-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UzFmNzoXJx+M9r2TR3Iul+PKcioXmCEO4C20dUa2TViT+xH8uzVvaLCygMKhtMRW ethJ9FWch3qE7nWaytIIlA== 0001021890-96-000022.txt : 19961118 0001021890-96-000022.hdr.sgml : 19961118 ACCESSION NUMBER: 0001021890-96-000022 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LASER STORM INC CENTRAL INDEX KEY: 0001001879 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 841139159 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-28254 FILM NUMBER: 96666789 BUSINESS ADDRESS: STREET 1: 7700 CHERRY CREEK SO DR STREET 2: UNIT 301 CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3037518545 MAIL ADDRESS: STREET 1: 7700 CHERRY CREEK S DR STREET 2: UNIT 301 CITY: DENVER STATE: CO ZIP: 80231 10QSB/A 1 AMENDED QUARTERLY REPORT ON FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSBA (Mark One) [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: 0-28254 ------------------------------- LASER STORM, INC. (Exact name of small business issuer as specified in its charter) Colorado 84-1139159 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 7808 Cherry Creek South Drive, Unit # 301 Denver, Colorado 80231 (Address of principal executive offices) Telephone: (303) 751-8545 (Issuer's telephone number) NA --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Outstanding at Class November 12, 1996 ----- ----------------- Common Stock, $.001 par value 3,821,211 Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] LASER STORM, INC. FORM 10-Q JUNE 30, 1996 INDEX ----- Page No. ------- PART I. Financial Information Item 1. Condensed Balance Sheets - June 30, 1996 and December 31, 1995 3 Condensed Statements of Operations - Three and six months ended June 30, 1996 and 1995 4 Condensed Statements of Cash Flows - Six months ended June 30, 1996 and 1995 5 Condensed Statement of Changes in Stockholders Equity Six months ended June 30, 1996 6 Notes to Condensed Financial Statements 7-8 Item 2. Management's Discussion and Analysis or Plan of Operation 9-11 PART II. Other Information NA SIGNATURES 12 2
LASER STORM, INC. CONDENSED BALANCE SHEET ASSETS Unaudited Audited June 30, 1996 December 31, 1995 -------------- ----------------- CURRENT ASSETS: Cash and equivalents ...................................................................... $ 3,803,878 $ 10,473 Accounts receivable-trade, net ............................................................ 824,029 613,949 Notes receivable, current ................................................................. 271,589 -- Inventories ............................................................................... 456,487 442,545 Deferred income taxes ..................................................................... 145,000 111,000 Prepaid expenses and other ................................................................ 248,096 57,524 ----------- ----------- Total current assets ............................................................ 5,749,079 1,235,491 ----------- ----------- PROPERTY AND EQUIPMENT, net .................................................................. 540,033 337,602 OTHER ASSETS: Deferred offering costs ................................................................... -- 277,929 Software development, net ................................................................. 72,527 88,536 License fees, net ......................................................................... 50,066 53,667 Notes receivable, non-current ............................................................. 348,684 -- Deposits and other ........................................................................ 43,128 29,473 ----------- ----------- Total other assets .............................................................. 514,405 449,605 ----------- ----------- TOTAL ASSETS ................................................................................. $ 6,803,517 $ 2,022,698 =========== =========== LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES: Accounts payable .......................................................................... $ 251,957 $ 722,755 Accrued expenses .......................................................................... 171,597 104,019 Accrued compensation ...................................................................... 172,606 127,238 Income taxes payable ...................................................................... 10,000 60,000 Current maturities of long-term debt ...................................................... 7,940 20,294 Customer deposits and deferred revenue .................................................... 150,507 214,805 Contingent settlements .................................................................... -- 270,000 ----------- ----------- Total current liabilities ....................................................... 764,607 1,519,111 ----------- ----------- LONG TERM DEBT, less current maturities DEFERRED INCOME TAXES ........................................................................ 33,942 30,884 COMMITMENTS AND CONTINGENCIES ................................................................ 51,000 60,000 STOCKHOLDERS EQUITY: Preferred stock, $.001 par value; 2,000,000 shares authorized: Series A 12% Convertible Cumulative Preferred Stock, 140,000 shares issued and outstanding at December 31, 1995, liquidation preference of $718,000 Series B 12% Convertible Cumulative Preferred Stock Common Stock, $.001 par value; 20,000,000 shares authorized; 1,601,250 and 3,726,211 shares issued and outstanding at December 31, 1995 and June 30, 1996, respectively ........................................................ 3,726 1,601 Additional paid in capital ................................................................ 6,186,662 575,136 Accumulated deficit ....................................................................... (236,420) (164,174) ----------- ----------- Total stockholders equity ...................................................... 5,953,968 412,703 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................................... $ 6,803,517 $ 2,022,698
See accompanying notes to condensed financial statements 3
LASER STORM, INC. CONDENSED STATEMENT OF OPERATIONS Quarter Ended June 30 Six Months Ended June 30 ------------------------------ ------------------------------ 1996 1995 1996 1995 ---- ---- ---- ---- NET REVENUES ............................................ $ 1,880,304 $ 1,290,493 $ 2,879,389 $ 2,169,436 COST OF GOODS SOLD ...................................... 715,128 558,893 1,133,549 1,023,959 ----------- ----------- ----------- ----------- GROSS PROFIT ............................................ 1,165,176 731,600 1,745,840 1,145,477 EXPENSES: General and administrative ........................... 544,918 298,598 1,059,719 617,705 Selling and marketing ................................ 360,049 194,744 627,634 353,037 Depreciation and amortization ........................ 61,395 25,370 105,313 43,363 Product development .................................. 52,193 37,095 101,433 83,161 ----------- ----------- ----------- ----------- Total expenses ............................. 1,018,555 555,807 1,894,099 1,097,266 ----------- ----------- ----------- ----------- OPERATING INCOME ........................................ 146,621 175,793 (148,259) 48,211 Interest income (expense) ............................ 35,620 754 33,013 (1,166) ----------- ----------- ----------- ----------- INCOME BEFORE TAXES ..................................... 182,241 176,547 (115,246) 47,045 Income tax (expense) benefit ......................... (67,000) -- 43,000 -- ----------- ----------- ----------- ----------- NET INCOME (LOSS) ....................................... $ 115,241 $ 176,547 $ (72,246) $ 47,045 ----------- ----------- ----------- ----------- Accrued preferred dividends ............................. $ (45,891) $ -- $ (45,891) $ -- ----------- ----------- ----------- ----------- Income (loss) applicable to common shareholders ......... $ 69,350 $ 176,547 $ (118,135) $ 47,045 =========== =========== =========== =========== Weighted average common shares outstanding .............. $ 3,414,000 $ 2,033,000 $ 2,395,000 $ 2,033,000 ----------- ----------- ----------- ---------- Earnings per share applicable to common shareholders .......................................... $ .02 $ .09 $ (.05) $ .02 =========== =========== =========== ===========
See accompanying notes to condensed financial statements 4
LASER STORM, INC. CONDENSED STATEMENT OF CASH FLOWS Six Months Ended June 30 ------------------------ 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ( loss ) ..................................................................... $ (72,246) $ 47,045 Adjustments to reconcile net income ( loss ) to net cash provided by (used in ) operating activities Depreciation and amortization ........................................................ 105,313 43,364 Loss on asset disposition ............................................................ (11,375) -- Provision for bad debts .............................................................. 10,000 -- Deferred income taxes ................................................................ (43,000) -- Changes in operating assets and liabilities ( Increase ) decrease in: Accounts receivable ........................................................... (226,513) 139,074 Notes receivable .............................................................. (620,273) -- Inventories ................................................................... (13,942) 214,628 Other ......................................................................... (203,792) (51,661) Increase ( decrease ) in: Accounts payable .............................................................. (464,799) (11,810) Accrued expenses .............................................................. 112,946 12,014 Income taxes payable .......................................................... (50,000) -- Customer deposits and deferred revenue ........................................ (64,299) (169,962) Contingent settlements ........................................................ (270,000) -- ----------- ----------- Net cash provided by ( used in ) operating activities ................................... (1,811,980) 222,692 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for property and equipment ......................................... (251,760) (34,609) Software development costs .............................................................. -- (15,251) License costs ........................................................................... (25,000) -- ----------- ----------- Net cash provided by ( used in ) investing activities ............................ (276,760) (49,860) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of Series B 12% Convertible Cumulative Preferred Stock ............... 889,985 -- Proceeds from sale of Common Stock ...................................................... 4,723,526 -- Deferred offering costs ................................................................. 277,929 (10,000) Principal payments on notes payable ..................................................... (9,295) (3,971) ----------- ----------- Net cash provided by ( used in ) financing activities ............................ 5,882,145 (13,971) ----------- ----------- INCREASE ( DECREASE ) IN CASH .............................................................. 3,793,405 158,861 CASH, at beginning of period ............................................................... 10,473 16,228 ----------- ----------- CASH, at end of period ..................................................................... $ 3,803,878 $ 175,089 =========== ===========
See accompanying notes to condensed financial statements 6
LASER STORM, INC. CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Six Months Ended June 30, 1996 Preferred Stock Common Stock ---------------------------- ------------------------ Shares Amount Shares Amount ------ ------ ------ ------ BALANCES, December 31, 1995 .................... 140,000 140 1,601,250 $ 1,601 Private placement of Series B 12% Convertible Cumulative Preferred Stock .... 200,000 200 Offering costs related to private placement . Public offering of 1,495,000 units .......... 1,495,000 1,495 Offering costs related to public offering ... Conversion of Series A and B 12 % Convertible Cumulative Preferred Stock ................ (340,000) (340) 629,961 630 Net income ( loss ) ......................... BALANCE, June 30, 1996 ......................... -- $ -- 3,726,211 $ 3,726 ----------- ----------- ----------- ----------- Additional Paid-In Accumulated Capital Deficit Total ---------- ----------- ----- BALANCES, December 31, 1995 .................... $ 575,136 $ (164,174) $ 412,703 Private placement of Series B 12% Convertible Cumulative Preferred Stock .... 999,800 1,000,000 Offering costs related to private placement . (109,815) (109,815) Public offering of 1,495,000 units .......... 5,978,505 5,980,000 Offering costs related to public offering ... (1,256,474) (1,256,474) Conversion of Series A and B 12 % Convertible Cumulative Preferred Stock ................ (480) (200) Net income ( loss ) ......................... (72,246) (72,246) ------------ ---------- ----------- BALANCE, June 30, 1996 ......................... $ 6,186,662 $ (236,420) $ 5,953,968
See accompanying notes to condensed financial statements 6 LASER STORM, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Interim Financial Statements: In the opinion of the management of the Company, the accompanying unaudited financial statements include all adjustments necessary, all of which were of a normal recurring nature, to make the financial statements not misleading. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the fiscal year ended December 31, 1995 contained in the Company's definitive prospectus dated April 23, 1996. The results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results to be expected for the full year. 2. Public Offering: In April 1996, the Company completed a public offering of 1,495,000 units at a price of $4.00 per unit. Each unit consists of one share of common stock and one warrant. The warrants are exercisable for a period of five years and entitle the holder to purchase one share of common stock at an exercise price of $5.00 per share. However, if the Company does not report net after tax earnings of at least $.40 per share (target earnings) for the four fiscal quarters ending March 31, 1997, then the exercise price per share will be reduced by $.20 for each $.01 shortfall from the target earnings, but such exercise price will not be reduced below $1.00 per share. The warrants are redeemable by the Company under certain circumstances at $.05 per warrant provided that for at least 30 consecutive trading days the market price of the Company's common stock is at least $7.00 per share. In connection with the offering, the underwriters received a 10% discount and a 3% nonaccountable expense allowance and, subject to certain limitations, the representative of the underwriters will receive a 4% commission on proceeds received from the exercise of warrants solicited by the representative of the underwriters. The representative of the underwriters also received a warrant, exercisable for 130,000 units at $5.40 per unit for a period of four years, beginning on April 23, 1997. Net proceeds from the public offering were $4,723,526, after paying the aforementioned discounts and expenses to the underwriters and other offering costs totaling $479,074. Also in April 1996, an additional 629,961 units were issued as a result of the conversion of 140,000 shares of Series A 12% Convertible Cumulative Preferred Stock and 200,000 shares of Series B 12% Convertible Cumulative Preferred Stock. 3. Notes Receivable: During the quarter ended June 30, 1996, the Company offered a financing program to its customers for sales of its systems and arenas. The program required an advanced deposit ranging from 30% to 40% and the balance plus interest to be paid over a period ranging from 24 to 36 months. Sales under this program were $941,554 and the amount financed was $620,284. 4. Earnings Per Share: For the quarter and six months ended June 30, 1995, the calculation of weighted average shares outstanding includes all common stock options and the Series A and Series B Preferred stock, which were issued prior to the Company's initial public offering at prices below the $4.00 per unit offering price. Such preferred stock and options to purchase common stock are included in the calculation for the entire six months ended June 30, 1995 and from January 1, 1996 through April 23, 1996, using the treasury stock method based on the $4.00 per unit offering price. For the six months ended June 30, 1996, common stock equivalents are excluded from the weighted average shares since they are anti-dilutive. 7 LASER STORM, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS CONTINUED 5. Concentration of Credit Risk: At June 30, 1996, cash and equivalents includes an investment in a single U.S. Treasury Bill with an amortized cost of $1,987,000. The Company also had investments in commercial paper issued by major U.S. corporations of approximately $995,000 and $648,000. 6. Subsequent Event: In July 1996 the Company purchased an existing Laser Storm Game Center located in Longmont, Colorado from unaffiliated persons. The total consideration was $160,000, which was paid at closing by paying $30,000 in cash and by paying the balance of $130,000 by issuing 32,500 shares of the Company's common stock to one of the sellers. Pursuant to the terms of the asset purchase agreement, the Company is registering the 32,500 shares for resale. The seller has 90 days from the date of the prospectus to sell the shares. If the seller has sold the shares for less than $130,000, the Company will immediately pay the seller the difference between the sales price of the shares and #130,000. Any remaining shares will be returned to the Company. If the sales price is more than $130,000, the Company has no further obligation to the seller and the seller is entitled to retain any excess shares or purchase price. In connection with the purchase, the Company also loaned the seller approximately $46,380 to pay the seller's bank loan. The loan is evidenced by a promissory note and is secured by a first in priority interest in the shares. All proceeds from the sale of the shares shall be applied first to retiring the loan. 8 LASER STORM, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS RESULTS OF OPERATIONS: Net revenues for the quarter ended June 30, 1996, increased by 46% to $1,880,304, as compared to $1,290,493 for the quarter ended June 30, 1995. The increase was the result of new customers ordering larger player systems and arenas and a 10% price increase implemented during the quarter ended June 30, 1996. The average sales price per system (net of discounts) has risen to $87,000 for the quarter ended June 30, 1996, from $66,000 for the quarter ended June 30, 1995. Sales of these larger systems, arenas and accessories were stimulated by a new financing program offered by the Company. Approximately 50% of the net revenues during the quarter ended June 30, 1996 were financed under this program which requires an advance deposit ranging from 30% to 40% and the balance to be paid over a period ranging from 24 to 36 months. Also contributing to the increase in revenues was the promotion of upgrade options to the Company's existing customer base and increased sales and marketing efforts. Discounts for the quarter ended June 30, 1996 were 11% of gross revenues compared to 3% for the quarter ended June 30, 1995. This increase is the result of negotiating down the 10% price increase on orders placed during the past six months that did not ship until the second quarter. A specific breakdown of revenues is as follows: Quarter Ended June 30, ---------------------------- 1996 1995 ---- ---- System Sales ............................. $ 1,116,170 $ 827,636 Upgrade Sales ............................ 118,986 -- Arena Sales .............................. 509,530 204,534 Warranty Sales ........................... 98,449 60,327 Accessories Sales ........................ 263,174 237,691 Discounts ................................ (226,005) (39,695) ----------- ----------- Net Revenues ........... $ 1,880,304 $ 1,290,493 =========== =========== Net revenues for the six months ended June 30, 1996 increased 33% to $2,879,389, as compared to $2,169,436 for the six months ended June 30, 1995. The increase was lower than that achieved during the second quarter as a result of the cyclical nature of the business whereby the first quarter is historically the lowest sales quarter of the year. Additionally, the Company's senior management was focused on completing the public offering which was completed on April 23, 1996 and opening Company-owned and Company operated facilities. A specific breakdown of revenues is a follows: Six Months Ended June 30, ---------------------------- 1996 1995 ---- ---- System Sales ............................. $ 1,658,934 $ 1,464,523 Upgrade Sales ............................ 118,986 -- Arena Sales .............................. 734,646 379,632 Warranty Sales ........................... 178,242 101,939 Accessories Sales ........................ 442,869 355,259 Discounts ................................ (254,288) (131,917) ----------- ----------- Net Revenues ........... $ 2,879,389 $ 2,169,436 =========== =========== 9 LASER STORM, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (Continued) Gross profit for the quarter ended June 30, 1996 increased 59% to $1,165,176 as compared to gross profit of $731,600 for the quarter ended June 30, 1995. Gross profit as a percent of net revenues increased during the quarter ended June 30, 1996 to 62% compared to 57% for the quarter ended June 30, 1995. Gross profit for the six months ended June 30, 1996 increased by 52% to $1,745,840 as compared to gross profit of $1,145,477 for the six months ended June 30, 1995. Gross profit as a percent of net revenues increased from 53% to 61% for the six months ended June 30, 1995, and 1996, respectively. The increase in the gross profit percentage is the result of the sales price increases on systems and arenas and lower direct material and labor costs. The lower direct material costs is the result of efficiencies realized from increased volumes and improved purchasing management. The Company has expanded its vendor base and improved its vendor selection processes in order to ensure that the Company receives the most competitive prices on its materials. The lower direct labor costs are the result of efficiencies being realized from increased volumes as well as improvements in the assembly processes. Selling, general and administrative expenses ("SGA expenses") increased by 83% to $904,967 for the quarter ended June 30, 1996, compared to $493,342 for the quarter ended June 30, 1995. "SGA expenses" as a percent of net revenues increased from 38% to 48% for the quarters ending June 30, 1995 and 1996, respectively. "SGA expenses" increased $716,611 or 74% to $1,687,353 for the six months ended June 30, 1996, compared to $970,742 for the six months ended June 30, 1995. "SGA expenses" as a percent of net revenues increased from 45% to 59% for the six month periods ending June 30, 1995 and 1996, respectively. The increases are primarily the result of additions to administrative and sales staffs to accelerate the opening of Company-owned and Company operated facilities and as a result of the Company becoming a publicly-held company. During the six months ended June 30, 1996, the Company increased its sales and marketing efforts associated with opening Company-owned and Company operated facilities by approximately $300,000. The Company believes that it is now positioned to meet its objectives of opening future Company-owned and Company operated facilities. As of June 30, 1996 there were no associated revenues generated from these recent efforts. Additionally, the Company incurred approximately $250,000 in expenditures related to becoming a public company and moving into a new facility which meets its capacity requirements for the foreseeable future. Product development expenses increased 41% to $52,193 for the quarter ended June 30, 1996, compared to $37,095 for the quarter ended June 30, 1995. These expenses increased 22% to $101,433 for the six months ended June 30, 1996 compared to $83,161 for the six months ended June 30, 1995. The Company is planning on continuing to increase its investment in the design and development of interactive laser tag game systems. The Company generated $35,620 of interest income for the quarter ended June 30, 1996 compared to $754 during the same period last year. Interest income was $33,014 for the six months ended June 30, 1996 compared to interest expense of $1,166 for the six months ended June 30, 1995. Pending the capital requirements associated with opening new Company-owned and Company operated facilities, proceeds from the public offering in April 1996 are being invested in short term, interest bearing investment grade securities. 10 LASER STORM, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (Continued) Operating income for the quarter ended June 30, 1996 was $146,621 compared to $175,793 for the quarter ended June 30, 1995. The Company experienced a $115,245 operating loss during the six months ended June 30, 1996 compared to operating income of $47,045 for the six months ended June 30, 1995. The lower operating income for the quarter ended June 30, 1996 and the operating loss for the six months ended June 30, 1996 is the result of additional "SGA expenses" incurred in establishing Company-owned and Company operated facilities and the cost of the Company being a publicly-held company. The provision for income taxes of $67,000 for the quarter ended June 30, 1996 is based upon an effective tax rate of 37%. The Company realized an income tax benefit of $43,000 during the six months ended June 30, 1996. The results for 1995 reflect no tax provision as a result of the full utilization of net operating loss carryovers from prior years. LIQUIDITY AND CAPITAL RESOURCES The Company's operations used cash flow of $1,811,980 for the six months ended June 30, 1996, but provided cash flow of $222,692 for the same period ending June 30, 1995. Cash flow was used during the first six months of 1996 to fund sales made through both the new extended term financing program being offered by the Company ($620,273) and the increase in the accounts receivable ($226,513). Additionally, payments were made on both accounts payable ($464,799), which had become aged when cash was being conserved until the public offering was completed; and to settle the contingent liabilities ($242,500) the Company had incurred during 1995. The Company is pursuing an opportunity to sell the total receivables associated with the extended term financing to an independent third party leasing company. Capital expenditures for the six months ended June 30, 1996 were $251,760 verses $34,609 for the six months ended June 30, 1995. The Company is funding the up-front capital requirements associated with opening Company owned facilities and facilities for which the Company has a revenue sharing arrangement. Additionally, the Company purchased new trade show equipment and made some leasehold improvements in its new office and assembly space. Financing activities provided $5,882,145 of cash flow for the six months ended June 30, 1996 as compared to a use of cash of $13,971 for the six months ended June 30, 1995. In February 1996, the Company completed the sale of 200,000 shares of Series B 12% Convertible Cumulative Preferred Stock and received net proceeds of $889,985. In April 1996, the Company completed the sale of 1,495,000 units at $4.00 per unit. Each unit sold consisted of one share of common stock and one warrant. Net proceeds from the sale were $4,723,526. Management believes current cash flows of the Company, when combined with the proceeds from the public offering of units, will support the Company's current operations associated with direct system and arena sales and opening and operating Company-owned Laser Storm(R) game facilities and will provide working capital for anticipated growth. 11 LASER STORM, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (Continued) The Company may require additional capital to finance enhancements to, and expansion of, its' manufacturing capacity and future Laser Storm(R) game facilities. Management believes that the need for working capital will continue to grow at a rate generally consistent with the growth of the Company's operations. Although no assurance can be given that financing will be available on terms acceptable to the Company, the Company may seek additional funds, from time to time, through public or private debt or equity offerings, bank borrowings or leasing arrangements. 12 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LASER STORM, INC. DATE: November 13, 1996 By: /s/ William R. Bauerle ------------------------------ William R. Bauerle President DATE: November 13, 1996 By: /s/ John E. McNutterle ------------------------------ John E. McNutt Vice President, Finance EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 3,803,878 0 1,483,719 39,417 456,487 5,749,079 699,937 159,904 6,803,517 764,607 0 0 0 3,726 5,950,242 6,803,517 2,879,389 2,879,389 1,133,549 1,133,549 1,894,099 10,000 0 (115,245) (43,000) (72,245) 0 0 0 (72,245) (.03) 0
-----END PRIVACY-ENHANCED MESSAGE-----