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, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______ to ________
Commission file number 33-26467-D
CELL ROBOTICS INTERNATIONAL, INC.
(Exact Name of small business issuer as Specified in its Charter)
Colorado 84-1153295
____________________________ ________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
2715 Broadbent Parkway N.E., Albuquerque, New Mexico 87107
_________________________________________________________________________
(Address of Principal 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 last 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 15, 1996, 3,843,414 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 31, 1996 (unaudited) and
December 31, 1995;
Consolidated Statement of Operations for the Three Months Ended
March 31, 1996 and March 31, 1995 (unaudited);
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 1996 and March 31, 1995 (unaudited); and
Notes to Unaudited Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
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
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying Consolidated Balance Sheet at March 31, 1996, the
Consolidated Statement of Operations for the Three Months Ended March 31, 1996
and March 31, 1995, and the Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1996 and March 31, 1995, are unaudited but reflect all
adjustments which are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations and cash flows
for the interim period presented, and not necessarily indicative of results
which may be expected for any other interim period or for the year as a whole.
CELL ROBOTICS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of As of
March 31, December 31,
1996 1995
__________ __________
ASSETS:
Current assets:
Cash and cash equivalents $857,589 $739,952
Restricted cash 0 425,000
Accounts receivable, net of allowance
for doubtful accounts of $1,841 174,210 389,608
Inventory 316,200 169,076
Other 30,763 29,067
__________ __________
Total current assets 1,378,762 1,752,703
Property and equipment, net 217,184 213,447
Other assets, net 100,655 33,963
__________ __________
$1,696,601 $2,000,113
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $161,536 $129,483
Payroll related liabilities 113,029 99,226
Royalties payable 38,349 56,587
Other current liabilities 2,794 24,871
__________ __________
Total current liabilities 315,708 310,167
Stockholders' equity:
Preferred stock, $.04 par value,
Authorized 2,500,000 shares,
no shares issued and outstanding
in 1996 and 1995 0 0
Common stock, $.004 par value,
Authorized 12,500,000 shares,
3,843,414 and 3,825,914 shares
issued and outstanding in 1996
and 1995, respectively 15,374 15,304
Additional paid in capital 11,312,499 11,271,008
Accumulated deficit (9,946,980) (9,596,366)
__________ __________
Total stockholders' equity 1,380,893 1,689,946
__________ __________
$1,696,601 $2,000,113
========== ==========
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31, March 31,
1995 1996
__________ __________
Sales 58,624 $194,679
Cost of goods sold (53,904) (159,531)
__________ __________
Gross profit 4,720 35,148
__________ __________
Operating expenses:
Salaries 132,636 96,935
Payroll taxes and benefits 19,765 14,473
Rent and utilities 28,497 28,072
Travel 11,598 25,248
Depreciation and amortization 24,828 28,960
Professional fees 47,558 30,457
Other operating expenses 175,417 72,033
__________ __________
Total operating expenses 440,299 296,168
__________ __________
Loss from operations $(435,579) $(261,020)
Other income (deductions):
Rental income 5,850 3,949
Grant revenue 69,190 0
Interest income 10,520 2
Interest expense (595) (123,009)
__________ __________
Total other 84,965 (119,058)
__________ __________
Net Loss $(350,614) $(380,078)
========== ==========
Net Loss per common share
Weighted average shares outstanding
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31, March 31,
1996 1995
__________ __________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(350,614) $(380,078)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 24,828 29,275
Decrease (Increase) in accounts
receivable 215,398 (33,211)
Increase in inventory (147,124) (71,569)
Increase in other current assets (1,696) (751)
Increase (Decrease) in accounts
payable and accrued expenses 5,541 (24,158)
Increase in accrued interest payable 0 116,760
__________ __________
Net cash used by operating activities (253,667) (363,731)
__________ __________
CASH FLOWS FROM INVESTING ACTIVITES:
Purchase of fixed assets (26,122) (5,603)
Cash paid for the development or
purchase of intangible assets (27,574) 0
__________ __________
Net cash used by investing activities (53,696) (5,603)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 270,000
Release of formerly restricted proceeds
from a previous sale of common stock 425,000 0
__________ __________
Net cash provided by financing activities 425,000 270,000
__________ __________
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 117,637 (99,333)
Cash and cash equivalents:
Beginning of period 739,952 138,753
__________ __________
End of period $857,589 $39,420
======== ========
SUPPLEMENTAL INFORMATION:
Short term borrowings repaid with
common stock 0 160,000
Fair market value of common stock issued
for the acquisition of intangible assets 41,561 0
Interest paid 595 4,800
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1996
(1) PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements have been prepared in accordance with
the rules of the Securities and Exchange Commission 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 financial position, results of operations and
cash flows on a consistent basis. 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) PURCHASE OF CERTAIN INTANGIBLE ASSETS
On January 9, 1996, the Company entered into a Purchase Agreement (the
"Agreement") with Tecnal Products, Inc. ("Tecnal"). The Agreement provides for
the acquisition of certain technological assets, primarily the rights under two
patents and a patent application. These patents and patent application relate
to an innovative laser design, and a medical device incorporating this laser
design. In exchange for these technological assets, the Company issued to
Tecnal, and its shareholders, an aggregate of 17,500 shares of the Company's
common stock, made cash payments on behalf of Tecnal in the amount of $14,800
and granted a one percent (1%) royalty on future sales of products
incorporating the acquired technology, with a lifetime maximum of $20,000.
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, 1996 COMPARED TO DECEMBER 31, 1995
Total assets decreased from $2,000,113 at December 31, 1995 to $1,696,601
at March 31, 1996, a decrease of $303,512, or 15.2%. During this same period,
total liabilities increased slightly from $310,167 to $315,708.
The decrease in total assets was primarily a result of a $373,941, or
21.3% decrease in the Company's current assets from $1,752,703 to $1,378,762.
Although the restricted cash balance at December 31, 1995 of $425,000 was
released to the Company during this period, and accounts receivable decreased
from $389,608 to $174,210, the Company's cash position improved only slightly
from $739,952 to $857,589. The overall decrease in current assets was
moderately offset by a $147,124, or 87.0% increase in inventory.
The net result of fixed assets acquisition, on the one hand, and
depreciation, on the other, led to a $3,737 increase in net property and
equipment. Other assets, net, increased from $33,963 to $100,655 as a result
of the acquisition of certain intangible assets from Tecnal Products, Inc. and
the capitalization of costs related to internally-developed software.
During the three-month period ending March 31, 1996, the Company's total
liabilities increased $5,541 from $310,167 to $315,708. Increases in accounts
payable and payroll related liabilities were substantially offset by decreases
in royalties payable and other current liabilities.
As a result of the foregoing, the Company's working capital decreased from
$1,442,536 at December 31, 1995 to $1,063,054 at March 31, 1996, a decrease of
$379,482, or 26.3%.
Stockholders' equity showed a corresponding decline for the quarter, from
$1,689,946 at December 31, 1995 to $1,380,893 at March 31, 1996, a decline of
$309,053, or 18.3%.
Other than the foregoing, management knows of no other trend, or other
demands, commitments, events or uncertainties that will result in, or that are
reasonably likely to result in, a material impact on the liquidity and capital
resources of the Company.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995 (UNAUDITED).
In October, 1995, the Company embarked on a comprehensive re-design of its
core optical trapping, cutting, and manipulating products. This effort was
undertaken to provide customers with a new, computer-controlled, workstation-
based product line. As a result of this re-design, the Company's new products
required testing and certification by an outside entity to ensure compliance
with certain regulations of the Federal Communication Commission (FCC) and
European Community Directive 93/465/EE, which became effective January 1, 1996.
Although such a certification is typically not time-consuming, many other
companies required the same type of testing during the same time-frame. As a
result, the Company was unable to obtain a testing appointment early enough in
the first quarter of 1996 to allow for the assembly and shipment of the newly-
designed product by March 31, 1996. The majority of orders received during the
first quarter of 1996 were for the newly-designed products. Therefore,
although the Company had a backlog of approximately $330,000 at March 31, 1996,
revenues for the three months then ended amounted to only $58,624, compared
with revenues of $194,679 for the same period last year. This represents a
$136,055, or 69.9% decrease. All products in the Company's new instrument line
have now passed both FCC and European Community testing.
Costs of sales decreased from $159,531 during the three-month period
ending March 31, 1995 to $53,904 for the comparable period in 1996, reflecting
decreased sales. Gross profit decreased similarly from $35,148 to $4,720. The
Company's gross margin as a percent of sales decreased from 18.1% during the
1995 period, to 8.1% during the comparable period in 1996. This was also the
result of the low volume of sales during the first quarter of 1996.
Total operating expenses increased $144,131, or 48.7%, from $296,168
during the three-month period ending March 31, 1995, to $440,299 during the
comparable period in 1996. Salaries and other operating expenses accounted for
the majority of this increase. Salaries increased $35,701, or 36.8%, from
$96,935 to $132,636, reflecting increased pay rates, and the addition of
personnel. During the three months ended March 31, 1996, other operating
expenses increased $103,384, or 143.5%, to $175,417 from $72,033 during the
comparable period in 1995. This bulk of this increase was subcontracted
research and other expenses incurred in relation to the Company's two grants
under the Small Business Innovation Research Program, funded by the federal
government. Expenditures by the Company related to these grants are
reimbursable by the federal government, and such reimbursement is reflected in
grant revenue. Also contributing to the increase in other operating expenses
was increased expenditures related to the re-design of the Company's core
products, and the design of new products incorporating the technology acquired
from Tecnal Products, Inc.
As a result of the foregoing, the Company incurred a loss from operations
of $(435,579) during the three-month period ending March 31, 1996, an increase
of $174,559 over the $(261,020) loss from operations incurred during the
comparable period of 1995.
During the three months ended March 31, other income and expenses
increased from a $119,058 net deduction during the period in 1995, to a $84,965
net contribution to income during the period in 1996. Two factors were
primarily responsible for this change. First, interest expense was
significantly reduced from the 1995 to the 1996 period, having gone from
$123,009 in 1995 to $595 in 1996. This reduction reflects the conversion to
equity of a shareholders' note payable in September, 1995, substantially
reducing the Company's outstanding debt. Secondly, the Company realized
$69,190 in grant revenue during the 1996 period, as it was reimbursed for
expenditures related to work performed under its two Small Business Innovation
Research grants. In addition, during the first quarter of 1996, the Company
realized $10,520 in interest income, primarily the result of interest on funds
raised during the Company's private offering of its securities.
The Company's net loss for the three months ended March 31, 1996 was
$(350,614), which is a slight improvement over the net loss of $(380,078)
incurred during the comparable period of last year. On a per share basis, this
amounts to a $(0.09) loss per share during the first quarter 1996, compared to
a $(.34) loss per share during the first quarter of 1995. As a result of the
Company's private placement of its securities in September, 1995, the weighted
average common shares outstanding increased from 1,132,294 at March 31, 1995 to
3,833,222 at March 31, 1996.
Other than the foregoing, management knows of no trend, or other demands,
commitments, events or uncertainties that will result in, or are reasonably
likely to result in, a material impact on the Company's results of operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES 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
Exhibit 1: Purchase Agreement between Cell Robotics, Inc. Tecnal
Products, Inc., dated effective January 9, 1996.
Reports on Form 8-K: None
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.
CELL ROBOTICS INTERNATIONAL, INC.
Dated: May 17, 1996 By: /s/ Ronald K. Lohrding
______________ _____________________________
Ronald K. Lohrding
President
Dated: May 17, 1996 By: /s/ Craig T. Rogers
______________ _____________________________
Craig T. Rogers
Chief Financial Officer