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 ALBUQUERQUE, N.M., Dec. 1 /PRNewswire/ -- The following is a letter from Lasertechnics Inc.'s (NASDAQ: LASX) Chairman and Chief Executive Officer, Richard M. Clarke:

Dear Stockholders,
 Since I last wrote to you in April in our 1992 shareholder report, your board of directors and management team have been very active in focusing the resources of our imaging and laser marking business units to maximize their potential for longterm profitability. I would like to take this opportunity to share information with you about the major steps that have been taken during the last seven months to reposition and expand our two businesses.
 In August of this year we started operating Sandia Imaging Systems (SIS), a controlled subsidiary of the company. SIS is headquartered in Carrollton, Texas, in the greater Dallas area. SIS was formed to more effectively develop the opportunities we have identified in the fast moving field of high-resolution imaging, to segregate and distinguish imaging from our laser marking business and to position SIS so that it could become in the future a separately traded public company. Lasertechnics has contributed the assets of its DIR printer division to SIS as well as its 43 percent ownership position and distribution rights with Printis, our French partner engaged in the development of dye diffusion color printing technology. A dedicated management team of seasoned imaging industry professionals has been assembled at SIS under the direction of President and Chief Executive Officer George Peterson. George was previously the chief operating officer of Varitronic Systems Inc., which he joined following a series of progressively more responsible positions with Dataserv, EDS, Xerox and Philips Information Systems.
 Our focus for the laser marking business has been to increase sales in order to improve profitability. Gene Bourque, president of Lasertechnics, and his management team have added new sales managers who possess many years of industrial coding experience, particularly in the use of ink jet systems. Under the direction of this expanded sales management team, 50 percent of the manufacturers representative organizations that sell our products are new. Our sales organization has more sales personnel calling on our potential customers and has the experience to cover a broader range of applications for our equipment. We have been pleased to see sales and backlog steadily increasing. At the end of the third quarter our backlog for laser marketing equipment was over $1.6 million. This compares to a backlog of approximately $240,000 at the end of the third quarter in 1992.
 Before I provide details about the progress of each business I would like to summarize our financial performance after three quarters. Attached is a schedule that shows abbreviated results for the third quarter and nine months ended for the current and previous year. Consolidated sales for the quarter were $2.2 million. This meets the third quarter sales plan we established early in 1993 and is almost three-quarters of a million dollars ahead of the same period last year. based on our present outlook for the fourth quarter we believe that total sales for 1993 will meet our 1993 plan of $8.1 million. Total sales in 1992 were $6.7 million.
 The net loss at nine months is almost $1.2 million. This is over $350,000 more than the loss at the same time last year and reflects the expenses we have incurred to invest in the start up of SIS and the increased selling effort in our laser marking business. However, based on the progress we believe we will make in the fourth quarter of 1993 we are tentatively projecting a total loss for 1993 of between $1.3 and $1.5 million. This compares to a total loss of $2.1 million in 1992.
 The loss for 1993 could be higher depending on the manner in which we account for certain financing activities. In late October, in order to finance the expanding activities of SIS and our laser marking business, Lasertechnics issued a note payable to Wolfensohn Associates L.P., a major shareholder of the company's stock, for $800,000 in return for an immediate payment of $375,000 and $375,000 within 45 days thereafter. In November a similar note was issued to an unrelated third party with a substantially identical payment schedule to the company. These notes are payable in full on Jan. 16, 1995, and bear interest at 6 percent per annum on the face amount. The notes are convertible into Common Stock of Lasertechnics at the option of the lender at 80 percent of the average publicly traded price during the 30 days prior to the issuance of the notes, and at the company's option at 60 percent of the average publicly traded price during the 30 days prior to the issuance of the debt. However, the company may be required to take a non-cash accounting charge of approximately $530,000 as a result of the two different discount levels provided in the notes. We are currently consulting with our independent auditors to determine the appropriate accounting treatment and expense implications, if any, for these transactions.
 On an unaudited basis the laser marking business operated at a break-even level in the third quarter. While our imaging business operated at a loss for the quarter, the amount of the loss was 27 percent less than we had planned. We currently believe that the marker business should be profitable in the fourth quarter of 1993. While we expect the imaging business to operate at a loss in the fourth quarter, we believe that their results will be better than we had originally planned.
 Now let me give you more details about the activities of our two groups, first the imaging business. In October of this year, SIS acquired the assets of Texas-based Media Imaging Technology Corp. (MITC). MITC provides SNAPSHOT, a powerful, multifunction software package for IBM PCs which supports reception, transmission, storage and manipulation of photographic quality images. SNAPSHOT can be combined with many printers, like our DIRs, and other imaging hardware to provide system solutions for a variety of imaging markets.
 In addition, as a result of our ownership in and distribution arrangement with Printis, SIS is actively developing a line of specialized color printers for identification and credit card applications. Demand for high volume, decentralized plastic card printing is presently soaring for applications such as health care, financial services/credit cards, student/employee identification, club member ID, visas, passports, drivers licenses and entitlement programs. During the fourth quarter of 1993, SIS expects to ship the first production units in the SecuMind card printer family, a 60-card-per-hour unit. These printers will be sold to organizations that need to instantly generate photographically customized ID/security and credit cards. In early 1994, SIS expects to launch 200-plus card-per-hour versions of SecuMind for centralized and service bureau operations. All SecuMind printers accommodate cards of any size and shape identified by the International Standards Organizations (ISO) card standard. These can be any kind of PVC plastic card available today, including plain, magnetic striped, smart (with on-card microprocessors) or optical storage.
 We are trying to make SIS become an imaging solutions resource, able to combine a variety of hardware and software with proprietary media into unique customer solutions. Our goal is to make SIS's increased marketing effort and broader product offering achieve sales in 1994 that would exceed all of Lasertechnics projected sales for 1993. The market certainly exists to make this possible. We just need a small share to achieve this goal. Over the next few months we hope to announce manufacturing and distribution arrangements with established international companies that should help SIS reduce its manufacturing costs and assist with its sales opportunities. As a result of the progress being made at SIS we hope to arrange for its initial public offering during the second half of 1994.
 With regard to the laser marking business I am pleased to report that on Nov. 4, the company received the largest order in its history. The Anheuser-Busch Co. placed an order for Blazer markers that is valued in excess of $7.5 million. The final amount of the order will depend on the level of spare parts and service support purchased by Anheuser- Busch. We expect to ship the entire order between December of this year and February of 1995. Consequently, we expect laser marking sales in 1994 to exceed all of Lasertechnics sales projected for 1993.
 As you know, Lasertechnics introduced the Xymark coding laser into the United States late in 1992. Xymark is manufactured in England at the former Hull operations of Coherent. In July of this year, Coherent's Hull operations were purchased by Lumonics Inc., a major laser competitor in the marking field. We were promptly informed by Lumonics that the Xymark distribution agreement, due to expire in August 1994, would not be renewed. In October the company agreed with Lumonics to terminate the Xymark agreement early, in February, 1994. In exchange, Lumonics agreed to continue supplying Autocode II processor- controlled disc units for a longer period, through the end of 1994. Autocode is used in conjunction with our Blazer product line and this agreement will insure that we can deliver all the Autocodes that have been ordered through the first quarter of 1995. The company plans to have a replacement for the Autocode product by the end of 1994. In addition, the company will move aggressively to replace the Xymark product when the current Xymark distribution agreement ends.
 We think these developments are demonstrating that our strategy of separating and focusing our two core businesses is a correct one. We believe that this "Back to Basics" approach announced in the last stockholders report will finally bring the positive results you have patiently awaited.
 As a result of the many and rapid changes taking place in the company, the board of directors has asked me to communicate with you on a more regular basis. This letter is the first of what will become more frequent reports to you. We thank you again for your continued patience and trust, and look forward to reaping further positive results in the near future. Should you have any questions or suggestions about the company, please feel free to write to me in Albuquerque.

Yours truly,

Richard M. Clarke Chairman & Chief Executive Officer
 Condensed Consolidated Statements of Operations
 For the three months ended Sept. 30,
 1993 1992
 Sales $2,236,501 $1,501,897
 Net loss ($404,246) ($542,011)
 Net loss per share ($0.02) ($0.04)
 Weighted average number of
 common shares outstanding 16,759,257 15,169,380
 For the nine months ended Sept. 30,
 1993 1992
 Sales $5,392,524 $5,432,457
 Net loss ($1,184,893) ($830,355)
 Net loss per share ($0.07) ($0.06)
 Weighted average number of
 common shares outstanding 16,379,900 14,970,841
 -0- 12/1/93
 /CONTACT: Gene Bourque, president and CFO, or Gary Tomlin, treasurer & corp. controller, of Lasertechnics, 505-822-1123/

CO: Lasertechnics Inc.; Sandia Imaging Systems ST: New Mexico IN: CPR SU: ERN

NY-LM -- SD006 -- 9526 12/01/93 18:17 EST
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Publication:PR Newswire
Date:Dec 1, 1993

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