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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, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ______________
Commission File No. 1-11642
LASER TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0970494
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
-------------------------------------------------
(Address of principal executive offices)
(303) 649-1000
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
At May 1, 2000, 5,019,551 shares of common stock of the Registrant were
outstanding.
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INDEX
PART I: FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements.............................................. 1
Consolidated Balance Sheets................................... 1
Consolidated Statements of Operations......................... 3
Consolidated Statements of Cash Flows......................... 4
Notes to Consolidated Financial Statements.................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 8
Results of Operations......................................... 8
Liquidity and Capital Resources............................... 10
Risk Factors and Cautionary Statements........................ 10
PART II: OTHER INFORMATION
Item 1. Legal Proceedings................................................. 11
Item 2. Changes in Securities............................................. 13
Item 3. Defaults upon Senior Securities................................... 13
Item 4. Submission of Matters to a Vote of Security Holders............... 13
Item 5. Other Information................................................. 13
Item 6. Exhibits and Reports on Form 8-K.................................. 13
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
ASSETS
March 31, September 30,
2000 1999
------------ -----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 951,488 $ 757,076
Investments 10,460 10,460
Trade accounts receivable, less allowance
for doubtful accounts of $252,304 and $250,000
at March 31, 2000 and September 30, 1999, respectively 1,962,335 2,826,460
Income Tax Refund Receivable 714,498 686,000
Royalties receivable 130,526 396,290
Inventories 2,937,504 2,847,735
Deferred income tax benefit 348,000 348,000
Prepaids and other current assets 151,688 133,354
Income tax prepayment 166,919 166,919
------------ -----------
Total Current Assets 7,373,418 8,172,294
------------ -----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,312,764 1,504,449
------------ -----------
LONG-TERM INVESTMENTS 679,503 689,801
------------ -----------
OTHER ASSETS 924,047 845,164
------------ -----------
TOTAL ASSETS $ 10,289,732 $11,211,708
------------ -----------
See accompanying notes to the consolidated financial statements
1
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, September 30,
2000 1999
--------------- -------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 497,980 $ 578,015
Accrued expenses 1,009,295 1,749,429
Current maturities of long-term debt 109,213 91,621
--------------- -------------
Total Current Liabilities 1,616,488 2,419,065
--------------- -------------
LONG-TERM DEBT
Long-term debt, less current maturities 41,340 114,400
--------------- -------------
Total Long Term Liabilities 41,340 114,400
--------------- -------------
Total Liabilities 1,657,828 2,533,465
--------------- -------------
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 5,244,201 52,442 52,442
Additional paid-in capital 9,708,245 9,708,245
Stock Subscription Receivable (15,196) (19,537)
Treasury stock at cost, 224,650 shares (194,259) (194,259)
Retained earnings (919,328) (868,648)
--------------- -------------
Total Stockholders' Equity 8,631,904 8,678,243
--------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,289,732 $ 11,211,708
=============== =============
See accompanying notes to the consolidated financial statements
2
LASER TECHNOLOGY, INC.
Consolidated Statements of Operations
For the Three and Six Months Ended
March 31, 2000 and 1999
(Unaudited)
Six Months Ended Three Months Ended
March 31, March 31,
----------------------------- --------------------------
2000 1999 2000 1999
------------ ------------ ----------- ------------
NET SALES $ 5,641,577 $ 5,341,438 $ 2,553,090 $ 2,684,738
LESS COST OF GOODS SOLD 2,681,700 2,656,254 1,126,437 1,430,318
------------ ------------ ----------- ------------
Gross Margin 2,959,877 2,685,184 1,426,653 1,254,420
ROYALTY AND LICENSING INCOME 395,797 365,867 130,290 122,928
------------ ------------ ----------- ------------
TOTAL OPERATING INCOME 3,355,674 3,051,051 1,556,943 1,377,348
LEGAL & SEVERANCE COSTS ASSOCIATED
WITH RESTRUCTURING OF MANAGEMENT AND EMPLOYEES 176,955 - 176,955
OPERATING EXPENSES 3,253,058 4,103,319 1,544,126 2,307,579
------------ ------------ ----------- ------------
TOTAL OPERATING EXPENSES 3,430,013 4,103,319 1,721,081 2,307,579
INCOME (LOSS) FROM OPERATIONS (74,339) (1,052,268) (164,138) (930,231)
INTEREST INCOME (EXPENSE), NET (4,833) 14,641 (6,736) 5,941
------------ ------------ ----------- ------------
INCOME (LOSS) BEFORE TAXES ON INCOME (79,172) (1,037,627) (170,874) (924,290)
TAXES ON INCOME (BENEFIT) (28,498) (364,100) (28,498) (323,300)
------------ ------------ ----------- ------------
NET INCOME (LOSS) $ (50,674) $ (673,527) $ (142,376) $ (600,990)
============ ============ =========== ============
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ (0.01) $ (0.13) $ (0.03) $ (0.12)
============ ============ =========== ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,019,551 4,994,551 5,019,551 4,994,551
============ ============ =========== ============
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ (0.01) $ (0.13) $ (0.03) $ (0.12)
============ ============ =========== ============
DILUTED AVERAGE SHARES
OUTSTANDING 5,586,883 4,994,551 5,586,883 4,994,551
============ ============ =========== ============
See accompanying notes to the consolidated financial statements
3
LASER TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
For the Six Months Ended March 31, 2000
and March 31, 1999
(Unaudited)
March 31, March 31,
2000 1999
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (50,674) $ (673,527)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 283,973 258,525
Loss on sale of property and equipment (4,914) -
Amortization of deferred share award 4,341 -
Changes in operating assets and liabilities:
Trade accounts receivable 1,101,391 1,235,613
Inventories (89,769) (402,879)
Other assets (18,334) (288,380)
Accounts payable and accrued expenses (820,169) (157,190)
-------------------- --------------------
Net cash provided by (used in) operating activities 405,839 (27,838)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments 10,298 502,743
Proceeds from sale of property and equipment (6,610) -
Patent costs paid (86,215) (56,331)
Purchases of property and equipment (73,439) (158,762)
-------------------- --------------------
Net cash provided by (used in) investing activities (155,959) 287,650
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt and capital leases (55,468) (37,479)
-------------------- --------------------
Net cash used in financing activities (55,468) (37,479)
-------------------- --------------------
INCREASE IN CASH AND CASH EQUIVALENTS 194,412 222,333
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 757,076 988,586
-------------------- --------------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 951,488 $ 1,210,919
==================== ====================
See accompanying notes to the consolidated financial statements
4
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
(Information for the three and six months ended March 31, 2000 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
and three month periods ended March 31, 2000 and 1999, (b) the consolidated
financial position at March 31, 2000, and (c) the consolidated statements of
cash flows for the six and three month periods ended March 31, 2000 and 1999.
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, 1999. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q. Accordingly, they do not include all of the
footnotes required to be presented for complete financial statements. The
accompanying financial statements include all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair presentation of the results for the interim periods presented.
The financial statements and related disclosures have been prepared with the
presumption that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the
Company's 1999 Annual Report on Form 10-K as filed with the Securities and
Exchange Commission on December 29, 1999.
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. Fully diluted
income per share for March 31, 2000 is not materially different from basic
income per share because the diluted shares would be antidilutive.
The following is provided to reconcile the earnings per share calculation:
Six Months Ended Three Months Ended
March 31, March 31,
----------------------------------- ---------------------------------
2000 1999 2000 1999
---- ---- ---- ----
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ (50,674) $ (673,527) $ (142,376) $ (600,990)
Denominator
Weighted Average Shares 5,019,551 4,994,551 5,019,551 4,994,551
---------------- ---------------- ---------------- ---------------
5
Per Share Amounts
Basic Earnings (Loss) $ (0.01) $ (0.13) $ (0.03) $ (0.12)
================ ================ ================ ===============
Diluted Earnings Per Common Share:
Numerator
Net Income (Loss) $ (50,674) $ (673,527) $ (142,376) $ (600,990)
Denominator
Weighted Average Shares 5,019,551 4,994,551 5,019,551 4,994,551
Employee Stock Options 567,332 369,583 567,332 369,583
---------------- ---------------- ---------------- ---------------
5,586,883 5,364,134 5,586,883 5,364,134
Per Share Amounts
Basic Earnings (Loss) $ (0.01) $ (0.13) $ (0.03) $ (0.12)
================ ================ ================ ===============
c. Operating Segments
The Company's primary operating segments for the three and six months ended
March 31, 2000 and 1999 were as follows:
Three Months Ended
March 31, 2000
---------------
Traffic Safety Survey/Mapping Other Royalties Total
---------------------------------------------------------------------------
Net sales...................................... $1,742,192 $ 723,269 $ 87,629 $ 2,553,090
Cost of goods sold............................. 766,073 320,457 39,907 1,126,437
Sales and marketing expenses................... 578,888 218,526 27,213 824,627
Gross margin (after sales and
marketing expenses).......................... 397,231 184,286 20,509 602,026
Royalty and licensing income................... 130,290 130,290
Total other operating expenses................. 896,454
Income (loss) from operations.................. (164,138)
Interest income (expense), net................. (6,736)
Income (loss) before taxes on income........... (170,874)
Taxes on income (benefit)...................... (28,498)
Net income (loss).............................. $ (142,376)
Three Months Ended
March 31, 2000
---------------
Traffic Safety Survey/Mapping Other Royalties Total
---------------------------------------------------------------------------
Net sales...................................... $ 1,516,829 $ 1,080,491 $ 87,418 $ 2,684,738
Cost of goods sold............................. 792,271 603,263 34,784 1,430,318
Sales and marketing expenses................... 582,928 483,027 21,698 1,087,653
Gross margin (after sales and
marketing expenses).......................... 141,630 (5,794) 30,936 166,767
Royalty and licensing income................... 122,928 122,928
Total other operating expenses................. 1,219,926
Income (loss) from operations.................. (930,231)
Interest income, net........................... 5,941
Income (loss) before taxes on income........... (924,290)
Taxes on income................................ (323,300)
Net income..................................... $ (600,990)
6
Three Months Ended
March 31, 2000
---------------
Traffic Safety Survey/Mapping Other Royalties Total
---------------------------------------------------------------------------
Net sales...................................... $ 3,978,581 $ 1,476,679 $ 186,318 $ 5,641,577
Cost of goods sold............................. 1,891,043 699,427 91,230 2,681,700
Sales and marketing expenses................... 1,119,729 396,766 51,753 1,568,248
Gross margin (after sales and
marketing expenses).......................... 967,809 380,486 43,335 1,391,629
Royalty and licensing income................... 395,797 395,797
Total other operating expenses................. 1,861,765
Income (loss) from operations.................. (74,339)
Interest income (expense), net................. (4,833)
Income (loss) before taxes on income........... (79,172)
Taxes on income (benefit)...................... (28,498)
Net income (loss).............................. $ (50,674)
Three Months Ended
March 31, 2000
---------------
Traffic Safety Survey/Mapping Other Royalties Total
---------------------------------------------------------------------------
Net sales...................................... $ 3,131,580 $ 2,026,450 $ 183,408 $ 5,341,438
Cost of goods sold............................. 1,525,374 1,037,087 93,793 2,656,254
Sales and marketing expenses................... 1,048,688 846,473 50,892 1,946,053
Gross margin (after sales and
marketing expenses).......................... 557,518 142,890 38,723 739,131
Royalty and licensing income................... 365,867 365,867
Total other operating expenses................. 2,157,266
Income (loss) from operations.................. (1,052,268)
Interest income, net........................... 14,641
Income (loss) before taxes on income........... (1,037,627)
Taxes on income................................ (364,100)
Net income..................................... $ (673,527)
d. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 137 amended the effective date of SFAS No. 133 for
all fiscal quarters of fiscal years beginning after June 15, 2000. Management
believes the adoption of this statement will have no material impact on the
Company's financial statements
7
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, 2000 and
March 31, 1999
For the three and six months ended March 31, 2000 and 1999, the following
table provides the percentage relationship to net sales of principal items in
the Company's Consolidated Statements of Operations. It should be noted that
percentages discussed throughout this analysis are stated on an approximate
basis.
Six Months Ended Three Months Ended
March 31, March 31,
------------------------ ------------------------
2000 1999 2000 1999
------ ------ ------- ------
Net sales 100% 100% 100% 100%
Cost of goods sold 48 50 44 53
------ ------ ------- ------
Gross profit 52 50 56 47
Royalty and licensing income 7 7 5 4
------ ------ ------- ------
Total operating income 59 57 61 51
Operating expenses 61 77 67 85
------ ------ ------- ------
Income from operations (1) (20) (6) (34)
Interest income, net - 1 - -
------ ------ ------- ------
Income before taxes on income (1) (19) (7) (34)
Tax (benefit) expense - 7 (2) 12
------ ------ ------- ------
Net income (1)% (12)% (6)% (22)%
====== ====== ======= ======
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.
Six Months Ended Three Month Ended
March 31, March 31,
---------------------------- -------------------------------
2000 1999 2000 1999
----------- ----------- -------------- ----------
Traffic Safety Systems $ 3,978,581 $ 3,131,580 $ 1,742,192 $1,516,829
Percentage of revenues 71% 59% 68% 57%
Survey and Mapping Systems 1,476,679 2,026,450 723,269 1,080,491
Percentage of revenues 25% 38% 27% 40%
Other 186,318 183,408 87,629 87,418
Percentage of revenues 3% 3% 3% 3%
Total Revenues $ 5,641,577 $ 5,341,438 $ 2,553,090 $2,684,738
=========== =========== ============== ==========
8
Comparison of Three-Months Ended March 31, 2000 and the Three-Months
Ended March 31, 1999
Total sales for the second quarter ended March 31, 2000 ("2000") decreased
5% to $2,553,090 from $2,684,738 realized in the second quarter ended March 31,
1999 ("1999"). A 15% increase in Traffic Safety sales to $1,742,192 from
$1,516,829 resulted from growing acceptance of the Company's second generation
UltraLyte laser speed gun. This increase was offset by a 33.1% decline in sales
of the company's Survey and Mapping equipment, which totaled $723,269 in 2000 as
compared to $1,080,491 realized in 1999. A substantial portion of the decrease
was caused by a held shipment of $300,184 which is expected to ship in the
fiscal third quarter of 2000. International sales declined 10% from the prior
year primarily due to a large final shipment of Criterion surveying lasers in
1999. The first quarter of 2000 ended with a Back Log of orders totaling
$1,705,522.
Gross Margins widened to 56% of sales in the first quarter versus 47% of
sales in 1999 because of a more profitable product mix. Higher profitability was
due to greater sales of second generation products such as the UltraLyte series,
increased output on the production line, reduction in specific materials cost,
and reduced manufacturing overhead staff.
Royalty and licensing income from the Company's licensees was $130,290, in
the second quarter of 2000 compared to $122,928 in 1999, representing a 6%
increase. This increase reflects the growing popularity of consumer laser range
finders.
Total operating expenses decreased approximately 26% to $ 1,721,081 for the
2000 second quarter from $2,307,579 for the comparable 1999 period, representing
a reduction in management and staff. Operating profit before legal and severance
costs associated with restructuring of management and employees were equal to
$12,817. Including all operating expenses, the net operating loss was reduced
sharply to $164,138 as against $930,231 in 1999. Net loss after interest
expenses and tax benefit declined 76% to $142,376, from $600,990 a year ago, or
a net loss of (0.03) per basic share compared to a net loss of (0.12) per basic
share the prior year.
Comparison of Six-Months Ended March 31, 2000 and the Six-Months
Ended March 31, 1999
Net sales for the first six months of 2000 were $5,641,577 compared to
$5,341,438 during the first six months of 1999 representing a 6% increase in
sales from the previous year. Traffic Safety sales increased 27% during the
first six months of 2000 to $ 3,978,581 compared to $3,131,580 a year earlier.
The Company believes the increase reflects a growing acceptance of the UltraLyte
speed gun and greater revenue per salesperson as the force gains experience in
the field. On a year to year basis, the Company's Survey and Mapping sales have
decreased 27.2% to $ 1,476,679 for the first six months of 2000 compared to
$2,026,450 realized in the comparable 1999 period. This decrease reflects a lag
in sales caused by a complete turnover in the Company's outside sales force,
which is currently being reestablished. International sales comprised 44% of net
sales during the first six months of 2000 as compared to 45% for the
corresponding 1999 period. Foreign sales of the Company's products are expected
to continue to comprise a significant portion of the Company's revenues.
Gross profit as a percentage of net sales was 52% for the first six months
of 2000 compared to 50% for the first six months of 1999. The change in the
Company's gross margin can be attributed primarily to improved efficiencies in
manufacturing, reductions in overhead, decreases in material costs and increased
sales of higher margin second generation products.
On a year to year basis, royalties increased 8.2% to $ 395,797 for the first
six months of 2000 from $365,867 realized in 1999, primarily as a result of
greater royalty income related to the Company's licensing agreement with
Bushnell.
Total operating expenses decreased approximately 16.4% to $ 3,430,013 for
the first six months of 2000 from $4,103,319 for the first six months of 1999.
As a percentage of net sales, total operating expenses decreased to 61% for the
first six months of 2000 from 77% for the first six months of 1999. Lower
executive, administrative and legal expenses associated with the absence of
litigation, and other cost saving measures have contributed to the reduction in
operating expenses. Operating profit before legal and severance costs associated
with restructuring of management and employees were equal to $102,616. Including
all operating expenses net loss after interest expenses and tax benefit declined
93% to $50,674, from $673,527 a year ago, or a net loss of (0.01) a basic are
compared to a net loss of (0.13) a basic share the prior year.
9
Liquidity and Capital Resources
At March 31, 2000, the Company had working capital of $ 5,756,930 compared
to $5,753,229 at September 30, 1999. The Company's present working capital is
expected to adequately meet the Company's needs for at least the next twelve
months.
For the six month period ended March 31, 2000, cash provided by operating
activities was $405,839. A net loss of $50,680 was financed by depreciation
expense of $283,973, and by accounts receivable of $1,101,391 offset by an
increase in inventory of $89,769, loss on sale of property of $4,914, increase
in other assets of $18,334 and reductions of accounts payable and accrued
expenses of $820,169. Cash used in investing activities, primarily for patent
related investments, totaled $155,959. Cash used in financing activities of
$55,468 reduced long-term debt. For the six month period ended March 31, 2000,
cash and cash equivalents increased by $194,412.
For the six months ended March 31, 1999, cash used in operating activities
was $27,838. A net loss of $673,527 was financed by a decrease in accounts
receivable of $1,235,613 related to increased collection efforts. Cash provided
by investing activities of $287,650 related to investment maturities of $502,743
of which $215,093 was used for the purchase of property and equipment and patent
related costs. Cash used in financing activities of $37,479 was used to reduce
long-term debt. For the six month period ended March 31, 1999, cash and cash
equivalents increased by $222,333.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995. The
Company wishes to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve risks
and uncertainties including but not limited to, continued acceptance of the
Company's products in the marketplace, competitive factors, potential changes in
the budgets of federal and state agencies, compliance with current and possible
future FDA or environmental regulations, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange Commission.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On February 10, 1999 a securities class action complaint entitled Moshe
Rosenfeld, On Behalf of Himself and All Others Similarly Situated, vs. Laser
Technology, Inc., David Williams, Pamela Sevy, Dan H. Grothe, Jeremy Dunne and
H. DeWorth Williams, was filed in the United States District Court, District of
Colorado (Case no. 99-Z-266). The Complaint alleges that the Company and certain
of its officers and directors violated federal securities laws, particularly
Sections10(b) and 20 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Specifically, the complaint alleges that the Company's financial
statements were false and misleading during the "class period" (February 12,
1996 to December 23, 1998) and that the Company made certain false or misleading
statements regarding the Company's financial statements during this period.
The Company believes the action is premised in part on the resignation of
the Company's independent accountant, BDO Seidman, LLP ("BDO"), on December 21,
1998, and the resignation of the members of the Audit Committee of the Board of
Directors on January 7, 1999. The resigning members of the Audit Committee
comprised the Special Audit Committee (the "Special Committee"). They resigned
from the Board of Directors as a result of disagreements between management and
the Special Committee. BDO also withdrew its opinions on the previously issued
certified financial statements for the fiscal years 1993, 1994, 1995, 1996 and
1997. At the time of BDO's resignation, the Special Committee was conducting an
independent investigation into the Company's accounting records and alleged
irregularities relating to the Company's accounting records. Following the
announcement of the resignation of BDO and withdrawal of five years of audited
financial statements, the American Stock Exchange suspended trading in the
Company's shares on December 23, 1998. Trading was resumed on March 22, 1999.
In its complaint, the plaintiff contends that the resignation of BDO and the
three directors is due to the Company's alleged unreliable and misleading
financial statements. Plaintiff's complaint further alleges violations of
Section 10(b) of the 1934 Act and Rule 10b-5 promulgated thereunder.
Five additional securities class actions and one stockholder's derivative
suit have been filed against the Company and certain of its former and present
officers and directors. All cases were filed in the United States District Court
for the District of Colorado and have been consolidated for pre-trial purposes.
The Company believes that the additional actions parallel the one described
above.
On October 6, 1999, the Company announced that it had entered into an
"agreement in principle" for the settlement of all the aforementioned actions.
On December 10, 1999, a Stipulation of Settlement was executed by the parties
and filed with the Court. Although the parties have agreed to a settlement, the
Stipulation of Settlement is subject to Court approval. A preliminary fairness
hearing before the Court will be requested.
Pursuant to the terms of the proposed settlement, the plaintiffs and their
attorneys will receive $850,000 in cash and 475,000 shares of the Company's
common stock. The Company has also reached an agreement with its insurance
carrier whereby $740,000 of the cash portion of the settlement will be paid by
the carrier. The remaining $110,000 in cash will be paid by the Company and
certain individuals involved in the settlement. It is proposed that the shares
to be issued in the settlement will become free from restriction and tradable at
various times following final approval by the Court. Accordingly, one-third of
the shares will be tradable at the time of the final judgment and distribution,
one-third will be tradable sixty days thereafter, and the final one-third will
be tradable 120 days after distribution. The 475,000 shares to be distributed
are equal to approximately 9.5% of the total shares presently outstanding.
As a condition of the settlement, the Company will be released from all
future claims and actions by the plaintiffs and class members related to the
pending actions. The costs of the settlement together with projected legal
expenses involved in completing the settlement have been accrued in the
Company's 1999 financial statements. Management believes that the terms of the
settlement as proposed will not have a material adverse effect on the Company.
Management estimates that if the proposed settlement is approved by the Court
and all the parties, the final resolution will most likely occur during the
third or fourth quarter of fiscal 2000.
An order directing private investigation was issued by the Securities and
Exchange Commission (the "Commission") on January 21, 1999 ("In the Matter of
Laser Technology, Inc. / NY-D-2129). In response to the order, certain
individuals
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gave depositions in the matter and the Company delivered to the Commission
certain requested documents pursuant to a subpoena duces tecum. The Company
believes that the investigation concerns matters related to the events which led
to the resignation of the Special Committee and the Company's independent
accountant.
On September 14, 1999, the Commission notified the Company of its intent to
recommend the filing of a civil injunctive case against the Company. The
Commission stated that its proposed complaint would allege violations by the
Company of certain provisions of the Securities Exchange Act of 1934. The
Commission further alleged that the Company filed false financial statements and
that certain officers falsified accounting records pertaining to the return and
resale of certain units previously sold to LTI Australia. The Commission also
filed cases against Jeremy Dunne and H. DeWorth Williams, both directors of the
Company.
On March 20, 2000 the Company agreed to a Securities and Exchange Commission
order to not cause any violations of Sections 10(b), 13(a), 13(b) (2) (A), and
13(b) (5) of the Exchange Act, Rules 10b-5, 13a-1, 13a-13, and 13b2-1
thereunder, and Exchange Act Rule 12b-20. Also on March 20, 2000 Messrs. Dunne
and Williams agreed to a Securities and Exchange Commission Oder to not cause
any violations of Section 13(a) of the Securities Exchange Act.
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Item 2. Changes in Securities
This Item is not applicable to the Company.
Item 3. Defaults upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the first quarter ended March 31,
1999.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27 - Financial Data Schedule
b. Reports on Form 8-K
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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.
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7070 South Tucson Way
Englewood, Colorado 80112
Date: May 5, 2000 By /s/ Roosevelt Rogers
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Roosevelt Rogers
Vice President
Date: May 5, 2000 By /s/ Eric A Miller
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Eric A. Miller
President and Chief Executive Officer
14