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 June 30, 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 June 30, 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 June 30, 1996 (unaudited) and
December 31, 1995;
Consolidated Statement of Operations for the Three Months Ended
June 30, 1996 and June 30, 1995 (unaudited);
Consolidated Statement of Operations for the Six Months Ended
June 30, 1996 and June 30, 1995 (unaudited);
Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1996 and June 30, 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 June 30, 1996, the
Consolidated Statement of Operations for the Three Months Ended June 30, 1996
and June 30, 1995, the Consolidated Statement of Operations for the Six Months
Ended June 30, 1996 and June 30, 1995, and the Consolidated Statement of Cash
Flows for the Six Months Ended June 30, 1996 and June 30, 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
As of As of
6-30-96 12-31-95
--------------- ------------
(UNAUDITED)
ASSETS:
Current assets:
Cash and cash equivalents $ 419,759 $ 739,952
Restricted cash 0 425,000
Accounts receivable, net of
allowance for doubtful
accounts of $1,841 359,887 389,608
Inventory 289,756 169,076
Other 35,983 29,067
--------------- ---------------
Total current assets 1,105,385 1,752,703
Property and equipment, net 261,450 213,447
Other assets, net 104,409 33,963
--------------- ---------------
$ 1,471,244 $ 2,000,113
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 225,364 $ 129,483
Payroll related liabilities 112,641 99,226
Royalties payable 58,960 56,587
Other current liabilities 712 24,871
--------------- ---------------
Total current liabilities 397,677 310,167
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 (10,254,307) (9,596,366)
--------------- ---------------
Total stockholders' equity 1,073,567 1,689,946
--------------- ---------------
$ 1,471,244 $ 2,000,113
=============== ===============
See accompanying notes to financial statements.
/TABLE
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Operations
UNAUDITED
--------Three months ended---------
June 30, 1996 June 30, 1995
--------------- ---------------
Sales $ 335,306 $ 187,618
Cost of goods sold (203,716) (137,871)
--------------- ---------------
Gross profit 131,590 49,747
--------------- ---------------
Operating expenses:
Salaries 134,955 111,260
Payroll taxes and benefits 18,817 13,626
Rent and utilities 30,386 35,835
Travel 17,837 24,415
Depreciation and amortization 26,143 23,615
Professional fees 91,408 26,145
Other operating expenses 128,844 76,457
--------------- ---------------
Total operating expenses 448,389 311,353
--------------- ---------------
Loss from operations $ (316,799) $ (261,606)
Other income (deductions):
Rental income 5,400 6,111
Interest income 4,314 8
Interest expense (242) (125,357)
---------------- ----------------
Total other 9,472 (119,238)
---------------- ----------------
Net Loss $ (307,327) $ (380,844)
================ ================
Net Loss per common share $ (0.08) $ (0.31)
---------------- ----------------
Weighted average shares outstanding 3,843,414 1,224,126
=============== ===============
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Operations
UNAUDITED
---------Six months ended----------
June 30, 1996 June 30, 1995
--------------- ---------------
Sales $ 393,930 $ 382,297
Cost of goods sold (257,620) (297,402)
--------------- ---------------
Gross profit 136,310 84,895
--------------- ---------------
Operating expenses:
Salaries 267,590 208,195
Payroll taxes and benefits 38,582 28,099
Rent and utilities 58,884 63,897
Travel 29,435 49,663
Depreciation and amortization 50,971 52,575
Professional fees 138,966 56,602
Other operating expenses 304,261 148,491
--------------- ---------------
Total operating expenses 888,688 607,522
--------------- ---------------
Loss from operations $ (752,378) $ (522,627)
Other income (deductions):
Rental income 11,250 10,060
Grant revenue 69,190 0
Interest income 14,834 10
Interest expense (837) (248,366)
--------------- ---------------
Total other 94,437 (238,296)
--------------- ---------------
Net Loss $ (657,941) $ (760,923)
=============== ===============
Net Loss per common share $ (0.17) $ (0.65)
--------------- ---------------
Weighted average shares outstanding 3,838,318 1,178,464
=============== ===============
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
UNAUDITED
---------Six months ended----------
June 30, 1996 June 30, 1995
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (657,941) $ (760,923)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 59,971 53,094
Decrease (Increase) in accounts
receivable 29,721 (39,191)
Increase in inventory (120,680) (3,474)
Increase in other current assets (6,916) (15,000)
Increase (Decrease) in accounts
payable and accrued expenses 87,510 (29,335)
Increase in accrued interest
payable 0 239,364
--------------- ---------------
Net cash used by operating
activities (608,335) (555,465)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (94,085) (5,603)
Cash paid for the development or
purchase of intangible assets (42,773) 0
--------------- ---------------
Net cash used by investing
activities (136,858) (5,603)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans, net of
capitalized financing fees 0 50,000
Sale of common stock 0 370,000
Release of formerly restricted
proceeds from a previous sale
of common stock 425,000 0
--------------- ---------------
Net cash provided by financing
activities 425,000 420,000
--------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (320,193) (141,068)
Cash and cash equivalents:
Beginning of period 739,952 138,753
--------------- ---------------
End of period $ 419,759 $ (2,315)
=============== ===============
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 837 9,002
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 1996 and 1995
(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 - JUNE 30, 1996 COMPARED TO DECEMBER 31, 1995
- -----------------------------------------------------------------------------
During the six month period ending June 30, 1996, the Company's liquidity
and capital resources were diminished, primarily the result of continuing,
although decreasing, operating losses. Total assets decreased from $2,000,113
at December 31, 1995 to $1,471,244 at June 30, 1996, a decrease of $528,869, or
26.4%. During this same period, total liabilities increased 28.2% from
$310,167 to $397,677.
The decrease in total assets was primarily a result of a $647,318, or
36.9% decrease in the Company's current assets from $1,752,703 to $1,105,385.
Depletion of the Company's cash and restricted cash were the primary factors
driving the decrease in total assets. Cash and restricted cash decreased 64.0%
from $1,164,952 to $419,759. The cash and restricted cash were primarily used
to fund unprofitable operations, and acquire or develop long term assets. A
decrease of $29,721 in net accounts receivable also contributed to the overall
decrease in total assets. Slightly offsetting the decrease in total assets
were a $120,680, or 71.4% increase in inventory, and a $6,916, or 23.8%
increase in other current assets.
The net result of fixed assets acquisitions on the one hand, and
depreciation on the other, led to a $48,003 increase in net property and
equipment. Other assets, net, increased from $33,963 to $104,409 as a result
of the acquisition of certain intangible assets from Tecnal Products, Inc, and
the capitalization of costs related to internally developed software.
Capitalized software development costs are amortized as an element of cost of
goods sold, based on units sold which incorporating the software.
During the six month period ending June 30, 1996, the Company's total
liabilities increased $87,510 from $310,167 in 1995 to $397,677 in 1996.
Increases in accounts payable of $95,881, or 74.0%, and payroll related
liabilities of $13,415, or 13.5%, and a slight increase in royalties payable
were offset by a decrease in other current liabilities of $24,159, or 97.1%.
The Company did not have any long term liabilities on December 31, 1995 or June
30, 1996.
As a result of the foregoing, the Company's working capital decreased from
$1,442,536 at December 31, 1995 to $707,708 at March 31, 1996, a decrease of
$734,828, or 50.9%.
Other than the foregoing, management knows of no trends, 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 JUNE 30, 1996 COMPARED TO THE THREE
MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
The Company's gross revenues increased 78.7% to $335,306 during the three
month period ending June 30, 1996, from $187,618 during the same period in
1995. During this same period, cost of sales increased from $137,871 in 1995
to $203,716 in 1996. As a result, the Company's gross margin as a percentage
of sales increased from 26.5% to 39.2%. This improvement in gross margin
percentage stems primarily from the re-design of the Company's core optical
trapping, cutting, and manipulating products, the result of which was a more
efficient design. Gross profit therefore increased to $131,590 during the
three months ended June 30, 1996 from $49,747 during the same period in 1995.
Total operating expenses increased $137,036 or 44.0%, from $311,353 during
the three month period ending June 30, 1995, to $448,389 during the comparable
period in 1996. Salaries, professional fees and other operating expenses
accounted for the majority of this increase. Salaries increased $23,695, or
21.3%, from $111,260 to $134,955, reflecting increased pay rates, and the
addition of personnel. During the three months ended June 30, 1996, other
operating expenses increased $52,387, or 68.5%, to $128,844 from $76,457 during
the comparable period in 1995. Professional fees increased from $26,145 in
1995 to $91,408 during the 1996 period. Much of the increases in professional
fees and other operating expenses were expenditures related to the re-design of
the Company's core products, the testing of the re-designed products to ensure
compliance with certain federal regulations, and the design and development of
new products incorporating the technology acquired from Tecnal Products, Inc.
The foregoing resulted in the Company incurring a loss from operations of
$316,799 during the three month period ending June 30, 1996, an increase of
$55,193 over the $261,606 loss from operations incurred during the comparable
period of 1995.
During the three months ended June 30, other income and expenses increased
from a $119,238 net deductions during the period in 1995, to an $9,472 net
contribution to income during the period in 1996. Primarily driving this was
interest expense, which was significantly reduced from the 1995 to the 1996
period, having gone from $125,357 in 1995 to $242 in 1996. This reduction
reflects the conversion to equity of a shareholder's note payable in September,
1995, substantially reducing the Company's outstanding debt. In addition,
during the second quarter of 1996, the Company realized $4,314 in interest
income, primarily the result of interest on funds raised during the Company's
recent private offering of its securities.
The Company's net loss for the three months ended June 30, 1996 was
$307,327, an improvement of $73,517 over the net loss of $380,844 incurred
during the comparable period of 1995. On a per share basis, this amounts to a
$(0.08) loss per share during the second quarter 1996, compared to a $(0.31)
loss per share during the second 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 1,224,126 for the three months ended
June 30, 1995 to 3,843,414 for the three months ended June 30, 1996.
Other than the foregoing, management knows of no trends, 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.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 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 Communications Commission (FCC) and
European Community Directive 93/465/EEC, 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 products by March 31, 1996. As a result, revenues for the
three months ended March 31, 1996 were $58,624. Combining this with the
revenues for the three months ended June 30, 1996, of $335,306, yields revenues
for the six months ended June 30, 1996 of $393,930. This is a $11,633, or 3.0%
increase over revenues for the comparable period in 1995 of $382,297.
During the six month period ending June 30, cost of sales decreased from
$297,402 in 1995 to $257,620 in 1996. Additionally, gross profits increased
from $84,895 to $136,310. The Company's gross margin as a percent of sales
increased from 22.2% during the 1995 period, to 34.6% during the comparable
period in 1996. The increase in gross profit percentage stems from the re-
design of the Company's core optical trapping, cutting, and manipulating
products, the result of which was a more efficient design.
Total operating expenses increased $281,166, or 46.3%, from $607,522
during the six month period ending June 30, 1995, to $888,688 during the
comparable period in 1996. Other operating expenses, professional fees, and
salaries accounted for the majority of this increase. During the six months
ended June 30, 1996, other operating expenses increased $155,770, or 104.9%, to
$304,261 from $148,491 during the comparable period in 1995. Professional fees
increased 145.5% to $138,966. Two factors were primarily responsible for the
increase in other operating expenses and professional fees. The first factor
was sub-contracted 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 reimbursements are
reflected in grant revenue. The second factor was increased expenditures
related to the re-design of the Company's core products, the testing of the re-
designed products to ensure compliance with certain federal regulations, and
the design and development of new products incorporating the technology
acquired from Tecnal Products, Inc. The increase in salaries of $59,395, or
28.5%, reflects increased pay rates, and the addition of personnel.
During the six months ended June 30, other income and expenses increased
from a $238,296 net deduction during the 1995 period, to an $94,437 net
contribution to income during the 1996 period. Interest expense was
significantly reduced from the 1995 to the 1996 period, having gone from
$248,366 in 1995 to $837 in 1996. This reduction reflects the conversion to
equity of a shareholder's note payable in September, 1995, substantially
reducing the Company's outstanding debt. During the first six months of 1996,
the Company realized $69,190 in grant revenue, resulting from the reimbursement
for expenditures related to work performed under its two Small Business
Innovation Research grants. In addition, during the same period, the Company
realized $14,834 in interest income, primarily the result of interest on funds
raised during the Company's recent private offering of its securities.
The foregoing resulted in the Company's narrowing its net loss for the six
months ended June 30, 1996 to $657,941, an improvement of $102,982 over the net
loss of $760,923 incurred during the comparable period of 1995. On a per share
basis, this amounts to a $(0.17) loss per share during the first six months of
1996, compared to a $(0.65) loss per share during the first six months 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 1,178,464
for the six months ended June 30, 1995 to 3,838,318 for the 1996 period.
Other than the foregoing, management knows of no trends, 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
Exhibits: None
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: August 19, 1996 By: /s/ Ronald K. Lohrding
__________________ _____________________________
Ronald K. Lohrding
President
Dated: August 19, 1996 By: /s/ Craig T. Rogers
__________________ _____________________________
Craig T. Rogers
Chief Financial Officer