<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------
Commission File No. 1-11642
LASER TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0970494
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
-------------------------------------------------
(Address of principal executive offices)
(303) 649-1000
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
At March 31, 1999, 4,994,551 shares of common stock of the Registrant were
outstanding.
<PAGE>
INDEX
PART I: FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements..................................................................................... 1
Consolidated Balance Sheets.................................................................. 1
Consolidated Statements of Income............................................................ 3
Consolidated Statements of Cash Flows........................................................ 4
Notes to Consolidated Financial Statements................................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................................. 8
Results of Operations........................................................................ 9
Liquidity and Capital Resources.............................................................. 11
Year 2000 Compliance......................................................................... 11
Risk Factors and Cautionary Statements....................................................... 11
</TABLE>
PART II: OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Legal Proceedings........................................................................................ 12
Item 2. Changes in Securities.................................................................................... 13
Item 3. Defaults upon Senior Securities.......................................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders...................................................... 13
Item 5. Other Information........................................................................................ 13
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,210,919 $ 988,586
Investments - 509,807
Trade accounts receivable, less allowance
of $10,000 for doubtful accounts 2,417,331 3,652,944
Royalties receivable 125,014 424,525
Inventories 4,260,842 3,857,963
Deferred income tax benefit 87,000 87,000
Prepaids and other current assets 335,031 225,476
Income tax recoverable and receivable 478,336 -
----------- ------------
Total Current Assets 8,914,473 9,746,301
----------- ------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,430,277 1,517,416
----------- ------------
LONG-TERM INVESTMENTS 683,358 676,294
----------- ------------
OTHER ASSETS 619,653 575,946
----------- ------------
TOTAL ASSETS $11,647,761 $12,515,957
=========== ============
</TABLE>
See accompanying notes to the consolidated financial statements
1
<PAGE>
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
----------- -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 648,646 $ 752,417
Accrued expenses 429,198 482,617
Current maturities of long-term debt 76,564 76,564
------------ ------------
Total Current Liabilities 1,154,408 1,311,598
------------ ------------
Long-term debt, less current maturities 122,070 159,549
------------ ------------
Total Liabilities 1,276,478 1,471,147
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value--shares authorized
2,000,000; shares issued--none - -
Common stock, $.01 par value-shares
authorized 25,000,000; shares issued 5,219,201 52,192 52,192
Additional paid-in capital 9,669,420 9,669,420
Treasury stock at cost, 224,650 shares (194,259) (194,259)
Retained earnings 843,930 1,517,457
------------ ------------
Total Stockholders' Equity 10,371,283 11,044,810
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 11,647,761 $ 12,515,957
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements
2
<PAGE>
LASER TECHNOLOGY, INC.
Consolidated Statements of Income
For the Three and Six Months Ended
March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
------------------------------ ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES $ 5,341,438 $ 4,817,764 $ 2,684,738 $ 2,405,413
LESS COST OF GOODS SOLD 2,656,254 2,164,538 1,430,318 1,095,715
Gross Profit 2,685,184 2,653,226 1,254,420 1,309,698
ROYALTY AND LICENSING INCOME 365,867 550,706 122,928 203,760
TOTAL OPERATING INCOME 3,051,051 203,932 1,377,348 1,513,458
OPERATING EXPENSES 4,103,319 57,254 2,307,579 1,379,583
INCOME (LOSS) FROM OPERATIONS (1,052,268) 446,678 (930,231) 133,875
INTEREST INCOME, NET 14,641 88,320 5,941 45,048
INCOME (LOSS) BEFORE TAXES ON INCOME (1,037,627) 534,998 (924,290) 178,923
TAXES ON INCOME (BENEFIT) (364,100) 185,000 (323,300) 64,000
NET INCOME (LOSS) $ (673,527) $ 349,998 $ (600,990) $ 114,923
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ (.13) $ .07 $ (.12) $ .02
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,994,551 4,998,351 4,994,551 4,998,351
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ (.13) $ .07 $ (.12) $ .02
DILUTED AVERAGE SHARES
OUTSTANDING 4,994,551 4,998,351 4,994,551 4,998,351
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE>
LASER TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
For the Six Months Ended March 31, 1999
and March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (673,527) $ 349,998
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 258,525 155,387
Deferred income taxes - (3,000)
Changes in operating assets and liabilities:
Trade accounts receivable 1,235,613 678,405
Inventories (402,879) (709,190)
Other assets (288,380) (81,123)
Accounts payable and accrued expenses (157,190) (171,018)
------------ -------------
Net cash provided by (used in) operating activities (27,838) 219,459
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments 502,743 496,705
Patent costs paid (56,331) (51,616)
Purchases of property and equipment (158,762) (130,166)
------------ -------------
Net cash provided by investing activities 287,650 314,923
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (37,479) -
------------ -------------
Net cash used in financing activities (37,479) -
------------ -------------
INCREASE IN CASH AND CASH EQUIVALENTS 222,333 534,382
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 988,586 951,945
------------ -------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,210,919 $ 1,486,327
============ =============
</TABLE>
See accompanying notes to the consolidated financial statements
4
<PAGE>
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
(Information for the three and six months ended March 31, 1999 is unaudited)
NOTE 1 - Summary of Significant Accounting Policies
a. Basis of Presentation
The consolidated financial statements presented are those of Laser
Technology, Inc. and its wholly-owned subsidiaries; Laser Communications, Inc.,
Laser Technology, U.S.V.I., and International Measurement and Control Company.
Laser Technology, Inc. is presently engaged in the business of developing,
manufacturing and marketing laser based measurement instruments.
In the opinion of management, the unaudited financial statements
reflect all adjustments, consisting only of normal recurring accruals necessary
for a fair presentation of (a) the consolidated statements of income for the
three and six month periods ended March 31, 1999 and 1998, (b) the consolidated
financial position at March 31, 1999 and September 30, 1998, and (c) the
consolidated statement of cash flows for the six month periods ended March 31,
1999 and 1998. The accounting policies followed by the Company are set forth in
the Notes to the Consolidated Financial Statements of the Company for the fiscal
year ended September 30, 1998. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full year.
b. Earnings Per Share
Through December 31, 1997, the Company followed the provisions of
Accounting Principles Board Opinion ("APB") 15, "Earnings Per Share." Effective
for the quarter ended March 31, 1998, the Company implemented Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No.
128 provides for the calculation of "Basic" and "Diluted" earnings per share.
Basic earnings per share includes no dilution and is computed by dividing income
available to common stockholders 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 that were
outstanding for the period, similar to fully diluted earnings per share. All
prior period earnings per share data has been restated to reflect the
requirements of SFAS No. 128.
The following is provided to reconcile the earnings per share
calculation:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
------------------------------------ ------------------------------
1999 1998 1999 1998
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ (673,527) $ 349,998 $ (600,990) $ 114,923
Denominator
Weighted Average Shares 4,994,551 4,998,351 4,994,551 4,998,351
Per Share Amounts
Basic Earnings (Loss) $ (.13) $ .07 $ (.12) $ .02
============== ============= ============ ============
</TABLE>
For the three and six month periods ended March 31, 1999 and 1998 the
calculation for diluted earnings per common share was the same as presented for
basic earnings per common share.
5
<PAGE>
NOTE 1 - Summary of Significant Accounting Policies (Continued)
c. Operating Segments
The Company's primary operating segments for the three and six months
ended March 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
--------------------------
Traffic Safety Survey/Mapping Other Royalties Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales......................... $1,516,829 $ 1,080,491 $ 87,418 $2,684,738
Cost of goods sold................ 792,271 603,263 34,784 $1,430,318
Sales and marketing expenses...... 582,928 483,027 21,698 1,087,653
Gross margin (after sales and
marketing expenses)............. 141,630 (5,794) 30,936 166,767
Royalty and licensing income...... 122,928 122,928
Total other operating expenses.... 1,219,926
Income (loss) from operations..... (930,231)
Interest income, net.............. 5,941
Income (loss) before taxes
on income....................... (924,290)
Taxes on income (benefit)......... (323,300)
Net income (loss)................. (600,990)
<CAPTION>
Three Months Ended
March 31, 1998
--------------------------
Traffic Safety Survey/Mapping Other Royalties Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales......................... $1,590,124 $717,904 $ 97,385 $2,405,413
Cost of goods sold................ 629,396 441,498 24,821 $1,095,715
Sales and marketing expenses...... 372,932 311,765 29,652 714,349
Gross margin (after sales and
marketing expenses)............. 587,796 (35,359) 42,912 595,349
Royalty and licensing income...... 203,760 203,760
Total other operating expenses.... 665,234
Income from operations............ 133,875
Interest income, net.............. 45,048
Income before taxes on income..... 178,923
Taxes on income................... 64,000
Net income........................ 114,923
<CAPTION>
Six Months Ended
March 31, 1999
--------------------------
Traffic Safety Survey/Mapping Other Royalties Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales......................... $3,131,580 $ 2,026,450 $183,408 $5,341,438
Cost of goods sold................ 1,525,374 1,037,087 93,793 $2,656,254
Sales and marketing expenses...... 1,048,688 846,473 50,892 1,946,053
Gross margin (after sales and
marketing expenses)............. 557,518 142,890 38,723 739,131
Royalty and licensing income...... 365,867 365,867
Total other operating expenses.... 2,157,266
Income (loss) from operations..... (1,052,268)
Interest income, net.............. 14,641
Income (loss) before taxes
on income....................... (1,037,627)
Taxes on income (benefit)......... (364,100)
Net income (loss)................. (673,527)
</TABLE>
6
<PAGE>
NOTE 1 - Summary of Significant Accounting Policies (Continued)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998
-----------------------------
Traffic Safety Survey/Mapping Other Royalties Total
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $3,007,265 $1,441,684 $ 368,815 $4,817,764
Cost of goods sold................. 1,325,602 691,971 146,965 $2,164,538
Sales and marketing expenses....... 762,319 642,093 64,966 1,469,378
Gross margin (after sales and
marketing expenses).............. 919,344 107,620 156,884 1,183,848
Royalty and licensing income....... 550,706 550,706
Total other operating expenses..... 1,287,876
Income from operations............. 446,678
Interest income, net............... 88,320
Income before taxes on income...... 534,998
Taxes on income.................... 185,000
Net income......................... 349,998
</TABLE>
d. Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and
Statement of Financial Accounting Standards No. 129 "Disclosures of Information
About an Entity's Capital Structure." SFAS No. 128 provides a different method
of calculating earnings per share than was previously used in accordance with
APB Opinion No. 15, "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Diluted" 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. In fiscal 1998, the Company adopted SFAS No. 128 and No. 129, both
which did not have a material impact on the Company's 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. The implementation of SFAS No. 130 and 131 did not have a material
effect on the Company's financial statements.
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard SFAS No. 132, "Employers" Disclosures
About Pensions and Other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other Postretirement benefits and
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis. SFAS No. 132 is
effective for years beginning after December 15, 1997 and requires comparative
information for earlier years to be restated, unless such information is not
readily available. The implementation of these accounting pronouncements had no
material impact on the Company's financial statements.
7
<PAGE>
NOTE 1 - Summary of Significant Accounting Policies (Concluded)
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Management believes the adoption of this
statement will have no material impact on the Company's financial statements.
8
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three and Six Months Ended March 31, 1999 and
March 31, 1998
For the three and six month fiscal periods ended March 31, 1999 and
1998, the following table provides the percentage relationship to net sales of
principal items in the Company's Consolidated Statements of Income. It should be
noted that percentages discussed throughout this analysis are stated on an
approximate basis.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
----------------------- ----------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Cost of goods sold 50 45 53 46
----- ----- ----- -----
Gross profit 50 55 47 54
Royalty and licensing income 7 11 4 8
----- ----- ----- -----
Total operating income 57 66 51 62
Operating expenses 77 57 85 57
----- ----- ----- -----
Income from operations (20) 9 (34) 5
Interest income, net 1 2 - 2
----- ----- ----- -----
Income before taxes on income (19) 11 (34) 7
Tax benefit (expense) 7 (4) 12 (3)
----- ----- ----- -----
Net income (12)% 7% (22)% 4%
----- ----- ----- -----
</TABLE>
Revenues
The following sales analysis provides information as to the percentage
of net sales of the Company's primary product lines. Revenues realized from
sales of the Company's less significant revenue producing product lines are
classified as "Other" for presentation purposes.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
March 31, March 31,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Traffic Safety Systems $ 3,131,580 $ 3,007,265 $1,516,829 $ 1,590,124
Percentage of revenues 59% 62% 57% 66%
Survey and Mapping Systems 2,026,450 1,441,684 1,080,491 717,904
Percentage of revenues 38% 30% 40% 30%
Other 183,408 368,815 87,418 97,385
Percentage of revenues 3% 8% 3% 4%
Total Revenues $ 5,341,438 $ 4,817,764 $ 2,684,738 $ 2,405,413
=========== =========== =========== ===========
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Total revenues for the second quarter ended March 31, 1999 ("1999")
increased 12% to $2,684,738 from $2,405,413 realized in the second quarter ended
March 31, 1998 ("1998"). Net sales for the first six months of 1999 were
$5,341,438 compared to $4,817,764 realized during the first six months of 1998
representing an 11% increase in revenues from the previous year.
Traffic Safety sales during the 1999 second quarter decreased slightly
to $1,516,829 from $1,590,124 realized in the prior year period and increased 4%
during the first six months of 1999 to $3,131,580 compared to $3,007,265
realized in the first six months of 1998. Sales of the Company's Survey and
Mapping products increased approximately 50% to $1,080,491 as compared to
$717,904 realized in the 1998 second quarter. On a year to year basis, the
Company's Survey and Mapping sales have increased 41% to $2,026,450 for the
first six months of 1999 compared to $1,441,684 realized in the comparable 1998
period. Increased Survey and Mapping sales in the 1999 periods resulted from
increased volume sales of the Company's Impulse and Mapstar product lines.
International sales comprised 52% and 45% of net sales for the second
quarter and first six months of 1999 as compared to 41% and 43% for the
corresponding 1998 periods. Historically, the Company experiences quarterly
fluctuations in foreign sales due to the placement of typically large orders for
the Company's Traffic Safety products. Management believes that sales of the
Company's Traffic Safety products to Pacific Rim areas have not been affected by
the Asian economic crisis. International sales of the Company's Survey and
Mapping products which had previously slowed due to the Asian economic
situation, strengthened during the second quarter. Foreign sales of the
Company's products are expected to continue to comprise a significant portion of
the Company's revenues.
Gross profit as a percentage of net sales was 47% and 50% for the
second quarter and first six months of 1999 compared to 54% and 55% for the
second quarter and first six months of 1998. The change in the Company's gross
margin can be attributed primarily to two factors. There were two large second
quarter bulk sales of first generation products (Criterion and Marksman) at
lower gross margins. Management also increased the Company's inventory
obsolescence reserve during the 1999 second quarter to accommodate slower moving
first generation product components. Sales of next generation products at higher
gross margins are expected to strengthen through the remainder of fiscal 1999.
Royalty and licensing income from the Company's licensees was $122,928
in the second quarter of 1999 compared to $203,760 in 1998, representing
approximately a 40% decrease in royalty and licensing income from the previous
year. On a year to year basis, royalties fell 33% to $365,867 in 1999 from
$550,706 realized in 1998. Management believes that the primary licensee of the
Company's technology, Bushnell, experienced short-term competitive pressure
during early 1999 due to competitors within the sports optics market selling
competitive products at reduced prices to deplete inventories of discontinued
product. Bushnell is transitioning to several new products which are expected to
have a positive impact on royalty income late in fiscal 1999. Management
believes that royalty income related to the Company's licensing agreement with
Bushnell, and it's various other licensing agreements, will continue to have a
beneficial impact on the Company's results of operations.
Total operating expenses increased approximately 67% to $2,307,579 for
the 1999 second quarter from $1,379,583 for the comparable 1998 period, and 49%
to $4,103,319 for the first six months of 1999 from $2,757,254 for the first six
months of 1998. As a percentage of net sales, total operating expenses increased
to 85% for the second quarter of 1999 from 57% for the second quarter of 1998,
and to 77% for the first six months of 1999 from 57% for the first six months of
1998. The increase in operating expenses primarily relates to accounting and
legal fees, in the amount of $368,452 and $178,615 for the first and second
quarters of 1999, respectively, and additional personnel costs largely in
engineering and research and development.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Due to increased operating expenses and lower royalty income, the
Company realized a loss from operations of $930,231 compared to income from
operations of $133,875 realized in the second quarter of 1998 and a loss from
operations of $1,052,269 for the first six months of 1999 compared to income
from operations of $446,678 realized in the 1998 period. After tax benefits on
losses, the Company realized a net loss of $600,990 in 1999, or $.12 basic loss
per share, compared to net income of $114,923 in 1998, or $.02 basic earnings
per share and a net loss of $673,528 for the first six months of 1999, or $.13
basic loss per share, as compared with net income of $349,998, or $.07 basic
earnings per share, for the six months ended 1998.
Liquidity and Capital Resources
At March 31, 1999, the Company had working capital of $7,760,065. The
Company's present working capital is expected to adequately meet the Company's
needs for at least the next twelve months.
For the six month period ended March 31, 1999, cash used in operating
activities was $27,838. A net loss of $673,527 was financed by a decrease in
accounts receivable of $1,235,614 related to increased collection efforts. Cash
provided by investing activities of $287,650 related to investment maturities of
$502,743 of which $215,093 was used for the purchase of property and equipment
and patent related costs. Cash used in financing activities of $37,479 was used
to reduce long-term debt. For the six month period ended March 31, 1999, cash
and cash equivalents increased $222,333.
For the six month period ended March 31, 1998, cash provided by
operating activities was $219,459. Net income of $349,998 and increased cash
from reduced trade accounts receivable of $678,405 financed an increase in
inventories of $709,190, primarily related to new product introductions, and
$171,018 was used to reduce accounts payable and accrued expenses. For the
period, the Company realized net cash provided by investing activities of
$314,923 related to investment of maturities of which $181,782 was used for the
purchase of property and equipment and patent related costs. For the six month
period ended March 31, 1998, cash and cash equivalents increased $534,382.
Year 2000 Compliance
During the year ended September 30, 1998, the Company converted its
computer systems to be year 2000 compliant (e.g., to recognize the difference
between '99 and '00 as one year instead of negative 99 years). Management
believes that the majority of the Company's updated computer system is Year 2000
compliant for both information technology ("IT") and non-IT systems. The Company
continues to evaluate Year 2000 compliance and does not anticipate any material
expenditures related to the conversion process.
The Company also continues to evaluate whether it will have Year 2000
issues related to any third parties, with which it has or may have a material
relationship. Management believes that most, if not all third parties with which
the Company has a material relationship, are, or will be Year 2000 compliant.
The Company does not anticipate any material expenditures related to Year 2000
compliance by any third party.
Risk Factors and Cautionary 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 periodic report filings with the Securities and
Exchange Commission.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On February 10, 1999 a securities class action complaint entitled Moshe
Rosenfeld, On Behalf of Himself and All Others Similarly Situated, vs. Laser
Technology, Inc., David Williams, Pamela Sevy, Dan H. Grothe and H. DeWorth
Williams, was filed in the United States District Court, District of Colorado
(Case no. 99-Z-266). The Complaint alleges that the Company and certain of its
officers and directors violated federal securities laws, particularly Sections
10(b) and 20 of the Securities Exchange Act of 1934, as amended (the "1934
Act"). Specifically, the complaint alleges that the Company's financial
statements were false and misleading during the "class period" (February 12,
1996 to December 23, 1998) and that the Company made certain false or misleading
statements regarding the Company's financial statements during this period.
The action appears to have followed and be premised in part on the
resignation of the Company's independent accountant, BDO Seidman, LLP ("BDO"),
on December 21, 1998, and the resignation of the members of the Audit Committee
of the Board of Directors on January 7, 1999. The resigning members of the Audit
Committee comprised the Special Audit Committee (the "Special Committee"). They
resigned from the Board of Directors as a result of disagreements between
management and the Special Committee. BDO also withdrew its opinions on the
previously issued certified financial statements for the fiscal years 1993,
1994, 1995, 1996 and 1997. At the time of BDO's resignation, the Special
Committee was conducting an independent investigation into the Company's
accounting records and alleged irregularities relating to the Company's
accounting records. Following the announcement of the resignation of BDO and
withdrawal of five years of audited financial statements, the American Stock
Exchange suspended trading in the Company's shares on December 23, 1998. Trading
of the Company's shares has since resumed.
On January 7, 1999, a Special Meeting of the Board of Directors (the
"Special Meeting") was held for the purpose of receiving the report and
recommendations from the Special Committee. At the Special Meeting, the Special
Committee made several proposals including, but not limited to, asking for the
resignation of the Company's Chief Executive Officer and Chief Financial
Officer. Following the presentation by the Special Committee of its findings and
proposed actions, those directors not serving on the Special Committee made a
counter proposal. Without responding to the counter-proposal, the individuals on
the Special Committee then informed the Board of Directors of their intent to
resign from the Special Committee and from the Board of Directors.
In its complaint, the plaintiff contends that the resignation of BDO
and the three directors is due to the Company's alleged unreliable and
misleading financial statements. Plaintiff's complaint further alleges
violations of Section 10(b) of the 1934 Act and Rule 10b-5 promulgated
thereunder.
The Company has not yet determined the extent of any possible liability
or material damage to the Company. The Company intends to vigorously defend
against the action.
Five additional securities class actions and one stockholder's
derivative suit have been filed against the Company and certain of its former
and present officers and directors. All cases were filed in the United States
District Court for the District of Colorado. The Company believes that the
actions parallel the one described above. The Company intends to vigorously
defend against all of the actions.
[Disclosure under Legal Proceedings]
An order directing private investigation was issued by the Securities and
Exchange Commission (the "Commission") on January 21, 1999 ("In the Matter of
Laser Technology, Inc. / NY-D-21291. Certain individuals have given depositions
in the matter and the Company has delivered to the Commission certain requested
documents pursuant to a subpoena duces tecum. The Company has been advised by
the Commission that the existence of the Commissions' inquiry should not be
construed as an indication by the Commission or its staff that any violations of
law have occurred, or as a reflection on any person, entity or security. The
Company believes that the investigation concerns matters related to the events
which led to the resignation of the Special Committee and the Company's
independent accountant and intends to cooperate completely in the matter. As of
the date hereof, the Company is not able to speculate as to the outcome or
possible effect of the investigation on the Company. To the best knowledge of
the Company, no action has been taken to date by or on behalf of Commission
against the Company or any of its officers or directors.
12
<PAGE>
PART II.
Item 2. Changes in Securities
This Item is not applicable to the Company.
Item 3. Defaults upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's security holders
during the three months ended March 31, 1999.
Item 5. Other Information
This Item is not applicable to the Company.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
----------------------
7070 South Tucson Way
Englewood, Colorado 80112
Date: May 10, 1999 By /s/ S.M. Parro
__________________ _______________________
S.M. Parro
Chief Financial Officer
Date: May 10, 1999 By /s/ Blair J. Zykan
__________________ _______________________
Blair J. Zykan
President and
Chief Executive Officer
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
----------------------
7070 South Tucson Way
Englewood, Colorado 80112
Date: May 10, 1999 By /s/ S.M. Parro
__________________ ______________________________
S.M. Parro
Chief Financial Officer
Date: May 10, 1999 By /s/ Blair J. Zykan
__________________ ______________________________
Blair J. Zykan
President and Chief
Executive Officer
15
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