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, 1997
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
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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
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(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 August 1, 1997, 5,013,414 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, 1997 (unaudited) and
December 31, 1996 (audited).
Consolidated Statement of Operations for the Three Months Ended
June 30, 1997 and June 30, 1996 (unaudited).
Consolidated Statement of Operations for the Six Months Ended June
30, 1997 and June 30, 1996 (unaudited).
Consolidated Statement of Cash Flows for the Six Months Ended June
30, 1997 and June 30, 1996 (unaudited).
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 interim unaudited financial statements have been prepared by
Cell Robotics International, Inc. ("Cell" or the "Company") and, in the
opinion of management, reflect all material adjustments which are necessary
to 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
for or omitted from the interim statements. These statements should be read
in conjunction with the financial statements and notes thereto included in
the Company's Form 10-KSB for the year ended December 31, 1996. 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 years.
CELL ROBOTICS INTERNATIONAL, INC.
BALANCE SHEETS
AS OF AS OF
3-31-97 12-31-96
------------- -------------
(UNAUDITED)
ASSETS:
- ------
Current assets:
Cash and cash equivalents $ 521,187 $ 1,724,671
Accounts receivable, net of allowance
for doubtful accounts of $1,841 429,273 69,845
Inventory 360,475 408,173
Other 71,164 19,121
------------- -------------
Total current assets 1,382,099 2,221,810
Property and equipment, net 221,577 256,635
Other assets, net 79,299 92,507
------------- -------------
$1,682,975 $2,570,952
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
- ------------------------------------
Current liabilities:
Accounts payable $ 267,210 $ 160,824
Payroll related liabilities 155,261 128,932
Royalties payable 114,649 42,029
Other current liabilities 27,566 31,937
------------- ------------
Total current liabilities 564,686 363,722
Stockholders equity:
Preferred stock, $.04 par value,
Authorized 2,500,000 shares,
no shares issued and
outstanding in 1997 and 1996 0 0
Common stock, $.004 par value,
Authorized 12,500,000 shares,
5,013,414 and 5,003,414
shares issued and outstanding
at June 30, 1997 and December 31,
1996, respectively 20,054 20,014
Additional paid in capital 13,345,131 13,327,672
Accumulated deficit (12,246,896) (11,140,456)
------------- -------------
Total stockholders' equity 1,118,289 2,207,230
------------- -------------
$ 1,682,975 $ 2,570,952
============= =============
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
UNAUDITED
THREE MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
-------------- --------------
Product Sales $ 278,325 $ 335,306
Research and development grants 0 0
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Total revenues 278,325 335,306
Cost of goods sold (184,947) (203,716)
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Gross profit 93,378 131,590
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Operating expenses:
Salaries 226,392 134,955
Payroll taxes and benefits 29,417 18,817
Rent and utilities 33,540 30,386
Travel 22,008 17,837
Depreciation and amortization 26,596 26,143
Professional fees 189,350 91,408
Other operating expenses 200,515 128,844
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Total operating expenses 727,818 448,389
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Loss from operations $ (634,440) $ (316,799)
Other income (deductions):
Rental income 4,600 5,400
Interest income 10,876 4,314
Interest expense (37) (242)
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Total other 15,439 9,472
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Net Loss $ (619,001) $ (307,327)
============= =============
Net Loss per common share (0.12) (0.08)
Weighted average shares outstanding 5,013,414 3,843,414
========= =========
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
UNAUDITED
SIX MONTHS ENDED
June 30, 1997 June 30, 1996
--------------- -------------
Product Sales $ 534,843 $ 393,930
Research and development grants 0 69,190
------------- -------------
Total revenues 534,843 463,120
Cost of goods sold (357,397) (257,620)
Gross profit 177,446 205,500
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Operating expenses:
Salaries 436,359 267,590
Payroll taxes and benefits 65,276 38,582
Rent and utilities 66,354 58,884
Travel 45,288 29,435
Depreciation and amortization 54,347 50,971
Professional fees 250,680 138,966
Other operating expenses 403,739 304,261
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Total operating expenses 1,322,043 888,688
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Loss from operations $(1,144,597) $ (683,188)
Other income (deductions):
Rental income 11,800 11,250
Interest income 26,830 14,834
Interest expense (473) (837)
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Total other 38,157 25,247
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Net Loss $(1,106,440) $ (657,941)
============= =============
Net Loss per common share (0.22) (0.17)
Weighted average shares outstanding 5,009,105 3,838,318
============ =============
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
UNAUDITED
SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
--------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
- ------------------------------------
Net loss $(1,106,440) $ (657,941)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 63,789 59,971
Decrease (Increase) in accounts
receivable (359,428) 29,721
Decrease (Increase) in inventory 47,698 (120,680)
Increase in other current assets (52,043) (6,916)
Increase in current liabilities 200,964 87,510
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Net cash used by operating activities (1,205,460) (608,335)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------
Purchase of fixed assets (15,524) (94,085)
Cash paid for the development or purchase
of intangible assets 0 (42,773)
Net cash used by investing activities (15,524) (136,858)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Sale of common stock 17,500 0
Release of formerly restricted proceeds
from a previous sale of common stock 0 425,000
Net cash provided by financing activities 17,500 425,000
NET INCREASE (DECREASE) IN CASH AND
- -----------------------------------
CASH EQUIVALENTS: (1,203,484) (320,193)
- ----------------
Cash and cash equivalents:
Beginning of period 1,724,671 739,952
------------- -------------
End of period $ 521,187 $ 419,759
============ ============
SUPPLEMENTAL INFORMATION:
- ------------------------
Fair market value of common stock issued for
the acquisition of intangible assets 0 41,561
Interest paid 473 837
See accompanying notes to financial statements.
CELL ROBOTICS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1997
(1) Presentation of Unaudited Financial Statements
----------------------------------------------
These 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
("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.
(3) Reclassification
----------------
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
FORWARD-LOOKING STATEMENTS
--------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, those discussed in the Section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the Company. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof.
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date
hereof. Readers should refer to and carefully review the information in
future documents the Company files with the Securities and Exchange
Commission.
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, 1997 COMPARED TO DECEMBER 31, 1996
- -----------------------------------------------------------------------------
The Company's liquidity and capital resources continued to decrease
during the six month period ending June 30, 1997, due primarily to the
Company's ongoing operating losses.
The Company's current ratio at December 31, 1996, was 6.1:1, compared to
a current ratio of 2.5:1 on June 30, 1997. This decrease in liquidity is
primarily due to the erosion of the Company's assets, and in particular its
current assets. Specifically, total assets decreased from $2,570,952 at
December 31, 1996 to $1,682,975 at June 30, 1997, a decrease of $887,977, or
34.5%. Of this decrease, current assets accounted for $839,711, or 94.6%.
The decrease in the Company's current assets of $839,711, or 37.8%, was
the result of a large drop in cash and cash equivalents which fell from
$1,724,671 at December 31, 1996, to $521,187 at June 30, 1997, a decrease of
$1,203,484 or 69.8%. This decrease in cash and cash equivalents was
primarily the result of net cash used in unprofitable operations. Slightly
offsetting the decrease in cash and cash equivalents was an increase in
accounts receivable of $359,428, from $69,845 at the end of fiscal 1996, to
$429,273 at June 30, 1997. The increase in accounts receivable was primarily
due to increased sales during the first six months of fiscal 1997. Also
resulting from the Company's increased sales was a decrease in inventory of
$47,698, or 11.7%. Finally, as a result of the pre-payment of a purchase
commitment made to a supplier of a particular inventory component, other
current assets increased from $19,121 to $71,164, an increase of 272.2%.
Property and equipment, net, decreased $35,058, or 13.6%, primarily as a
result of depreciation. Other assets also decreased slightly from $92,507 to
$79,299, or 14.3%.
During the six month period ended June 30, 1997, the Company's total
liabilities increased $200,964, from $363,722 at December 31, 1996 to
$564,686 at June 30, 1997. Increases in accounts payable of $106,386, or
66.2%, and royalties payable of $72,620, or 172.8%, and a smaller increase in
payroll related liabilities were slightly offset by a small decrease in other
current liabilities of $4,371, or 13.7%. The Company did not have any long
term liabilities on December 31, 1996 or June 30, 1997.
As a result of the foregoing, the Company's working capital decreased
from $1,858,088 at December 31, 1996 to $817,413 at June 30, 1997, a decrease
of $1,040,675. This decrease was due almost exclusively to the Company's
operating loss incurred during the same six month period.
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 or have, a material impact on the
liquidity and capital resources of the Company.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
During the three month period ending June 30, 1997, the Company's total
revenues decreased 17.0% when compared with the same period in 1996,
decreasing from $335,306 to $278,325. The Company's gross margin as a
percentage of sales also decreased when compared with the same period in
1996, dropping from 39.2% to 33.5%. As a result, gross profit decreased
$38,212, or 29.0%, from $131,590 to $93,378.
Total operating expenses increased $279,429 or 62.3%, from $448,389
during the three month period ending June 30, 1996, to $727,818 during the
comparable period in 1997. Professional fees, salaries and other operating
expenses were the primary factors contributing to this increase.
Professional fees increased $97,942, or 107.1%, due primarily to professional
design and engineering consulting fees incurred by the Company in conjunction
with the development of certain new and innovative medical products.
Salaries increased $91,437, or 67.8%, as a result of additional personnel and
increased wage rates. Payroll taxes and benefits increased in rough
proportion to the increase in salaries, increasing $10,600, or 56.3%. Also,
as a result of the Company's ongoing development efforts other operating
expenses increased $71,671 or 55.6%.
The foregoing resulted in the Company's incurring a loss from operations
of $634,440 during the three month period ended June 30, 1997, an increase of
$317,641 over the $316,799 loss from operations incurred by the Company
during the comparable period of 1996.
Other income and expenses increased from a $9,472 net contribution to
income during the three months ended June 30, 1996, to a $15,439 net
contribution to income during the same three (3) month period in 1997. The
primary factor contributing to this increase was a $6,562 increase in
interest income.
The Company's net loss for the three months ended June 30, 1997 was
$619,001, an increase of $311,674 over the net loss of $307,327 incurred
during the comparable period in 1996. On a per weighted average share
basis, this amounts to a loss per share of $(0.12) during the second quarter
of 1997, compared to an $(0.08) loss per share during the second quarter of
1996. Weighted average common shares outstanding increased from 3,843,414
for the three months ended June 30, 1996 to 5,013,414 for the three months
ended June 30, 1997.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------
During the six month period ended June 30, 1997, the Company's total
revenues increased 15.5% when compared with the same six (6) month period in
1996, increasing from $463,120 to $534,843. Cost of sales increased in
approximately the same proportion to the increase in product sales. During
the six months ended June 30, 1996, the Company realized research and
development grant revenue in the amount of $69,190. The Company realized no
such revenue during the six month period ending June 30, 1997. As a result,
the Company's gross profit decreased 13.7%, from $205,500 during the six
months ended June 30, 1996 to $177,446 during the same six (6) month period
in 1997.
During the six months ended June 30, 1997, total operating expenses
increased $433,355, or 48.8% when compared with the same six (6) month period
in 1996, increasing from $888,688 to $1,322,043. The majority of the
increase in total operating expenses is attributable to costs related to the
design and development of various new medical products currently being
developed by the Company. To this end, increases in salaries, professional
fees, and other operating expenses each contributed to the increase in total
operating expenses. Specifically, salaries increased $168,769, or 63.1% due
to the hiring of additional personnel and increased wage rates. Payroll and
benefits also increased in approximately the same proportion as salaries.
Professional fees increased $111,714, or 80.4% primarily as a result of
professional design and engineering consulting fees related to the
development of the Company's new medical products. The $99,478, or 32.7%
increase in other operating expenses was, again, primarily related to
increased costs associated with the development of the Company's new medical
products.
During the six months ended June 30, other income and expenses increased
from a $25,247 net contribution to income in 1996, to a $38,157 net
contribution to income in 1997. This increase was due almost exclusively to
an increase in interest income of $11,996, or 80.9%.
The foregoing resulted in an increased net loss of $448,499 or 68.2%,
from a loss for the six months ended June 30, 1996 of $657,941, to a loss
during the same period in 1997 of $1,106,440. On a per weighted average
share basis, this amounts to a $(0.22) loss per share during the first two
quarters 1997, compared to a $(0.17) loss per share during the first two
quarters of 1996. The weighted average common shares outstanding increased
from 3,838,318 for the six months ended June 30, 1996 to 5,009,105 for the
six months ended June 30, 1997.
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 or have, a material impact on the Company's
results of operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings have been filed on behalf of or against the
Company nor have any claims been made.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 6, 1997, the Company held its regular Annual Meeting of
Shareholders (the "Meeting"). At the Meeting, the following
matters were voted upon and approved:
1) The following persons were elected to serve as Directors of
the Company until the next regular Annual Meeting of Shareholders
and until their successors have been duly elected and qualified:
Director Votes For Votes Abstain
Against
-------- --------- ------- -------
Dr. Ronald K. Lohrding 3,860,787 -0- 200
Craig T. Rogers 3,860,787 -0- -0-
Mark Waller 3,860,787 -0- -0-
Dr. Raymond Radosevich 3,860,787 -0- -0-
2) The Company increased the number of shares which may be issued
pursuant to the exercise of options granted under the Company's
Incentive Stock Option Plan by an additional 250,000 shares.
For Against Abstain
3,736,262 123,825 900
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits:
Exhibit No. 27 - Financial Data Schedule
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, 1997 By: /s/ Ronald K. Lohrding
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Ronald K. Lohrding,
President
Dated: August 19, 1997 By: /s/ John Hanlon
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Chief Financial Officer