-----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, U5+PXH7QRg5zJNhJrnoZHZqHrH4ubmexF6xvXcJMJ8I5VPxwJ+PU132YeIRdgJle G6ZeiygcgV8SXqdgDjAFeA== 0000950120-96-000109.txt : 19960613 0000950120-96-000109.hdr.sgml : 19960613 ACCESSION NUMBER: 0000950120-96-000109 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960427 FILED AS OF DATE: 19960611 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ELECTROMEDICS CORP CENTRAL INDEX KEY: 0000352281 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042608713 STATE OF INCORPORATION: DE FISCAL YEAR END: 0727 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09922 FILM NUMBER: 96579450 BUSINESS ADDRESS: STREET 1: 13 COLUMBIA DR STE 18 CITY: AMHERST STATE: NH ZIP: 03031 BUSINESS PHONE: 6038806300 MAIL ADDRESS: STREET 1: 13 COLUMBIA DR STREET 2: STE 18 CITY: AMHERST STATE: NH ZIP: 03031 10QSB 1 FORM 10-QSB OF AMERICAN ELECTROMEDICS CORP. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended Commission File Number APRIL 27, 1996 0-9922 -------------- ------ AMERICAN ELECTROMEDICS CORP. ---------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) DELAWARE 04-2608713 -------- ---------- (State or Other Jurisdiction of Incorporation (IRS Employer ID No.) or Organization) 13 COLUMBIA DRIVE, SUITE 18, AMHERST, NEW HAMPSHIRE 03031 --------------------------------------------------------- (Address and Zip Code of Principal Executive Offices) Issuer's telephone number, including area code: 603-880-6300 ------------ Securities registered pursuant to Section 12(b) of the Exchange Act: NONE ----- Securities registered pursuant to Section 12(g) of the Exchange Act: COMMON STOCK, PAR VALUE $.10 PER SHARE -------------------------------------- (Title of Class) Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- As of June 10, 1996 there were outstanding 12,273,333 shares of the Issuer's Common Stock, $.10 par value. AMERICAN ELECTROMEDICS CORP. INDEX ----- PART I - FINANCIAL INFORMATION Item 1. Financial Statements. PAGE ---- Balance Sheets, April 27, 1996 and July 29, 1995 3 Statements of Income for the Three and Nine Months Ended April 27, 1996 and April 29, 1995. 4 Statements of Cash Flows for the Nine Months Ended April 27, 1996 and April 29, 1995. 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis or Plan of Operation. 7-8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 8 SIGNATURES 9 AMERICAN ELECTROMEDICS CORP. BALANCE SHEETS APRIL 27, 1996 JULY 29, 1995 -------------- ------------- (Unaudited) (Thousands) ASSETS Current Assets: Cash and cash equivalents $ 215 $ 505 Accounts receivable, net 735 431 Inventories 454 267 Prepaid and other current assets 138 29 ------ ------ Total current assets 1,542 1,232 Property and Equipment 403 389 Accumulated depreciation (358) (338) ------- ------ 45 51 Investment in affiliate 912 - Goodwill 224 230 ------ ------ $2,723 $1,513 ====== ====== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 294 $ 290 Bank line of credit 300 - Accrued liabilities 20 23 Current portion of long-term debt 66 4 ------ ------ Total current liabilities 680 317 Long-term debt 112 - Stockholders' Equity: Preferred stock, $.01 par value; Authorized- 1,000,000 shares; Outstanding-none - - Common stock, $.10 par value; Authorized- 20,000,000 shares; Outstanding-12,273,333 at April 27, 1996 and 11,718,333 at July 29, 1995 1,227 1,172 Additional paid-in capital 1,801 1,546 Retained deficit (1,097) (1,522) ------ ------ Total stockholders' equity 1,931 1,196 ------ ------ $2,723 $1,513 ====== ====== See accompanying notes. AMERICAN ELECTROMEDICS CORP. STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended ------------------- ------------------- April 27, April 29, April 27, April 29, 1996 1995 1996 1995 ---- ---- ---- ---- (Thousands, except per share amounts) Net sales $ 1,066 $ 590 $ 2,573 $1,710 Cost of goods sold 519 322 1,338 986 ------- ------ ------- ------ Gross profit 547 268 1,235 724 Selling, general and administrative 264 210 713 501 Research and development 50 32 158 46 ------- ------ ------- ------ Total operating expenses 314 242 871 547 Operating income 233 26 364 177 Other income (expenses): Equity in net income of affiliate (7) - 93 - Interest, net (10) - (7) (1) Other - (2) - (8) ------- ------ ------- ------ Income before provision for income taxes 216 24 450 168 Provision for income taxes 15 2 25 12 ------- ------ ------- ------ Net income $ 201 $ 22 $ 425 $ 156 ======= ====== ======= ====== Weighted average number of common and common equivalent shares outstanding 12,603,939 9,505,000 12,358,293 9,297,000 ========== ========= ========== ========= Earnings per common and common equivalent share $.02 $.00 $.03 $.02 ========== ========= ========== ========= See accompanying notes. AMERICAN ELECTROMEDICS CORP. STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended ----------------------- April 27, April 29, 1996 1995 --------- --------- (Thousands) OPERATING ACTIVITIES: Net Income $ 425 $ 156 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 26 25 Equity in net income of affiliate (93) - Provision for doubtful accounts - 5 Changes in operating assets and liabilities: Accounts receivable (304) (166) Inventories, prepaid and other current assets (296) (155) Accounts payable and accrued liabilities 1 138 ------- -------- Net cash provided by (used in) operating activities (241) 3 INVESTING ACTIVITIES: Investment in affiliate (519) - Purchase of property and equipment, net (14) (10) ------- -------- Net cash used in investing activities (533) (10) FINANCING ACTIVITIES: Proceeds from term loan and bank line of credit 500 - Principal payments on notes payable (26) (5) Proceeds from exercise of stock options 10 68 ------- -------- Net cash provided by financing activities 484 63 ------- -------- Increase (decrease) in cash and cash equivalents (290) 56 Cash and cash equivalents, beginning of period 505 265 ------- -------- Cash and cash equivalents, end of period $ 215 $ 321 ======= ======== See accompanying notes. AMERICAN ELECTROMEDICS CORP. NOTES TO FINANCIAL STATEMENTS APRIL 27, 1996 (Unaudited) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited financial statements of American Electromedics Corp. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended April 27, 1996 are not necessarily indicative of the results that may be expected for the year ended July 27, 1996. For further information, refer to the financial statements and footnotes thereto included in the Registrant's annual report on Form 10-KSB for the year ended July 29, 1995. 2. INVESTMENT IN AFFILIATE ----------------------- In January 1996, the Company invested $500,000 of cash and issued 500,000 shares of its common stock, $.10 par value, for a fifty percent interest in Rosch GmbH Medizintechnik ("Rosch GmbH"). Rosch GmbH is a marketing and distribution company based in Berlin, Germany specializing in the distribution of healthcare products, including American Electromedics products, to primary care physicians throughout Europe. In January 1996, Rosch GmbH sold its exclusive distributorship rights for a manufacturer's ear, nose, and throat ("ENT") line of products in order to concentrate on the Company's products as well as other healthcare products. At April 27, 1996 the investment in Rosch GmbH exceeded the Company's share of the underlying equity in net assets by approximately $550,000 and is being amortized over forty years. Financial information for Rosch GmbH for the three-month period ended April 27, 1996 is as follows: sales - $723,000; gross profit - $229,000; net loss - $14,000. For the four-month period ended April 27, 1996, Rosch GmbH results of operations were as follows: sales - $966,000; gross profit - $303,000; and net income - $186,000, which includes $335,000 from the sale of the ENT distributorship rights discussed above. 3. DEBT ---- In December 1995, the Company entered into a term loan agreement with a bank. The loan is payable in equal monthly installments through December 1998. Interest is based on the Wall Street Journal Prime Rate plus .5%. There remains outstanding, under this loan, $178,000 as of April 27, 1996. The Company also has a revolving line of credit from the same bank in the amount of $300,000. Interest is payable monthly and is based on the Wall Street Journal Prime Rate plus .5%. As of April 27, 1996 there was $300,000 outstanding under this revolving line of credit. Borrowings under these loans are collateralized by essentially all of the assets of the Company. AMERICAN ELECTROMEDICS CORP. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS --------------------- Net sales for the three and nine month periods ended April 27, 1996 were $1,066,000 and $2,573,000, respectively, compared to $590,000 and $1,710,000 for the three and nine month periods ended April 29, 1995, respectively. The increase in sales is primarily a result of shipments of the new Race Car Tympanometer(R) which was introduced in the second quarter. Additionally, sales increased as a result of continued market penetration of the Company's other product lines, including the Pilot(R) Audiometer, introduced in 1995. The Company is also selling its products throughout the European Community using its new 50%-owned German medical products distribution affiliate, Rosch GmbH Medizintechnik. The Company made this strategic investment in January 1996. Cost of sales for the three and nine months ended April 27, 1996 were 48.7% and 52.0% of net sales compared to 54.6% and 57.7% of net sales during the same periods in the prior year. The decrease in cost as a percentage of sales can be attributed to the product mix. Selling, general and administrative expenses for the three and nine month periods ended April 27, 1996 were $264,000 and $713,000, respectively, compared to $210,000 and $501,000, respectively, for the comparable prior year periods. The increase reflects increased sales and promotional activity and corporate development expense. Research and development expense was $50,000 and $158,000 for the three and nine month periods ended April 27, 1996, respectively, compared to $32,000 and $46,000, respectively, for the same periods last year. The increase in research and development expenditures is the result of work performed in preparation for the release of the Company's new Race Car Tympanometer along with other products under development. Net income for the three and nine month periods ended April 27, 1996 was $201,000, or $.02 per share, and $425,000, or $.03 per share, respectively, compared to $22,000, or $.00 per share, and $156,000, or $.02 per share, respectively, for the same periods last year. The increase in net income is the result of a combination of higher sales and an increase in gross profit margins. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Working capital of the Company at April 27, 1996 was $862,000 compared to $915,000 at fiscal year ended July 29, 1995. The decrease was primarily the result of the strategic investment in our new German affiliate offset by proceeds from a term loan and bank line of credit and the results of operations. AMERICAN ELECTROMEDICS CORP. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued) Currently, the Company expects that available cash will be sufficient to meet its normal operating requirements, including research and development expenditures, over the near term. The Company is considering future growth through acquisitions of companies or business segments in related lines of business or other lines of business, as well as through expansion of the existing line of business. In this connection, the Company is seeking to enhance its banking facility and also sell its capital stock. There is no assurance that management will find suitable acquisition candidates or effect the necessary financial arrangements. PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K There were no reports on Form 8-K filed during the quarterly period ended April 27, 1996. Exhibits - 27. Financial Data Schedule 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. AMERICAN ELECTROMEDICS CORP. ---------------------------- /s/ Noel A. Wren Dated: June 10, 1996 ------------------ Noel A. Wren President and Chief Executive Officer /s/ Michael T. Pieniazek Dated: June 10, 1996 ------------------------- Michael T. Pieniazek Chief Financial Officer EXHIBIT INDEX ------------- Exhibit Description ------- ----------- 27 Financial Data Schedule EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-QSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN ELECTROMEDICS CORP.'S BALANCE SHEET, STATEMENT OF INCOME, AND STATEMENT OF CASH FLOW FOR THE PERIOD ENDED APRIL 27, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUL-27-1996 APR-27-1996 215 0 735 0 454 1,542 403 358 2,723 680 0 0 0 1,227 704 2,723 2,573 2,573 1,338 1,338 871 0 7 450 25 425 0 0 0 425 .03 .03
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