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, 2001
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, 2001, 5,486,220 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................................... 12
Item 3. Defaults upon Senior Securities......................... 12
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
PART I. FINANCIAL INFORMATION
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
ASSETS
March 31, September 30,
2001 2000
----------- -----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 1,825,654 $ 585,882
Investments 0 2,159,936
Trade accounts receivable, less allowance
for doubtful accounts of $98,690 and $112,670
at March 31, 2001 and September 30, 2000, respectively 2,490,294 2,724,344
Income Tax Refund Receivable 0 0
Royalties receivable 131,929 1,697
Inventories 4,014,924 3,096,862
Deferred income tax benefit 60,000 60,000
Prepaids and other current assets 208,671 83,254
Income tax prepayment 28,927 28,927
----------- -----------
Total Current Assets 8,760,399 8,740,902
----------- -----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 949,386 1,155,165
----------- -----------
LONG-TERM INVESTMENTS 288 0
----------- -----------
OTHER ASSETS 1,030,788 967,146
----------- -----------
TOTAL ASSETS $10,740,861 $10,863,213
----------- -----------
See accompanying notes to the consolidated financial statements
1
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, September 30,
2001 2000
----------- -----------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 913,957 $ 790,260
Accrued expenses 178,194 948,696
Current maturities of long-term debt 27,676 83,727
----------- -----------
Total Current Liabilities 1,119,827 1,822,683
----------- -----------
LONG-TERM DEBT
Long-term debt, less current maturities 14,364 14,364
----------- -----------
Total Long Term Liabilities 14,364 14,364
----------- -----------
Total Liabilities 1,134,191 1,837,047
----------- -----------
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 5,710,870 at March 31, 2001 57,109 52,359
and 5,235,870 at September 30, 2000
Additional paid-in capital 10,314,226 9,695,302
Stock Subscription Receivable 0 0
Treasury stock at cost, 224,650 shares (194,259) (194,259)
Retained earnings (570,406) (527,236)
----------- -----------
Total Stockholders' Equity 9,606,670 9,026,166
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $10,740,861 $10,863,213
=========== ===========
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, 2001 and 2000
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
---------- ----------
2001 2000 2001 2000
---------- ---------- ---------- ----------
NET SALES $3,060,393 $2,553,090 $5,470,035 $5,641,577
LESS COST OF GOODS SOLD 1,488,591 1,126,437 2,609,022 2,681,700
---------- ---------- ---------- ----------
Gross Margin 1,571,802 1,426,653 2,861,013 2,959,877
ROYALTY AND LICENSING INCOME 137,144 130,290 389,876 395,797
---------- ---------- ---------- ----------
TOTAL OPERATING INCOME 1,708,946 1,556,943 3,250,889 3,355,674
LEGAL & SEVERANCE COSTS ASSOCIATED
WITH RESTRUCTURING OF MANAGEMENT AND EMPLOYEES 176,955 176,955
OPERATING EXPENSES 1,677,199 1,544,126 3,401,845 3,253,058
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 1,677,199 1,721,081 3,401,845 3,430,013
INCOME (LOSS) FROM OPERATIONS 31,747 (164,138) (150,956) (74,339)
INTEREST INCOME (EXPENSE), NET 21,749 (6,736) 66,483 (4,833)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE TAXES ON INCOME 53,496 (170,874) (84,473) (79,172)
TAXES ON INCOME (BENEFIT) 8,289 (28,498) (41,380) (28,498)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 45,207 $ (142,376) $ (43,093) $ (50,674)
========== ========== ========== ==========
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ 0.01 $ (0.03) $ (0.01) $ (0.01)
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,486,220 5,019,551 5,486,220 5,019,551
========== ========== ========== ==========
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ 0.01 $ (0.03) $ (0.01) $ (0.01)
========== ========== ========== ==========
DILUTED AVERAGE SHARES
OUTSTANDING 6,291,220 5,586,883 6,291,220 5,586,883
========== ========== ========== ==========
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, 2001
and March 31, 2000
(Unaudited)
March 31, March 31,
2001 2000
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (43,093) $ (50,674)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 298,155 283,973
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 103,818 1,101,391
Inventories (918,062) (89,769)
Other assets (125,417) (18,334)
Accounts payable and accrued expenses (23,207) (820,169)
---------- ----------
Net cash provided by (used in) operating activities (707,806) 405,839
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments 2,159,648 10,298
Proceeds from sale of property and equipment 0 (6,610)
Patent costs paid (82,246) (86,215)
Purchases of property and equipment (73,772) (73,439)
---------- ----------
Net cash provided by (used in) investing activities 2,003,630 (155,959)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt and capital leases (56,051) (55,468)
---------- ----------
Net cash used in financing activities (56,051) (55,468)
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS 1,239,773 194,412
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 585,882 757,076
---------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 1,825,654 $ 951,488
========== ==========
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, 2001 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, 2001 and 2000, (b) the consolidated
financial position at March 31, 2001, and (c) the consolidated statements of
cash flows for the six and three month periods ended March 31, 2001 and 2000.
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, 2000. 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 2000 Annual Report on Form 10-K as filed with the Securities and
Exchange Commission on January 3, 2001.
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, 2001 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:
Three Months Ended Six Months Ended
March 31, March 31,
------------- -------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ 45,207 $ (142,376) $ (43,093) $ (50,674)
Denominator
Weighted Average Shares 5,486,220 5,019,551 5,486,220 5,019,551
---------- ---------- ---------- ----------
5
Per Share Amounts
Basic Earnings (Loss) $ 0.01 $ (0.03) $ (0.01) $ (0.01)
========== ========== ========== ==========
Diluted Earnings Per Common Share:
Numerator
Net Income (Loss) $ 45,207 $ (142,376) $ ( 43,093) $ ( 50,674)
Denominator
Weighted Average Shares 5,486,220 5,019,551 5,486,220 5,019,551
Employee & Director Stock Options 805,000 567,332 805,000 567,332
---------- ---------- ---------- ----------
6,291,220 5,586,883 6,291,220 5,586,883
Per Share Amounts
Basic Earnings (Loss) $ 0.01 $ (0.03) $ ( 0.01) $ (0.01)
========== ========== ========== ==========
c. Operating Segments
The Company's primary operating segments for the three and six months ended
March 31, 2001 and 2000 were as follows:
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
Interest income (expense), net........... 21,749
Income (loss) before taxes on income..... 53,496
Taxes on income (benefit)................ 8,289
Net income (loss)........................ $ 45,207
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)
6
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)
Interest income (expense), net......... 66,483
Income (loss) before taxes on income... (84,473)
Taxes on income (benefit).............. (41,380)
Net income (loss)...................... $ (43,093)
Six 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)
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, 2001 and
March 31, 2000
The following table provides the percentage relationship to net sales of
principal items in the Company's Consolidated Statements of Operations for the
three and six months ended March 31, 2001 and 2000. 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,
--------- ---------
2001 2000 2001 2000
---- ---- ---- ----
Net sales 100% 100% 100% 100%
Cost of goods sold 49 44 48 48
--- ---- ---- ----
Gross profit 51 56 52 52
Royalty and licensing income 4 5 7 7
--- ---- ---- ----
Total operating income 56 61 59 59
Operating expenses 55 67 62 61
--- ---- ---- ----
Income from operations 1 (6) (3) (1)
Interest income, net 1 - 1 -
--- ---- ---- ----
Income before taxes on income 2 (7) (2) (1)
Tax (benefit) expense 0 (2) (1) -
--- ---- ---- ----
Net income 1% (6)% (1)% (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,
--------- ---------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Traffic Safety Systems $1,838,619 $1,742,192 $3,413,205 $3,978,581
Percentage of revenues 60% 68% 62% 71%
Survey and Mapping Systems 966,794 723,269 1,627,947 1,476,679
Percentage of revenues 32% 27% 30% 25%
Other 254,980 87,629 428,883 186,318
Percentage of revenues 8% 3% 8% 3%
Total Revenues $3,060,393 $2,553,090 $5,470,035 $5,641,577
========== ========== ========== ==========
8
Comparison of Three-Months Ended March 31, 2001 and the Three-Months Ended
March 31, 2000
Total sales for the second quarter ended March 31, 2001 ("2001") increased 20%
to $3,060,393 from $2,553,090 realized in the second quarter ended March 31,
2000 ("2000"). A substantial order backlog remaining at the end of the first
quarter was filled during the second quarter which inflated aggregate second
quarter sales at the expense of the first quarter. Traffic Safety sales
increased 5% to $1,838,619 from $1,742,192 in 2000, coupled with a 34% increase
in sales of Survey and Mapping equipment, which totaled $966,794 in 2001 as
compared to $723,269 in 2000, contributed to the overall increase. First time
shipments of the Company designed ASIC chip to an O.E.M. manufacturer also
contributed to the gain.
Gross Margins narrowed to 51% of sales in the second quarter versus 56% of the
second quarter prior year. Additional overtime necessary to complete finished
goods resulted in higher direct labor costs which penalized gross margins.
Royalty and licensing income was $137,144, in the second quarter of 2001
compared to $130,290 in 2000, a 5% increase representing fluctuations in the
consumer product market.
Total operating expenses decreased approximately 3% to $1,677,199 for the 2001
second quarter from $1,721,081 for the comparable 2000 period. An absence of
legal costs and severance costs associated with restructuring of personnel was
offset by increased travel expenses, Board of Directors fees, Consultant fees
and patent defense costs. The net operating income for the quarter was $31,747
as against a net loss of $164,138 in 2000. Net profit after interest and taxes
increased to $45,207 from a net loss of $142,376 a year ago, or a net profit of
0.01 per basic share compared to a net loss of (0.03) per basic share the prior
year.
Comparison of Six-Months Ended March 31, 2001 and the Six-Months Ended March 31,
2000
Net sales for the first six months of 2001 were $5,470,035 compared to
$5,641,577 during the first six months of 2000 representing a 3% decrease in
sales from the previous year. Traffic Safety sales decreased 14% during the
first six months of 2001 to $3,413,205 compared to $3,978,581 a year earlier.
This decrease is attributed to a decline in the Company's international sales
due to the strength of the U.S. dollar. On a year to year basis, the Company's
Survey and Mapping sales have increased 10% to $1,627,947 for the first six
months of 2001 compared to $1,476,679 realized in the comparable 2000 period.
This increase reflects a greater contribution from the restructured domestic
sales force. International sales comprised 41% of net sales during the first
six months of 2001 as compared to 44% for the corresponding 2000 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 unchanged at 52% for the first six
months of 2001 as compared to the prior year.
On a year to year basis, royalties, primarily related to the Company's licensing
agreement with Bushnell, decreased 1.5% to $ 389,876 for the first six months of
2001 from $395,797 realized in 2000.
Total operating expenses decreased approximately 1% to $3,401,845 for the first
six months of 2000 from $3,430,013 for the first six months of 2000. As a
percentage of net sales, total operating expenses increased to 62% for the first
six months of 2001 from 61% for the first six months of 2000. Net income
improved 15% to a loss of $43,093, from a loss of $50,674 a year ago, or a net
loss of (0.01) a basic share each year.
9
Liquidity and Capital Resources
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 (ratio of current assets
minus inventories and prepaid expenses to liabilities) was in excess of 3.8 to
1. Thus, the present working capital is expected to adequately meet the
Company's needs for at least the next twelve months.
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.
For the six month period ended March 31, 2000, cash provided by operating
activities was $405,839. A net loss of $50,674 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.
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 alleged that the Company and certain
of its officers and directors violated federal securities laws, particularly
Sections 10(b) and 20 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Specifically, the complaint alleged 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 was 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 alleged that the resignation of BDO and the
three directors was due to the Company's alleged unreliable and misleading
financial statements. Plaintiff's complaint further alleged 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
were 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 were consolidated.
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. On October 13, 2000, the Court issued its Final Judgment and Order of
Dismissal With Prejudice in the action. As a provision of the Final Judgment,
the Court ordered the Company to issue 475,000 shares of its common stock and
ordered payment of $850,000 in the settlement of the action. Following the
appropriate hearing, the Court found that the aggregate settlement amount and
other terms of the settlement reflected a good faith settlement of the actions.
The Company reached an agreement with its insurance carrier whereby $740,000 of
the cash portion of the settlement was paid by the carrier into the settlement
escrow account. The remaining $110,000 in cash was paid into the settlement
escrow account by certain defendants involved in the settlement, including the
Company. The 475,000 shares were also issued and delivered to the settlement
escrow account. These shares are equal to approximately 8.7% of the Company's
total shares currently outstanding.
Pursuant to the settlement, the 475,000 shares will be distributed at a date to
be determined by the plaintiffs and their counsel. One-third of the shares will
be available for trading immediately, one-third will be available for trading 60
days after the initial distribution, and the final third will be available for
trading 120 days from the initial distribution.
As a condition of the settlement, the Company is released from all future claims
and actions by the plaintiffs and class members related to such actions. The
costs of the settlement together with projected legal expenses involved in
completing the settlement have been accrued in the Company's fiscal 1999
financial statements except for $18,430, which was recorded during fiscal 2000.
On February 8, 2000, the Company filed a complaint against Nikon, Inc. ("Nikon")
in U.S. District Court for the District of Colorado (Civ. No. 00-B-272) for
selling and using a product infringing one of the Company's patents. On July
26, 2000, the Company amended the complaint to include allegations that Nikon's
conduct infringed a second patent obtained by the Company. On August 9, 2000,
Nikon filed an answer and counterclaims, seeking a declaratory judgment that
Nikon did not infringe the patents, that the patents are invalid and
unenforceable, and that Nikon has been damaged by willful and unfounded
assertions of infringement by the Company. The counterclaims do not quantify
the damages sought. On September 28, 2000, upon a stipulated motion to
withdraw, the Court ordered the dismissal, without prejudice to reassertion, of
the counterclaims asserting that the patents-in-suit are invalid and
unenforceable. On January 22, 2001, Asia Optical Co., Inc., the manufacturer of
the laser range finders being sold by Nikon, was added to this lawsuit as a
defendant.
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The Company is vigorously prosecuting the lawsuit and defending the
counterclaims. The parties have just begun formal discovery in this matter, and
the Company recently filed a motion seeking to amend the complaint to add a
newly issued patent and another allegation of willful infringement. The Court
has not yet ruled on this motion.
PART II.
Item 2. Changes in Securities
During the three month period ended December 31, 2000, the Company issued
475,000 shares of authorized, but previously unissued common stock, as partial
consideration for the settlement of the class action and derivative action
lawsuits filed against the Company in 1999. The shares were issued on November
02, 2000 and were delivered to the special settlement escrow account established
to facilitate the settlement of the lawsuits. The shares are to be held in the
escrow account and delivered to approximately 812 claimants pursuant to a
schedule prepared by the plaintiffs and their counsel. As further consideration
for the issuance of the shares, the Company was released from all future claims
and actions by the plaintiffs and class members of the suits.
Issuance of the 475,000 shares was pursuant to the terms and conditions of the
Final Judgment and Order of Dismissal with Prejudice issued by the court in the
action. The shares are deemed "exempted securities" and were issued pursuant to
the exemption from registration under the Securities Act of 1933, as amended,
provided by Section 3(a)(10) of such Act. Section 3(a)(10) provides an
exemption for:
any security which is issued in exchange for one or more bona fide
outstanding securities, claims or property interests, or partly in
such exchange and partly for cash, where the terms and conditions of
such issuance and exchange are approved, after a hearing upon the
fairness of such terms and conditions at which all persons to whom it
is proposed to issue securities in such exchange shall have the right
to appear, by any court, or by any official or agency of the United
States, or by any State or Territorial banking or insurance commission
or other governmental authority expressly authorized by law to grant
such approval.
To satisfy the provisions of Section 3(a)(10), an issuer must satisfy certain
conditions, including the following:
* Securities must be issued in exchange for securities, claims or
property interests; they cannot be offered for cash;
* A court or authorized governmental entity must approve the fairness
of the terms and conditions of the exchange;
* The reviewing court or authorized governmental entity must find the
terms and conditions of the exchange are fair and be advised that the
issuer will rely on the Section 3(a)(10) exemption;
* A court or authorized governmental entity must hold a hearing
before approving the fairness of the transaction, which hearing must
be open to the persons to whom the securities would be issued in the
proposed exchange; and
* Adequate notice must be given to those persons and there cannot be
any improper impediments to the appearance by those persons at the
hearing.
The Company's reliance upon the Section 3(a)(10) exemption is premised upon
the facts that the shares were issued pursuant to the exchange of a legal claim
against the Company and an appropriate court, having held an open hearing upon
proper notice, approved the fairness of the terms and conditions of the
transaction. Accordingly, the shares were issued as exempted securities which do
not require a restrictive legend relating the resale of the shares, except as
set forth by the terms of the settlement.
Item 3. Defaults upon Senior Securities
This Item is not applicable to the Company.
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Item 4. Submission of Matters to a Vote of Security Holders
On March 1, 2001, 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 4,215,736 64,478
Jeremy G. Dunne 4,218,386 61,828
H. Deworth Williams 4,182,336 97,878
Walter R. Keay 4,203,986 76,228
Edward F. Cowle 4,217,186 63,028
William P. Behrens 4,208,686 71,528
Nicholas J. Cooney 4,220,586 59,628
In addition the stockholders also ratified the appointment of H.J. Associates
(formerly Jones, Jensen & Company) as independent auditors for the Company's
fiscal year ending September 30, 2001 by a vote of 4,219,480 for, 34,255
against, and 26,479 abstaining.
Item 5. Other Information
This Item is not applicable to the Company.
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.
----------------------
7070 South Tucson Way
Englewood, Colorado 80112
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
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