<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996, OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT FOR THE TRANSITION PERIOD FROM ________ TO ________.
COMMISSION FILE NUMBER: 0-24738
LORONIX INFORMATION SYSTEMS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 33-0248747
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
820 AIRPORT ROAD, DURANGO, COLORADO 81301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER: (970) 259-6161
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE SECURITY EXCHANGE ACT OF 1934 DURING THE PAST 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
--- ---
AS OF JULY 10, 1996, THERE WERE 4,667,936 SHARES OF THE ISSUER'S COMMON
STOCK OUTSTANDING.
<PAGE>
LORONIX INFORMATION SYSTEMS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET 1
FOR JUNE 30, 1996
CONDENSED CONSOLIDATED STATEMENTS 3
OF OPERATIONS FOR THREE AND SIX MONTHS
ENDED JUNE 30, 1996 AND JUNE 30, 1995
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 4
FOR SIX MONTHS ENDED JUNE 30, 1996 AND
JUNE 30, 1995
NOTES TO CONDENSED CONSOLIDATED FINANCIAL 5
STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 6
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY 11
HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
<PAGE>
PART I - FINANCIAL INFORMATION
LORONIX INFORMATION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
JUNE 30,
1996
--------------
(UNAUDITED)
Current assets:
Cash and cash equivalents $4,570,414
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $191,461 2,325,280
Officers and employees 148,445
Contracts in progress with earned revenue
exceeding related progress billings 3,193,912
Inventory, net 1,052,311
Prepaid expenses and other assets 107,779
Deferred income taxes 154,000
--------------
Total current assets 11,552,141
Property and equipment, net of accumulated
depreciation of $688,238 2,883,732
Software development costs, net of accumulated
amortization of $446,188 430,712
Deposits and other assets 33,203
Goodwill, net of accumulated amortization
of $46,083 11,361
Total assets $14,911,149
--------------
--------------
See accompanying notes to condensed consolidated financial statements
1
<PAGE>
LORONIX INFORMATION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30,
1996
--------------
(UNAUDITED)
Current liabilities:
Accounts payable $1,211,141
Accrued commission payable 261,893
Income tax payable 123,000
Accrued liabilities 132,564
Customer deposits 24,520
--------------
Total current liabilities 1,753,118
Deferred maintenance revenue 32,817
--------------
Total liabilities 1,785,935
Stockholders' equity:
Preferred stock, $.001 par value,
authorized 2,000,000 shares, no shares
issued and outstanding -
Common stock, $.001 par value, authorized
20,000,000 shares, issued and outstanding,
4,667,936 shares 4,668
Additional paid-in capital 15,288,676
Notes receivable from stockholders (244,231)
Accumulated deficit (1,923,899)
--------------
Total stockholders' equity 13,125,214
--------------
Total liabilities and stockholders' equity $14,911,149
--------------
--------------
See accompanying notes to condensed consolidated financial statements
2
<PAGE>
LORONIX INFORMATION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
--------------------------- ---------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Systems, supplies and maintenance
revenue $2,822,268 $1,924,406 $5,544,279 $2,982,463
------------ ------------ ------------ ------------
Operating costs and expenses:
Cost of products sold 1,276,294 966,107 2,621,084 1,484,208
Operations and customer support 261,559 236,025 506,007 442,011
Selling, general and administrative 802,710 694,376 1,558,549 1,338,463
Research and development 231,363 199,069 446,978 368,667
------------ ------------ ------------ ------------
Total cost and expenses 2,571,926 2,095,577 5,132,618 3,633,349
Income (loss) from operations 250,342 (171,171) 411,661 (650,886)
Other income (expense):
Interest income 66,083 114,987 157,534 239,120
Other 276 (180) (769) (418)
------------ ------------ ------------ ------------
66,359 114,807 156,765 238,702
------------ ------------ ------------ ------------
Income (loss) before income
taxes 316,701 (56,364) 568,426 (412,184)
Income (tax) benefit (48,213) - (124,013) 106,300
------------ ------------ ------------ ------------
Net income (loss) $268,488 ($56,364) $444,413 ($305,884)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income (loss) per share - primary and
fully diluted $0.06 ($0.01) $0.10 ($0.07)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding 4,667,936 4,670,936 4,667,936 4,670,936
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
LORONIX INFORMATION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1996 1995
-------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $444,413 ($305,884)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 393,674 211,400
Changes in operating assets and liabilities:
Increase in accounts receivable, net (452,984) (322,452)
Increase in contracts in progress with earned revenue
exceeding related progress billings (2,303,450)
Decrease in inventory, net 230,267 306,945
Decrease (increase) in prepaid expenses 13,052 (21,023)
Increase in deferred income taxes - (106,000)
Increase (decrease) in accounts payable 515,921 (51,404)
Increase (decrease) in accrued liabilities 69,711 (64,540)
Increase (decrease) in customer deposits 24,520 (2,719)
Decrease in deferred revenue (6,320) (14,798)
-------------- --------------
Net cash used in operating activities (1,071,196) (370,475)
-------------- --------------
Cash flows from investing activities:
Capital expenditures (424,667) (443,600)
Deposits (893) 2,049
Software development costs (149,600) (89,200)
-------------- --------------
Net cash used in investing activities (575,160) (530,751)
-------------- --------------
Cash flows from financing activities:
Payments on notes payable - (63,216)
Payments for offering costs - (1,332)
-------------- --------------
Net cash used in financing activities - (64,548)
-------------- --------------
Net decrease in cash and cash equivalents (1,646,356) (965,774)
Cash and cash equivalents, beginning of period 6,216,770 8,887,944
-------------- --------------
Cash and cash equivalents, end of period $4,570,414 $7,922,170
-------------- --------------
-------------- --------------
Noncash investing activities:
In 1996, the Company transferred inventory valued at $12,551 to property and equipment.
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
LORONIX INFORMATION SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(JUNE 30, 1996 - UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with Securities and Exchange Commission requirements for
interim financial statements. Therefore, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The financial statements should be read in
conjunction with Loronix Information Systems, Inc's. Form 10-KSB for the year
ended December 31, 1995.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operations. All such adjustments are of a normal recurring
nature.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with
Loronix Information Systems, Inc.'s (the "Company") condensed financial
statements and the notes related thereto included herein.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
REVENUE
The Company's revenue is derived from sales of systems and supplies and
from maintenance services. Historically, systems and supplies have accounted
for greater than 90% of total revenue, with system sales accounting for a
substantial majority of total revenue. The Company expects this trend to
continue for the foreseeable future. Revenue increased from $1.9 million in the
second quarter of 1995 to $2.8 million in the second quarter of 1996,
representing a 47% increase. Original Equipment Manufacturer ("OEM") sales
decreased from $801,000 in the second quarter of 1995 to $122,000 in the second
quarter of 1996, while sales from all other channels increased from $1.1 million
in the second quarter of 1995 to $2.7 million in the second quarter of 1996.
The decline in OEM revenue is primarily attributable to two factors. First, one
of the Company's OEMs has elected to produce its own imaging products. Second,
two of the Company's OEMs are evaluating their internal product strategies to
determine which of the Company's products they will continue to offer. To
address this decline in OEM sales the Company has increased its direct sales
efforts, established a nationwide dealer network and is evaluating other
potential OEM relationships. Revenue in the second quarter of 1996 included
approximately $1.8 million associated with a contract between the Company and a
U.S. subsidiary of a Middle Eastern multinational corporation which provides for
the sale of security systems (the "Middle East Contract"). The Company believes
it will record substantially all of the revenue under its Middle East Contract
by year-end 1996. In July 1996, the Company received its first payment of $1.8
million under the terms of the Middle East Contract.
COSTS AND EXPENSES
COST OF PRODUCTS SOLD. The cost of products sold, consisting principally
of the costs of hardware components and supplies as well as software
amortization, increased from $966,000 in the second quarter of 1995 to $1.3
million in the second quarter of 1996, and represented 50% and 45% of revenue,
respectively. The margin improvement is primarily attributed to increased
margins on supplies and hardware items.
OPERATIONS AND CUSTOMER SUPPORT. Operations and customer support expenses
increased from $236,000 in the second quarter of 1995 to $262,000 in the second
quarter of 1996, and represented 12% and 9% of revenue, respectively. The
increase in such expenses resulted primarily from compensation-related increases
and an increase in travel expenses.
6
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased from $694,000 in the second quarter of 1995 to $803,000, net
of expense credits associated with the Middle East Contract, in the second
quarter of 1996, and represented 36% and 28% of revenue, respectively. Of the
$109,000 increase, $80,000 is attributable to the Company's United Kingdom
subsidiary which did not exist in the second quarter of 1995.
RESEARCH AND DEVELOPMENT. Research and development expenses, net of
capitalized software costs, increased from $199,000 in the second quarter of
1995 to $231,000 in the second quarter of 1996, net of expense credits
associated with the Middle East Contract, and represented 10% and 8% of revenue,
respectively. The increase in such expenses resulted primarily from headcount
and compensation-related increases and an increase in depreciation.
INTEREST INCOME. Interest income decreased from $115,000 in the second
quarter of 1995 to $66,000 in the second quarter of 1996. This decrease was due
to a reduction in cash available for investment.
INCOME TAX. There was no income tax provision for the second quarter of
1995. Income tax expense of $48,000 for the second quarter of 1996 was
estimated to be 15% of pretax earnings. The Company's U.S. tax rate is less
than the statutory federal rate of 34% primarily because of the benefit of net
operating loss carry-forwards and research and experimentation credits.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
REVENUE
Revenue increased from $3.0 million in the first six months of 1995 to
$5.5 million in the first six months of 1996, representing an 83% increase. OEM
sales decreased from $1.4 million in the first six months of 1995 to $606,000 in
the first six months of 1996, while sales from all other channels increased from
$1.6 million in the first six months of 1995 to $4.9 million in the first six
months of 1996. Revenue in the first six months of 1996 included approximately
$3.3 million associated with the Middle East Contract.
COSTS AND EXPENSES
COST OF PRODUCTS SOLD. The cost of products sold increased from $1.5
million in the first six months of 1995 to $2.6 million in the first six months
of 1996, and represented 50% and 47% of revenue, respectively. The margin
improvement is primarily attributed to increased margins on supplies and
hardware items.
OPERATIONS AND CUSTOMER SUPPORT. Operations and customer support expenses
increased from $442,000 in the first six months of 1995 to $506,007, net of
expense credits associated with the Middle East Contract, in the first six
months of 1996, and represented 15% and 9% of revenue, respectively. The
increase in expenses resulted primarily from compensation-related increases.
7
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased from $1.3 million in the first six months of 1995 to $1.6
million, net of expense credits associated with the Middle East Contract, in the
first six months of 1996, and represented 45% and 28% of revenue, respectively.
Of the $300,000 increase, $150,000 is attributable to the Company's United
Kingdom subsidiary which did not exist in the first six months of 1995. The
remaining $150,000 increase resulted primarily from compensation-related
increases and increases in expenses associated with product promotions and
depreciation.
RESEARCH AND DEVELOPMENT. Research and development expenses, net of
capitalized software costs, increased from $369,000 in the first six months of
1995 to $447,000, net of expense credits associated with the Middle East
Contract, in the first six months of 1996, and represented 12% and 8% or
revenue, respectively. The increase in such expenses resulted primarily from
headcount and compensation-related increases and an increase in depreciation.
INTEREST INCOME. Interest income decreased from $239,000 in the first six
months of 1995 to $158,000 in the first six months of 1996. This decrease was
due to a reduction of cash available for investment.
INCOME TAX/BENEFIT. An income tax benefit for the first six months of 1995
was estimated to be 26% of the pretax loss. An income tax expense of $124,000
for the first six months of 1996 was estimated to be 22% of the pretax earnings.
The Company's U.S. tax rate is less than the statutory federal rate of 34%
primarily because of the benefit of net operating loss carry-forwards and
research and experimentation credits.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1995 and 1996, the Company financed
its operations primarily from working capital.
The Company's principal uses of cash during the six months ended June 30,
1995 and 1996 were to (i) fund operating activities; (ii) acquire property and
equipment; (iii) invest in the development of software; and (iv) in 1995, repay
debt.
During the first six months of 1995, the Company's cash and cash
equivalents decreased from $8,887,944 at December 31, 1994 to $7,922,170 at June
30, 1995. Net cash used in operating activities of $370,475 consisted primarily
of a net loss of $305,884, increases in accounts receivable and deferred income
taxes and decreases in accounts payable and accrued liabilities of $544,696,
offset by a decrease in inventory of $306,945. Net cash used in investing
activities of $530,751 consisted primarily of $443,600 in capital expenditures
and $89,200 in software development costs. Net cash used in financing
activities of $64,548 consisted primarily of a final payment for land purchased
in June 1992.
During the first six months of 1996, the Company's cash and cash
equivalents decreased from $6,216,770 at December 31, 1995 to $4,570,414 at June
30, 1996. Net cash used in operating activities of $1,071,196 consisted
primarily of net income of $444,413, a decrease in inventory of $230,267 and
increases in accounts payable and accrued liabilities of $585,632, offset by
increases in accounts receivable and contracts in progress billings of
$2,756,434. Net cash
8
<PAGE>
used in investing activities of $575,160 consisted primarily of $424,293 of
capital expenditures and $149,600 of software development costs.
The Company anticipates capital expenditures for the remainder of 1996 of
approximately $600,000. The Company believes it has sufficient cash to meet its
capital requirements and fund operations for at least the next twelve months.
CERTAIN FACTORS BEARING ON FUTURE RESULTS
The statements in the third sentence and the second to last sentence under
the caption "Revenue" on page 6 and in the second sentence of the fifth
paragraph under the caption "Financial Condition, Liquidity and Capital
Resources" on page 9 are forward-looking statements. In addition, the Company
may from time to time make oral forward-looking statements. The following are
important factors that could cause results to differ materially from those
projected in any such forward-looking statements.
OEM RELATIONSHIPS. Sales through OEMs have historically accounted for a
significant portion of the Company's revenue. The Company believes its success
in penetrating markets for its digital identification and video image management
systems depends in large part on its ability to maintain its OEM relationships
and to cultivate additional, similar relationships. There can be no assurance
that OEMs, most of which have significantly greater financial and marketing
resources than the Company, will not develop and market products in competition
with the Company or will not otherwise discontinue their relationships with the
Company. One of the Company's OEMs has elected to produce its own imaging
products and may compete with the Company in the future. The loss of any
further OEM relationships could have a negative impact on the Company's
revenue stream.
INTERNATIONAL SALES. The Company is seeking to expand its international
presence by developing new distribution channels in certain foreign countries
where it has not previously had a presence. For instance, the Company has
established a wholly owned subsidiary in the United Kingdom and entered into the
Middle East Contract. International sales are subject to a number of risks,
including political and economic instability, unexpected changes in regulatory
requirements, tariffs and other trade barriers, fluctuating exchange rates and
the possibility of greater difficulty in accounts receivable collection. There
can be no assurance that these and other factors will not have a material
adverse effect on the Company's future international sales, if any, and,
consequently, the Company's business, operating results and financial condition.
DEPENDENCE ON A SINGLE CUSTOMER. The Middle East Contract accounted for
59% of the Company's revenue in the first six months of 1996, and it is expected
to continue to account for a substantial percentage of the Company's revenue
through September, 1996. The Company currently has no reason to believe that it
will not be successful in fulfilling all of its obligations due to be performed
under the Middle East Contract or receiving all the payments to be made
thereunder; however, there can be no assurance that events or conditions may not
occur which could threaten the Company's ability to complete the Middle East
Contract or collect all amounts owed thereunder. If such events or conditions
occur, the Company's business, operating results and financial condition would
be materially adversely affected. In addition, there can be no assurance that
any further revenue will arise after September 1996 from this customer.
9
<PAGE>
COMPETITION. The Company's competitors include a broad range of companies
that develop and market products for the identification market including: (i) in
the film-based systems market, Polaroid Corporation and Eastman Kodak, Co., and
(ii) in the digital identification and badge issuance systems market, Polaroid
Corporation, Eastman Kodak, Co., Data Card Corporation, Dactek International,
Inc., Image Base, Inc., G&A Imaging, Goddard Technology Corporation and Laminex,
Inc. Certain of the Company's current and prospective competitors have
substantially greater technical, financial and marketing resources than the
Company. In addition, there can be no assurance that the Company's products
will be competitive in the face of advances in product technology developed by
the Company's current or future competitors. Moreover, while the Company
believes that the price/performance characteristics of its products are
currently competitive, increased competition from low-cost, low-functionality
identification systems have created, and will continue to create, pricing
pressures which could materially and adversely affect the Company's business,
operating results and financial condition.
PROPRIETARY RIGHTS. The Company is not aware that its products, trademarks
or other proprietary rights infringe on the proprietary rights of any third
parties. However, there can be no assurance that third parties will not assert
infringement claims against the Company in the future with respect to current or
future products. As the number of software products in the industry increases
and the functionality of these products further overlaps, the Company believes
that software developers may become increasingly subject to infringement claims.
Any such claims, with or without merit, could result in costly litigation or
might require the Company to enter into royalty or licensing agreements. Such
royalty and licensing agreements, if required, may not be available on terms
acceptable to the Company.
PRODUCT OBSOLESCENCE. The Company's current products and products under
development are limited in number and concentrated primarily in the markets for
identification and surveillance products. The life cycles of the Company's
products are difficult to estimate due in large measure to changing and
developing technology as well as the unknown future effect of products
introduced by the Company's competition. Price reductions or declines in demand
for the Company's products, whether as a result of competition, technological
change or otherwise, would have a materially adverse effect on the Company's
results of operations or financial position.
DEPENDENCE ON NEW PRODUCTS. The market for the Company's products is
characterized by ongoing technological development and evolving industry
standards. The Company's success will depend upon its ability to enhance its
current products and to introduce new products which address technological and
market developments and satisfy the increasingly sophisticated needs of
customers. There can be no assurance that the Company will be successful in
developing and marketing, on a timely basis, fully functional product
enhancements of new products that respond to the technological advances by
others, or that the Company's new products will be accepted by customers.
VARIABILITY OF OPERATING RESULTS. The Company's revenue and operating
results have fluctuated significantly from quarter to quarter, and may continue
to fluctuate, due to a combination of factors. These factors include relatively
long sales cycles for certain products, the timing or cancellation of orders
from major customers, the timing of new product introductions by the Company or
its competitors, the Company's use of third-party distribution channels, the
10
<PAGE>
fulfillment of large on-time orders to particular customers and general economic
conditions and other factors affecting capital spending. Additionally, the
Company generally ships orders in the quarter in which such orders are received,
and accordingly, revenue in any quarter is substantially dependent on the orders
booked and shipped in that quarter. A small variation in revenue can cause
significant variations in operating results from quarter to quarter and may
result in losses.
LEGAL PROCEEDINGS. The Company is currently involved in litigation with
the Company's former Vice President of Marketing and Sales, who filed a lawsuit
against the Company alleging breach of contract and fraud. This individual, who
terminated his employment with the Company in May 1994 alleges that he was
promised, but never received, options to purchase shares of the Company's Common
Stock at a significant discount from fair market value and that he was deprived
of certain sales commissions. A jury trial was scheduled to begin on April 29,
1996 but it was postponed and is currently scheduled to begin on September 30,
1996. Although the Company believes that this individual's claims are without
merit and is defending this action vigorously, an adverse result in the
litigation could have a negative impact on the results of operations.
MANAGEMENT AND EMPLOYEES. The Company's future success depends in
significant part upon the continued service of its key technical and senior
management personnel and its continuing ability to attract and retain highly
qualified technical and managerial personnel in the future. The Company has in
the past encountered some difficulties in fulfilling its hiring needs in the
Durango, Colorado employment market, and there can be no assurance that the
Company will be successful in hiring and retaining qualified employees in the
future.
CAPITAL REQUIREMENTS. The Company believes that it has sufficient cash to
meet its requirements for at least the next twelve months. While operating
activities may provide cash in certain periods, to the extent the Company
experiences growth in the future, it anticipates that it may require additional
cash in its operating and investing activities, and accordingly, the Company may
require additional capital resources. There can be no assurance that such
capital resources will be available to the Company on favorable terms, if at
all.
VOLATILITY OF STOCK PRICE. In recent months, the stock market in general,
and the market for shares of technology companies in particular, have
experienced extreme price fluctuations, which have often been unrelated to the
operating performance of the affected companies. In addition, factors such as
quarterly variations in operating results, announcements of technological
innovations or new products by the Company or its competitors, as well as other
events or factors, may have a significant impact on the market price of the
Company's Common Stock. There can be no assurance that the trading price of the
Company's stock will remain at or near its current level.
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Matters submitted for a vote by security holders at the Company's May 20, 1996
annual meeting of stockholders included:
11
<PAGE>
a) approval of the minutes of the 1994 annual meeting of stockholders;
b) election of directors;
c) ratification and approval of a 250,000 share increase in the Common Stock
issuable under the 1992 Stock Plan; and
d) ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors.
The results of the stockholders votes was as follows:
a) The minutes of the prior year's annual meeting of stockholders' were
approved.
Votes Votes Votes Votes
For Against Withheld Abstained
--------------------------------------------
b) Election of Directors:
Edward Jankowski 3,476,763 24,136
M. Dean Gilliam 3,476,763 24,136
George M. Duffy 3,476,763 24,136
C. Rodney Wilger 3,476,763 24,136
Don W. Stevens 3,476,763 24,136
c) Increase in shares 2,022,855 121,089 7,564
issuable under the
1992 Stock Plan
d) Appointment of KPMG 3,456,322 21,500 16,400
Peat Marwick LLP
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data
(b) No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 1996.
12
<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.
Loronix Information Systems, Inc.
July 30, 1996 /s/ Jonathan C. Lupia
- ------------- ---------------------
Date Jonathan C. Lupia
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATI0N EXTRACTED FROM THE
LORONIX CONDENSED CONSOLIDATED BALANCE SHEET, STATEMENT OF OPERATIONS AND
CASH FLOWS FROM ITS 10-QSB FOR THE QUARTER ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,570,414<F1>
<SECURITIES> 0
<RECEIVABLES> 2,516,741
<ALLOWANCES> 191,461
<INVENTORY> 1,052,311
<CURRENT-ASSETS> 11,552,141
<PP&E> 3,571,970
<DEPRECIATION> 688,238
<TOTAL-ASSETS> 14,911,149
<CURRENT-LIABILITIES> 1,753,118
<BONDS> 0
0
0
<COMMON> 4,668
<OTHER-SE> 13,120,546
<TOTAL-LIABILITY-AND-EQUITY> 14,911,149
<SALES> 2,822,268
<TOTAL-REVENUES> 2,822,268
<CGS> 1,276,294
<TOTAL-COSTS> 1,276,294
<OTHER-EXPENSES> 1,295,632
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 316,701
<INCOME-TAX> 48,213
<INCOME-CONTINUING> 268,488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268,488
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
<FN>
<F1>The Company has two outstanding letters of credit collateralized by
certificates of deposit totaling approximately $50,000.
</FN>
</TABLE>
