UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission File No. 1-11642
LASER TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0970494
------------------------------------------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
7070 SOUTH TUCSON WAY, ENGLEWOOD, COLORADO 80112
------------------------------------------------
(Address of principal executive offices)
(303) 649-1000
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____.
At January 31, 2001, 5,486,220 shares of common stock of the Registrant were
outstanding.
INDEX
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PART I: FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements............................................ 1
Consolidated Balance Sheets................................ 1
Consolidated Statements of Operations...................... 3
Consolidated Statements of Cash Flows...................... 4
Notes to Consolidated Financial Statements................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 7
Results of Operations...................................... 7
Liquidity and Capital Resources............................ 8
Risk Factors and Cautionary Statements..................... 9
PART II: OTHER INFORMATION
Item 1. Legal Proceedings............................................... 9
Item 2. Changes in Securities........................................... 11
Item 3. Defaults upon Senior Securities................................. 11
Item 4. Submission of Matters to a Vote of Security Holders............. 11
Item 5. Other Information............................................... 11
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
ASSETS
December 31, September 30,
2000 2000
----------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 759,709 $ 585,882
Investments 1,702,466 2,159,936
Trade accounts receivable, less allowance
for doubtful accounts of $111,583 and $112,670
at December 31, 2000 and September 30, 2000, respectively 2,137,009 2,724,344
Income Tax Refund Receivable 0 0
Royalties receivable 0 1,697
Inventories 3,541,546 3,096,862
Deferred income tax benefit 60,000 60,000
Prepaids and other current assets 118,989 83,254
Income tax prepayment 28,927 28,927
----------- -----------
Total Current Assets 8,348,646 8,740,902
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 1,045,807 1,155,165
----------- -----------
LONG-TERM INVESTMENTS 0 0
----------- -----------
OTHER ASSETS 985,604 967,146
----------- -----------
TOTAL ASSETS $10,380,057 $10,863,213
----------- -----------
See accompanying notes to the consolidated financial statements
1
LASER TECHNOLOGY, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
2000 2000
---- ----
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 568,274 $ 790,260
Accrued expenses 179,920 948,696
Current maturities of long-term debt 55,962 83,727
----------- -----------
Total Current Liabilities 804,156 1,822,683
----------- -----------
LONG-TERM DEBT
Long-term debt, less current maturities 14,364 14,364
----------- -----------
Total Long Term Liabilities 14,364 14,364
----------- -----------
Total Liabilities 818,520 1,837,047
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value--
shares authorized
2,000,000; shares issued--none - -
Common stock, $.01 par value-shares
authorized 25,000,000; shares issued
5,710,867 57,109 52,359
Additional paid-in capital 10,314,226 9,695,302
Stock Subscription Rec
Treasury stock at cost, 224,650 shares (194,259) (194,259)
Retained earnings (615,539) (527,236)
----------- -----------
Total Stockholders' Equity 9,561,537 9,026,166
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $10,380,057 $10,863,213
----------- -----------
See accompanying notes to the consolidated financial statements
2
LASER TECHNOLOGY, INC.
Consolidated Statements of Operations
For the Three Months Ended
December 31, 2000 and 1999
(Unaudited)
Three Months Ended
December 31,
------------
2000 1999
---- ----
NET SALES $2,409,642 $3,088,487
LESS COST OF GOODS SOLD 1,120,431 1,555,262
---------- ----------
Gross Profit 1,289,211 1,533,225
ROYALTY AND LICENSING INCOME 252,732 265,507
---------- ----------
TOTAL OPERATING INCOME 1,541,943 1,798,732
OPERATING EXPENSES 1,724,647 1,708,923
---------- ----------
INCOME (LOSS) FROM OPERATIONS (182,704) 89,809
INTEREST INCOME (EXPENSE), NET 44,734 1,893
---------- ----------
INCOME (LOSS) BEFORE TAXES ON INCOME (137,970) 91,702
INCOME TAX BENEFIT (49,669) 0
---------- ----------
NET INCOME (LOSS) $ (88,301) $ 91,702
---------- ----------
BASIC EARNINGS (LOSS) PER
COMMON SHARE $ (0.02) $ 0.02
---------- ----------
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,417,582 5,019,551
---------- ----------
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ (0.02) $ 0.02
---------- ----------
DILUTED AVERAGE SHARES
OUTSTANDING 5,835,248 5,586,883
---------- ----------
See accompanying notes to the consolidated financial statements
3
LASER TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
For the Three Months Ended December 31, 2000
and December 31, 1999
(Unaudited)
December 31, December 31,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (88,301) $ 91,702
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 148,363 128,965
Loss on sale of property and equipment (12,600) (4,914)
Amortization of deferred share award 5,427
Changes in operating assets and liabilities:
Trade accounts receivable 589,032 (149,149)
Inventories (444,684) 260,750
Other assets (35,734) (4,387)
Accounts payable and accrued expenses (367,090) (601,315)
--------- ---------
Net cash provided by (used in) operating activities (211,014) (272,921)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments 457,470 14,717
Proceeds from sale of property and equipment (59,486) 835
Patent costs paid (27,720) (13,131)
Purchases of property and equipment 42,342 (31,807)
--------- ---------
Net cash provided by (used in) investing activities 412,606 (29,386)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt and capital leases (27,765) (30,699)
--------- ---------
Net cash used in financing activities (27,765) (30,699)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 173,827 (333,006)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 585,882 757,076
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 759,709 $ 424,070
--------- ---------
See accompanying notes to the consolidated financial statements
4
LASER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
(Information for the three months ended December 31, 2000 is unaudited)
NOTE 1 - Summary of Significant Accounting Policies
a. Basis of Presentation
The consolidated financial statements presented are those of Laser Technology,
Inc. and its wholly-owned subsidiaries; Laser Communications, Inc., Laser
Technology, U.S.V.I., Light Solutions Research, Inc. and International
Measurement and Control Company. Laser Technology, Inc. is presently engaged in
the business of developing, manufacturing and marketing laser based measurement
instruments.
In the opinion of management, the unaudited financial statements reflect all
adjustments, consisting only of normal recurring accruals necessary for a fair
presentation of (a) the consolidated statements of operations for the three
month periods ended December 31, 2000 and 1999, (b) the consolidated financial
position at December 31, 2000, and (c) the consolidated statements of cash flows
for the three month periods ended December 31, 2000 and 1999. The accounting
policies followed by the Company are set forth in the Notes to the Consolidated
Financial Statements of the Company for the fiscal year ended September 30,
2000. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
b. Earnings Per Share
SFAS No. 128 provides for the calculation of "Basic" and "Diluted" income (loss)
per share. Basic income (loss) per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted income (loss) per share
reflects the potential dilution of securities that could share in the earnings
of an entity that were outstanding for the period. Fully diluted income per
share for December 31, 2000 is not materially different from basic income per
share because the diluted shares would be antidilutive.
The following is provided to reconcile the earnings per share calculation:
Three Months Ended
December 31,
------------
2000 1999
---------------------------
Basic Earnings Per Common Share:
Numerator
Net Income (Loss) $ (88,301) $ 91,702
Denominator
Weighted Average Shares 5,417,582 5,019,551
----------- ----------
Per Share Amounts
Basic Earnings (Loss) $ (0.02) $ 0.02
----------- ----------
Diluted Earnings Per Common Share:
Numerator
Net Income (Loss) $ (88,301) $ 91,702
Denominator
Weighted Average Shares 5,417,582 5,019,551
Employee & Non Employee
Stock Options 417,666 567,332
----------- ----------
5,835,248 5,586,883
Per Share Amounts
Basic Earnings (Loss) $ (0.02) $ 0.02
----------- ----------
5
c. Operating Segments
The Company's primary operating segments for the three months ended
December 31, 2000 and 1999 were as follows:
Three Months Ended
December 31, 2000
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales........................................ 1,574,586 661,153 $173,903 2,409,642
Cost of goods sold............................... 726,353 305,423 88,655 1,120,431
Sales and marketing expenses..................... 532,394 255,620 23,058 811,072
Gross margin (after sales and marketing expenses) 315,839 100,110 62,190 478,139
Royalty and licensing income..................... 252,732 252,732
Total other operating expenses................... 913,575
Income (loss) from operations.................... (182,704)
Interest income (expense), net................... 44,734
Income (loss) before taxes on income............. (137,970)
Taxes on income (benefit)........................ ( 49,669)
Net income (loss)................................ (88,301)
Three Months Ended
December 31, 1999
Traffic Safety Survey/Mapping Other Royalties Total
-------------- -------------- ----- --------- -----
Net sales........................................ $2,236,389 $753,410 $ 98,688 $3,088,487
Cost of goods sold............................... 1,151,155 378,407 25,700 1,555,262
Sales and marketing expenses..................... 501,468 237,246 4,698 743,412
Gross margin (after sales and marketing expenses) 583,766 137,757 68,290 789,813
Royalty and licensing income..................... 265,507 265,507
Total other operating expenses................... 965,511
Income (loss) from operations.................... 89,809
Interest income (expense), net................... 1,893
Income (loss) before taxes on income............. 91,702
Taxes on income (benefit)........................ 0
Net income (loss)................................ $ 91,702
d. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 137 amended the effective date of SFAS No. 133 for
all fiscal quarters of fiscal years beginning after June 15, 2000. Management
believes the adoption of this statement will have no material impact on the
Company's financial statements
NOTE 2 - Subsequent Events
Not applicable.
6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended December 31, 2000 and December
31, 1999
For the three month periods ended December 31, 2000 and 1999, the following
table provides the percentage relationship to net sales of principal items in
the Company's Consolidated Statements of Operations. It should be noted that
percentages discussed throughout this analysis are stated on an approximate
basis.
Three Months Ended
December 31,
------------
2000 1999
---------------------------
Net sales 100% 100%
Cost of goods sold 46 50
--- ---
Gross profit 54 50
Royalty and licensing income 11 8
--- ---
Total operating income 64 58
Operating expenses 72 55
--- ---
Income from operations (8) 3
Interest income, net 2 -
--- ---
Income before taxes on income (6) 3
Tax (benefit) expense (2) -
--- ---
Net income (4)% 3%
=== ===
Revenues
The following sales analysis provides information as to the percentage of net
sales of the Company's primary product lines. Revenues realized from sales of
the Company's less significant revenue producing product lines are classified as
"Other" for presentation purposes.
Three Months Ended
December 31,
------------
2000 1999
---------------------------
Traffic Safety Systems $1,574,586 $2,236,389
Percentage of revenues 65% 72%
Survey and Mapping Systems 661,153 753,410
Percentage of revenues 27% 24%
Other 173,903 98,688
Percentage of revenues 8% 4%
Total Revenues $2,409,642 $3,088,487
---------- ----------
Total revenues for the first quarter ended December 31, 2000 decreased 22% to
$2,409,642 from $3,088,487 realized in the first quarter ended December 31,
1999.
7
Traffic Safety sales during the first quarter ended December 31, 2000 decreased
30% to $1,574,586 from $2,236,389 realized in the prior year first quarter.
Domestic sales decreased 18 percent to $796,767 from $969,057 while
International sales of Traffic Safety products declined 39% to $777,819 from
$1,267,332. The Company believes the decrease in domestic sales reflected delays
in government funded orders and the postponement in shipments of the Company's
new Angle Encoder because of the difficulty in securing certain product
components. The decrease in International sales reflects the customers
postponing orders because of delays in approvals to purchase from government.
Sales of the Company's Survey and Mapping products decreased 12% to $661,153 in
the first quarter ended December 31, 2000 as compared to $753,410 realized in
the year earlier like period. Domestic sales declined 23.5% to $405,494 from
$530,708. As with Traffic Safety products, difficulty in securing certain
product components restrained the production of finished goods, thereby limiting
the ability to ship orders. International sales increased 14.7% to $255,659 from
$222,702 demonstrating the acceptance of the Impulse and MapStar Compase Module
that replaced the Criterion series. International sales were not as
significantly impacted as Domestic sales by the restrained production schedule
due to time of placement and types of orders.
International sales comprised 43% of net sales for the first quarter ended
December 31, 2000 period as compared to 48% for the corresponding quarter ended
December 31, 1999. Increased competition for laser products internationally and
the strong U.S dollar has had a negative impact in International sales this
period.
Gross profit as a percentage of net sales was 54% for the quarter ended December
31, 2000 period compared to 50% for the quarter ended December 31, 1999. The
increase in gross profit margins was primarily due to improving sales of second
generation products such as the UltraLyte series, increased output on the
production line and a reduction in specific materials cost.
Royalty and licensing income from the Company's licensees was $252,732 in the
first quarter ended December 31, 2000 compared to $265,507 in quarter ended
December 31, 1999, representing a 4.8% decrease. This modest decline is
attributed to the increased sales administration fees paid by the licensee which
reduced the net sales base subject to royalty payments. Management believes that
royalty income related to the Company's licensing agreements will continue to
beneficially impact the Company's operating results.
Total operating expenses increased 1% to $1,724,647 for the quarter ended
December 31, 2000 from $1,708,923 for the quarter ended December 31, 1999. The
decline in sales in the first quarter fiscal year 2001 resulted in an increase
of total operating expenses as a percentage of net sales to 72% from 55% for the
first quarter fiscal year 2000.
Due to decreased revenues the Company realized a loss from operations of
$182,704 compared to a profit from operations of $89,809 for the quarter ended
December 31, 1999. After interest and income tax, the Company realized a net
loss of $88,301 in the quarter ended December 31, 2000, or a loss of $.02 per
share, compared to a net income of $91,702 in the quarter ended December 31,
1999, or $.02 basic earnings per share.
Liquidity and Capital Resources
At December 31, 2000, the Company had working capital of $7,544,490. The
Company's present working capital is expected to adequately meet the Company's
needs for at least the next twelve months.
For the three month period ended December 31, 2000, cash used by operating
activities was $211,014. Cash was decreased by a net loss of $88,301, an
increase in inventory of $444,684, a decrease in accounts payable and accrued
expenses of $367,090, offset by depreciation and amortization expense of
$148,363 and reductions in accounts receivable of $589,032. Cash provided by
investing activities totaled $412,606, which reflected a decrease in investments
of $457,470, net purchases of property and equipment of $17,144 and patent
related costs of $27,720. Cash used in financing activities of $27,765 reduced
long-term debt. For the three month period ended December 31, 2000, cash and
cash equivalents increased by $173,827. This decrease in investments is
primarily related to the Company beginning to increase inventories to make a
transition from turn key purchases to consignment agreements with contract
manufacturers. Consignment arrangements with contract manufacturers will allow
the Company to control the procurement of parts and inventory levels providing
the ability for delivery of finished products based on a forecasted
manufacturing schedule, this will decrease the potential for delayed product to
effect customer shipments and future revenues. On November 2, 2000 the Company
made a non cash transaction of $623,625, that was accrued at September 30, 1999
(see Part II, Item 1), issuing 475,000 shares of common stock in settlement of
the Shareholder Derivative and Class Action Suits.
For the three month period ended December 31, 1999, cash used by operating
activities was $272,921. Cash was increased by net income of $91,702, and by
depreciation expense of $128,965 and reductions in inventory of $260,750, offset
by an increase in accounts receivable of $149,149 and reductions of accounts
payable and accrued expenses of $601,315. Cash used in investing activities of
$29,386 for purchases of property and equipment and patent related costs. Cash
used in financing activities of $30,699
8
reduced long-term debt. For the three month period ended December 31, 1999, cash
and cash equivalents decreased by $333,006. This decrease is primarily related
to the Company beginning to pay some of the costs associated with the 1999
settlement and restructuring costs that were accrued at September 30, 1999 (see
Part II, Item 1) as well as reductions in accounts payable.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties including but not limited to, continued acceptance of the
Company's products in the marketplace, competitive factors, potential changes in
the budgets of federal and state agencies, compliance with current and possible
future FDA or environmental regulations, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange Commission.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On February 10, 1999 a securities class action complaint entitled Moshe
Rosenfeld, On Behalf of Himself and All Others Similarly Situated, vs. Laser
Technology, Inc., David Williams, Pamela Sevy, Dan H. Grothe, Jeremy Dunne and
H. DeWorth Williams, was filed in the United States District Court, District of
Colorado (Case no. 99-Z-266). The Complaint alleged that the Company and certain
of its officers and directors violated federal securities laws, particularly
Sections 10(b) and 20 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"). Specifically, the complaint alleged that the Company's financial
statements were false and misleading during the "class period" (February 12,
1996 to December 23, 1998) and that the Company made certain false or misleading
statements regarding the Company's financial statements during this period.
The Company believes the action was premised in part on the resignation of the
Company's independent accountant, BDO Seidman, LLP ("BDO"), on December 21,
1998, and the resignation of the members of the Audit Committee of the Board of
Directors on January 7, 1999. The resigning members of the Audit Committee
comprised the Special Audit Committee (the "Special Committee"). They resigned
from the Board of Directors as a result of disagreements between management and
the Special Committee. BDO also withdrew its opinions on the previously issued
certified financial statements for the fiscal years 1993, 1994, 1995, 1996 and
1997. At the time of BDO's resignation, the Special Committee was conducting an
independent investigation into the Company's accounting records and alleged
irregularities relating to the Company's accounting records. Following the
announcement of the resignation of BDO and withdrawal of five years of audited
financial statements, the American Stock Exchange suspended trading in the
Company's shares on December 23, 1998. Trading was resumed on March 22, 1999.
In its complaint, the plaintiff alleged that the resignation of BDO and the
three directors was due to the Company's alleged unreliable and misleading
financial statements. Plaintiff's complaint further alleged violations of
Section 10(b) of the 1934 Act and Rule 10b-5 promulgated thereunder.
Five additional securities class actions and one stockholder's derivative suit
were filed against the Company and certain of its former and present officers
and directors. All cases were filed in the United States District Court for the
District of Colorado and were consolidated.
On October 6, 1999, the Company announced that it had entered into an "agreement
in principle" for the settlement of all the aforementioned actions. On December
10, 1999, a Stipulation of Settlement was executed by the parties and filed with
the Court. On October 13, 2000, the Court issued its Final Judgment and Order of
Dismissal With Prejudice in the action. As a provision of the Final Judgment,
the Court ordered the Company to issue 475,000 shares of its common stock and
ordered payment of $850,000 in the settlement of the action. Following the
appropriate hearing, the Court found that the aggregate settlement amount and
other terms of the settlement reflected a good faith settlement of the actions.
The Company reached an agreement with its insurance carrier whereby $740,000 of
the cash portion of the settlement was paid by the carrier into the settlement
escrow account. The remaining $110,000 in cash was paid into the settlement
escrow account by certain defendants involved in the settlement, including the
Company. The 475,000 shares were also issued and delivered to the settlement
escrow account. These shares are equal to approximately 8.7% of the Company's
total shares currently outstanding.
Pursuant to the settlement, the 475,000 shares will be distributed at a date to
be determined by the plaintiffs and their counsel. One-third of the shares will
be available for trading immediately, one-third will be available for trading 60
days after the initial distribution, and the final third will be available for
trading 120 days from the initial distribution.
9
As a condition of the settlement, the Company is released from all future claims
and actions by the plaintiffs and class members related to the pending actions.
The costs of the settlement together with projected legal expenses involved in
completing the settlement have been accrued in the Company's fiscal 1999
financial statements except for $18,430, which was recorded during fiscal 2000.
On February 8, 2000, the Company filed a complaint against Nikon, Inc. ("Nikon")
in U.S. District Court for the District of Colorado (Civ. No. 00-B-272) for
selling and using a product infringing one of the Company's patents. On July 26,
2000, the Company amended the complaint to include allegations that Nikon's
conduct infringed a second patent obtained by the Company. On August 9, 2000,
Nikon filed an answer and counterclaims, seeking a declaratory judgment that
Nikon did not infringe the patents, that the patents are invalid and
unenforceable, and that Nikon has been damaged by willful and unfounded
assertions of infringement by the Company. The counterclaims do not quantify the
damages sought. On September 28, 2000, upon a stipulated motion to withdraw, the
Court ordered the dismissal, without prejudice to reassertion, of the
counterclaims asserting that the patents-in-suit are invalid and unenforceable.
The Company is vigorously prosecuting the lawsuit and defending the
counterclaims. The parties have just begun formal discovery in this matter, and
the Company recently filed a motion seeking to amend the complaint to add as a
defendant Nikon's Taiwanese supplier, Asia Optical Co., Inc. The Court has not
yet ruled on this motion. A trial is scheduled for March 25, 2002.
10
PART II.
Item 2. Changes in Securities
During the three month period ended December 31, 2000, the Company issued
475,000 shares of authorized, but previously unissued common stock, as partial
consideration for the settlement of the class action and derivative action
lawsuits filed against the Company in 1999. The shares were issued on November
02, 2000 and were delivered to the special settlement escrow account established
to facilitate the settlement of the lawsuits. The shares are to be held in the
escrow account and delivered to approximately 812 claimants pursuant to a
schedule prepared by the plaintiffs and their counsel. As further consideration
for the issuance of the shares, the Company was released from all future claims
and actions by the plaintiffs and class members of the suits.
Issuance of the 475,000 shares was pursuant to the terms and conditions
of the Final Judgment and Order of Dismissal with Prejudice issued by the court
in the action. The shares are deemed "exempted securities" and were issued
pursuant to the exemption from registration under the Securities Act of 1933, as
amended, provided by Section 3(a)(10) of such Act. Section 3(a)(10) provides an
exemption for:
"any security which is issued in exchange for one or more bona fide
outstanding securities, claims or property interests, or partly in
such exchange and partly for cash, where the terms and conditions of
such issuance and exchange are approved, after a hearing upon the
fairness of such terms and conditions at which all persons to whom it
is proposed to issue securities in such exchange shall have the right
to appear, by any court, or by any official or agency of the United
States, or by any State or Territorial banking or insurance
commission or other governmental authority expressly authorized by
law to grant such approval."
To satisfy the provisions of Section 3(a)(10), an issuer must satisfy
certain conditions, including the following:
* Securities must be issued in exchange for securities, claims or
property interests; they cannot be offered for cash;
* A court or authorized governmental entity must approve the
fairness of the terms and conditions of the exchange;
* The reviewing court or authorized governmental entity must find
the terms and conditions of the exchange are fair and be advised that
the issuer will rely on the Section 3(a)(10) exemption;
* A court or authorized governmental entity must hold a hearing
before approving the fairness of the transaction, which hearing must
be open to the persons to whom the securities would be issued in the
proposed exchange; and
* Adequate notice must be given to those persons and there cannot
be any improper impediments to the appearance by those persons at
the hearing.
The Company's reliance upon the Section 3(a)(10) exemption is premised
upon the fact that the shares were issued pursuant to the exchange of a legal
claim against the Company and an appropriate court, having held an open hearing
upon proper notice, approved the fairness of the terms and conditions of the
transaction. Accordingly, the shares were issued as exempted securities which do
not require a restrictive legend relating the resale of the shares, except as
set forth by the terms of the settlement.
Item 3. Defaults upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the first quarter ended December
31, 2000.
Item 5. Other Information
This Item is not applicable to the Company.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER TECHNOLOGY, INC.
----------------------
7070 South Tucson Way
Englewood, Colorado 80112
Date: February 14, 2001 By /s/ Eric A. Miller
------------------
Eric A. Miller
President, Chief Executive Officer and Director
Date: February 14, 2001 By /s/ Elizabeth A. Hearty
-----------------------
Elizabeth A. Hearty
Corporate Secretary and Controller
12