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, 2002
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
incorporation or organization) identification number)
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 April 29, 2002, 5,710,867 shares of common stock of the Registrant were
outstanding.
INDEX
PART I: FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements.......................................... 2
Consolidated Balance Sheets............................. 2
Consolidated Statements of Operations................... 4
Consolidated Statements of Cash Flows................... 5
Notes to Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9
Results of Operations................................... 9
Liquidity and Capital Resources......................... 11
Forward Looking and Cautionary Statements............... 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 11
PART II: OTHER INFORMATION
Item 1. Legal Proceedings............................................. 12
Item 2. Changes in Securities and Use of Proceeds..................... 12
Item 3. Defaults upon Senior Securities............................... 12
Item 4. Submission of Matters to a Vote of Security Holders........... 12
Item 5. Other Information............................................. 13
Item 6. Exhibits and Reports on Form 8-K.............................. 13
1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
ASSETS
March 31, September 30,
2002 2001
----------- -----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,848,437 $ 1,641,586
Trade accounts receivable, less allowance
for doubtful accounts of $66,235 and $55,228
at March 31, 2002 and September 30, 2001, respectively 1,607,179 2,363,225
Royalties receivable 123,220 443,713
Inventories 3,620,603 4,493,440
Prepaids and other current assets 113,591 186,017
Income tax prepayment 284,666 8,406
----------- -----------
Total Current Assets 8,597,696 9,136,387
PROPERTY AND EQUIPMENT, net of accumulated
depreciation 599,877 788,983
----------- -----------
OTHER ASSETS 1,042,760 1,068,559
----------- -----------
TOTAL ASSETS $10,240,333 $10,993,929
----------- -----------
See accompanying notes to the consolidated financial statements
2
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, September 30,
2002 2001
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 377,652 $ 593,271
Accrued expenses 240,624 327,094
Current maturities of long-term debt 2,400 14,611
------------ ------------
Total Current Liabilities 620,676 934,976
------------ ------------
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 5,710,867 57,109 57,109
Additional paid-in capital 10,314,226 10,314,226
Treasury stock at cost, 224,650 shares (194,259) (194,259)
Retained earnings (Deficit) (557,419) (118,123)
------------ ------------
Total Stockholders' Equity 9,619,657 10,058,953
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,240,333 $ 10,993,929
------------ ------------
See accompanying notes to the consolidated financial statements
3
LASER TECHNOLOGY, INC.
Consolidated Statements of Operations
For the Three and Six Months Ended
March 31, 2002 and 2001
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2002 2001 2002 2001
----------- ----------- ----------- -----------
NET SALES $ 2,234,728 $ 3,060,393 $ 4,700,807 $ 5,470,035
LESS COST OF GOODS SOLD 1,209,949 1,488,591 2,398,303 2,609,022
----------- ----------- ----------- -----------
Gross Margin 1,024,779 1,571,802 2,302,504 2,861,013
ROYALTY AND LICENSING INCOME 124,178 137,144 345,888 389,876
----------- ----------- ----------- -----------
TOTAL OPERATING INCOME 1,148,957 1,708,946 2,648,392 3,250,889
OPERATING EXPENSES 1,684,477 1,677,199 3,370,272 3,401,845
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (535,520) 31,747 (721,880) (150,956)
OTHER INCOME (EXPENSE), NET 21,938 21,749 50,426 66,483
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE CHANGES IN ACCOUNTING ESTIMATE (513,582) 53,496 (671,454) (84,473)
CHANGES IN ACCOUNTING ESTIMATE INCOME/(EXPENSE) -- -- (14,945) --
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE TAXES ON INCOME (513,582) 53,496 (686,399) (84,473)
TAXES ON INCOME (BENEFIT) (184,890) 8,289 (247,104) (41,380)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (328,692) $ 45,207 $ (439,295) $ (43,093)
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ (0.06) $ 0.01 $ (0.08) $ (0.01)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,710,867 5,486,220 5,710,867 5,486,220
=========== =========== =========== ===========
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ (0.05) $ 0.01 $ (0.07) $ (0.01)
=========== =========== =========== ===========
DILUTED AVERAGE SHARES
OUTSTANDING 6,664,067 6,291,220 6,664,067 6,291,220
=========== =========== =========== ===========
See accompanying notes to the consolidated financial statements
4
LASER TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 2002
and March 31, 2001
(Unaudited)
March 31, March 31,
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (439,295) $ (43,093)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 262,797 298,155
Write down of patent 14,945 --
Changes in operating assets and liabilities:
Trade accounts receivable 1,076,539 103,818
Inventories 872,837 (918,062)
Other assets (203,835) (125,417)
Accounts payable and accrued expenses (302,088) (23,207)
----------- -----------
Net cash provided by (used in) operating activities 1,281,900 (707,806)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments -- 2,159,648
Patent costs paid (10,589) (82,246)
Purchases of property and equipment (52,248) (73,772)
----------- -----------
Net cash provided by (used in) investing activities (62,837) 2,003,630
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt and capital leases (12,212) (56,051)
----------- -----------
Net cash used in financing activities (12,212) (56,051)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 1,206,851 1,239,773
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,641,586 585,882
----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,848,437 $ 1,825,655
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 372 $ 2,095
----------- -----------
Cash paid for Income Taxes $ 50,000 $ 0
----------- -----------
See accompanying notes to the consolidated financial statements
5
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
(Information for the three and six months ended March 31, 2002 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., Light Solutions Research, Inc. 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 operations for the six month
and three month periods ended March 31, 2002 and 2001, (b) the consolidated
financial position at March 31, 2002, and (c) the consolidated statements of
cash flows for the six month periods ended March 31, 2002 and 2001. 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, 2001. 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
SFAS No. 128 provides for the calculation of "Basic" and "Diluted" income (loss)
per share. Basic income (loss) 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 income (loss) per share
reflects the potential dilution of securities that could share in the earnings
of an entity that were outstanding for the period.
The following is provided to reconcile the earnings per share calculation:
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ (328,692) $ 45,207 $ (439,295) $ (43,093)
Denominator
Weighted Average Shares 5,710,867 5,486,220 5,710,867 5,486,220
----------- ----------- ----------- -----------
Per Share Amounts
Basic Earnings (Loss) $ (0.06) $ 0.01 $ (0.08) $ (0.01)
=========== =========== =========== ===========
Diluted Earnings Per Common Share:
Numerator
Net Income (Loss) $ (328,692) $ 45,207 $ (439,295) $ (43,093)
Denominator
Weighted Average Shares 5,710,867 5,486,220 5,710,867 5,486,220
Employee & Director Stock Options 953,200 805,000 953,200 805,000
----------- ----------- ----------- -----------
6,664,067 6,291,220 6,664,067 6,291,220
Per Share Amounts
Basic Earnings (Loss) $ (0.05) $ 0.01 $ (0.07) $ (0.01)
=========== =========== =========== ===========
6
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
c. Operating Segments
The Company's primary operating segments for the three and six months ended
March 31, 2002 and 2001 were as follows:
Three Months Ended
March 31, 2002
--------------
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales .......................... $ 1,442,330 $ 661,697 $ 130,701 $ 2,234,728
Cost of goods sold ................. 767,141 349,574 93,234 1,209,949
Sales and marketing expenses ....... 462,022 226,396 16,098 704,516
Gross margin (after sales and
marketing expenses) .............. 213,167 85,727 21,369 320,263
Royalty and licensing income ....... 124,178 124,178
Total other operating expenses ..... 979,961
Income (loss) from operations ...... (535,520)
Other income (expense), net ........ 21,938
Income (loss) before taxes on income (513,582)
Taxes on income (benefit) .......... (184,890)
Net income (loss) .................. $ (328,692)
Three Months Ended
March 31, 2001
--------------
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales .......................... $ 1,838,619 $ 966,794 $ 254,980 $ 3,060,393
Cost of goods sold ................. 867,050 461,879 159,662 1,488,591
Sales and marketing expenses ....... 482,561 289,718 26,215 798,494
Gross margin (after sales and
marketing expenses) .............. 489,008 215,197 69,103 773,308
Royalty and licensing income ....... 137,144 137,144
Total other operating expenses ..... 878,705
Income (loss) from operations ...... 31,747
Other income (expense), net ........ 21,749
Income (loss) before taxes on income 53,496
Taxes on income (benefit) .......... 8,289
Net income (loss) .................. $ 45,207
Six Months Ended
March 31, 2002
--------------
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales .......................... $ 3,094,853 $ 1,208,463 $ 397,491 $ 4,700,807
Cost of goods sold ................. 1,575,266 605,290 217,747 2,398,303
Sales and marketing expenses ....... 953,104 416,882 46,788 1,416,774
Gross margin (after sales and
marketing expenses) .............. 566,483 186,291 132,956 885,730
Royalty and licensing income ....... 345,888 345,888
Total other operating expenses ..... 1,953,498
Income (loss) from operations ...... (721,880)
Other income (expense), net ........ 50,426
Income (loss) before changes
in accounting estimate ........... (671,454)
Changes in accounting estimate ..... (14,945)
Taxes on income (benefit) .......... (247,104)
Net income (loss) .................. $ (439,295)
Six Months Ended
March 31, 2001
--------------
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales .......................... $ 3,413,205 $ 1,627,947 $ 428,883 $ 5,470,035
Cost of goods sold ................. 1,599,196 765,159 244,667 2,609,022
Sales and marketing expenses ....... 1,014,955 545,338 49,273 1,609,566
Gross margin (after sales and
marketing expenses) .............. 799,054 317,450 134,943 1,251,447
Royalty and licensing income ....... 389,876 389,876
Total other operating expenses ..... 1,792,279
Income (loss) from operations ...... (150,956)
Other income (expense), net ........ 66,483
Income (loss) before taxes on income (84,473)
Taxes on income (benefit) .......... (41,380)
Net income (loss) .................. $ (43,093)
7
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
d. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities. The new standard establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Accounting for changes in the values of
those derivatives depends on the intended use of the derivatives and whether
they qualify for hedge accounting. SFAS 133, as amended by SFAS 137 and SFAS
138, was adopted as of April 1, 2001. We believe the adoption of this statement
will have no material impact on our financial statements.
In June 2001, the FASB issued SFAS 141, Business Combinations, and SFAS
142, Goodwill and Other Intangible Assets. SFAS 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001 as well as all purchase method business combinations completed after
June 30, 2001. SFAS 141 also specifies criteria that intangible assets acquired
in a purchase method business combination must meet to be recognized and
reported apart from goodwill, noting that any purchase price allocatable to an
assembled workforce may not be accounted for separately. SFAS 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of SFAS 142. SFAS 142 also requires that intangible assets
with estimatable useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. We adopted SFAS 141 upon issuance
and SFAS 142 effective April 1, 2001. The adoption of SFAS 141 did not affect
our consolidated financial statements. The adoption of SFAS 142 resulted in a
write down of patents of $14,945. Accordingly, income before changes in
accounting estimates did not change, net income decreased by $14,945, basic
earnings per share did not change, and diluted earnings per share decreased by
$0.01.
On August 16, 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which is effective for fiscal years beginning after June
15, 2002. It requires that obligations associated with the retirement of a
tangible long-lived asset be recorded as a liability when those obligations are
incurred, with the amount of the liability initially measured at fair value.
Upon initially recognizing an accrued retirement obligation, an entity must
capitalize the cost by recognizing an increase in the carrying amount of the
related long-lived asset. Over time, the liability is accreted to its present
value each period, and the capitalized cost is depreciated over the useful life
of the related asset. Upon settlement of the liability, an entity either settles
the obligation for its recorded amount or incurs a gain or loss upon settlement.
Although we have not completed the process of determining the effect of this new
accounting pronouncement, we currently expect that the effect of SFAS No. 143 on
our consolidated financial statements, when it becomes effective, will not be
significant.
In October 2001, the FASB issued SFAS 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. Although SFAS 144
supersedes SFAS 121, it retains many of the fundamental provisions of SFAS 121.
SFAS 144 also supersedes the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30, Reporting-the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business. However, it retains the requirement in APB 30 to report
separately discontinued operations and extends that reporting to a component of
an entity that either has been disposed of, by sale, abandonment, or in a
distribution to owners, or is classified as held for sale. SFAS 144 is effective
for fiscal years beginning after December 15, 2001 and interim periods within
those fiscal years. We believe the adoption of SFAS 144 will not have a
significant effect on our consolidated financial statements.
NOTE 2 - Subsequent Events
Not applicable.
8
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, 2002 and
March 31, 2001
For the three and six months ended March 31, 2002 and 2001, the following table
provides the percentage relationship to net sales of principal items in our
Consolidated Statements of Operations. It should be noted that percentages
discussed throughout this analysis are stated on an approximate basis.
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2002 2001 2002 2001
---- ---- ---- ----
Net sales 100% 100% 100% 100%
Cost of goods sold 54 49 51 48
---- ---- ---- ----
Gross profit 46 51 49 52
Royalty and licensing income 6 4 7 7
---- ---- ---- ----
Total operating income 51 56 56 59
Operating expenses 75 55 71 62
---- ---- ---- ----
Income from operations (24) 1 (15) (3)
Other income, net 1 1 1 1
---- ---- ---- ----
Income before taxes on income (23) 2 (14) (2)
Tax (benefit) expense (8) 0 (5) (1)
----
Net income (15)% 1% (9)% (1)%
---- ==== ---- ====
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.
Three Months Ended Six Month Ended
March 31, March 31,
--------- ---------
2002 2001 2002 2001
---- ---- ---- ----
Traffic Safety Systems $ 1,442,330 $ 1,838,619 $ 3,094,853 $ 3,413,205
Percentage of revenues 65% 60% 66% 62%
Survey and Mapping Systems 661,697 966,794 1,208,463 1,627,947
Percentage of revenues 29% 32% 26% 30%
Other 130,701 254,980 397,491 428,883
Percentage of revenues 6% 8% 8% 8%
Total Revenues $ 2,234,728 $ 3,060,393 $ 4,700,807 $ 5,470,035
------------ ============ ------------ ============
9
Comparison of Three-Months Ended March 31, 2002 and the Three-Months Ended March
31, 2001
Net sales during the second quarter of fiscal 2002, which ended March 31, 2002,
declined 27% from the same period a year earlier, to $2,234,728 from $3,060,393.
Traffic Safety revenues during the second quarter fell 22% to $1,442,330, from
$1,838,619 a year ago. North America accounted for 67% of sales while
International sales totaled 33%. Traffic Safety product sales in North American
markets rose 2% to $966,409 from $947,043, while International sales of Traffic
Safety products declined 47% to $475,921 from $891,576.This decrease reflected
continued competitive pricing in overseas markets, and cautionary spending for
capital items by various government agencies.
Sales of our Survey and Mapping products decreased 32% to $661,697 in 2002 as
compared to $966,794 in 2001. North American sales and International sales
comprised 70% and 30%, respectively of the total during the quarter ended March
31, 2002. North American sales declined 31% to $465,484 from $674,108.Continued
uncertainty about the economy slowed private spending while purchases by
government agencies were hindered by reallocated budgets. International sales
decreased by 33%, to $196,212 from $292,686 as customers postponed discretionary
purchases of capital items.
Of total revenue, North American sales accounted for 70% and International sales
30%. We expect International sales to continue to account for a significant
portion of overall volume.
Gross margins narrowed to 46% of sales in the second quarter versus 51% in the
second quarter a year ago. Although average selling prices for the majority of
products held at or above last year's levels, higher labor content in cost of
goods sold reduced gross margins. Management is continually evaluating our
manufacturing processes to identify areas for potential efficiency improvements.
Royalty and licensing income which is based on a percentage of sales from our
licensee was $124,178 in the second quarter of 2002 as compared to $137,144 in
2001. This 9.5% decrease represents higher sales of lower cost units.
Total operating income fell 33%, to $1,148,957 from $1,708,946 as a result of
narrower gross margins and lower royalty and licensing income.
Total operating expenses remained virtually unchanged at $1,684,477 from
$1,677,199 for the comparable 2001 period. After other income of $21,938, the
company posted a pretax loss of $513,582 for the March 31,2002 quarter, as
against a profit of $53,496 a year earlier. The net loss after tax benefit
amounted to $328,692, or $0.06 per share, versus a profit of $45,207 or $0.01
per share a year ago.
Comparison of Six-Months Ended March 31, 2002 and the Six-Months Ended March 31,
2001
Net sales for the first six months of 2002 were $4,700,807 compared to
$5,470,035 during the first six months of 2001 representing a 14% decrease in
sales from the previous year. Traffic Safety sales decreased 9% during the first
six months of 2002 to $3,094,853 compared to $3,413,205 a year earlier. North
American sales increased 9% to $1,905,259 from $1,741,541. This gain was more
than offset by a 29% decline in International sales to $1,189,594 from
$1,671,664. A continued competitive price environment in overseas markets
coupled with a pause in the buying cycle of various government agencies
restrained International sales. On a year to year basis, the Company's Survey
and Mapping sales have decreased 26% to $1,208,463 for the first six months of
2002 compared to $1,627,947 realized in the comparable 2001 period. North
American sales were down 30% to $760,995 from $1,079,602. Lower demand persisted
in both the private and government sectors. International sales were reduced by
18% to $447,468 from $548,345 in the first six months of fiscal 2002 when
compared with the first half of 2001. Continued price competition from foreign
manufactured products and lower demand caused by more cautionary spending on the
part of customers contributed to the decline.
International sales comprised 35% of net sales during the first six months of
2002 as compared to 41% for the corresponding 2001 period. The decline was due
to increased market competition, the strong U.S. dollar and regional economic
fluctuations. 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 declined to 49% from 52% for the first
six months of 2002 as compared to the prior year. Lower sales volumes coupled
with increased labor content negatively impacted our gross margin.
On a year to year basis, royalties, primarily related to the Company's licensing
agreement with Bushnell, decreased 11% to $345,888 for the first six months of
2002 from $389,876 realized in 2001.
Total operating expenses decreased approximately 1% to $3,370,272 for the first
six months of 2002 from $3,401,845 for the first six months of 2001. As a
percentage of net sales, total operating expenses increased to 72% for the first
six months of 2002 from 62% for the first six months of 2001 reflecting lower
sales volumes. Net loss increased to $439,295, from a loss of $43,093 a year
ago, or a net loss of $0.08 a basic share compared to $0.01 the prior year.
10
Liquidity and Capital Resources
Our net working capital at March 31, 2002 was $7,977,020 as compared to working
capital of $8,201,411 at September 30, 2001, a decrease of $224,391. Current
assets exceeded current liabilities by a ratio of 13.8 to 1. Furthermore, the
acid test ratio (ratio of current assets minus inventories and prepaid expenses
to liabilities) was in excess of 7 to 1. Thus, the present working capital is
expected to adequately meet our needs for at least the next twelve months.
A reduction in accounts payable and accrued expenses of $302,088 with a net loss
of $439,295 were the largest items that required funding. Patent, fixed asset
and long term debt costs required additional $75,049 of cash out flows.
Adjustments to reconcile net income to cash provided by operating activities
were depreciation and amortization of $262,797, and a write down of Patents of
$14,945. The operating activities that provided cash were a reduction of
inventory of $872,837 and a reduction in accounts receivables of $1,076,539. The
other material item that decreased cash was an increase in prepaid expenses of
$203,835.
For the six months ended March 31, 2002, a net cash decrease of $62,837 from
investing activities was due to the purchase of property and equipment of
$52,248 and patent costs of $10,589. After repayments of $12,212 on long term
debt and capital leases, the increase from operating activities of $1,281,900
produced a net increase in cash and equivalents of $1,206,851. When added to
cash on hand at the beginning of the fiscal year, total cash and equivalents at
March 31, 2002 stood at $2,848,437. Thus, cash and equivalents alone exceeded
total liabilities by $2,227,761 at the end of the period.
At March 31, 2001, the Company had working capital of $7,640,649 compared to
$6,918,219 at September 30, 2000. Current assets exceeded current liabilities by
a ratio of 7.8 to 1. Furthermore, the acid test ratio was in excess of 3.8 to 1.
The largest items that required financing were inventory which increased by
$918,062 and prepaid insurance and car leases in the amount of $125,417 which
are classified as other assets. The only operating activities that provided cash
was depreciation, which totaled $298,155. This was offset by a small operating
loss of $43,093. The only other items that reduced cash were an increase in
accounts payable and accrued expenses of $25,417.
A net cash increase of $2,003,630 from investing activities was due to the
conversion of investment accounts into working capital. After expending $707,806
on operating activities and $56,051 on long term debt and capital leases, there
was a net increase in cash and equivalents of $1,239,773. When added to cash on
hand at the beginning of the six month period, total cash and equivalents at
March 31, 2001 stood at $1,825,654. Thus, cash and equivalents alone comfortably
exceeded total liabilities of $1,134,191 at the end of the period.
Forward-Looking 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
This Item is not applicable.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On February 8, 2000, we filed a complaint against Nikon, Inc. in U.S. District
Court for the District of Colorado (Civ. No. 00-B-272), for selling and using a
product infringing one of our patents.
On July 26, 2000, we amended the complaint to include allegations that Nikon's
conduct infringed a second patent obtained by us. On May 24, 2001, we amended
the complaint to add allegations that Nikon and Asia Optical Co, Inc. are
infringing a third patent issued to us in May 2001. Nikon and Asia Optical have
filed an answer and counterclaims, seeking a declaratory judgment that the
Defendants did not infringe the patents, that the patents are invalid and
unenforceable, and that the Defendants have been damaged by willful and
unfounded assertions of infringement by us. The counterclaims do not quantify
the damages sought.
Efforts to resolve the matter through court ordered mediation have not been
successful. We are vigorously prosecuting the lawsuit. The discovery period has
closed, and both parties have submitted briefs to the Court in support of their
proposed claim constructions. A hearing is scheduled in July, 2002.
In March 2002, Bushnell Performance Optics of Overland Park, Kansas filed a
lawsuit against us in the District Court of Johnson County, Kansas (Case No. 02
CV 1498). The lawsuit alleges breach of contract and unauthorized surcharges on
a certain technical component. Bushnell is asking for $350,000 in damages. We
have filed with the Court an answer containing several counterclaims whereby we
allege, among other claims, a breach of contract by Bushnell, fraud and
defamation, and also ask for an injunction against Bushnell. Parties are in the
initial phase of the discovery process. Management believes Bushnell's suit is
without merit and that we will prevail in any potential proceeding.
Notwithstanding the lawsuit, we continue to conduct business with Bushnell under
the terms of our current contract.
Item 2. Changes in Securities and Use of Proceeds
This Item is not applicable.
Item 3. Defaults upon Senior Securities
This Item is not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On March 7, 2002, pursuant to proper notice to stockholders, the Company
held its annual meeting of stockholders at the corporate offices located at 7070
South Tuscon Way, Englewood, Colorado, 80112. At the meeting, the following
directors were elected by the indicated vote to serve as directors until the
next annual meeting of stockholders or until their successors are elected and
qualified:
Nominee For Withheld
------- ---- --------
Eric A. Miller 4,685,645 60,039
Jeremy G. Dunne 4,685,645 60,039
H. Deworth Williams 4,683,745 61,939
Walter R. Keay 4,688,945 56,739
Edward F. Cowle 4,692,645 53,039
William P. Behrens 4,690,645 55,039
Nicholas J. Cooney 4,692,645 53,039
In addition the stockholders also ratified the appointment of HJ Associates, LLC
as independent auditors for the Company's fiscal year ending September 30, 2002
by a vote of 4,687,779 for, 52,771 against, and 5,134 abstaining.
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Item 5. Other Information
In April 2002 we signed an agreement with MPH Industries Inc., a subsidiary of
MPD, Inc., to distribute their radar speed measurement products in 20 states
across the United States. Current customers and prospects should welcome this
agreement as it broadens Laser Technology, Inc.'s ability to offer additional
speed enforcement solutions. LTI developed and introduced the first commercial
speed measurement laser into the market, while MPH Industries is one of the more
technologically advanced traffic radar companies in the country. Both companies
have played a major role in establishing initial judicial precedence for their
respective technologies.
Laser and radar measurement technology each have their place in the speed
enforcement market. When using radar an officer can measure a vehicle's speed
while in a moving vehicle. Laser speed measurements are taken from a stationary
position but offer pinpoint targeting and positive vehicle identification within
dense traffic. These additional product offerings will allow us to better
leverage our domestic traffic direct sales force.
Item 6. Exhibits and Reports on Form 8-K
b. Reports on Form 8-K
No reports on Form 8-K filed during period
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
Date: May 14, 2001 By /s/ Elizabeth Hearty
- ------------------ --------------------
Elizabeth Hearty
Corporate Secretary and Controller
Date: May 14, 2001 By /s/ Eric A Miller
- ------------------ --------------------
Eric A. Miller
President and Chief Executive Officer
14