1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ____________________ to ____________________
Commission file number: 0-27840
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CELL ROBOTICS INTERNATIONAL, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Colorado 84-1153295
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(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
2715 Broadbent Parkway N.E., Albuquerque, New Mexico 87107
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (505) 343-1131
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 14, 2000 9,980,644 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 2001 (unaudited)
and December 31, 2000
Consolidated Statements of Operations for the Three Months
ended March 31, 2001 and March 31, 2000 (unaudited)
Consolidated Statements of Cash Flows for the Three Months
ended March 31, 2001 and March 31, 2000 (unaudited)
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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ITEM 1. FINANCIAL STATEMENTS
The interim unaudited consolidated financial statements contained in
this report have been prepared by Cell Robotics International, Inc. (the
"Company") and, in the opinion of management, reflect all material adjustments
which are necessary for a fair presentation of the financial position, results
of operations and cash flows for the interim periods presented. Such adjustments
consisted only of normal recurring items. Certain information and footnote
disclosures made in the Company's last annual report on Form 10-KSB have been
condensed or omitted for the interim statements. These statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 2000. The
results of the interim periods are not necessarily indicative of results which
may be expected for any other interim period or for the full year.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements. These statements relate to
future events or our future financial performance. In some cases,
forward-looking statements can be identified by terminology, for instance the
terms "may," "will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," the negative of these terms or
other comparable terminology. The forward-looking statements are made pursuant
to safe harbor provisions of the Private Securities Litigation Reform Act of
1995. In addition, these forward-looking statements include, but are not limited
to, statements regarding the following:
o anticipated operating results and sources of future revenue;
o growth;
o adequacy of the Company's financial resources;
o development of new products and markets;
o obtaining and maintaining regulatory approval and changes in regulations;
o competitive pressures;
o commercial acceptance of new products;
o changing economic conditions;
o expectations regarding competition from other companies; and
o the Company's ability to manufacture and distribute its products.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. These forward-looking statements
are based largely on our current expectations and are subject to a number of
risks and uncertainties. Actual results will differ and could differ materially
from these forward-looking statements. The factors that could cause actual
results to differ materially from those in the forward-looking statements
include the following: (i) industry conditions and competition, (ii) reforms in
the health care industry or limitations imposed on third party reimbursement of
health care costs, (iii) the rate of market acceptance of the Company's
products, particularly the Lasette, (iv) operational risks and insurance, (v)
risks associated with operating in foreign jurisdictions, (vi) product
liabilities which may arise in the future which are not covered by insurance or
indemnity, (vii) the impact of current and future laws and government
regulation, as well as repeal or modification of same, affecting the medical
device industry and the Company's operations in particular, (viii) the ability
to retain key personnel, (ix) renegotiation, nullification, or breach of
contracts with distributors, suppliers or other parties, (x) the relationship
with the Company's suppliers, particularly its supplier of crystals used in our
Ebrium: YAG lasers and (xi) the risks described elsewhere, herein and from time
to time in the Company's other reports to and filings with the Securities and
Exchange Commission. In light of these risks and uncertainties, there can be no
assurance that the matters referred to in the forward-looking statements
contained in this Report will in fact occur. The Company does not intend to
update any of the forward-looking statements after the date of this Report.
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CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF AS OF
3-31-01 12-31-00
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(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 476,200 $ 1,043,230
Accounts receivable, net of allowance for
doubtful accounts of $1,841 in 2001 and
2000 120,045 378,853
Inventory 1,032,962 1,079,086
Other 26,241 60,850
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Total current assets 1,655,448 2,562,019
Property and equipment, net 504,888 549,688
Other assets, net 22,901 24,109
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Total assets $ 2,183,237 $ 3,135,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 675,321 $ 250,000
Accounts payable 288,578 350,399
Payroll related liabilities 117,830 152,860
Royalties payable 65,116 79,046
Other current liabilities 19,084 518,010
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Total current liabilities 1,165,929 1,350,315
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Stockholders' equity:
Common stock, $.004 par value. Authorized
50,000,000 shares, 9,980,644 and 9,965,644 shares
issued and outstanding at March 31, 2001
and December 31, 2000, respectively 39,923 39,863
Additional paid-in capital 25,152,373 25,114,871
Accumulated deficit (24,174,988) (23,369,233)
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Total stockholders' equity 1,017,308 1,785,501
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$ 2,183,237 $ 3,135,816
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SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
THREE MONTHS ENDED
MARCH 31, 2001 MARCH 31, 2000
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Product sales $ 219,291 $ 214,594
Research and development grants 10,387 5,960
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Total revenues 229,678 220,554
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Product cost of goods sold (252,862) (170,994)
SBIR direct expenses (10,387) (5,960)
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Total cost of goods sold (263,249) (176,954)
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Gross profit/(loss) (33,571) 43,600
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Operating expenses:
General and administrative 238,329 503,080
Marketing & Sales 357,354 134,278
Research and development 159,222 125,267
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Total operating expenses 754,905 762,625
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Loss from operations (788,476) (719,025)
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Other income (deductions):
Interest income 4,296 3,287
Interest expense (21,575) (3,555)
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Total other income (deductions) (17,279) (268)
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Net loss applicable to common shareholders $ (805,755) $ (719,293)
=========== ===========
Weighted average common shares
outstanding, basic and diluted 9,979,296 8,513,547
=========== ===========
Net loss applicable to common shareholders
per common share, basic and diluted $ (0.08) $ (0.08)
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SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
THREE MONTHS ENDED
MARCH 31, 2001 MARCH 31, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (805,755) $ (719,293)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 46,639 27,587
Amortization of discount of notes payable 2,512 --
Common stock issued for services 8,907 156,039
Options and warrants issued for services 28,655 84,509
Decrease (increase) in accounts receivable 258,808 (34,209)
Decrease (increase) in inventory 46,124 (15,244)
Decrease (increase) in other current assets 34,609 (304)
Decrease in current liabilities (609,707) (190,236)
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Net cash used in operating activities (989,208) (691,151)
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CASH FLOWS FROM INVESTING ACTIVITIES -
purchase of property and equipment (631) (4,849)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options -- 133,105
Proceeds from exercise of warrants -- 691,756
Repayment of notes payable (19,034) --
Proceeds from notes payable and warrants 441,843 700,000
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Net cash provided by financing activities 422,809 1,524,861
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Net increase (decrease) in cash and cash equivalents: (567,030) 828,861
Cash and cash equivalents:
Beginning of period 1,043,230 358,379
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End of period $ 476,200 $ 1,187,240
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SUPPLEMENTAL INFORMATION:
Interest paid $ 1,988 $ --
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SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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CELL ROBOTICS INTERNATIONAL, INC.
AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
1. Presentation of Unaudited Consolidated Financial Statements
These unaudited consolidated financial statements have been prepared in
accordance with the rules of the SEC and, therefore, do not include all
information and footnotes otherwise necessary for a fair presentation of
financial position, results of operations and cash flows, in conformity with
generally accepted accounting principles. However, the information furnished, in
the opinion of management, reflects all adjustments necessary to present fairly
the Company's financial position, results of operations and cash flows. The
results of operations are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
2. Issuance of Equity Securities and Convertible Note
In July 1999, the Company sold 9.5 units to four investors in a private
placement of its securities. Each unit consisted of 35,000 shares of Common
Stock and 7,500 Common Stock purchase warrants. Each warrant is exercisable
through February 2, 2003 to purchase one share of Common Stock at a price of
$2.40 per share. In connection with this private placement, the Company granted
15,000 warrants to two placement agents. The Company granted an additional
15,000 warrants to one of these placement agents for other investment banking
services, which were unrelated to the private placement. These 30,000 warrants
are exercisable through February 2, 2003 to purchase one share of Common Stock
at a price of $2.40 per share.
In January 2000, the Company terminated its public and investor
relations agreement with RCG Capital Markets Group, Inc. effective January 1,
2000. In lieu of payment for three additional months of service retainer fees,
the Company granted options for an additional 25,000 shares of Common Stock at
an exercise price equal to $3.25, the closing price of the Company's Common
Stock on February 15, 2000. Due to early termination of this agreement, 50,000
unvested options were cancelled.
Additionally, in January 2000, the Company issued a total of 40,000
Common Stock purchase warrants to an investment research firm and a new public
relations firm. The Company was also committed under the terms of the agreement
with the new public relations firm to issue an additional 30,000 warrants if
representation continued beyond six months. The warrants are exercisable through
February 2, 2003 to purchase one share of Common Stock for a price of $2.40 per
share. Of the additional 30,000 warrants, 15,000 vested April 1, 2000, after
three months of service, and the remaining 15,000 vested on July 1, 2000, after
six months of service. The fair value of these performance-based options has
been measured upon vesting and charged to operations at such time.
In February 2000, the Company executed a secured convertible promissory
note from a member of the Company's Board of Directors, which was amended in
March 2000. The director advanced $250,000 on March 3, 2000; $250,000 on March
9, 2000; $200,000 on March 28, 2000; and the remaining $500,000 on April 26,
2000 under the note. The principal amount of $1,200,000 was paid in full with
and converted into 500,000 shares of Common Stock on August 30, 2000. An SB-2
registration statement registering the shares issuable upon conversion of the
promissory note was declared effective by the SEC on July 20, 2000. In
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connection with the beneficial conversion of this note, the Company recorded a
non-cash charge of $1,200,000 in the quarter ended September 30, 2000.
In February 2000, an underwriter in a previous offering exercised a
portion of its Placement Agent's Warrants to purchase a total of 10.9825 units
at a price of $25,000 per unit. Each unit consists of 20,000 shares of Common
Stock and class A warrants exercisable for 10,000 shares of Common Stock. The
underwriter exercised the underlying class A warrants simultaneously with the
exercise of the Private Placement Warrants. Proceeds to the Company were
approximately $467,000.
In March 2000, a previous distributor of the Company exercised its
warrant to purchase 100,000 shares of Common Stock at a price of $2.25 per
share. Proceeds to the Company were approximately $225,000.
On May 26, 2000 the Company issued 500,000 shares of its Common Stock
for $2,000,000 in a private placement with Paulson Investment Company of
Portland, Oregon. A five percent placement fee was paid to Mark T. Waller of
BridgeWorks Capital, a member of the Company's Board of Directors, after the
close of the transaction.
In February, May and June 2000, and in January 2001, the Company issued
a total of 145,000 shares of its Common Stock to Pollet & Richardson as payment
for legal services.
3. Notes Payable
In December 1999, the Company issued a note payable for $250,000 to
Humagen Fertility Diagnostic, Inc. whose president, chief executive officer and
majority shareholder is Dr. Debra Bryant, a member of the Company's board of
directors. The note bears interest at six percent. In January 2001, the Company
used $45,000 of the proceeds of the loans by the Company's directors and their
affiliates described below as payment against the outstanding balance of
$250,000 plus accrued interest. The remaining balance is payable in monthly
installments of $10,000 each commencing February 15, 2001.
On January 31, 2001, the Company entered into a loan agreement with
certain members of the board of directors or their affiliates. The aggregate
amount of the loan commitment is $1 million. The loan pays interest on January
31, 2002, at an annual rate of 10%. As of May 14, 2001, $750,000 of loans have
been funded. An advance for the remaining balance of the loan commitment may be
requested by the Company on or before May 30, 2001. Additionally, the
participating directors received 150,000 warrants to purchase Common Stock. The
warrants are exercisable until January 31, 2004, for Common Stock at a price of
$1.125 per share, the market price for the Common Stock when the loan agreement
was signed. As of May 14, 2001, warrants to purchase 112,500 shares of Common
Stock are immediately exercisable. The remaining warrants to purchase 37,500
shares of Common Stock will not be exercisable until, and only to the extent,
the balance of the loan commitment is funded. The Company has allocated $15,074
in proceeds from the loan to the warrants based on the fair value of the
warrants. This has been recorded as a discount on the loans and will be
amortized over the life of the loans.
4. Earnings Per Share
Basic loss per share is computed on the basis of the weighted average
number of common shares
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outstanding during the quarter. Diluted loss per share, which is computed on the
basis of the weighted average number of common shares and all potentially
dilutive common shares outstanding during the quarter, is the same as basic loss
per share for the quarters ended March 31, 2001 and 2000, as all potentially
dilutive securities were anti-dilutive.
Options to purchase 1,924,075 and 1,469,623 shares of common stock were
outstanding at March 31, 2001 and 2000, respectively. Warrants to purchase
1,577,326 and 1,589,351 shares of common stock were outstanding at March 31,
2001 and 2000. These were not included in the computation of diluted loss per
share as the assumed exercise of the options would have been anti-dilutive
because of the net losses incurred in the quarters ended March 31, 2001 and
2000.
5. Operating segments
The Company has two operating segments: scientific research instruments
and laser-based medical devices. The scientific research instruments segment
produces research instruments for sale to universities, research institutes, and
distributors. The laser-based medical devices segment produces the Lasette for
home and clinical use for sale to clinics, individual consumers and to
distributors.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies in the Company's Annual Report
on Form 10-KSB. The Company evaluates segment performance based on profit or
loss from operations prior to the consideration of unallocated corporate general
and administration costs. The Company does not have intersegment sales or
transfers.
The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately because each
business utilizes different technologies and marketing strategies.
Operating Segments
March 31, 2001
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Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
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Revenues from customers $ 135,378 83,913 -- 219,291
Research and development
grants 10,387 -- -- 10,387
Loss from operations (2,819) (548,228) (237,429) (788,476)
March 31, 2000
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Scientific Laser-Based
Research Medical
Instruments Devices Corporate Total
----------- ----------- --------- --------
Revenues from customers $ 71,478 143,116 -- 214,594
Research and development
grants 5,960 -- -- 5,960
Profit (loss) from operations (30,214) (192,458) (496,353) (719,025)
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6. Capital Resources
Since inception, the Company has incurred operating losses and other
equity charges, which have resulted in an accumulated deficit of $24,174,988.
During the three-month period ended March 31, 2001, the Company's operations
used net cash of $989,208.
The Company's ability to improve cash flow and ultimately achieve
profitability will depend on its ability to significantly increase sales. The
Company is primarily focusing its efforts on manufacturing and marketing the
Lasette, which leverages the Company's existing base of patented technology. The
Company believes the market for this product is broader than that of the
scientific instrumentation market, and, as such, offers a greater opportunity of
significantly increased sales. In addition, the Company is pursuing development
and marketing partners for the Lasette. If the Company is able to obtain and
develop these partnerships for the Lasette, the Company believes they will
enhance the Company's ability to rapidly ramp-up its marketing and distribution
strategy, and possibly offset the product's manufacturing costs.
Although the Company has begun manufacturing and marketing the Lasette and
continues to market its scientific instrument line, it does not anticipate
achieving profitable operations before the end of fiscal 2001. The $1 million
loan signed with the Company's board of directors in January is expected to
provide sufficient capital resources until the end of June 2001. To ensure
sufficient working capital exists for the remainder of 2001, the Company is
seeking additional financing through the sale of equity or debt securities.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CELL ROBOTICS INTERNATIONAL, INC.
The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto appearing elsewhere in this
report.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 2001 COMPARED TO DECEMBER 31, 2000
The Company's working capital decreased to $489,519 at March 31, 2001
from $1,211,704 at December 31, 2000. The Company's current ratio decreased to
1.4:1 at March 31, 2001 compared with 1.9:1 at December 31, 2000. Total assets
also decreased from $3,135,816 at December 31, 2000 to $2,183,237 at March 31,
2001.
Accounts receivable and inventory decreased $258,808, or 68%, and
$46,124, or 4%, respectively, as of March 31, 2001 when compared with December
31, 2000. The decrease in accounts receivable was primarily the result of the
Company's efforts in collecting outstanding receivables during the quarter ended
March 31, 2001. The accounts receivable for substantially all research
instrumentation sales made during the first quarter of 2001 have been collected.
As of March 31, 2001, the Company's total liabilities were $1,165,929
compared to $1,350,315 at December 31, 2000. This decrease was primarily due to
the payment made in January 2001 to settle the Company's dispute with Big Sky
Laser Technologies (BSLT). An accrual of $400,000 for the Company's potential
settlement of the dispute with BSLT was established during the period ended
September 30, 2000.
In January 2001, certain members of the Company's board of directors or
their affiliated entities also agreed to make term loan advances to the Company
in an aggregate amount of $500,000. An aggregate of $65,000 of the loans was
made in February 2001, while the loan for the remaining $435,000 was made in
March 2001. The loans are evidenced by unsecured promissory notes, bear interest
at the rate of ten percent per annum and are due on January 31, 2002.
Additionally, in January 2001, as part of the same loan transaction, Oton Tisch,
a member of the Company's board of directors, agreed to loan the Company, at its
request at any time between March 15, 2001 and May 30, 2001, an additional
$500,000. As of the filing date of this Report, Mr. Tisch has funded $250,000 of
this $500,000 commitment. In connection with the January 2001 loan commitment,
each lender was issued a warrant in proportion to the amount of the loan made by
that lender. The warrants allow the lenders to purchase an aggregate of 150,000
shares of Common Stock. The warrants may be exercised until January 31, 2004, at
a price equal to $1.125 per share of Common Stock; provided that warrants
covering 37,500 shares of Common Stock will not become exercisable by Mr. Tisch
until he has loaned the Company the remaining $250,000 under his loan
commitment. The Company used $45,000 of the proceeds of the above loans by its
directors as payment against the outstanding balance of the $250,000 note
payable to Humagen Fertility Diagnostic, Inc., whose president, chief executive
officer and majority shareholder is Dr. Debra Bryant, one of the Company's
directors.
In December 1999, the Company borrowed $250,000 from Humagen Fertility
Diagnostic, Inc. The note did not bear interest until June 2000, at which time
the unpaid balance of the note began to accrue interest at six percent per
annum. In January 2001, the Company used $45,000 of the proceeds of the above
loans by the Company's directors and their affiliates as payment against the
outstanding balance of $250,000. The remaining balance is payable in monthly
installments of $10,000 each commencing February 15, 2001.
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To date, the Company has funded its operations primarily from the sale
of equity securities and short term borrowings as it has not generated
sufficient cash from its operations. The Company expects cash used in operating
activities will increase throughout the remainder of 2001, as a more aggressive
sales and marketing campaign is launched and full-scale production of the
Lasette is implemented. The Company expects that its existing current working
capital, the $1 million loan and loan commitment from the Company's board of
directors and their affiliates and future product sales will be sufficient to
allow the Company to meet operational obligations through June 2001.
Accordingly, it is imperative that the Company complete a significant financing
during the quarter ending June 30, 2001. Although the Company has had
discussions with potential investors, it has not been able to obtain financing
on acceptable terms as of the date of this Report that will allow it to continue
its operations after June 2001. The Company intends to continue to seek to raise
equity or debt financing. However, no assurance can be given that the Company
will be able to obtain additional financing on favorable terms, if at all.
Borrowing money may involve pledging some or all of the Company's assets.
Raising additional funds by issuing common stock or other types of equity
securities would further dilute our existing shareholders. If new equity
securities are issued, those securities may have rights, preferences or
privileges senior to those of existing holders of common stock. If the Company
cannot obtain additional financing as needed, the Company may not be able to
continue its operations, grow its market share, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.
This would have a material adverse effect on the Company's business, financial
condition, results of operation and its ability to continue as a going concern.
Even if the Company is able to obtain additional financing during the
quarter ending June 30, 2001 to allow it to continue its operations, the Company
still will need to generate significant revenues or obtain additional financing
to fund anticipated capital requirements and to achieve and maintain
profitability. The Company's capital requirements depend upon several factors,
including:
o the rate of market acceptance of its products, particularly the
Lasette;
o its level of expenditures for marketing and sales;
o costs associated with its staffing; and
o other factors, including unforeseen factors and developments.
The Company will need additional cash to fund the costs associated with
manufacturing, marketing and selling its products. The Company may also need
cash to file, prosecute, defend and enforce patent claims and other intellectual
property rights, purchase capital equipment, develop new products and maintain
or obtain necessary regulatory approvals. If the Company's capital requirements
vary materially from those currently planned, the Company may require more
financing during 2001 than currently anticipated. The Company's inability to
finance its growth, either internally or externally, may limit its growth
potential and its ability to execute its business plan. External financing may
not be available to the Company on favorable terms or at all. In addition, the
Company received a report from its independent auditors covering its fiscal
years ended December 31, 2000 and 1999 financial statements. The report contains
an explanatory paragraph that states that the Company's recurring losses and
negative cash flows from operations raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of that
uncertainty.
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RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 2000
The Company's total revenue increased 4% to $229,678 at March 31, 2001
from $220,554 at March 31, 2000. Sales of the Lasette during the quarter ended
March 31, 2001 were $78,065, an increase of 126% from sales of $34,614 in the
comparable quarter of 2000. Sales of the Company's scientific research
instruments during the quarter ended March 31, 2001 were $135,378, an 89%
increase over sales of the scientific research instruments in the first quarter
of 2000. The increases in sales of the Company's current products were offset by
a decrease in sales of approximately $97,000 of its in-vitro fertilization
product, which occurred in the first quarter of 2000. As disclosed in the
Company's previous filings with the SEC, the Company sold its in-vitro
fertilization product and related technology in May 2000. Therefore, there are
no corresponding sales of that product in 2001.
The Company's gross margin decreased from 20% for the quarter ended
March 31, 2000 to a negative margin of 15% for the quarter ended March 31, 2001.
The current negative gross margin is due primarily to low sales activity. As
sales increase, management believes that fixed manufacturing overhead costs will
be adequately absorbed and help generate positive gross margins.
Overall operating expenses remained constant decreasing $7,720 from
$762,625 for the quarter ended March 31, 2000 to $754,905 for the quarter ended
March 31, 2001. General and administrative expenses decreased $264,751, or 53%,
primarily due to the reduction in the amount of legal fees in the first quarter
of 2001 when compared to the same period of 2000. The savings resulting from the
decrease in legal fees was offset by an increase in sales and marketing expenses
as the Company devoted more resources to a marketing campaign for its products,
namely the Lasette. As a result, marketing and selling expenses more than
doubled, from $134,278 in the first quarter of 2000 to $357,354 in the same
period of 2001, without increasing the overall operating expenses.
During the three months ended March 31, 2001 interest expense increased
to $21,575 from $3,555 during the quarter ended March 31, 2000. Interest expense
increased because of the promissory notes issued to the Company's board of
directors in January 2001.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During 2000, Big Sky Laser Technologies, Inc., or BSLT, filed a lawsuit
alleging that the Company was in breach of contract. In January 2001, the
Company reached a settlement with BSLT and the lawsuit was dismissed with
prejudice. Under the settlement agreement, the Company paid BSLT $350,000. As
consideration for this payment, BSLT completed and shipped to the Company 100
units of the Professional Lasette that BSLT had previously been manufacturing
for the Company and will ship to the Company all remaining parts inventory in
its possession. The Company had accrued $400,000 for the anticipated costs of
settling the lawsuit during the quarter ended September 30, 2000.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
10.17 Loan Agreement dated January 31, 2001, among
the Company, Dipl. Ing. Oton Tisch, Ronald
K. Lohrding, Ph.D., Raymond Radosevich,
Ph.D., HaeMedic LLC and Humagen Fertility
Diagnostics, Inc.
10.18 Form of Warrant dated January 31, 2001
issued to Dipl. Ing. Oton Tisch, Ronald K.
Lohrding, Ph.D., Raymond Radosevich, Ph.D.,
HaeMedic LLC and Humagen Fertility
Diagnostics, Inc.
Reports on Form 8-K:
None.
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15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this quarterly report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CELL ROBOTICS INTERNATIONAL, INC.
Dated: May 15, 2001 By: /s/ Ronald K. Lohrding
-----------------------------------------
Ronald K. Lohrding, President, Chief
Executive Officer and Chairman of the
Board of Directors
Dated: May 15, 2001 By: /s/ Paul C. Johnson
-----------------------------------------
Paul C. Johnson, Chief Financial Officer
and Secretary
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16
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.17 Loan Agreement dated January 31, 2001, among the Company,
Dipl. Ing. Oton Tisch, Ronald K. Lohrding, Ph.D., Raymond
Radosevich, Ph.D., HaeMedic LLC and Humagen Fertility
Diagnostics, Inc.
10.18 Form of Warrant dated January 31, 2001 issued to Dipl. Ing.
Oton Tisch, Ronald K. Lohrding, Ph.D., Raymond Radosevich,
Ph.D., HaeMedic LLC and Humagen Fertility Diagnostics, Inc.