to the Company's Form S-1 registration statement,
file no. 1-11642.
** 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) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Registrant during the quarter ended
September 30, 1997.
31
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 AND 15(D) 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.
/s/ David Williams
December 23, 1996 By __________________________________
David Williams
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED:
/s/ David Williams President and Chief December 31, 1997
- ------------------------------------- Executive Officer 1997
David Williams and Director
/s/ Jeremy G. Dunne Vice President and December 31, 1997
- ------------------------------------- Director
Jeremy G. Dunne
/s/ Pamela Sevy Treasurer, Chief December 31, 1997
- ------------------------------------- Financial Officer
Pamela Sevy and Principal
Accounting Officer
/s/ Dan N. Grothe Secretary and December 31, 1997
- ------------------------------------- Director
Dan N. Grothe
/s/ William R. Carr Director December 31, 1997
- -------------------------------------
William R. Carr
/s/ F. James Lynch Director December 31, 1997
- -------------------------------------
F. James Lynch
/s/ Richard B. Sayford Director December 31, 1997
- -------------------------------------
Richard B. Sayford
/s/ H. DeWorth Williams Director December 31, 1997
- -------------------------------------
H. DeWorth Williams
32
<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-10
Notes to Consolidated Financial Statements............................ F-11--F-17
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, 1997 and 1996 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1997. 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 statements 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, 1997 and 1996 and the
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1997 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 21, 1997
F-2
<PAGE>
LASER TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1997 1996
ASSETS ----------- -----------
<S> <C> <C>
Current:
Cash and cash equivalents.......................... $ 951,945 $ 2,247,239
Investments........................................ 1,023,431 600,000
Trade accounts receivable (Note 6), less allowance
of $10,000 for doubtful accounts.................. 3,334,479 2,764,325
Royalties receivable............................... 415,648 187,193
Inventories (Note 1)............................... 2,798,903 2,577,635
Deferred income tax benefit (Note 4)............... 81,000 52,000
Prepaids and other current assets.................. 188,824 240,886
----------- -----------
Total current assets............................. 8,794,230 8,669,278
Property and equipment, net of accumulated
depreciation and amortization (Note 2)............ 1,291,899 1,113,274
Long-term investments.............................. 617,427 611,273
Other assets....................................... 441,070 269,634
----------- -----------
$11,144,626 $10,663,459
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable................................... $ 660,736 $ 723,178
Accrued expenses................................... 329,529 247,426
----------- -----------
Total current liabilities........................ 990,265 970,604
Commitments (Note 5)
Stockholders' equity (Note 3):
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 and 5,088,201. 52,082 50,882
Additional paid-in capital......................... 9,622,780 9,623,980
Treasury stock at cost, 209,850 and 88,768 shares.. (141,459) (17,535)
Retained earnings.................................. 620,958 35,528
----------- -----------
Total stockholders' equity....................... 10,154,361 9,692,855
----------- -----------
$11,144,626 $10,663,459
=========== ===========
</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,
--------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales (Note 6)............................ $9,292,637 $9,306,777 $8,225,776
Less cost of goods sold....................... 4,086,026 4,241,389 3,864,473
---------- ---------- ----------
Gross profit.................................. 5,206,611 5,065,388 4,361,303
Royalty and licensing income.................. 868,931 401,121 --
---------- ---------- ----------
Total operating income........................ 6,075,542 5,466,509 4,361,303
Operating expenses.......................... 5,342,067 4,058,908 3,431,694
---------- ---------- ----------
Income from operations........................ 733,475 1,407,601 929,609
Interest income, net.......................... 163,955 235,771 157,523
---------- ---------- ----------
Income before taxes on income................. 897,430 1,643,372 1,087,132
Taxes on income (Note 4)...................... 312,000 580,000 383,000
---------- ---------- ----------
Net income.................................... $ 585,430 $1,063,372 $ 704,132
========== ========== ==========
Income per common share....................... $ .12 $ 0.20 $ 0.14
========== ========== ==========
Weighted average shares outstanding........... 4,998,351 5,209,981 4,989,600
========== ========== ==========
</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, 1997, 1996 AND 1995
<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,
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) (1,027,884) 8,589,692
Exercised stock
options.............. 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
Concurrent exercise of
stock options and
purchase of treasury
stock................ 120,000 1,200 (1,200) (120,000) -- (120,000)
Purchase of treasury
stock ............... -- -- -- (3,924) -- (3,924)
Net income for the
year................. -- -- -- -- 585,430 585,430
--------- ------- ---------- --------- ----------- -----------
Balance, September 30,
1997................... 5,208,201 $52,082 $9,622,780 $(141,459) $ 620,958 $10,154,361
========= ======= ========== ========= =========== ===========
</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,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Operating activities:
Net income............................... $ 585,430 $1,063,372 $ 704,132
Adjustments to reconcile net income to
cash provided by (used in) operating
activities:
Depreciation and amortization............ 288,447 184,119 179,620
Deferred income taxes.................... (29,000) (6,000) 257,000
Changes in operating assets and
liabilities:
Trade accounts receivable.............. (570,154) (1,028,760) 590,934
Royalties receivable................... (228,455) (78,035) --
Inventories............................ (221,268) (284,029) (896,209)
Other assets........................... 52,762 (160,458) 433
Accounts payable and accrued expenses.. 19,661 511,465 127,829
---------- ---------- ----------
Cash provided by (used in) operating
activities................................ (102,577) 201,674 963,739
---------- ---------- ----------
Investing activities:
Purchases of property and equipment...... (453,851) (632,437) (74,894)
Purchases of investments................. (1,297,465) (631,117) (2,370,538)
Proceeds from sale of investments........ 867,880 1,801,031 2,058,916
Patent costs paid........................ (185,357) (115,761) (83,573)
---------- ---------- ----------
Cash provided by (used in) investing activ-
ities..................................... (1,068,793) 421,716 (470,089)
---------- ---------- ----------
Financing activities:
Payments on long-term debt............... -- (9,463) (200,129)
Proceeds from exercise of stock options.. -- 39,791 --
Purchase of treasury stock............... (123,924) -- --
---------- ---------- ----------
Cash provided by (used in) financing
activities................................ (123,924) 30,328 (200,129)
---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents............................... (1,295,294) 653,718 293,521
Cash and cash equivalents, beginning of
year...................................... 2,247,239 1,593,521 1,300,000
---------- ---------- ----------
Cash and cash equivalents, end of year..... $ 951,945 $2,247,239 $1,593,521
========== ========== ==========
</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.
Effective May 30, 1997, Laser Technology, Inc. an Idaho corporation ("Laser
Technology-Idaho"), was merged into a newly formed subsidiary, Laser
Technology, Inc., a Delaware corporation ("Laser Technology-Delaware), with
Laser Technology-Idaho ceasing to exist, for the principal purposes of (a)
changing the corporate domicile of the Company from the State of Idaho to
Delaware, and (b) to adopt certain changes to the Company's corporate charter.
The transaction was accounted for as a recapitalization similar to a pooling
of interests and the merger did not involve any change in the business,
properties, management or capital structure of the Company. Laser Technology-
Delaware had no operations prior to the merger. Stockholders of Laser
Technology-Delaware received the same number of shares of common stock as
previously held in Laser Technology-Idaho.
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, royalties 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, 1997 and 1996 investments consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Current--
U.S. Government Obligations...................... $1,023,431 $ 600,000
---------- ----------
Non-current:
Municipal Bonds.................................. 529,589 509,775
U.S. Government Obligations...................... 87,838 101,498
---------- ----------
617,427 611,273
---------- ----------
$1,640,858 $1,211,273
========== ==========
</TABLE>
F-7
<PAGE>
LASER TECHNOLOGY, INC.
SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)
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.
PATENTS AND AMORTIZATION
Patents are carried at cost and when granted, are amortized over their
estimated useful lives of 15 to 17 years. The carrying value of patents is
periodically reviewed and impairments, if any, are recognized when the
expected future benefit to be derived from individual intangible assets is
less than its carrying value.
RESEARCH AND DEVELOPMENT COST
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 $664,000, $514,000 and $363,000 for
the years ended September 30, 1997, 1996 and 1995.
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.
STOCK OPTIONS
The Company applies Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for all stock option plans. Under APB Opinion 25, compensation cost
is recognized for stock options granted to employees when the option price is
less than the market price of the underlying common stock on the date of
grant.
SFAS Statement No. 123, "Accounting for Stock-Based Compensation," requires
the Company to provide pro forma information regarding net income as if
compensation cost for the Company's stock option plans had been determined in
accordance with the fair value based method prescribed in SFAS No. 123. To
provide the required pro forma information, the Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model.
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 recognized when earned in accordance with the specific terms of each
agreement.
F-8
<PAGE>
LASER TECHNOLOGY, INC.
SUMMARY OF ACCOUNTING POLICIES--(CONTINUED)
ADVERTISING
Advertising expenses are charged to operations in the period in which they
are incurred. Advertising expense for the years ended September 30, 1997, 1996
and 1995 was approximately $381,000, $301,000 and $208,000.
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, 1997 and 1996, cash and cash equivalents
included money market and mutual fund accounts of approximately $206,000 and
$2,077,000.
NEW 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.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 financial statements to
conform to the current year's presentation.
F-9
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1997 1996
---------- ----------
<S> <C> <C>
Finished goods........................................... $ 896,381 $ 710,027
Work-in-process.......................................... 840,877 785,339
Raw materials and supplies............................... 1,061,645 1,082,269
---------- ----------
$2,798,903 $2,577,635
========== ==========
</TABLE>
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1997 1996
---------- ----------
<S> <C> <C>
Shop equipment........................................... $ 791,692 $ 691,885
Office equipment......................................... 614,381 479,843
Leasehold improvements................................... 447,807 335,069
Automobiles.............................................. 208,524 214,841
Furniture/fixtures....................................... 183,967 127,504
---------- ----------
2,246,371 1,849,142
Less accumulated depreciation and amortization........... 954,472 735,868
---------- ----------
$1,291,899 $1,113,274
========== ==========
</TABLE>
Depreciation expense was $275,227 and $163,610 for the years ended September
30, 1997 and 1996.
3. STOCKHOLDERS' EQUITY
CAPITAL STOCK
At September 30, 1997, the Company had 3,094,250 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
Warrants:
Redeemable warrants................................................. 1,652,000
PRC warrants........................................................ 356,250
Underwriter's nonredeemable warrants................................ 276,000
Laser Partners' warrants............................................ 160,000
---------
3,094,250
=========
</TABLE>
PREFERRED STOCK
Laser Technology is authorized to issue 2,000,000 shares of preferred stock
by action of the Company's Board of Directors. The Board of Directors is
authorized, without further action by stockholders, to determine the voting
rights, dividend rights, dividend rates, liquidation preferences, redemption
provisions, conversion or
F-10
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
exchange rights and other rights, preferences, privileges and restriction of
any unissued series of preferred stock and the number of shares constituting
such series. The Company has no current plans to issue any preferred stock.
TREASURY STOCK
(a) In connection with the Company's merger into Delaware, stockholders
objecting to the proposed merger were entitled to the right to dissent and
appraisal rights of stockholders as allowed by Idaho law. Upon completion of
the merger, the Company purchased the dissenting stockholders stock.
Cumulatively, nine stockholders, representing 1,082 shares of the Company's
common stock, exercised their right to dissent and received $3,924 in total
which has been recorded as Treasury Stock.
(b) In April 1997, 120,000 shares of common stock were issued to three
employees at $3.00 per share, under a cashless exercise of unqualified options
previously granted in April 1992. Concurrent with the exercise of these
options such shares were purchased by the Company at the fair market value of
$4.00 per share and recorded as Treasury Stock.
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.
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
The Company has 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.
F-11
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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. As of September 30, 1997, options to purchase 505,750
shares of the Company's common stock were outstanding, at exercise prices
ranging from $3.25 to $5.25 per share of which 471,000 options were
exercisable at September 30, 1997.
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,
1997 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
100,000 options were exercisable at September 30, 1997.
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.
In April 1997 such shares were issued under a cashless exercise of these
options.
FASB Statement 123, "Accounting for Stock-Based Compensation" ("SFAS No.
123"), requires the Company to provide pro forma information regarding net
income and net income per share as if compensation costs for the Company's
stock option plans and other stock awards had been determined in accordance
with the fair value based method prescribed in SFAS No. 123. The Company
estimates the fair value of each stock award at the grant date by using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants, respectively; dividend yield of zero percent for
all years; expected volatility of 35 percent for all years; risk-free interest
rates of 5.9 to 6.0 percent and expected lives of 5 years.
F-12
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Under the accounting provisions of SFAS No. 123, the Company's net income
would have been decreased by the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
-------- ----------
<S> <C> <C>
Net income:
As reported............................................... $585,430 $1,063,372
Pro forma................................................. 564,123 1,063,372
Net income per share:
As reported............................................... $ 0.12 $ 0.20
Pro forma................................................. 0.11 0.20
</TABLE>
During the initial phase-in period of SFAS 123, the effect on pro forma
results are not likely to be representative of the effects on pro forma
results in future years since options vest over several years and additional
awards could be made each year.
A summary of the status of the Company's stock option plans as of September
30, 1997 and 1996 and changes during the years ending on those dates is
presented below:
<TABLE>
<CAPTION>
1997 1996
------------------ -----------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year............ 746,500 $4.05 729,500 $4.01
Granted................................. 34,250 3.83 37,000 4.81
Canceled................................ (10,000) 4.49 (10,167) 3.86
Exercised............................... (120,000) 3.00 (9,833) 3.95
-------- ----- ------- -----
Outstanding, end of year.................. 650,750 $4.22 746,500 $4.05
-------- ----- ------- -----
Exercisable, end of year.................. 571,000 $4.23 491,417 $3.93
-------- ----- ------- -----
Weighted average fair value of options and
warrants granted during the year......... $0.89 $1.94
===== =====
</TABLE>
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
-------------------------------- --------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES AT 9/30/97 LIFE PRICE AT 9/30/97 PRICE
- ------------------------ ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$3.00-3.25............... 34,000 7.48 $3.08 20,000 $3.06
3.50-3.87............... 35,250 2.92 3.79 6,750 3.61
4.00-4.25............... 518,500 6.70 4.25 513,250 4.25
4.39-4.91............... 18,250 8.89 4.51 6,083 4.51
4.94-5.25............... 44,750 8.01 5.02 24,917 4.99
------- ---- ----- ------- -----
$3.00-5.25............... 650,750 6.69 $4.22 571,000 $4.23
======= ==== ===== ======= =====
</TABLE>
F-13
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. TAXES ON INCOME
For the years ended September 30, 1997 and 1996 the provision for federal
and state income taxes consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Current:
Federal......................................... $323,000 $541,000 $ 114,000
State........................................... 18,000 45,000 12,000
Deferred:
Federal......................................... (27,000) (6,000) 230,000
State........................................... (2,000) -- 27,000
-------- -------- ---------
$312,000 $580,000 $383,0000
======== ======== =========
</TABLE>
A reconciliation of income taxes at the federal statutory rate to the
effective tax rate is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Income taxes computed at the federal statutory
rate............................................. $305,000 $559,000 $370,000
State income taxes, net of federal benefit........ 12,000 42,000 8,000
Other, net........................................ (5,000) (21,000) 5,000
-------- -------- --------
Taxes on income................................... $312,000 $580,000 $383,000
======== ======== ========
</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,
---------------
1997 1996
------- -------
<S> <C> <C>
Future deductions:
Inventories (Uniform Capitalization Rules)................... $79,000 $49,000
Other, net................................................... 2,000 3,000
------- -------
$81,000 $52,000
======= =======
</TABLE>
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.
5. COMMITMENTS
RETIREMENT PLAN
Effective January 1, 1997, the Company adopted a defined contribution 401k
profit sharing plan (the "Plan"). Eligible emplopyees, as defined, may
contribute up to 15% of their annual compensation. Under the Plan, the Company
may make discretionary matching contributions up to 100% of an employee's
contribution and may make discretionary profit sharing contributions. For the
year ended September 30, 1997 no contributions were made by the Company to the
Plan.
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 $145,000, $119,000 and $93,000 for the years
ended September 30, 1997, 1996 and 1995.
F-14
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of September 30, 1997 future minimum lease payments under operating lease
agreements are as follows:
<TABLE>
<S> <C>
1998................................................................. $122,000
1999................................................................. 124,000
2000................................................................. 114,000
2001................................................................. 122,000
2002................................................................. 119,000
Thereafter........................................................... 137,000
--------
$738,000
========
</TABLE>
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, 1997:
<TABLE>
<S> <C>
Foreign distributors (a)............................................ $2,032,354
State and local municipalities (b).................................. 622,877
U.S. government agencies (c)........................................ 93,773
Other receivables................................................... 595,475
----------
3,344,479
Less allowance for doubtful accounts................................ 10,000
----------
$3,334,479
==========
</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.
(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 years ended September 30, 1997 and 1996, one customer accounted for
11% and 12% of sales. For the year ended September 30, 1995, no single
customer accounted for more than 10% of sales.
F-15
<PAGE>
LASER TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A summary of the Company's sales by geographic area is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Foreign sales:
Asia......................................... $2,364,000 $2,187,000 $1,540,000
Europe....................................... 641,000 1,233,000 1,171,000
Canada....................................... 795,000 552,000 680,000
Australia.................................... 378,000 326,000 124,000
Other........................................ 205,507 292,777 109,776
---------- ---------- ----------
Total foreign sales............................ 4,383,507 4,590,777 3,624,776
Domestic sales................................. 4,909,130 4,716,000 4,601,000
---------- ---------- ----------
$9,292,637 $9,306,777 $8,225,776
========== ========== ==========
</TABLE>
The Company has no foreign assets.
7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest........................................... $ 1,130 $ 860 $13,197
Income taxes....................................... 317,000 487,000 90,000
</TABLE>
F-16
<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, 1995...... $10,000 $17,254 $(17,254) $10,000
Year Ended September 30, 1996...... 10,000 -- -- 10,000
Year Ended September 30, 1997...... 10,000 3,665 (3,665) 10,000
</TABLE>
S-1
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
LASER TECHNOLOGY, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (the "Corporation") is:
LASER TECHNOLOGY, INC.
SECOND: The address of the Corporation's current registered office in
the State of Delaware is 1209 Orange Street, Wilmington, Delaware. The
registered office of the Corporation is located in New Castle County. The name
of the Corporation's registered agent at that address is CT Corporation System.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: (a) Authorized Shares. The total number of shares of stock
-----------------
that the Corporation shall have authority to issue is 27,000,000, divided into
the following classes:
(i) 25,000,000 shares of Common Stock, par value $.01 per share;
and
1
<PAGE>
(ii) 2,000,000 shares of preferred stock, par value $.01 per
share.
(b) Common Stock.
------------
(i) Each holder of Common Stock shall be entitled to one vote
for each share of such stock held, on all matters presented to
stockholders.
(c) Preferred Stock. The Board of Directors is authorized, subject to
---------------
any limitations prescribed by law, to provide from time to time for the issuance
of the shares of preferred stock in series, and by filing a certificate pursuant
to the applicable law of the State of Delaware, to establish the characteristics
of each series, including the following:
(i) the number of shares of that series, which may subsequently
be increased or decreased (but not below the number of shares of
that series then outstanding) by resolution of the Board of
Directors, and the distinctive designation thereof;
(ii) the voting powers, full or limited, if any, of the shares
of that series and the number of votes per share;
(iii) the rights in respect of dividends on the shares of that
series, whether dividends shall be cumulative and, if so, from
which date or dates and the relative rights or priority, if any,
of payment of dividends on shares of that series and any
limitations, restrictions or conditions on the payment of
dividends;
(iv) the relative amounts, and the relative rights or priority,
if any, of payment in respect of shares of that series, which the
holders of the shares of that series shall be entitled to receive
upon any liquidation, dissolution or winding up of the
Corporation;
(v) the terms and conditions (including the price or prices,
which may vary under different conditions and at different
2
<PAGE>
redemption dates), if any, upon which all or any part of the
shares of that series may be redeemed, and any limitations,
restrictions or conditions on such redemption;
(vi) the terms, if any, of any purchase, retirement or sinking
fund to be provided for the shares of that series;
(vii) the terms, if any, upon which the shares of that series
shall be convertible into or exchangeable for shares of any other
class, classes or series, or other securities, whether or not
issued by the Corporation;
(viii) the restrictions, limitations and conditions, if any, upon
issuance of indebtedness of the Corporation so long as any shares
of that series are outstanding; and
(ix) any other preferences and relative, participating,
optional or other rights and limitations not inconsistent with
law, this Article Fourth or any resolution of the Board of
Directors pursuant to this Article Fourth.
FIFTH: (a) General. The business and affairs of the Corporation shall
-------
be managed by a Board of Directors. The number of directors shall be fixed by,
or in the manner provided in the by-laws.
(b) Term of Office; Vacancies. A director shall hold office until the
-------------------------
annual meeting for the year in which his or her term expires and until his or
her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement or removal from office. The directors shall have
the exclusive power to fill vacancies and newly created directorships resulting
from any increase in the authorized number of directors. Any newly created
directorship resulting from an increase in the number of directors or any other
vacancy on the Board of Directors, however caused, shall be filled by a majority
of the directors then in office, although less than a quorum, or by a sole
remaining director. Any director elected by one or more directors to fill a
newly created directorship or other vacancy shall, without regard to the class
in which the vacancy occurred, hold office until the next succeeding annual
meeting of stockholders and until his or her successor shall have been elected
and qualified.
(c) Removal. Any or all of the directors of the Corporation may be
-------
removed for cause by the stockholders only by the affirmative vote of the
holders of at least 80 percent of
3
<PAGE>
the votes of the outstanding shares of stock generally entitled to vote in the
election of directors ("Voting Stock"), voting together as a single class, at a
meeting of stockholders for which proper notice of the proposed removal has been
given. Directors may not be removed without cause.
(d) Notice of Nominations. Advance notice of nominations for the
---------------------
election of directors, other than nominations by the Board of Directors or a
committee thereof, shall be given to the Corporation in the manner provided in
the Bylaws.
SIXTH: To the fullest extent permitted by the General Corporation Law
of the State of Delaware, as now existing or hereafter amended, a director of
the Corporation shall not be liable to the Corporation or any of its
stockholders for monetary damages for breach of his fiduciary duty as a
director. No amendment or repeal of this Article Sixth shall adversely affect
any right or protection of a director of the Corporation existing under this
Article Sixth immediately before the amendment or repeal.
SEVENTH: Each person who is or was a director or officer of the
Corporation, and each such person who is or was serving at the request of the
Corporation as a director or officer of another corporation, or in a similar
capacity of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans maintained or sponsored by the
Corporation (including the heirs, executors, administrators and estate of such
person) shall be indemnified by the Corporation, in accordance with the
procedures specified in the Bylaws of the Corporation, to the fullest extent
permitted from time to time by the General Corporation Law of the State of
Delaware. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation. Without
limiting the generality of the foregoing, the Corporation may enter into one or
more agreements with any person that provide for indemnification and advancement
of expenses greater or different than that provided in this Article Seventh. No
amendment or repeal of this Article Seventh shall adversely affect any right or
protection existing under or pursuant to this Article Seventh immediately before
the amendment or repeal.
EIGHTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be taken at a duly called annual or special
meeting of the stockholders and may not be taken by consent in writing or
otherwise.
NINTH: Except as otherwise required by law or provided in the bylaws
of the Corporation, and subject to the rights of the holders of any class or
series of shares issued by the Corporation having a preference over the Common
Stock as to dividends or upon liquidation to
4
<PAGE>
elect directors in certain circumstances, special meetings of the stockholders
of the Corporation may be called only by the Board of Directors pursuant to a
resolution approved by the affirmative vote of a majority of the directors then
in office.
TENTH: The Board of Directors shall have the power to adopt, alter,
amend or repeal the Bylaws of the Corporation by vote of not less than a
majority of the directors then in office. The holders of shares of capital
stock of the Corporation entitled at the time to vote for the election of
directors shall, to the extent such power is at the time conferred on them by
applicable law, also have the power to adopt, alter, amend or repeal the Bylaws
of the Corporation, but only if such action receives at least 80 percent of the
votes of the outstanding Voting Stock, voting together as a single class.
ELEVENTH: Election of directors need not be by written ballot.
TWELFTH: Notwithstanding anything to the contrary in this Certificate
of Incorporation, the affirmative vote of the holders of at least 80 percent of
the votes of the outstanding Voting Stock, voting together as a single class,
shall be required to amend, repeal or adopt any provision inconsistent with any
of Articles Fifth, Eighth, Ninth, Tenth, Eleventh and Twelfth of this
Certificate of Incorporation or to provide for any cumulative voting by
stockholders.
THIRTEENTH: The name and the mailing address of the incorporator are
as follows:
NAME MAILING ADDRESS
- ---- ---------------
Nick Nimmo Holme Roberts & Owen LLP
1700 Lincoln, Suite 4100
Denver, CO 80203
Signed on January 17, 1997.
/s/ NICK NIMMO
____________________________
Nick Nimmo, Incorporator
5
<PAGE>
EXHIBIT 3.4
BYLAWS
OF
LASER TECHNOLOGY, INC.
As of January 17, 1997
<PAGE>
INDEX TO BYLAWS
OF
LASER TECHNOLOGY, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Offices........................................................ 1
Section 1.01 Business Offices............................................... 1
Section 1.02 Registered Office.............................................. 1
ARTICLE II Stockholders................................................... 1
Section 2.01 Annual Meeting................................................. 1
Section 2.02 Special Meetings............................................... 1
Section 2.03 Place of Meeting............................................... 1
Section 2.04 Notice of Meetings............................................. 2
Section 2.05 Fixing Date for Determination of Stockholders of Record........ 2
Section 2.06 Voting List.................................................... 2
Section 2.07 Proxies........................................................ 3
Section 2.08 Quorum and Manner of Acting.................................... 3
Section 2.09 Voting of Shares............................................... 3
Section 2.10 Voting of Shares by Certain Holders............................ 3
(a) Fiduciaries; Pledgors..................................... 3
(b) Joint Owners.............................................. 3
Section 2.11 Stockholder Proposals at Annual Meetings....................... 4
Section 2.12 Nominations of Persons for Election to the Board of Directors.. 4
ARTICLE III Board of Directors............................................. 5
Section 3.01 General Powers................................................. 5
Section 3.02 Number, Tenure and Qualifications.............................. 5
Section 3.03 Resignation.................................................... 5
Section 3.04 Vacancies...................................................... 6
Section 3.05 Regular Meetings............................................... 6
Section 3.06 Special Meetings............................................... 6
Section 3.07 Meetings by Telephone.......................................... 6
Section 3.08 Notice of Meetings............................................. 6
Section 3.09 Quorum and Manner of Acting.................................... 7
Section 3.10 Action Without a Meeting....................................... 7
Section 3.11 Committees..................................................... 7
Section 3.12 Compensation................................................... 8
ARTICLE IV Officers....................................................... 8
Section 4.01 Number and Qualifications...................................... 8
Section 4.02 Election and Term of Office.................................... 8
Section 4.03 Compensation................................................... 8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.04 Resignation.................................................... 8
Section 4.05 Removal........................................................ 9
Section 4.06 Vacancies...................................................... 9
Section 4.07 Authority and Duties........................................... 9
(a) Chairman of the Board..................................... 9
(b) Chief Executive Officer................................... 9
(c) President................................................. 9
(d) Vice-President............................................10
(e) Chief Financial Officer; Treasurer........................10
(f) Secretary.................................................10
Section 4.08 Surety Bonds...................................................10
ARTICLE V Stock..........................................................11
Section 5.01 Issuance of Shares.............................................11
Section 5.02 Stock Certificates; Uncertificated Shares......................11
Section 5.03 Payment for Shares.............................................11
Section 5.04 Lost Certificates..............................................11
Section 5.05 Transfer of Shares.............................................12
Section 5.06 Registered Holders.............................................12
Section 5.07 Transfer Agents, Registrars and Paying Agents..................12
ARTICLE VI Indemnification................................................12
Section 6.01 Definitions....................................................12
(a) Code......................................................12
(b) Corporation...............................................12
(c) Expenses..................................................13
(d) Liability.................................................13
(e) Party.....................................................13
(f) Proceeding................................................13
Section 6.02 Right to Indemnification.......................................13
Section 6.03 Advancement of Expenses........................................13
Section 6.04 Burden of Proof................................................13
Section 6.05 Notification and Defense of Claim..............................14
Section 6.06 Enforcement....................................................14
Section 6.07 Proceedings by a Party.........................................15
Section 6.08 Subrogation....................................................15
Section 6.09 Other Payments.................................................15
Section 6.10 Insurance......................................................15
Section 6.11 Other Rights and Remedies......................................15
Section 6.12 Applicability; Effect..........................................16
Section 6.13 Severability...................................................16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII Miscellaneous..................................................16
Section 7.01 Waivers of Notice..............................................16
Section 7.02 Presumption of Assent..........................................16
Section 7.03 Voting of Securities by the Corporation........................17
Section 7.04 Seal...........................................................17
Section 7.05 Fiscal Year....................................................17
Section 7.06 Amendments.....................................................17
</TABLE>
<PAGE>
BYLAWS
OF
LASER TECHNOLOGY, INC.
ARTICLE I
Offices
Section 1.01 Business Offices. The corporation may have such offices,
----------------
either within or outside Delaware, as the board of directors may from time to
time determine or as the business of the corporation may require.
Section 1.02 Registered Office. The registered office of the corporation
-----------------
required by the Delaware General Corporation Law to be maintained in Delaware
shall be as set forth in the certificate of incorporation, unless changed as
provided by law.
ARTICLE II
Stockholders
Section 2.01 Annual Meeting. An annual meeting of the stockholders shall
--------------
be held on the first Monday in February in each year, or on such other date as
may be determined by the board of directors, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday, such
meeting shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated herein for any annual meeting
of the stockholders, or at any adjournment thereof, the board of directors shall
cause the election to be held at a meeting of the stockholders as soon
thereafter as conveniently may be. Failure to hold an annual meeting as
required by these bylaws shall not invalidate any action taken by the board of
directors or officers of the corporation.
Section 2.02 Special Meetings. Special meetings of the stockholders, for
----------------
any purpose or purposes, may be called only by the Chairman of the Board or the
board of directors pursuant to a resolution approved by the affirmative vote of
a majority of directors then in office.
Section 2.03 Place of Meeting. Each meeting of the stockholders shall be
----------------
held at such place, either within or outside Delaware, as may be designated in
the notice of meeting, or, if no place is designated in the notice, at the
principal office of the corporation.
<PAGE>
Section 2.04 Notice of Meetings. Except as otherwise required by law,
------------------
written notice of each meeting of the stockholders stating the place, day and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given, either personally
(including delivery by private courier) or by first class, certified or
registered mail, to each stockholder of record entitled to notice of such
meeting, not less than ten nor more than 60 days before the date of the meeting.
Such notice shall be deemed to be given, if personally delivered, when delivered
to the stockholder, and, if mailed, when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation, but if notice of two consecutive annual meetings and
all notices of meetings of or the taking of action by written consent without a
meeting to any stockholder during the period between such two consecutive annual
meetings, or all, and at least two, payments (if sent by first class mail) of
dividends or interest on securities during a 12-month period, have been mailed
addressed to such person at his address as shown on the records of the
corporation and have been returned undeliverable, the giving of such notice to
such person shall not be required until another address for such person is
delivered to the corporation. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting in accordance with the foregoing
provisions of this Section 2.04.
Section 2.05 Fixing Date for Determination of Stockholders of Record.
-------------------------------------------------------
For the purpose of determining stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for any other lawful action, the board of directors may fix, in
advance, a date as the record date for any such determination of stockholders,
which date shall be not more than 60 nor less than ten days before the date of
such meeting, and not more than 60 days prior to any other action. If no record
date is fixed then the record date shall be, for determining stockholders
entitled to notice of or to vote at a meeting of stockholders, the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, the close of business on the day next preceding the day on
which the meeting is held, or, for determining stockholders for any other
purpose, the close of business on the day on which the board of directors adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
Section 2.06 Voting List. The officer who has charge of the stock books
-----------
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
<PAGE>
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 2.07 Proxies. Each stockholder entitled to vote at a meeting of
-------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
Section 2.08 Quorum and Manner of Acting. At all meetings of
---------------------------
stockholders, the holders of a majority of the combined voting power of the
outstanding shares of common stock of the corporation entitled to vote at the
meeting, represented in person or by proxy, shall constitute a quorum. If a
quorum is present, the affirmative vote of shares representing a majority of
voting power of shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless the vote of a
greater proportion or number or voting by classes is otherwise required by law,
the certificate of incorporation or these bylaws. In the absence of a quorum,
the stockholders of the Corporation present in person or by proxy and entitled
to vote, by majority vote, may adjourn the meeting from time to time in
accordance with Section 2.04, until a quorum shall be present.
Section 2.09 Voting of Shares. Subject to the provisions of Section
----------------
2.05, each stockholder entitled to vote shall have the number of votes specified
in the certificate of incorporation for each outstanding share of capital stock
held of record by such stockholder on each matter submitted to a vote of the
stockholders. In the election of directors each record holder of stock
entitled to vote at such election shall have the right to vote the number of
shares owned by him multiplied by the number of votes per share specified in the
certificate of incorporation for as many persons as there are directors to be
elected, and for whose election he has the right to vote. Cumulative voting
shall not be allowed.
Section 2.10 Voting of Shares by Certain Holders.
-----------------------------------
(a) Fiduciaries; Pledgors. Persons holding stock in a fiduciary
---------------------
capacity shall be entitled to vote the shares so held. Persons whose stock is
pledged shall be entitled to vote, unless in the transfer by the pledgor on the
books of the corporation he has expressly empowered the pledgee to vote thereon,
in which case only the pledgee or his proxy may represent such shares and vote
thereon.
(b) Joint Owners. If shares stand of record in the names of two or
------------
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or if two or more
persons have the same fiduciary relationship respecting the same shares, unless
the secretary of the corporation is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following
<PAGE>
effects: (i) if only one votes, his act binds all; (ii) if more than one votes,
the act of the majority so voting binds all; (iii) if more than one votes, but
the vote is evenly split on any particular matter, each faction may vote the
shares in question proportionally, or any person voting the shares, or a
beneficiary, if any, may apply to any court having jurisdiction to appoint an
additional person to act with the persons so voting the shares, in which case
the shares shall then be voted as determined by a majority of such persons; and
(iv) if a tenancy is held in unequal interests, a majority or even split for the
purposes of subparagraph (iii) shall be a majority or even split in interest.
Section 2.11 Stockholder Proposals at Annual Meetings. At an annual
----------------------------------------
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors,
otherwise properly brought before the meeting by or at the direction of the
board of directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation, not
less than 30 days nor more than 60 days prior to the meeting; provided, however,
that in the event that less than 40 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting, (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of the corporation that are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Notwithstanding
anything in these bylaws to the contrary, no business shall be conducted at the
annual meeting except in accordance with the procedures set forth in this
Section 2.11, provided, however, that nothing in this Section 2.11 shall be
deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.
Section 2.12 Nominations of Persons for Election to the Board of
---------------------------------------------------
Directors. In addition to any other applicable requirements, only persons who
- ---------
are nominated in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the board of
directors of the corporation may be made at a meeting of stockholders by or at
the direction of the board of directors, by any nominating committee or person
appointed by the board of directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 2.12. Such nominations, other
than those made by or at the direction of the board of directors, shall be made
pursuant to timely notice in writing to the secretary of the corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices
<PAGE>
of the corporation not less than 30 days nor more than 60 days prior to the
meeting; provided, however, that in the event that less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of the corporation beneficially owned by the person, and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934; and (b) as to the stockholder giving
the notice, (i) the name and record address of the stockholder, and (ii) the
class and number of shares of the corporation beneficially owned by the
stockholder. The corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the corporation to determine
the eligibility of such proposed nominee to serve as a director of the
corporation. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth herein.
These provisions shall not apply to nomination of any persons entitled to be
separately elected by holders of preferred stock.
ARTICLE III
Board of Directors
Section 3.01 General Powers. The business and affairs of the corporation
--------------
shall be managed by or under the direction of its board of directors, except as
otherwise provided in the Delaware General Corporation Law or the certificate of
incorporation.
Section 3.02 Number, Tenure and Qualifications. The number of directors
---------------------------------
of the Corporation shall be as determined by vote of a majority of the entire
Board of Directors. All of the directors shall be of full age. Directors need
not be stockholders. Except as otherwise provided by statute or these By-Laws,
the directors shall be elected at the annual meeting of the stockholders for the
election of directors at which a quorum is present, and the persons receiving a
plurality of the votes cast at such election shall be elected. Each director
shall hold office until the next annual meeting of the stockholders and until
his successor shall have been duly elected and qualified or until his death, or
until he shall have resigned, or have been removed, as hereinafter provided in
these By-Laws, or as otherwise provided by statute or the Certificate of
Incorporation.
Section 3.03 Resignation. Any director may resign at any time by giving
-----------
written notice to the corporation. A director's resignation shall take effect
at the time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
<PAGE>
Section 3.04 Vacancies. Unless otherwise provided in the certificate of
---------
incorporation, any vacancy or any newly created directorship resulting from any
increase in the authorized number of directors may be filled by a majority of
directors then in office, although less than a quorum, or by the affirmative
vote of two directors if there are only two directors remaining, or by a sole
remaining director, or by the stockholders if there are no directors remaining.
A director so chosen shall hold office until the next succeeding annual meeting
of the stockholders and until his successor is duly elected and qualified,
unless sooner displaced. When one or more directors shall resign from the
board, effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this Section for the filling of other vacancies.
Section 3.05 Regular Meetings. A regular meeting of the board of
----------------
directors shall be held immediately after and at the same place as the annual
meeting of stockholders, or as soon thereafter as conveniently may be, at the
time and place, either within or without Delaware, determined by the board, for
the purpose of electing officers and for the transaction of such other business
as may come before the meeting. Failure to hold such a meeting, however, shall
not invalidate any action taken by any officer then or thereafter in office.
The board of directors may provide by resolution the time and place, either
within or outside Delaware, for the holding of additional regular meetings
without other notice than such resolution.
Section 3.06 Special Meetings. Special meetings of the board of
----------------
directors may be called by or at the request of the chairman of the board or any
other two directors. The persons authorized to call special meetings of the
board of directors may fix any convenient place, either within or outside
Delaware, as the place for holding any special meeting of the board of directors
called.
Section 3.07 Meetings by Telephone. Members of the board of directors
---------------------
may participate in a meeting of such board by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting in such
manner shall constitute presence in person at the meeting.
Section 3.08 Notice of Meetings. Notice of each meeting of the board of
------------------
directors (except those regular meetings for which notice is not required)
stating the place, day and hour of the meeting shall be given to each director
at least five days prior thereto by the mailing of written notice by first
class, certified or registered mail, or at least two days prior thereto by
personal delivery (including delivery by private courier) of written notice or
by telephone, telegram, telex, facsimile, cablegram or other similar method,
except that in the case of a meeting to be held pursuant to Section 3.07 notice
may be given by telephone one day prior thereto. The method of notice need not
be the same to each director. Notice shall be deemed to be given when deposited
in the United States mail, with postage thereon prepaid, addressed to the
director at his business or residence address, when delivered or communicated to
the director or when the telegram, telex, cablegram or other form of notice is
personally delivered to the director or
<PAGE>
delivered to the last address of the director furnished by him to the
corporation for such purpose. Neither the business to be transacted at nor the
purpose of any meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.
Section 3.09 Quorum and Manner of Acting. Except as otherwise may be
---------------------------
required by law, the certificate of incorporation or these bylaws, a majority of
the number of directors fixed in accordance with these bylaws, present in
person, shall constitute a quorum for the transaction of business at any meeting
of the board of directors, and the vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the board of
directors. If less than a quorum is present at a meeting, the directors present
may adjourn the meeting from time to time without further notice other than
announcement at the meeting, until a quorum shall be present. No director may
vote or act by proxy or power of attorney at any meeting of the board of
directors.
Section 3.10 Action Without a Meeting. Any action required or permitted
------------------------
to be taken at any meeting of the board of directors may be taken without a
meeting, without prior notice and without a vote, if all members of the board
consent thereto in writing and the writing or writings are filed with the
minutes of the proceedings of the board.
Section 3.11 Committees. The board of directors, by resolution adopted
----------
by a majority of the whole board, may designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to (a) amending
the certificate of incorporation (except as permitted by the Delaware General
Corporation Law with respect to fixing the terms and conditions of series of
stock); (b) adopting an agreement of merger or consolidation; (c) recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets; (d) recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution; (e) amending
the bylaws of the corporation; and (f) unless the resolution of the board
expressly so provides, declaring a dividend or authorizing the issuance of
stock. The delegation of authority to any committee shall not operate to
relieve the board of directors or any member of the board from any
responsibility imposed by law. Subject to the foregoing, the board of directors
may provide such powers, limitations and procedures for such committees as the
board deems advisable. To the extent the board of directors does not establish
other procedures, each committee shall be governed by the procedures set forth
in Sections 3.06 (except as they relate to an annual meeting), 3.07 through 3.11
and 7.01 and 7.02 as if the committee were the board of directors. Each
committee shall keep regular minutes of its meetings, which shall be reported to
<PAGE>
the board of directors when required and submitted to the secretary of the
corporation for inclusion in the corporate records.
Section 3.12 Compensation. Unless otherwise restricted by the
------------
certificate of incorporation, the board of directors shall have the authority to
fix the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and each meeting of
any committee of the board of which he is a member and may be paid a fixed sum
for attendance at each such meeting or a stated salary or both a fixed sum and a
stated salary. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
Officers
Section 4.01 Number and Qualifications. The officers of the corporation
-------------------------
shall consist of a chairman of the board, chief executive officer, a president
and one or more vice-presidents, a secretary and such other officers, including
a vice-chairman or vice-chairmen of the board, chief financial officer, a
treasurer and a controller, as may from time to time be elected or appointed by
the board. In addition, the board of directors or the chief executive officer
may elect or appoint such assistant and other subordinate officers including
assistant vice-presidents, assistant secretaries and assistant treasurers, as it
or he shall deem necessary or appropriate. Any number of offices may be held by
the same persons, except that no person may simultaneously hold the offices of
president and secretary.
Section 4.02 Election and Term of Office. Except as provided in Sections
---------------------------
4.01 and 4.06, the officers of the corporation shall be elected by the board of
directors annually at the first meeting of the board held after each annual
meeting of the stockholders as provided in Section 3.05. If the election of
officers shall not be held as provided herein, such election shall be held as
soon thereafter as conveniently may be. Each officer shall hold office until
his successor shall have been duly elected and shall have qualified or until the
expiration of his term in office if elected or appointed for a specified period
of time or until his earlier death, resignation or removal.
Section 4.03 Compensation. Officers shall receive such compensation for
------------
their services as may be authorized or ratified by the board of directors and no
officer shall be prevented from receiving compensation by reason of the fact
that he is also a director of the corporation. Election or appointment as an
officer shall not of itself create a contract or other right to compensation for
services performed by such officer.
Section 4.04 Resignation. Any officer may resign at any time, subject to
-----------
any rights or obligations under any existing contracts between the officer and
the corporation, by giving written notice to the corporation. An officer's
resignation shall take effect at the time stated
<PAGE>
therein; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.05 Removal. Any officer may be removed at any time by the
-------
chief executive officer (whether or not such officer was appointed by the chief
executive officer) or by the board of directors, whenever in his or its
judgment, as the case may be, the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an officer
shall not in itself create contract rights.
Section 4.06 Vacancies. A vacancy occurring in any office by death,
---------
resignation, removal or otherwise may be filled by the chief executive officer
or the board of directors for the unexpired portion of the term.
Section 4.07 Authority and Duties. The officers of the corporation shall
--------------------
have the authority and shall exercise the powers and perform the duties
specified below, and as may be additionally specified by the chief executive
officer, the board of directors or these bylaws (and in all cases where the
duties of any officer are not prescribed by the bylaws or the board of
directors, such officer shall follow the orders and instructions of the chief
executive officer), except that in any event each officer shall exercise such
powers and perform such duties as may be required by law:
(a) Chairman of the Board. The chairman of the board, who shall be
---------------------
elected from among the directors, shall preside at all meetings of the
stockholders and directors of the corporation and shall have and may exercise
all such powers and perform such other duties as may be assigned to him from
time to time by the board of directors.
(b) Chief Executive Officer. The chief executive officer shall,
-----------------------
subject to the direction and supervision of the board of directors, (i) have
general and active control of its affairs and business and general supervision
of its officers, agents and employees; (ii) in the absence of the chairman of
the board, preside at all meetings of the stockholders and the board of
directors; (iii) see that all orders and resolutions of the board of directors
are carried into effect; and (iv) perform all other duties incident to the
office of chief executive officer and as from time to time may be assigned to
him by the board of directors. Unless otherwise authorized and directed by the
board of directors or unless the chief executive officer is unavailable, the
chief executive officer shall execute all material contracts on behae officer.
At the request of the chief executive officer or in his absence or in the event
of his inability or refusal to act, the president and chief operating officer
shall perform the duties of the chief executive officer, and when so acting
shall have all the powers and be subject to all the restrictions upon the chief
executive officer.
(d) Vice-President. The vice-president, if any (or if there is more
--------------
than one then each vice-president), shall assist the president and chief
financial officer and shall perform such duties as may be assigned to him by the
chief executive officer, the president and chief financial officer or by the
board of directors. Assistant vice-presidents, if any, shall have the
<PAGE>
powers and perform the duties as may be assigned to them by the chief executive
officer or by the board of directors.
(e) Chief Financial Officer; Treasurer. The chief financial officer
----------------------------------
or, in the absence of a chief financial officer, the treasurer shall: (i) be
the principal financial officer of the corporation and have the care and custody
of all funds, securities, evidences of indebtedness and other personal property
of the corporation and deposit the same in accordance with the instructions of
the board of directors; (ii) unless assigned to the controller, receive and give
receipts and acquittances for moneys paid in on account of the corporation, and
pay out of the funds on hand all bills, payrolls and other just debts of the
corporation of whatever nature upon maturity; (iii) unless there is a
controller, be the principal accounting officer of the corporation and as such
prescribe and maintain the methods and systems of accounting to be followed,
keep complete books and records of account, prepare and file all local, state
and federal tax returns, prescribe and maintain an adequate system of internal
audit and prepare and furnish to the chief executive officer and the board of
directors statements of account showing the financial position of the
corporation and the results of its operations; (iv) upon request of the board,
make such reports to it as may be required at any time; and (v) perform all
other duties incident to such office and such other duties as from time to time
may be assigned to him by the board of directors or by the chief executive
officer. Assistant treasurers, if any, shall have the same powers and duties,
subject to the supervision of the chief financial officer or treasurer. If
there is no chief financial officer or treasurer, these duties shall be
performed by the secretary or the chief executive officer or other person
appointed by the board of directors.
(f) Secretary. The secretary shall: (i) keep the minutes of the
---------
proceedings of the stockholders, the board of directors and any committees of
the board of directors; (ii) see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; (iii) be custodian of
the corporate records and of the seal of the corporation; (iv) keep at the
corporation's registered office or principal place of business a record
containing the names and addresses of all stockholders and the number and class
of shares held by each, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (v) have general charge of the stock
books of the corporation, unless the corporation has a transfer agent; and (vi)
in general, perform all other duties incident to the office of secretary and
such other duties as from time to time may be assigned to him by the chief
executive officer or by the board of directors. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the secretary.
Section 4.08 Surety Bonds. The board of directors may require any
------------
officer or agent of the corporation to execute to the corporation a bond in such
sums and with such sureties as shall be satisfactory to the board, conditioned
upon the faithful performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE V
Stock
<PAGE>
Section 5.01 Issuance of Shares. The issuance or sale by the corporation
------------------
of any shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors, except
as otherwise may be provided by law. Every issuance of shares shall be recorded
on the books of the corporation maintained for such purpose by or on behalf of
the corporation.
Section 5.02 Stock Certificates; Uncertificated Shares. The shares of
-----------------------------------------
stock of the corporation shall be represented by certificates, except that the
board of directors may, in accordance with applicable provisions of law,
authorize the issuance of some or all of any or all classes or series of stock
of the corporation without certificates. If shares are represented by
certificates (or if a holder of uncertificated shares requests his shares to be
represented by a certificate), each certificate shall be signed by or in the
name of the corporation by the chairman or a vice-chairman of the board of
directors, chief executive officer, or the president or a vice-president, and by
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
Certificates of stock shall be in such form consistent with law as shall be
prescribed by the board of directors.
Section 5.03 Payment for Shares. Shares shall be issued for such
------------------
consideration (but not less than the par value thereof) as shall be determined
from time to time by the board of directors. Treasury shares shall be disposed
of for such consideration as may be determined from time to time by the board.
Such consideration shall be paid in such form and in such manner as the
directors shall determine. In the absence of actual fraud in the transaction,
the judgment of the directors as to the value of such consideration shall be
conclusive. The capital stock issued by the corporation shall be deemed to be
fully paid and non-assessable stock if: (a) the entire amount of the
consideration has been received by the corporation in the form of cash, services
rendered, personal property, real property, leases of real property or a
combination thereof; or (b) not less than the amount of the consideration
determined to be capital pursuant to statute has been received by the
corporation in such form and the corporation has received a binding obligation
of the subscriber or purchaser to pay the balance of the subscription or
purchase price; provided, however, nothing contained herein shall prevent the
board of directors from issuing partly paid shares pursuant to statute.
Section 5.04 Lost Certificates. In case of the alleged loss, destruction
-----------------
or mutilation of a certificate of stock the board of directors or the president
may direct the issuance of a new certificate in lieu thereof upon such terms and
conditions in conformity with law as it may prescribe. The board of directors
or the president may, in their discretion, require a bond in such form and
amount and with such surety as it may determine before issuing a new
certificate.
<PAGE>
Section 5.05 Transfer of Shares. Upon presentation and surrender to the
------------------
corporation or to a transfer agent of the corporation of a certificate of stock
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, payment of all transfer taxes, if any, and the
satisfaction of any other requirements of law, including inquiry into and
discharge of any adverse claims of which the corporation has notice, the
corporation or the transfer agent shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction on the
books maintained for such purpose by or on behalf of the corporation. No
transfer of shares shall be effective until it has been entered on such books.
The corporation or a transfer agent of the corporation may require a signature
guaranty or other reasonable evidence that any signature is genuine and
effective before making any transfer. Transfers of uncertificated shares shall
be made in accordance with applicable provisions of law.
Section 5.06 Registered Holders. The corporation shall be entitled to
------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
Section 5.07 Transfer Agents, Registrars and Paying Agents. The board of
---------------------------------------------
directors may at its discretion appoint one or more transfer agents, registrars
and agents for making payment upon any class of stock, bond, debenture or other
security of the corporation. Such agents and registrars may be located either
within or outside Delaware. They shall have such rights and duties and shall be
entitled to such compensation as may be agreed.
ARTICLE VI
Indemnification
Section 6.01 Definitions. For purposes of this Article, the following
-----------
terms shall have the meanings set forth below:
(a) Code. The term "Code" means the Delaware General Corporation Law
----
as it exists on the date of the adoption of this Article and as it may hereafter
be amended from time to time, but in the case of any amendment, only to the
extent that the amendment permits the corporation to provide broader
indemnification rights than the Delaware General Corporation Law permitted the
corporation to provide at the date of the adoption of this Article and prior to
the amendment.
(b) Corporation. The term "corporation" means the corporation and, in
-----------
addition to the resulting or surviving corporation, any domestic or foreign
predecessor entity of the corporation in a merger, consolidation or other
transaction in which the predecessor's existence ceased upon consummation of the
transaction.
<PAGE>
(c) Expenses. The term "expenses" means the actual and reasonable
--------
expenses (including but not limited to expenses of investigation and preparation
and fees and disbursements of counsel, accountants or other experts) incurred by
a party in connection with a proceeding.
(d) Liability. The term "liability" means the obligation to pay a
---------
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan) or expense incurred with respect to a
proceeding.
(e) Party. The term "party" means any individual who was, is, or is
-----
threatened to be made, a named defendant or respondent in a proceeding by reason
of the fact that he is or was a director, officer or employee of the corporation
and any individual who, while a director, officer or employee of the corporation
is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, fiduciary or agent of any other foreign or domestic
corporation or of any partnership, joint venture, trust, other enterprise or
employee benefit plan. A party shall be considered to be serving an employee
benefit plan at the corporation's request if his duties to the corporation also
impose duties on or otherwise involve services by him to the plan or to
participants in or beneficiaries of the plan.
(f) Proceeding. The term "proceeding" means any threatened, pending
----------
or completed action, suit or proceeding, or any appeal therein, whether civil,
criminal, administrative, arbitrative or investigative (including an action by
or in the right of the corporation), and whether formal or informal.
Section 6.02 Right to Indemnification. The corporation shall indemnify
------------------------
any party to a proceeding against liability incurred in, relating to or as a
result of the proceeding to the fullest extent permitted by law (including
without limitation in circumstances in which, in the absence of this Section
6.02, indemnification would be (a) discretionary under the Code or (b) limited
or subject to particular standards of conduct under the Code).
Section 6.03 Advancement of Expenses. In the event of any proceeding in
-----------------------
which a party is involved or which may give rise to a right of indemnification
under this Article, following written request to the corporation by the party,
the corporation shall pay to the party, to the fullest extent permitted by law
(including without limitation in circumstances in which, in the absence of this
Section 6.03, advancement of expenses would be (a) discretionary under the Code
or (b) limited or subject to particular standards of conduct under the Code),
amounts to cover expenses incurred by the party in, relating to or as a result
of such proceeding in advance of its final disposition.
Section 6.04 Burden of Proof. If under applicable law the entitlement of
---------------
a party to be indemnified or advanced expenses hereunder depends upon whether a
standard of conduct has been met, the burden of proof of establishing that the
party did not act in accordance with such standard shall rest with the
corporation. A party shall be presumed to have acted in accordance with such
standard and to be entitled to indemnification or the advancement of expenses
(as the case may be) unless, based upon a preponderance of the evidence, it
shall be determined that the
<PAGE>
party has not met such standard. Such determination and any evaluation as to the
reasonableness of amounts claimed by a party shall be made by the board of
directors of the corporation or such other body or persons as may be permitted
by the Code. Subject to any express limitation of the Code, if so requested by
the party, such determination and evaluation as to the reasonableness of the
amounts claimed by the party shall be made by independent counsel who is
selected by the party and approved by the corporation (which approval shall not
be unreasonably withheld). For purposes of this Article, unless otherwise
expressly stated, the termination of any proceeding by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere or its equivalent, shall not create a presumption that a
party did not meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not permitted by
applicable law.
Section 6.05 Notification and Defense of Claim. Promptly after receipt
---------------------------------
by a party of notice of the commencement of any proceeding, the party shall, if
a claim in respect thereof is to be made against the corporation under this
Article, notify the corporation in writing of the commencement thereof;
provided, however, that delay in so notifying the corporation shall not
constitute a waiver or release by the party of any rights under this Article.
With respect to any such proceeding: (a) the corporation shall be entitled to
participate therein at its own expense; (b) any counsel representing the party
to be indemnified in connection with the defense or settlement thereof shall be
counsel mutually agreeable to the party and to the corporation; and (c) the
corporation shall have the right, at its option, to assume and control the
defense or settlement thereof, with counsel satisfactory to the party. If the
corporation assumes the defense of the proceeding, the party shall have the
right to employ its own counsel, but the fees and expenses of such counsel
incurred after notice from the corporation of its assumption of the defense of
such proceeding shall be at the expense of the party unless (i) the employment
of such counsel has been specifically authorized by the corporation, (ii) the
party shall have reasonably concluded that there may be a conflict of interest
between the corporation and the party in the conduct of the defense of such
proceeding, or (iii) the corporation shall not in fact have employed counsel to
assume the defense of such proceeding. Notwithstanding the foregoing, if an
insurance carrier has supplied directors' and officers' liability insurance
covering a proceeding and is entitled to retain counsel for the defense of such
proceeding, then the insurance carrier shall retain counsel to conduct the
defense of such proceeding unless the party and the corporation concur in
writing that the insurance carrier's doing so is undesirable. The corporation
shall not be liable under this Article for any amounts paid in settlement of any
proceeding effected without its written consent. The corporation shall not
settle any proceeding in any manner that would impose any penalty or limitation
on a party without the party's written consent. Consent to a proposed
settlement of any proceeding shall not be unreasonably withheld by either the
corporation or the party.
Section 6.06 Enforcement. The right to indemnification and advancement
-----------
of expenses granted by this Article shall be enforceable in any court of
competent jurisdiction if the corporation denies the claim, in whole or in part,
or if no disposition of such claim is made within 90 days after the written
request for indemnification or advancement of expenses is received. If
successful in whole or in part in such suit, the party's expenses incurred in
bringing and prosecuting such claim shall also be paid by the corporation.
Whether or not the party has
<PAGE>
met any applicable standard of conduct, the court in such suit may order
indemnification or the advancement of expenses as the court deems proper
(subject to any express limitation of the Code). Further, the corporation shall
indemnify a party from and against any and all expenses and, if requested by the
party, shall (within ten business days of such request) advance such expenses to
the party, which are incurred by the party in connection with any claim asserted
against or suit brought by the party for recovery under any directors' and
officers' liability insurance policies maintained by the corporation, regardless
of whether the party is unsuccessful in whole or in part in such claim or suit.
Section 6.07 Proceedings by a Party. The corporation shall indemnify or
----------------------
advance expenses to a party in connection with any proceeding (or part thereof)
initiated by the party only if such proceeding (or part thereof) was authorized
by the chief executive officer or board of directors of the corporation.
Section 6.08 Subrogation. In the event of any payment under this
-----------
Article, the corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the indemnified party, who shall execute all
papers and do everything that may be necessary to assure such rights of
subrogation to the corporation.
Section 6.09 Other Payments. The corporation shall not be liable under
--------------
this Article to make any payment in connection with any proceeding against or
involving a party to the extent the party actually receives payment (under any
insurance policy, agreement or otherwise) of the amounts otherwise indemnifiable
hereunder. A party shall repay to the corporation the amount of any payment the
corporation makes to the party under this Article in connection with any
proceeding against or involving the party, to the extent the party has otherwise
actually received payment (under any insurance policy, agreement or otherwise)
of such amounts advanced.
Section 6.10 Insurance. So long as any party who is or was an officer or
---------
director of the corporation may be subject to any possible proceeding by reason
of the fact that he is or was an officer or director of the corporation (or is
or was serving in any one or more of the other capacities covered by this
Article during his tenure as officer or director), if the corporation maintains
an insurance policy or policies providing directors' and officers' liability
insurance, such officer or director shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
applicable to any then current officer or director of the corporation, or the
corporation shall purchase and maintain in effect for the benefit of such
officer or director one or more valid, binding and enforceable policy or
policies of directors' and officers' liability insurance providing, in all
respects, coverage at least comparable to that provided to any then current
officer or director at the corporation.
Section 6.11 Other Rights and Remedies. The rights to indemnification
-------------------------
and advancement of expenses provided in this Article shall be in addition to any
other rights to which a party may have or hereafter acquire under any law,
provision of the certificate of incorporation, any other or further provision of
these bylaws, vote of the stockholders or directors, agreement or otherwise.
The corporation shall have the right, but shall not be obligated, to indemnify
or
<PAGE>
advance expenses to any agent of the corporation not otherwise covered by
this Article in accordance with and to the fullest extent permitted by the Code.
Section 6.12 Applicability; Effect. The rights to indemnification and
---------------------
advancement of expenses provided in this Article shall be applicable to acts or
omissions that occurred prior to the adoption of this Article, shall continue as
to any party during the period such party serves in any one or more of the
capacities covered by this Article, shall continue thereafter so long as the
party may be subject to any possible proceeding by reason of the fact that he
served in any one or more of the capacities covered by this Article, and shall
inure to the benefit of the estate and personal representatives of each such
person. Any repeal or modification of this Article or of any Section or
provision hereof shall not affect any rights or obligations then existing. All
rights to indemnification under this Article shall be deemed to be provided by a
contract between the corporation and each party covered hereby.
Section 6.13 Severability. If any provision of this Article shall be
------------
held to be invalid, illegal or unenforceable for any reason whatsoever (a) the
validity, legality and enforceability of the remaining provisions of this
Article (including without limitation, all portions of any Sections of this
Article containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Article (including, without limitation, all
portions of any Section of this Article containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent of this
Article that each party covered hereby is entitled to the fullest protection
permitted by law.
ARTICLE VII
Miscellaneous
Section 7.01 Waivers of Notice. Whenever notice is required to be given
-----------------
by law, by the certificate of incorporation or by these bylaws, a written waiver
thereof, signed by the person entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting or (in the case of a stockholder) by proxy shall constitute
a waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting need be specified in any written waiver of notice unless required by
these bylaws to be included in the notice of such meeting.
Section 7.02 Presumption of Assent. A director or stockholder of the
---------------------
corporation who is present at a meeting of the board of directors or
stockholders at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward
<PAGE>
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director or stockholder who voted in favor of such action.
Section 7.03 Voting of Securities by the Corporation. Unless otherwise
---------------------------------------
provided by resolution of the board of directors, on behalf of the corporation
the chief executive officer, president, chief operating officer, treasurer, or
any vice-president shall attend in person or by substitute appointed by him, or
shall execute written instruments appointing a proxy or proxies to represent the
corporation at, all meetings of the stockholders of any other corporation,
association or other entity in which the corporation holds any stock or other
securities, and may execute written waivers of notice with respect to any such
meetings. At all such meetings and otherwise, the chief executive officer,
president, chief operating officer, treasurer, or any vice-president, in person
or by substitute or proxy as aforesaid, may vote the stock or other securities
so held by the corporation and may execute written consents and any other
instruments with respect to such stock or securities and may exercise any and
all rights and powers incident to the ownership of said stock or securities,
subject, however, to the instructions, if any, of the board of directors.
Section 7.04 Seal. The corporate seal of the corporation shall be in
----
such form as adopted by the board of directors, and any officer of the
corporation may, when and as required, affix or impress the seal, or a facsimile
thereof, to or on any instrument or document of the corporation.
Section 7.05 Fiscal Year. The fiscal year of the corporation shall be as
-----------
established by the board of directors.
Section 7.06 Amendments. These bylaws may be amended or repealed and new
----------
bylaws adopted by the board of directors or, subject to the certificate of
incorporation, by the stockholders entitled to vote.
/s/ NICK NIMMO
______________________________
Nick Nimmo, Incorporator
END
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF MERGER
(UNDER SECTION 252 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
AND
ARTICLES OF MERGER
(UNDER SECTION 30-1-77 OF THE IDAHO BUSINESS CORPORATION ACT)
FOR THE MERGER OF
LASER TECHNOLOGY, INC.,
AN IDAHO CORPORATION,
WITH AND INTO
LASER TECHNOLOGY, INC.,
A DELAWARE CORPORATION
--------------------
LASER TECHNOLOGY, INC., an Idaho corporation, and LASER TECHNOLOGY, INC., a
Delaware corporation, hereby certify that:
1. The name and state of incorporation of each of the constituent corporations
to the merger are:
(a) Laser Technology, Inc., a Delaware corporation ("LTD"); and
(b) Laser Technology, Inc., an Idaho corporation ("LTI").
2. An Agreement and Plan of Merger, dated as of January 20, 1997, by and
between LTD and LTI, has been approved, adopted, certified, executed and
acknowledged by LTD and LTI in accordance with the provisions of Section
252 of the General Corporation Law of the State of Delaware and Section 30-
1-71 of the Idaho Business Corporation Act. The Agreement and Plan of
Merger is attached hereto as Attachment A. A copy of the Agreement and
Plan of Merger is on file in the principal office of LTD at 7070 South
Tucson Way, Englewood, Colorado 80012 and a copy will be provided free of
charge to any stockholder of the constituent corporation upon his or her
request.
3. The name of the corporation surviving the merger is:
Laser Technology, Inc., a Delaware corporation.
4. The merger shall be effective at 5:00 p.m. Delaware time on May 30, 1997.
5. The authorized capital stock of LTI consists of 25,000,000 shares of common
stock. A meeting of shareholders was held on February 18, 1997 to consider
approval and adoption of the Agreement and Plan of Merger. The record date
for the meeting was January 20, 1997, and as of that date 4,999,433 shares
were outstanding. At the meeting, 2,630,839 shares of common stock of LTI
were voted for and 59,821 shares were voted against the Agreement and Plan
of Merger.
<PAGE>
6. LTD agrees that it may be served with process in the State of Idaho in any
proceeding for the enforcement of any obligation of any domestic
corporation which is a party to the merger and in any proceeding for the
enforcement of the rights of a dissenting shareholder of any such domestic
corporation against the surviving corporation and irrevocably appoints the
Secretary of State of the State of Idaho as its agent to accept service of
process in any such proceeding. A copy of such process shall be mailed to
the principal place of business of LTD at 7070 South Tucson Way, Englewood,
Colorado 80112.
7. The surviving corporation will promptly pay to the dissenting shareholders
of LTI the amount, if any, to which they shall be entitled under the
provisions of the Idaho Business Corporation Act with respect to the rights
of dissenting shareholders.
IN WITNESS WHEREOF, each of LTI and LTD has caused this instrument to be
signed by its duly authorized officer, as of the 21st day of May, 1997.
LASER TECHNOLOGY, INC., an Idaho corporation
By: /s/
________________________________________
Name:________________________________________
Title:_______________________________________
LASER TECHNOLOGY, INC., a Delaware corporation
By: /s/
________________________________________
Name:________________________________________
Title:_______________________________________
<PAGE>
ATTACHMENT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is by and between Laser Technology, Inc.,
an Idaho corporation (herein sometimes called the "Idaho Corporation") and
Laser Technology, Inc., a Delaware corporation (herein sometimes called the
"Delaware Corporation").
W I T N E S S E T H :
WHEREAS, the Idaho Corporation was incorporated by the filing of a
Certificate of Incorporation in the office of the Secretary of State of the
State of Idaho on September 19, 1950; the total number of shares which it is
authorized to issue is 25,000,000 shares of common stock, $.01 par value
("Common Stock"); and the total number of shares which are issued and
outstanding is 4,999,433 shares of Common Stock;
WHEREAS, the Delaware Corporation was incorporated on January 17, 1997 under
the provisions of the General Corporation Law of the State of Delaware; its
registered office in Delaware is in the City of Dover, County of Kent; the
total number of shares which it is authorized to issue is 25,000,000 Common
Stock, par value $.01 per share, and 2,000,000 shares of Preferred Stock, par
value $.01 per share; and no shares have been issued; and
WHEREAS, the laws of the State of Delaware and Idaho permit the merger of
said corporations (herein sometimes called the "constituent corporations")
into a single corporation; and
WHEREAS, it is deemed advisable by the Board of Directors of each of the
constituent corporations that the Idaho Corporation be merged into the
Delaware Corporation;
NOW, THEREFORE, it is agreed as follows:
1. The Idaho Corporation as of the Effective Date (as defined herein) shall
be merged (the "Merger") pursuant to Section 252 of the General corporation
Law of the State of Delaware into the Delaware Corporation. The Delaware
Corporation shall be the surviving corporation and it shall continue and shall
be deemed to continue for all purposes whatsoever after the merger with and
into itself of the Idaho Corporation.
2. The Merger shall become effective when this Agreement has been adopted by
the Idaho Corporation and by the Delaware Corporation and appropriate
documentation has been prepared and filed in accordance with the laws of the
States of Idaho and Delaware. For operational, accounting and bookkeeping
purposes, the time when the Merger shall become effective is referred to
herein as the "Effective Date" which shall be the date fixed in accordance
with the laws of and the documentation filed with the state of incorporation
of the surviving corporation.
3. After the Effective Date, the surviving corporation shall be governed by
the laws of the State of Delaware and its name shall continue to be Laser
Technology, Inc. The present Certificate of Incorporation of the Delaware
Corporation shall continue to be the Certificate of Incorporation of the
surviving corporation. The present By- Laws of the Delaware Corporation shall
be and remain the By-Laws of the surviving corporation. The directors and
officers of the Idaho Corporation immediately prior to the Effective Date
shall be the directors of the surviving corporation upon the Effective Date.
4. Each share of Common Stock of the Idaho Corporation shall be converted
into one share of Common Stock of the surviving corporation. Each warrant or
option to purchase a share of Common Stock of the Idaho Corporation shall be
converted into a warrant or option to purchase one share of Common Stock of
the surviving corporation.
<PAGE>
5. Upon the Effective Date, the outstanding certificates for shares of the
Idaho Corporation's Common Stock will, until replaced by the surviving
corporation, represent the same number of shares of Common Stock of the
surviving corporation.
6. This Agreement may be terminated and abandoned by action of the Board of
Directors of the Idaho Corporation or the Delaware Corporation at any time
prior to the Effective Date, for any reason whatsoever.
7. This Agreement, upon its being authorized, adopted, approved, signed and
acknowledged by each of the constituent corporations in accordance with the
laws under which it is formed, and filed in the office of the Secretary of
State of the State of Delaware, shall take effect and shall thereupon be
deemed and taken to be the Agreement and act of merger and consolidation of
the constituent corporations; and the organization and separate corporate
existence of the Idaho Corporation, except in so far as it may be continued by
statute, shall cease. The point of time at which the constituent corporations
shall become a single corporation shall be the Effective Date.
8. Upon the Effective Date all and singular, the rights, capacity,
privileges, powers, franchises and authority of each of the constituent
corporations, and all property real, personal and mixed, and all debts,
obligations and liabilities, due to each of the constituent corporations on
whatever account as well as for subscriptions for shares as for all other
things, belonging to each of the constituent corporations shall be vested in
the surviving corporation; and all such property, rights, capacity,
privileges, powers, franchises, authority and immunities and all and every
other interest shall be thereafter as fully and effectually the property of
the surviving corporation as though they were the property of the several and
respective constituent corporations, and shall not revert or be in any way
impaired by reason of the Merger; provided however, that all rights of the
creditors of the constituent corporations shall be preserved unimpaired and
all debts, liabilities (including liability, if any, to dissenting
shareholders) and duties of the respective constituent corporations shall
thenceforth be attached to the surviving corporation and may be enforced
against it to the same extent as if said debts, liabilities and duties had
been incurred or contracted by the surviving corporation.
9. Each constituent corporation agrees that from time to time as when it
shall be requested by the surviving corporation or by its successors or
assigns, it will execute and deliver or cause to be executed and delivered all
such other instruments and will take or cause to be taken such further or
other action as the surviving corporation may deem necessary or desirable in
order to vest in and to confirm to the surviving corporation title to all of
the property, capacity, privileges, powers, franchises, authority, and
immunities of the constituent corporation and otherwise to carry out the
intent and purposes of this Agreement.
10. The surviving corporation agrees that it may be served with process in
the State of Delaware or in the State of Idaho, in any proceeding for
enforcement of any obligation of the Idaho Corporation as well as for
enforcement of any obligation of the corporation arising from the Merger,
including any suit or other proceeding to enforce the right of any stockholder
as determined in any appraisal proceeding pursuant to Section 30-1-80 of the
Idaho Business Corporation Act and shall irrevocably appoint the Secretary of
State of the State of Delaware as its agent in Delaware and the Secretary of
State of the State of Idaho as its agent in Idaho to accept service of process
in any such suit or other proceeding. The address to which a copy of such
process shall be mailed by the Secretary of State of the State of Delaware
shall be c/o The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801, and by the Secretary of State of the State of Idaho shall be
The Corporation Trust Company, 300 North Sixth Street, Boise, Idaho 83701.
11. The surviving corporation hereby reserves the right to amend, alter,
change or repeal any provisions contained in any of the articles of this
Agreement or as the same may hereafter be amended, in the manner now or
hereafter provided by the laws of the State of Delaware and all rights of the
stockholders of the surviving corporation are granted subject to this
reservation.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Agreement this day
of , 1997.
LASER TECHNOLOGY, INC.
a Delaware corporation
By:
-----------------------------------
President
LASER TECHNOLOGY, INC.
an Idaho corporation
By:
-----------------------------------
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 951,945
<SECURITIES> 1,023,431
<RECEIVABLES> 3,344,479
<ALLOWANCES> 10,000
<INVENTORY> 2,798,903
<CURRENT-ASSETS> 8,794,230
<PP&E> 2,246,371
<DEPRECIATION> 954,472
<TOTAL-ASSETS> 11,144,626
<CURRENT-LIABILITIES> 990,265
<BONDS> 0
0
0
<COMMON> 5,208,201
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,144,626
<SALES> 9,292,637
<TOTAL-REVENUES> 9,292,637
<CGS> 4,086,026
<TOTAL-COSTS> 6,969,170
<OTHER-EXPENSES> 2,458,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 897,430
<INCOME-TAX> 312,000
<INCOME-CONTINUING> 585,430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 585,430
<EPS-PRIMARY> .12
<EPS-DILUTED> 0
</TABLE>
