<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-QSB
(Mark one)
[x] Quarterly Report under section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended September 30, 1997
[ ] Transition Report under section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-27908
Semiconductor Laser International Corporation
------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 16-1494566
- ---------------------------------------- -------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15 Link Drive, Binghamton, New York 13904
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (607) 722-3800
Check whether the issuer (1) 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 a 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 [ ]
As of November 1, 1997, there were outstanding 3,570,242 shares of the
issuers common stock, par value $.01 per share.
Transitional Small Business Disclosure Format
Yes [ ] No [x]
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Semiconductor Laser International Corporation
Balance Sheet
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
(unaudited)
------------ ------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 4,266,168 $ 638,104
Accounts Receivable, net of allowance for
doubtful accounts of $25,000 and $25,000,
respectively 61,047 237,903
Inventory 6,316 128,870
------------ ------------
Total current assets 4,333,531 1,005,277
Property, plant and equipment, net 3,035,929 2,687,732
Intangible assets, net 1,348 843
Deposits and other assets 655,928 602,809
------------ ------------
Total assets $ 8,026,736 $ 4,296,661
============ ============
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 1,142,272 $ 788,391
Accrued expenses and other liabilities 92,199 82,413
Current portion of long-term debt 25,948 35,485
------------ ------------
Total current liabilities 1,260,419 906,289
Long-term debt 809,926 807,565
Accrued royalty payments 100,000 100,000
------------ ------------
Total liabilities 2,170,345 1,813,854
------------ ------------
Commitments and contingencies (Note 6)
Shareholders' Equity
Common stock, $.01 par value, 20,000,000 shares
authorized, 3,409,607 issued and outstanding
at December 31, 1996, and 3,570,242 issued and
outstanding at September 30, 1997 34,096 35,702
Common stock issuable 1,123,438 51,250
Treasury stock (248,241) (248,241)
Additional paid-in capital 10,081,464 11,154,013
Accumulated deficit (5,134,366) (8,509,917)
------------ ------------
Total Shareholders' Equity 5,856,391 2,482,807
------------ ------------
Total liabilities and
Shareholders' Equity $ 8,026,736 $ 4,296,661
============ ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ - $ 147,916 $ - $ 326,724
Cost of Sales - (517,466) - (871,043)
---------- ---------- ------------ ------------
Gross Profit (369,550) (544,299)
Operating expenses:
Research and development expenses 282,859 30,571 532,307 545,098
General and administrative expenses 393,337 606,220 972,928 2,376,751
Royalties - - 43,188 -
---------- ---------- ------------ ------------
Total operating expenses 676,196 636,791 1,548,423 2,921,849
---------- ---------- ------------ ------------
Loss from operations 676,196 1,006,341 1,548,423 3,466,148
Interest income 79,339 14,318 183,192 90,597
---------- ---------- ------------ ------------
Loss before extraordinary
item 596,857 992,023 1,365,231 3,375,551
Extraordinary loss on the early
extinguishment of debt - - 305,301 -
---------- ---------- ------------ ------------
Net loss after extraordinary
item $ 596,857 $ 992,023 $ 1,670,532 $ 3,375,551
========== ========== ============ ============
Net loss per share
Loss before extraordinary
item $ (0.18) $ (0.28) $ (0.48) $ (0.95)
Extraordinary item - - (0.11) -
-------- -------- -------- --------
Net loss $ (0.18) $ (0.28) $ (0.59) $ (0.95)
======== ======== ======== ========
Weighted average shares outstanding 3,387,238 3,569,600 2,834,753 3,541,320
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Statement of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1997
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,670,532) $ (3,375,551)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 53,985 90,204
Expenses settled through the
issuance of common stock 30,730
Amortization of debt discount 51,585
Amortization of deferred expenses 61,341
Extraordinary loss on early
extinguishment of debt 305,301
Gain on sale of equipment (17,364)
Change in assets and liabilities:
(Increase)decrease in accounts
receivable, net (32,947) (176,856)
Decrease (increase)in inventory (3,716) (122,554)
(Increase) decrease in deposits
and other assets (480,558) (350,490)
(Increase) decrease in deferred
financing costs 134,431
Increase (decrease) in accounts
payable 111,953 91,518
Increase(decrease) in accrued
expenses and other liabilities (11,811) (9,786)
----------- -----------
Net cash used in operating activities (1,511,579) (3,809,538)
----------- -----------
Cash flows from investing activities:
Purchase of plant, property and
equipment (844,020) (2,837,439)
Sale of equipment 3,010,145
----------- -----------
Net cash provided from (used for)
investing activities (844,020) 172,706
----------- -----------
Cash flows from financing activities
Proceeds from long-term debt 455,000 31,306
Payments on long-term debt (879,682) (24,109)
Issuance of common stock, net of
expenses 7,860,472 1,971
----------- -----------
Net cash provided by financing
activities 7,435,790 9,168
----------- -----------
Net (decrease) increase in cash, cash
equivalents and restricted cash 5,080,191 (3,627,664)
Cash, cash equivalents and restricted
cash at beginning of period 531,042 4,266,168
----------- -----------
Cash, cash equivalents and restricted
cash at end of period $ 5,611,233 $ 638,504
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Notes to Financial Statements
September 30, 1997
1. Organization
Semiconductor Laser International Corporation ( the "Company") was
incorporated in New York State on September 21, 1993 (inception), and
subsequently reincorporated in Delaware on September 26, 1997, to produce
high power semiconductor diode laser wafers and bars ("HPDLs") and to
market these products worldwide.
The Company's primary activities since incorporation as a development
stage enterprise had been research and development, business planning,
raising capital, and constructing and equipping its manufacturing
facility. The Company had previously relied on facilities provided
through the Wright Cooperative Research and Development Agreement (CRDA)
with the U.S. Air Force for the development and quality control testing
of its HPDLs. The Company has since completed the construction of its
manufacturing facility in Binghamton, New York where it is conducting all
activities.
Production of the Company's products has begun at the Company's new
facility in Binghamton, New York. Effective April 1, 1997 the Company
ceased operating as a development stage enterprise as it began commercial
production of its product.
2. Basis of Presentation
The accompanying unaudited financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included
in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted. In the opinion of
the Company's management, the disclosures made are adequate to make the
information presented not misleading, and the financial statements
contain all adjustments necessary to present fairly the financial
position as of September 30, 1997, the results of operations for the three
and nine month periods ended September 30,1997 and 1996 ( which are not
necessarily indicative of the results to be expected for the full year) and
cash flows for the nine month periods ended September 30, 1996 and 1997.
3. Summary of Significant Accounting Policies
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 financial statements and the reported amount of revenue
and expenses during the period. Actual results could differ from those
estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with an
initial maturity of three months or less to be cash equivalents.
<PAGE>
Inventory
Inventory is valued at the lower of cost or market. Cost is determined
by the first in, first out (FIFO) method and the cost of finished goods
includes costs to purchase materials and subcontracted labor costs.
Deferred Financing Costs
Costs incurred in the preparation of the Company's initial public
offering were deferred and offset against the proceeds received from
the offering.
Depreciation and Amortization
Property plant and equipment are recorded at cost and depreciated over
the assets' estimated useful lives ranging from three to thirty years.
Depreciation is computed using the straight line method for financial
reporting and the modified accelerated cost recovery system for income
tax purposes. Expenditures for major renewals and betterments that
extend the useful lives of the property and equipment are capitalized.
Expenditures for maintenance and repairs are charged to expense as
incurred.
Intangible assets are amortized using the straight-line method over
five years.
Research and Development
Research and development costs are expensed as incurred. Included in
research and development expenses are costs related to the development
of prototypes of $508,816 for the nine month period ended September 30,
1997.
Income Taxes
The Company follows the asset and liability approach for deferred income
taxes. This method provides that deferred tax assets and liabilities
are recorded, using currently enacted tax rates, based upon the
difference between the tax bases of assets and liabilities and their
carrying amounts for financial statement purposes. A valuation
allowance is recorded when it is more likely than not that deferred
tax assets will not be realized.
Net Loss Per Share
Net loss per share is computed using the weighted average number of
common shares outstanding and dilutive common share equivalents. Common
shares issued, and options and warrants granted, by the Company during
the twelve months preceding the initial public offering have been
included in the calculation of common and common equivalent shares
outstanding as if they were outstanding for all periods presented using
the Treasury Stock method and an initial public offering price of $5.00
per share. Options and warrants granted before the aforementioned
twelve-month period and subsequent to the Company's initial public
offering have been included in the calculation of common and common
equivalent shares outstanding when dilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 128, "Earnings per Share"
("FAS 128"), which requires the presentation of basic earnings per share
in financial statements for reporting periods ending subsequent to
December 15, 1997. Early adoption of FAS 128 is not permitted. The
adoption of FAS 128 is not expected to have a material impact on the
Company's financial statements.
As of September 30,1997, the Company had outstanding warrants and options
to purchase 2,176,334 and 135,755 shares of Common Stock, respectively,
which are not included in the calculation of earnings per share for the
three and nine month periods ended September 30, 1997, and would not be
included in such calculation under the guidance prescribed by FAS 128, due
to the anti-dilutive nature of these instruments.
4. Commitment, Contingencies and Other Matters
Operating Leases
In October 1996, the Company entered into a master equipment lease
agreement with FINOVA Technology Finance, Inc. ("FINOVA"). The agreement
provides for the sale and leaseback by the Company of up to $3,850,000 of
equipment, furnishings and fixtures. As part of the consideration for
the agreement, the Company issued a warrant certificate for 58,334
warrants, entitling FINOVA to purchase a corresponding number of shares
of the Company's Common Stock at $5.00 per share. The warrants cannot
be assigned, sold, transferred or otherwise disposed of prior to
February 27, 1998. The warrants are currently exercisable and have been
valued at $167,710 and are being amortized over the term of the lease.
Rent expense under non-cancellable operating leases, including the FINOVA
leases, was $722,117 for the nine months ended September 30,1997.
Future minimum payments under non-cancellable operating leases, including
the FINOVA lease agreement, at September 30, 1997, are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, Commitment
------------- -------------
<S> <C> <C>
1997 $ 267,500
1998 1,009,000
1999 1,009,000
2000 1,009,000
2001 213,000
-------------
$3,507,500
=============
</TABLE>
Litigation
The Company is currently engaged in a dispute with Theodore Konopelski
("Konopelski"), a director and former employee and officer of the Company
The dispute involves the termination of Konopelski's employment for
cause. An arbitration proceeding was instituted by Konopelski in
Syracuse, New York challenging his termination under his employment
contract. Konopelski is seeking damages in the aggregate of $500,000.
The arbitration is in process and the Company believes the termination
was proper and that no amount should be awarded to Konopelski.
Subsequent to the commencement of the arbitration, the Company brought
an action against Konopelski in the New York Supreme Court (Broome
County) alleging violation by Konopelski of his obligations under the
terms of a non-disclosure agreement between Konopelski and the Company.
The Court issued a temporary restraining order barring Konopelski from
making any disclosures or using confidential information or trade
secrets. Subsequently, the court ruled that the issue of the non-disclosure
agreement was not in their jurisdiction and rescinded the temporary
restraining order and referred the issue of the non-disclosure agreement to
the arbitration process.
Mr. Konepelski was not proposed for reelection as a Director and was not
reelected as a Director of the Company at the annual meeting of Stockholders
held on June 20, 1997
The Company believes it will prevail in the arbitration as well as in all
matters with respect to the enforcement of Konopelski's non-disclosure
obligations.
The Company is currently engaged in litigation with a former employee who
the Company sought action against relative to a breach of confidentiality
and defamation of character. The former employee has responded with a
counter claim alleging defamation of character and is seeking $500,000 in
damages. The litigations are presently in the discovery stage.
The Company believes the counter claim is without merit and is
rigorously defending such action and that the ultimate outcome of such
action will not have a material impact on the financial condition of the
Company.
5. Subsequent Events
October 1997 Private Placement
On October 27, 1997, the Company completed a private placement of 10 Units,
each Unit consisting of 200,000 shares of its Series A 8% Convertible
Preferred Stock ("Series A Preferred Stock") for the aggregate purchase
price of $3,500,000. Pursuant to the terms of the Private Placement, one
half of the purchase price of each Unit was paid on October 27, 1997 with
the balance payable on or before the second closing, which is scheduled to
occur on December 11, 1997. One half of each Unit has been delivered with
the remaining half to be delivered upon payment of the second half of the
purchase price. The net proceeds to the Company, after deduction of
placement agency fees of $525,000, is estimated to be $2,975,000. The net
proceeds of this financing will be used for working capital and general
corporate purposes.
The Series A Preferred Stock underlying the Units are convertible at the
option of the holder into Common Stock on a one for one basis prior to
December 5, 1997 and, after December 5, 1997, at 70% of the average Market
Price of the Company's Common Stock for the five consecutive trading days
immediately prior to the conversion date. The market price (the"Market
Price") for any such conversion date shall be the closing bid price of the
Common Stock on such date as reported by the National Association of
Securities Dealers' Automated Quotation System.
The Company has the right to cause the conversion the Series A Preferred
Stock subsequent to the filing and declaration of effectiveness of a
registration statement with the Securities and Exchange Commission covering
the shares of Common Stock underlying the Series A Preferred Stock and upon
30 days notice to the holders of the Series A Preferred Stock. In such
case, the conversion rate would be 70% of the average Market Price of the
Company's Common Stock for the five consecutive trading days immediately
prior to the conversion date. The Company expects to file a Registration
Statement ("the Registration Statement") with the Securities and Exchange
Commission covering the aforementioned shares, as well as up to 750,000
shares issuable upon exercise of warrants issued to Marketing Direct
Concepts, Inc. ("MDC") (described below) and 55,000 shares issued to
attorneys for the Company in payment for certain outstanding legal fees of
$96,250 in the aggregate, on or before November 11,1997.
Any delay in filing the Registration Statement beyond November 11, 1997
would delay on a day for day basis the December 11, 1997 closing date.
Also, if such Registration Statement is not effective by February 4, 1998
the Company is required to issue each Unit holder 10,000 shares of Common
Stock for each Unit owned and an additional 10,000 shares of Common Stock
per Unit owned for each additional 30 day delay in the effectiveness of the
Registration Statement beyond February 4, 1998.
During the twelve month following October 27,1997, the Company has agreed to
grant the Placement Agent a fifteen day right of first refusal to obtain
equity financing on behalf of the Company on the same terms as are offered
by a bona fide third party or third party agent for such financing. The
Company has also granted the Placement Agent the option during the ninety
day period following December 11, 1997 to have its investors purchase one
million additional shares of Common Stock for an aggregate purchase price of
$1,750,000 less commissions and expenses estimated at $262,500 payable to
the Placement Agent.
Financial Public Relations Agreement
The Company has entered into a one year agreement (the"MDC Consulting
Agreement") with Marketing Direct Concepts, Inc. ("MDC"), in connection with
services related to the October 1997 Private Placement, for ongoing
services. Under the MDC Consulting Agreement, the Company will receive a
range of public relations services, including the establishment of
contact with a number of brokers, the preparation of certain reports, the
establishment of a Web site and the arrangement of broker teleconferences.
In consideration for MDC services, the Company will be obligated to pay a
fee of $195,000 plus 40,000 shares of non-registered Common Stock, 150,000
three year Warrants at exercise prices at or above the closing bid price on
the Company's Common Stock as of October 27, 1997, and, after the second
closing, 600,000 three year Warrants exercisable at $3.4688. It is
anticipated that the shares underlying the Warrants issued to MDC will be
included in the Registration Statement.
<PAGE>
Item 2. Managements Discussion and Analysis
The following information should be read in conjunction with the
unaudited financial statements included herein. See Item 1.
OVERVIEW
Certain statements in this Quarterly Report on Form 10-QSB constitute or may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the"Litigation Reform Act"). The
Company desires to avail itself of certain "safe harbor" provisions of the
Litigation Reform Act and is therefor including this special note to enable
the Company to do so. Forward-looking statements included in this Quarterly
Report on Form 10-QSB or hereafter included in other publically available
documents filed with the Securities & Exchange Commission (the "Commission"),
reports to the Company's stockholders and other publically available
statements issued or released by the Company involve known and unknown risk,
uncertainties, and other factors which could cause the Company's actual
results, performance (financial or operating) or achievements to differ from
the future results, performance (financial or operating) or achievements
express or implied by such forward-looking statements. Such future results
are based upon management's best estimate based upon current conditions and
the most recent results of operations. These risks include, but are not
limited to, need for additional capital, certain patent and technology
considerations, competition and technological changes, government
regulations, dependence upon key personnel and other risks detailed in the
Company's Commission filings, each of which could adversely affect the
Company's business and the accuracy of the forward-looking statements
contained herein. Additional information concerning certain risks and
uncertainties that would cause actual results to differ materially from those
projected or suggested in the forward-looking statements as contained in the
Company's filings with the Commission, including those risks and
uncertainties discussed in the Company's final Prospectus, dated March 19,
1996, included as part of the Company's Registration Statement on Form S-1
(Reg. No. 333-754), in the Section entitled "Risk Factors".
The Company has begun the production of its products at its new facility
in Binghamton, New York. Since its inception in 1993, the Company had been
engaged primarily in research and development, business and financial
planning, recruitment of key management and technical personnel, raising
capital to fund operations and the development of its HPDL prototypes. As
a result, the Company had not generated any significant product sales through
March 31, 1997. The Company has completed the construction and equipping of
the first phase of its manufacturing facility and has begun production of its
products and the generation of sales revenues. In addition, the Company has
and will continue to secure licensing agreements for the production,
marketing and sale of technologically improved products which complement its
product line.
RESULTS OF OPERATIONS
Three months ended September 30, 1997, compared to three months ended
September 30, 1996.
Effective April 1, 1997, the Company was no longer considered to be a
Development Stage Enterprise. During the period in which the Company was
considered a Development Stage Enterprise, sales of prototype units and the
costs associated therewith were insignificant and were offset against
research and development expenses.
Sales were $147,916 compared to $0 for the same period in the prior year,
primarily the result of the Company being in commercial production during the
three months ended September 30, 1997. In the same period in the prior year,
the Company was not in commercial production but rather using subcontractors
to produce prototype products. Sales of these prototype products during the
three months ended September 30, 1996 were insignificant and offset against
research and development expenses.
Cost of Sales, which includes materials, production labor and certain
overheads was $517,466 as compared to $0 for the same period in the prior
year. The increase is primarily associated with increased levels of
production labor, materials and overhead associated with the production
process. Cost of sales levels are expected to exceed sales levels until
sales levels commensurate with production capacity are achieved. The
Company expects sales levels to increase in the future, thus steadily moving
the production levels to full capacity.
Research and development expenditures were $30,571 for the three months
ended September 30, 1997 as compared to $282,859 for the three months ended
September 30, 1996. The decrease of approximately $252,000 is primarily
associated with decreased activity associated with the development of the
production process and prototype products. Pure research and development
expenses were lower as a result of concentration on the production process
and commercial operating activities.
General and administrative expenses were $606,220 for the three months
ended September 30, 1997 as compared to $393,337 for the same period in 1996.
The increase of approximately $213,000 is attributable to increased levels
of employment, increased levels of employee benefits and overheads associated
with higher levels of employment, increased levels of marketing expenses
associated with sales efforts, increased legal and professional fees,
increased equipment costs (leasing and depreciation), increased utility costs
and increases in office supplies and expense.
Interest income was $14,318 for the three months ended September 30, 1997,
a decrease of approximately $65,000. The decrease is attributable to lower
average invested cash balances during the current three months. Average
cash balances decreased as a result of increased operating costs and the
lack of appreciable sales revenue to offset such operating expenses.
Nine months ended September 30, 1997 compared to nine months ended September
30, 1996.
Increases in sales ($326,724) and increases in cost of sales ($871,043) are
attributable to the commencement of commercial production during the nine
month period ended September 30, 1997. During the nine month period ended
September 30, 1996, sales of prototype products and the costs thereof were
insignificant and were reported as a charge to research and development
expenses.
Research and development expenses for the nine month period ended September
30, 1997 were at approximately the same level as for the comparable period in
1996. Since the commencement of commercial production during the quarter
ended June 30, 1997, research and development expenditures have declined and
are expected to be minimal in the near term.
Selling, general and administrative expenses increased approximately
$1,404,000 for the nine months ended September 30, 1997, as compared to the
nine months ended September 30, 1996 as a result of increased levels of
employment, increased insurance costs as a result of increased investment in
capital assets, increased marketing expense associated with the increased
sales effort, increased professional fees associated with ongoing litigation,
patent filings and protection of the Company's patents and ongoing public
reporting requirements, increased lease expense associated with increased
levels of leasing and increased facilities cost.
Interest income decreased approximately $93,000 as a result of lower levels
of invested cash due to operating needs and the lack of significant sales
revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements have been significant and are expected to
remain significant. The Company's cash and cash equivalents at September 30,
1997 were $638,504 as compared to $4,266,168 at December 31, 1996, a
decrease of $3,627,664 for the period ended September 30, 1997.
The net cash used in operating activities for the nine month period ended
September 30, 1997 of $3,809,538 was used to fund the operating loss of
$3,375,551 and net changes in other working capital of $568,168, offset
by net non-cash expenditures of $134,181.
Net cash provided by investing activities of $172,706 is primarily the result
of the sale and leaseback transaction entered into with FINOVA and the
timing of the same.
Although cash expenditures have been significant over the period and are
expected to increase, additional cash flow is expected to result from
increased production levels and increased sales of the Company's products.
However the timing of these sales cannot be predicted nor assured.
In connection with expected cash needs, the Company entered into a privately
placed equity financing arrangement on October 27, 1997 which would result in
net proceeds of approximately $2,975,000 through December 31, 1997. The
arrangement also provides an option whereby the Company could receive an
additional $1,487,500. The details of this financing are discussed in Note 5
of the Notes to Financial Statements. The equity financing will provide a
needed source of working capital. Also, the Company is in the process of
securing funding for its anticipated facilities expansion which the Company
believes lead to significantly increased production capabilities and
efficiency.
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is involved in litigation described in Note 4 in the
Notes to the Financial Statements.
Item 2. Change in Securities.
See Note 5 of Notes to Financial Statements
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
Effective October 31, 1997, Mr. Michael P. Murphy resigned from the
Board of Directors of Semiconductor Laser International Corporation
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
No. 11 Statement re: Computation of Weighted Average
Shares Outstanding
No. 27 Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Semiconductor Laser International Corporation
---------------------------------------------
(Registrant)
Date: November 6, 1997 By:/s/ Geoffrey T Burnham
----------------------------
Geoffrey T. Burnham
Chairman, President and
Chief Executive Officer
Date: November 6, 1997 By:/s/ Nicholas L.Prioletti, Jr.
-----------------------------
Nicholas L. Prioletti, Jr.
Chief Financial Officer,
Principal Financial Officer
and Principal Accounting
Officer
<PAGE>
EXHIBIT 11
SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
COMPUTATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
PERIODS ENDED SEPTEMBER 30, 1996
"CHEAP STOCK" METHOD
<TABLE>
<CAPTION>
SHARES ISSUED OR SHARES REDEEMED USING NINE MONTHS ENDED THREE MONTHS ENDED
WARRANTS AND OPTIONS PROCEEDS FROM SHARES SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
DEEMED EXERCISED ISSUED DEEMED EXERCISED WEIGHTED AVERAGE WEIGHTED AVERAGE
OF WARRANTS & OPTIONS SHARES OUTSTANDING SHARES OUTSTANDING
-------------------- ----------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
1993 SHARES OUTSTANDING (NOTE 1) 729,003 0 729,003 729,003
1994 SHARES OUTSTANDING (NOTE 1) 192,344 0 192,344 192,344
1995 SHARES OUTSTANDING (NOTE 1) 472,306 0 472,306 472,306
1996 "CHEAP" STOCK 150,000 (59,000) 91,000 150,000
1996 WEIGHTED SHARES ISSUED IN
IPO (NOTE 2) 1,197,445 0 1,197,445 1,700,000
1995 OPTIONS 88,659 (887) 87,772 83,957
1996 SHARES 158,954 (94,072) 64,882 59,628
---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 2,834,753 3,387,228
========== ==========
</TABLE>
NOTE 1: SHARES AND WARRANTS ISSUED MORE THAN ONE YEAR PRIOR
TO INITIAL PUBLIC OFFERING ("IPO")
NOTE 2: COMPUTED USING THE WEIGHTED AVERAGE METHOD
PERIODS ENDED SEPTEMBER 30,1997
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
SHARES ISSUED AND WEIGHTED AVERAGE WEIGHTED AVERAGE
OUTSTANDING SHARES OUTSTANDING SHARES OUTSTANDING
----------------- ------------------- -------------------
<S> <C> <C> <C>
COMMON SHARES ISSUED AND
OUTSTANDING JANUARY 1, 1997 3,409,607 3,409,607 3,409,607
COMMON SHARES ISSUED JANUARY 10,
1997 120,000 116,044 120,000
COMMON SHARES ISSUED FEBRUARY 9,
1997 1,231 1,055 1,231
COMMON SHARES ISSUED MAY 19, 1997 9,851 4,871 9,851
COMMON SHARES ISSUED JULY 3, 1997 29,553 9,743 28,911
---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 3,541,320 3,569,600
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 638,504
<SECURITIES> 0
<RECEIVABLES> 262,903
<ALLOWANCES> 25,000
<INVENTORY> 128,870
<CURRENT-ASSETS> 1,005,277
<PP&E> 2,853,342
<DEPRECIATION> 165,610
<TOTAL-ASSETS> 4,296,661
<CURRENT-LIABILITIES> 906,289
<BONDS> 0
0
0
<COMMON> 35,702
<OTHER-SE> 2,447,105
<TOTAL-LIABILITY-AND-EQUITY> 4,296,661
<SALES> 147,916
<TOTAL-REVENUES> 147,916
<CGS> 517,466
<TOTAL-COSTS> 1,154,257
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,984
<INCOME-PRETAX> (992,023)
<INCOME-TAX> 0
<INCOME-CONTINUING> (992,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (992,023)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
