-----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, IXYZvGrUbF5IoFBabUB/7g0i6w1V7MZwlQhZBgu3m6jZjdM+aquIo2cEbHv0R1wp SbCqjyjAnpzbMJCst4v/PA== 0000950120-96-000281.txt : 19961212 0000950120-96-000281.hdr.sgml : 19961212 ACCESSION NUMBER: 0000950120-96-000281 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961026 FILED AS OF DATE: 19961210 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: 96678806 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 OCTOBER 26, 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 or Organization) ID No.) 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 December 9, 1996, there were outstanding 2,506,266 shares of the Issuer's Common Stock, $.10 par value, after adjustment for a one-for-five reverse stock split effective November 8, 1996. AMERICAN ELECTROMEDICS CORP. Index ----- Page ----- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets, October 26, 1996 and July 27, 1996 . . 2 Statements of Income for the Three Months Ended October 26, 1996 and October 28, 1995 . . . . . . . . 3 Statements of Cash Flows for the Three Months Ended October 26, 1996 and October 28, 1995 . . . . . . . . 4 Notes to Financial Statements . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . 6 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 6 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 7 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 8 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS AMERICAN ELECTROMEDICS CORP. BALANCE SHEETS OCTOBER 26 JULY 27 1996 1996 --------- ---------- (Thousands) ASSETS Current assets: Cash and cash equivalents . . $1,465 $ 317 Accounts receivable, net of allowance of $11,000: Trade . . . . . . . . . . . 194 303 402 Affiliate . . . . . . . . . 447 641 705 Inventories . . . . . . . . . 561 480 133 Prepaid and other current 99 assets . . . . . . . . . . . Total current assets . . 2,766 1,635 Property and equipment . . . 412 406 Accumulated depreciation . . (372) (365) 40 41 Deferred financing costs . . 166 Investment in affiliate . . . 846 876 Goodwill . . . . . . . . . . 216 219 ----- ------ $4,034 $2,771 ======== ======= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable . . . . . . $0,418 $0,324 Bank line of credit . . . . . 300 300 Accrued liabilities . . . . . 16 38 67 Current portion of long-term 167 debt . . . . . . . . . . . . Total current liabilities 901 729 Long-term debt . . . . . . . 477 94 Convertible subordinated 720 __ debentures . . . . . . . . . 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 - 12,531,333 1,253 1,227 shares at October 26, 1996 and 12,273,333 shares at July 27, 1996 . . . . . Additional paid-in capital . 1,923 1,801 Retained deficit . . . . . . (1,240) (1,080) ------- -------- Total stockholders' equity 1,936 1,948 ------ -------- $4,034 $2,771 ======= ======== See accompanying notes. AMERICAN ELECTROMEDICS CORP. STATEMENTS OF INCOME (Unaudited) THREE MONTHS ENDED ---------------------------------- OCTOBER 26 JULY 28 1996 1995 ------------- ------------ (Thousands except per share amounts) Net sales . . . . . . . . . . . . . . $0,540 $ 664 312 391 Cost of goods sold . . . . . . . . . ----- ----- Gross profit . . . . . . . . . . . 228 273 Selling, general and administrative . 315 193 34 60 Research and development . . . . . . ---- ---- 349 253 Total operating expenses . . . . . ----- ----- (121) 20 Operating income (loss) . . . . . . . ------ ----- Other income (expenses): Undistributed earnings of affiliate (30) -- Interest, net . . . . . . . . . . . (9) 4 Other . . . . . . . . . . . . . . . ------ ----- (39) 4 Income (loss) before provision for income taxes . . . . . . . . . . . . (160) 24 - 2 Provision for income taxes . . . . . ----- ------ $ (160) $ 22 ------- ------- Net income (loss) . . . . . . . . . . Weighted average number of common and common equivalent 12,280,321 12,195,639 shares outstanding . . . . . . . =========== ============ Earnings (loss) per common and common $ (.01) $ .00 equivalent share . . . . . . . . . . See accompanying notes. AMERICAN ELECTROMEDICS CORP. STATEMENTS OF CASH FLOWS (Unaudited) THREE MONTHS ------------------ OCTOBER OCTOBER 26, 1996 28, 1995 ------- ------- (Thousands) Operating activities: Net income (loss) . . . . . . . . . . . $ (160) $ 22 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization . . . . 10 6 Undistributed earnings of affiliate . 30 -- Changes in operating assets and liabilities: Accounts receivable . . . . . . . . 64 36 Inventories, prepaid and other (47) (227) current assets . . . . . . . . . . . . Accounts payable and accrued 72 11 liabilities . . . . . . . . . . . . . . Net cash used in operating activities (31) (152) INVESTING ACTIVITIES: Purchase of property and equipment, net (6) 2 ----- ---- Net cash provided by (used in) investing activities . . . . . . . . . (6) 2 FINANCING ACTIVITIES: Principal payments on long-term debt . (17) (1) Proceeds from long-term debt . . . . . 500 -- Issuance of common stock, net . . . . . 146 __ Issuance of convertible subordinated debt . . . . . . . . . . . . . . . . . 720 __ Deferred financing costs . . . . . . . (166) __ Proceeds from exercise of stock options 2 __ ----- ------ Net cash provided by (used in) financing activities . . . . . . . . 1,185 (1) Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . 1,148 (151) Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . 317 505 ------- ------ Cash and cash equivalents, end of year $1,465 $ 354 ====== ====== See accompanying notes. AMERICAN ELECTROMEDICS CORP. NOTES TO FINANCIAL STATEMENTS OCTOBER 26, 1996 (Unaudited) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited financial statements 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 month period ended October 26, 1996 are not necessarily indicative of the results that may be expected for the year ending July 26, 1997. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended July 27, 1996. 2. CORPORATE FINANCING ------------------- In October 1996, the Company completed a private placement (the "Placement") of 12 units (the "Units") at a price of $75,000 per Unit or an aggregate Placement of $900,000. Each Unit consisted of a $60,000 principal amount 14% Convertible Subordinated Debenture due October 31, 1999 (the "Debentures") and 20,000 shares of Common Stock, or an aggregate of $720,000 principal amount of Debentures and 240,000 shares of Common Stock. The Debentures are convertible into Common Stock at $.75 per share upon or after the Debentures are called for redemption or the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Act"), covering the underlying shares of Common Stock, subject to customary anti-dilution provisions. The Company may call all or part of the Debentures at par, plus accrued interest, at any time after October 31, 1997. The Debentures contain various covenants upon the Company, including a restriction on the payment of cash dividends on its Common Stock. Simultaneously with the closing of the Placement, the Company received a Term Loan from its bank. The bank had conditioned the closing of the Term Loan on the Company receiving at least $700,000 from the issuance of subordinated debentures and/or capital stock. The Term Loan is repayable over five years, bears annual interest at a rate equal to prime plus 1/2%, and is guaranteed by the New Hampshire Business Finance Authority. The bank had separately increased the Company's revolving line of credit to $400,000 from $300,000. As of October 26, 1996 there was $300,000 outstanding under this revolving line of credit. The Term Loan and the credit line are secured by a lien on the Company's assets. The net proceeds of the Placement and the Term Loan of approximately $1,200,000 will be used for general working capital purposes, including possible acquisitions and marketing. 3. SUBSEQUENT EVENT ---------------- At the Company's annual meeting of stockholders on October 8, 1996, stockholders authorized the Board of Directors to effect a reverse stock split at a ratio to be determined by the Board and when the Board determined it was in the best interest of the Company and the stockholders. In November 1996 the Company announced that its Board of Directors had approved a 1-for-5 reverse stock split, to be effective November 8, 1996. The reverse split will reduce the number of shares outstanding to 2,506,266. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS --------------------- Net sales for the three month period ended October 26,1996 was $540,000, compared to $664,000 for the three month period ended October 28, 1995. The decrease in first quarter sales resulted from a temporary regulatory delay of a single product in Germany by the Company's German medical products distribution arm, Rosch GmbH Medizintechnik along with a general industry-wide slowdown. Cost of sales for the three months ended October 26, 1996 was 57.8% of net sales compared to 58.9% of net sales during the three months ended October 28,1995. The decrease in cost as percentage of sales can be attributed to the favorable product mix. Selling, general and administrative expenses for the three month period ended October 26, 1996 was $315,000, compared to $193,000 for the comparable prior year period. The increase reflects increased sales and promotional activity and corporate development and communications expense. Net loss for the three month period ended October 26, 1996 was $160,000, or $.01 per share, compared to net income of $22,000, or $.00 per share, for the same period last year. The decrease in net income is the result of decreased sales along with increases in expenditures for marketing efforts to promote and position the Company's new products, and the Company's corporate development and communications efforts. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Working capital of the Company at October 26, 1996 was $1,865,000, compared to $906,000 at fiscal year ended July 27, 1996. The increase of $959,000 was primarily the result of net proceeds of the Company's private placement and term loan from its bank of approximately $1,200,000 offset by results of operations. Currently, the Company expects that available cash and its existing bank line of credit 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. There is no assurance that management will find suitable acquisition candidates or effect the financial arrangements which may be necessary for such acquisitions. PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) On October 8, 1996, the Company held an annual meeting of stockholders (the "Meeting"). (b) At the Meeting, the following persons were elected directors, each to hold office until the next annual meeting of stockholders: Noel A. Wren Alan Gelband Kenneth Levy Thomas A. Slamecka Joseph Wear (c) The other items considered at the Meeting were the adoption of the 1996 Stock Option Plan (the "Option Plan") and the authorization of a reverse stock split (the "Reverse Split") or if the Reverse Split is not effected an increase in the authorized shares of Common Stock to 30,000,000 shares (the "Recapitalization"). The votes cast at the Meeting were as follows: ABSTAIN OR BROKER ITEM FOR AGAINST WITHHOLD NO-VOTE ------ ---- -------- --------- ------ Directors 10,649,671 2,200 Option Plan 7,428,218 45,900 1,043 3,176,710 Reverse 10,530,078 21,300 493 100,000 Split Recapital- 10,248,528 303,300 43 100,000 ization Item 6. EXHIBITS AND REPORTS ON FORM 8-K The Company filed a Form 8-K, for an event October 25, 1996, to report on Item 5 the completion of a private placement of an aggregate of $900,000 and the receipt of a $500,000 term loan. Exhibits - 4.1 Form of 14% Convertible Subordinated Debentures, due October 31, 1999 (filed as Exhibit 4 to the Company's Form 8-K for an event of October 25, 1996, and incorporated herein by reference). 10.1 Loan Agreement, dated October 4, 1996, between the Company and Citizens Bank New Hampshire (the "Bank") (filed as Exhibit 10.9.1 to the Company's Form 10-KSB for the fiscal year ended July 27, 1996 (the "1996 Form 10-KSB"), and incorporated herein by reference). 10.2 Security Agreement, dated October 4, 1996, between the Company and the Bank (filed as Exhibit 10.9.2 to the Company's 1996 Form 10-KSB and incorporated herein by reference). 10.3 Revolving Line of Credit Promissory Note, dated October 4, 1996, from the Company to the Bank (filed as Exhibit 10.9.3 to the Company's 1996 Form 10-KSB and incorporated herein by reference). 10.4 Term Promissory Note, dated October 4, 1996, from the Company to the Bank (filed as Exhibit 10.9.4 to the Company's 1996 Form 10- KSB and incorporated herein by reference). 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: December 9, 1996 ----------------------- Noel A. Wren President and Chief Executive Officer /s/ Michael T. Pieniazek Dated: December 9, 1996 ------------------------ Michael T. Pieniazek Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN ELECTROMEDICS CORP FORM 10-QSB FOR THE PERIOD ENDED OCTOBER 26, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUL-31-1997 OCT-26-1996 1,465 0 641 0 561 2,766 412 (372) 4,034 901 720 0 0 1,253 683 4,034 540 540 312 312 349 0 9 (160) 0 (160) 0 0 0 (160) (.01) (.01)
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