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 June 30, 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 June 30, 2000, 5,019,551 shares of common stock of the Registrant were
outstanding.
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
June 30, September 30,
2000 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 1,475,966 $ 757,076
Investments 0 10,460
Trade accounts receivable, less allowance
for doubtful accounts of $111,314 and $250,000
at June 30, 2000 and September 30, 1999, respectively 2,370,578 2,826,460
Income Tax Refund Receivable 0 686,000
Royalties receivable 164,610 396,290
Inventories 3,082,769 2,847,735
Deferred income tax benefit 348,000 348,000
Prepaids and other current assets 39,125 133,354
Income tax prepayment 0 166,919
------------ ------------
Total Current Assets 7,481,048 8,172,294
------------ ------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,271,868 1,504,449
------------ ------------
LONG-TERM INVESTMENTS 705,842 689,801
------------ ------------
OTHER ASSETS 955,146 845,164
------------ ------------
TOTAL ASSETS $ 10,413,904 $ 11,211,708
============ ============
See accompanying notes to the consolidated financial statements
1
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, September 30,
2000 1999
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 484,423 $ 578,015
Accrued expenses 871,552 1,749,429
Current maturities of long-term debt 89,523 91,621
------------ ------------
Total Current Liabilities 1,445,498 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 1,486,838 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 (624,166) (868,648)
------------ ------------
Total Stockholders' Equity 8,927,066 8,678,243
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,413,904 $ 11,211,708
============ ============
See accompanying notes to the consolidated financial statements
2
LASER TECHNOLOGY, INC.
Consolidated Statements of Operations
For the Three and Nine Months Ended
June 30, 2000 and 1999
(Unaudited)
Nine Months Ended Three Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
NET SALES $ 9,327,656 $ 8,720,744 $ 3,686,079 $ 3,379,306
LESS COST OF GOODS SOLD 4,237,953 4,226,536 1,556,253 1,570,282
------------ ------------ ------------ ------------
Gross Margin 5,089,703 4,494,208 2,129,826 1,809,024
ROYALTY AND LICENSING INCOME 560,172 546,907 164,374 181,040
------------ ------------ ------------ ------------
TOTAL OPERATING INCOME 5,649,875 5,041,115 2,294,200 1,990,064
OPERATING EXPENSES 5,303,513 6,389,186 1,873,499 2,285,867
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 346,362 (1,348,071) 420,701 (295,803)
INTEREST INCOME (EXPENSE), NET 35,648 9,463 40,481 (5,178)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE TAXES ON INCOME 382,010 (1,338,608) 461,182 (300,981)
TAXES ON INCOME (BENEFIT) 137,528 (471,600) 166,026 (107,500)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 244,482 $ (867,008) $ 295,156 $ (193,481)
============ ============ ============ ============
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ 0.05 $ (0.17) $ 0.06 $ (0.04)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,019,551 4,994,551 5,019,551 4,994,551
============ ============ ============ ============
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ 0.04 $ (0.17) $ 0.05 $ (0.04)
============ ============ ============ ============
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 Nine Months Ended June 30, 2000
and June 30, 1999
(Unaudited)
June 30, June 30,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 244,482 $ (867,008)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 397,237 393,965
Loss on sale of property and equipment (3,174) 13,377
Amortization of deferred share award 4,341 -
Changes in operating assets and liabilities:
Accounts receivable 1,379,051 954,700
Inventories (235,034) 171,657
Other assets 261,148 (344,429)
Accounts payable and accrued expenses (964,630) (175,986)
------------ ------------
Net cash provided by (used in) operating activities 1,083,421 146,276
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments (26,501) 500,070
Proceeds from sale of property and equipment 29,877 32,000
Patent costs paid (127,332) (80,956)
Purchases of property and equipment (165,417) (474,565)
------------ ------------
Net cash provided by (used in) investing activities (289,373) (23,451)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt and capital leases (75,158) (58,484)
------------ ------------
Net cash provided by (used in) financing activities (75,158) (58,484)
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 718,890 64,341
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 757,076 988,586
------------ ------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,475,966 $ 1,052,927
============ ============
See accompanying notes to the consolidated financial statements
4
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
(Information for the three and nine months ended June 30, 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 three
and nine month periods ended June 30, 2000 and 1999, (b) the consolidated
financial position at June 30, 2000, and (c) the consolidated statements of cash
flows for the nine month period ended June 30, 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 June 30, 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:
Nine Months Ended Three Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ 244,482 $ (867,008) $ 295,156 $ (193,481)
Denominator
Weighted Average Shares 5,019,551 4,994,551 5,019,551 4,994,551
------------ ------------ ------------ ------------
Per Share Amounts
5
Nine Months Ended Three Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Basic Earnings (Loss) $ 0.05 $ (0.17) $ 0.06 $ (0.04)
============ ============ ============ ============
Diluted Earnings Per Common Share:
Numerator
Net Income (Loss) $ 244,482 $ (867,008) $ 295,156 $ (193,481)
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) $ 0.04 $ (0.17) $ 0.05 $ (0.04)
============ ============ ============ ============
c. Operating Segments
The Company's primary operating segments for the three and nine months
ended June 30, 2000 and 1999 were as follows:
Three Months Ended
June 30, 2000
-------------
Traffic Safety Survey/Mapping Other Royalties Total
-----------------------------------------------------------------------------
Net sales........................................... $ 2,406,223 $ 1,064,782 $ 215,074 $ 3,686,079
Cost of goods sold.................................. 1,027,127 451,313 77,813 1,556,253
Sales and marketing expenses........................ 561,160 340,075 19,699 920,934
Gross margin (after sales and marketing expenses)... 817,936 273,394 117,562 1,208,892
Royalty and licensing income........................ 164,374 164,374
Total other operating expenses...................... 952,565
Income (loss) from operations....................... 420,701
Interest income (expense), net...................... 40,481
Income (loss) before taxes on income................ 461,182
Taxes on income (benefit)........................... 166,026
Net income (loss)................................... $ 295,156
Three Months Ended
June 30, 1999
-------------
Traffic Safety Survey/Mapping Other Royalties Total
-----------------------------------------------------------------------------
.................................................
Net sales........................................... $ 2,290,547 $ 934,941 $ 153,818 $ 3,379,306
Cost of goods sold.................................. 1,055,290 470,442 44,550 1,570,282
Sales and marketing expenses........................ 457,932 369,631 24,866 852,429
Gross margin (after sales and marketing expenses).. 777,325 94,868 84,402 956,595
Royalty and licensing income........................ 181,040 181,040
Total other operating expenses...................... 1,433,438
Income (loss) from operations....................... (295,803)
Interest income, net................................ (5,178)
Income (loss) before taxes on income................ (300,981)
Taxes on income (benefit)........................... (107,500)
Net income.......................................... $ (193,481)
6
Nine Months Ended
June 30, 2000
-------------
Traffic Safety Survey/Mapping Other Royalties Total
-----------------------------------------------------------------------------
Net sales........................................... $ 6,199,897 $ 2,726,367 $ 401,392 $ 9,327,656
Cost of goods sold.................................. 2,839,428 1,271,386 127,139 4,237,953
Sales and marketing expenses........................ 1,581,381 871,131 36,671 2,489,183
Gross margin (after sales and marketing expenses)... 1,779,088 583,850 237,582 2,600,520
Royalty and licensing income........................ 560,172 560,172
Total other operating expenses...................... 2,814,330
Income (loss) from operations....................... 346,362
Interest income (expense), net...................... 35,648
Income (loss) before taxes on income................ 382,010
Taxes on income (benefit)........................... 137,528
Net income (loss)................................... $ 244,482
Nine Months Ended
June 30, 1999
-------------
Traffic Safety Survey/Mapping Other Royalties Total
-----------------------------------------------------------------------------
.................................................
Net sales........................................... $ 5,422,126 $ 2,961,391 $ 337,227 $ 8,720,744
Cost of goods sold.................................. 2,580,664 1,507,529 138,343 4,226,536
Sales and marketing expenses........................ 1,506,620 1,216,104 75,758 2,798,482
Gross margin (after sales and marketing expenses).. 1,334,842 237,758 123,126 1,695,726
Royalty and licensing income........................ 546,907 546,907
Total other operating expenses...................... 3,590,704
Income (loss) from operations....................... (1,348,071)
Interest income, net................................ 9,463
Income (loss) before taxes on income................ (1,338,608)
Taxes on income (benefit)........................... (471,600)
Net income.......................................... $ (867,008)
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 Nine Months Ended June 30, 2000 and
June 30, 1999
For the three and nine months ended June 30, 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.
Nine Months Ended Three Months Ended
June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
------ ------ ------ ------
Net sales 100 % 100 % 100 % 100 %
Cost of goods sold 45 48 42 46
------ ------ ------ ------
Gross profit 55 52 58 54
Royalty and licensing income 6 6 5 5
------ ------ ------ ------
Total operating income 61 58 63 59
Operating expenses 57 73 51 68
------ ------ ------ ------
Income from operations 4 (15) 12 (9)
Interest income, net 1 - 1 -
------ ------ ------ ------
Income before taxes on income 5 (15) 13 (9)
Tax (benefit) expense 2 (5) 5 (3)
------ ------ ------ ------
Net income 3 % (10)% 8 % (6)%
====== ====== ====== ======
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.
Nine Months Ended Three Month Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Traffic Safety Systems $ 6,199,897 $ 5,422,126 $ 2,406,223 $ 2,290,547
Percentage of revenues 67% 62% 65% 68%
Survey and Mapping Systems 2,726,367 2,961,391 1,064,782 934,941
Percentage of revenues 30% 34% 29% 28%
Other 401,392 337,227 215,074 153,818
Percentage of revenues 3% 4% 6% 4%
Total Revenues $ 9,327,656 $ 8,720,744 $ 3,686,079 $ 3,379,306
============ ============ ============ ============
8
Comparison of Three-Months Ended June 30, 2000 and the Three-Months Ended
June 30, 1999
Total sales for the third quarter ended June 30, 2000 ("2000") increased
9% to $3,686,079 from $3,379,306 realized in the third quarter ended June 30,
1999 ("1999"). A 5% increase in Traffic Safety sales to $2,406,223 from
$2,290,547 resulted from growing acceptance of the Company's second generation
UltraLyte laser speed gun. Additionally the Company realized a 14% increase in
sales of the it's Survey and Mapping equipment, which totaled $1,064,782 in 2000
as compared to $934,941 realized in 1999 which reflected a growing contribution
from the recently reorganized sales force. International sales comprised 42% of
net sales for the third quarter 2000 compared to 31% of net sales for the
quarter ended June 30, 1999 primarily due to a large shipment of camera systems
to the Far East. The third quarter of 2000 ended with a Back Log of orders
totaling $849,786.
Gross Margins widened to 58% of sales in the third quarter versus 54% of
sales in 1999 because of a more profitable product mix, due to greater sales of
newer, higher margin products such as the UltraLyte series, and increased
productivity due to higher production throughput coupled with reduced
manufacturing staff and lower specific materials cost.
Royalty and licensing income from the Company's licensees was $164,374,
in the third quarter of 2000 compared to $181,040 in 1999, representing a 10%
decrease. Management believes that royalty income related to the licensing
agreements will continue to beneficially impact the Company's operating results.
Total operating expenses decreased approximately 18% to $ 1,873,499 for
the 2000 third quarter from $2,285,867 for the comparable 1999 period,
representing a reduction in management and staff, lower legal expenses and the
absence of severance costs. The third quarter of 2000 ended with an operating
profit of $420,701 as compared to an operating loss of $295,803 in 1999. Net
income after interest and taxes was $295,156, up from a net loss of $193,481 a
year ago, or a net income of 0.06 per basic share compared to a net loss of
(0.04) per basic share the prior year.
Comparison of Nine Months Ended June 30, 2000 and the Nine Months Ended
June 30, 1999
Net sales for the first nine months of 2000 were $9,327,656 up 7% from
$8,720,744 during the first nine months of 1999. Traffic Safety sales increased
14% during the first nine months of 2000 to $ 6,199,897 compared to $5,422,126 a
year earlier. The Company believes the increase reflects a growing acceptance of
the new product mix 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 8% to $ 2,726,367 for the nine months of 2000
compared to $2,961,391 realized in the comparable 1999 period. This decrease
reflects a lag in sales caused by the rebuilding of the Company's outside sales
force. International sales comprised 43% of net sales during the first nine
months of 2000 as compared to 39% 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 55% for the first nine
months of 2000 compared to 52% for the first nine 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 3% to $ 560,172 for the
first nine months of 2000 from $546,907 realized in 1999. Royalty income should
continue to improve the Companies operating results with new technology
improving the products.
Total operating expenses decreased approximately 17% to $ 5,303,513 for
the first nine months of 2000 from $6,389,186 for the first nine months of 1999.
As a percentage of net sales, total operating expenses decreased to 57% for the
first nine months of 2000 from 73% for the first nine months of 1999. Lower
executive, administrative and legal expenses associated with the absence of
litigation, and other cost saving measures initiated by the Company have
contributed to the reduction in operating expenses. Net income after interest
and taxes for the first nine months was $244,482, from a net loss of $867,008 a
year ago, or a net profit of 0.05 a basic share compared to a net loss of (0.17)
a basic share the prior year.
9
Liquidity and Capital Resources
At June 30, 2000, the Company had working capital of $6,035,550 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 nine month period ended June 30, 2000, cash provided by
operating activities was $1,083,421. Cash was increased by net income of
$244,482, by depreciation expense of $397,237, by accounts receivable of
$1,379,051, and other assets by $261,148, offset by an increase in inventory of
$235,034, loss on sale of property of $3,174 and reductions of accounts payable
and accrued expenses of $964,630. Cash used in investing activities totaled
$289,373. Cash used in financing activities of $75,158 reduced long-term debt.
For the nine month period ended June 30, 2000, cash and cash equivalents
increased by $718,890.
For the nine months ended June 30, 1999, cash provide by operating
activities was $146,276. A net loss of $867,008 was financed by a decrease in
accounts receivable of $954,700 related to increased collection efforts. Cash
used in investing activities of $23,451 related to investment maturities of
$500,070 of which $474,565 was used for the purchase of property and equipment.
Cash used in financing activities of $58,484 was used to reduce long-term debt.
For the nine month period ended June 30, 1999, cash and cash equivalents
increased by $64,341.
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 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 is scheduled for October 13, 2000.
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
fourth quarter of fiscal 2000 or the first quarter of 2001.
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
11
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 Order to not cause
any violations of Section 13(a) of the Securities Exchange Act.
12
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
On April 20, 2000, 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
------- --- --------
Jeremy G. Dunne 2,452,430 51,625
H. DeWorth Williams 2,450,930 53,125
Walter R. Keay 2,462,330 41,725
Edward F. Cowle 2,462,430 41,625
William P. Behrens 2,462,330 41,725
Nicholas J. Cooney 2,462,330 41,725
The stockholders also approved the adoption of an amendment to the Laser
Technology, Inc. Non-Employee Director Option Plan to increase the number of
shares available under the plan by 120,000 by a vote of 2,388,276 for, 111,145
against, and 4,634 abstaining.
The stockholders also approved reimbursement to certain shareholders for legal
fees and other expenses associated with the Proxy Statement filed by the
Independent Shareholders Committee by a vote of 2,070,783 for, 118,659 against,
and 6,019 abstaining.
In addition the stockholders also ratified the appointment of Jones, Jensen &
Company as independent auditors for the Company's fiscal year ending September
30, 2000 by a vote of 2,464,327 for, 37,439 against, and 2,289 abstaining.
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
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
----------------------
7070 South Tucson Way
Englewood, Colorado 80112
Date: August 9, 2000 By /s/ Roosevelt Rogers
-------------- -------------------------------------
Roosevelt Rogers
Vice President
Date: August 9, 2000 By /s/ Eric A Miller
-------------- ------------------------------------
Eric A. Miller
President and Chief Executive Officer
14