-----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, RGENTzOdA0YB3hsZ9+qCoqqQKwuKrudatE0jHyCOWWeM/otEG5BD5BZgxXDbc2D6 rfsrlkVAvep28bOFcImL4A== 0000950135-95-002413.txt : 19951119 0000950135-95-002413.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950135-95-002413 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PSYCHEMEDICS CORP CENTRAL INDEX KEY: 0000806517 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 581701987 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-13738 FILM NUMBER: 95592932 BUSINESS ADDRESS: STREET 1: 1280 MASSACHUSETTS AVENUE STREET 2: SUITE 200 CITY: CAMBRIDGE STATE: MA ZIP: 02138 BUSINESS PHONE: 6178687455 MAIL ADDRESS: STREET 1: 1280 MASSACHUSETTS AVE STREET 2: SUITE 200 CITY: CAMBRIDGE STATE: MA ZIP: 02138 10QSB 1 PSYCHEMEDICS CORPORATION FORM 10-QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE ----- SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended SEPTEMBER 30, 1995 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF ----- THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 1-13738 PSYCHEMEDICS CORPORATION (exact name of Small Business Issuer as specified in its charter) Delaware 58-1701987 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 1280 Massachusetts Ave., Ste. 200, Cambridge, MA 02138 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code (617-868-7455) 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 90 days. Yes X No ----- ----- Number of shares outstanding of only class of Issuer's Common Stock as of September 30, 1995: Common Stock $.005 par value (19,779,793 shares). Transitional Small Business Disclosure Format. Yes No X ------- ------- Page 1 2 PSYCHEMEDICS CORPORATION INDEX
Part I FINANCIAL INFORMATION Page No. -------- Item 1 Financial Statements Condensed Balance Sheets as of September 30, 1995 and December 31, 1994 3 Condensed Statements of Income for the three and nine month periods ended September 30, 1995 and 1994 4-5 Condensed Statements of Cash Flows for the nine month periods ended September 30, 1995 and 1994 6 Notes to Condensed Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 11
Page 2 3 PSYCHEMEDICS CORPORATION CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, 1995 1994 ------------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 409,178 $ 544,776 Short-term investments 6,209,991 6,120,453 Receivables 1,702,029 1,417,701 Laboratory supplies 281,723 188,703 Prepaid expenses and other current assets 154,584 79,687 ----------- ----------- Total current assets 8,757,505 8,351,320 ----------- ----------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS 3,651,807 2,837,862 Less-accumulated depreciation and amortization 1,685,599 1,291,684 ----------- ----------- 1,966,208 1,546,178 ----------- ----------- OTHER ASSETS - NET 418,696 392,224 ----------- ----------- $11,142,409 $10,289,722 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of obligations under capital leases $ 56,357 $ 153,942 Accounts payable 351,970 303,562 Accrued expenses 297,944 235,978 ----------- ----------- Total current liabilities 706,271 693,482 ----------- ----------- OBLIGATIONS UNDER CAPITAL LEASES, net of current portion - 16,031 ----------- ----------- SHAREHOLDERS' EQUITY: Preferred stock, $.005 par value; authorized 1,000,000 shares; none outstanding - - Common stock; $.005 par value; authorized 50,000,000 shares; issued 20,279,280 and 19,510,879 shares in 1995 and 1994, respectively 101,396 97,554 Paid-in capital 15,710,988 14,709,632 Treasury stock, at cost; 499,487 shares in 1995 (1,634,179) - Accumulated deficit (3,742,067) (5,226,977) ----------- ----------- Total shareholders' equity 10,436,138 9,580,209 ----------- ----------- $11,142,409 $10,289,722 =========== ===========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 3 4 PSYCHEMEDICS CORPORATION CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, ------------------------- 1995 1994 ----------- ----------- REVENUE $ 2,667,417 $ 2,547,508 DIRECT COSTS 1,208,335 1,018,053 ----------- ----------- Gross profit 1,459,082 1,529,455 ----------- ----------- EXPENSES: General and administrative 440,945 357,299 Marketing and selling 536,276 421,765 Research and development 114,305 103,810 ----------- ----------- 1,091,526 882,874 ----------- ----------- INCOME FROM OPERATIONS 367,556 646,581 OTHER INCOME - NET 92,835 51,008 ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 460,391 697,589 PROVISION FOR INCOME TAXES 30,000 24,300 ----------- ----------- NET INCOME $ 430,391 $ 673,289 =========== =========== NET INCOME PER COMMON SHARE AND COMMON EQUIVALENT SHARE $ 0.02 $ 0.03 =========== =========== WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING 21,637,380 21,048,643 =========== ===========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 4 5 PSYCHEMEDICS CORPORATION CONDENSED STATEMENTS OF INCOME (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------- 1995 1994 ----------- ----------- REVENUE $ 7,735,816 $ 6,420,766 DIRECT COSTS 3,453,336 2,711,604 ----------- ----------- Gross profit 4,282,480 3,709,162 ----------- ----------- EXPENSES: General and administrative 1,279,635 998,493 Marketing and selling 1,356,536 1,181,768 Research and development 325,965 303,912 ----------- ----------- 2,962,136 2,484,173 ----------- ----------- INCOME FROM OPERATIONS 1,320,344 1,224,989 OTHER INCOME - NET 268,866 81,751 ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 1,589,210 1,306,740 PROVISION FOR INCOME TAXES 104,300 45,500 ----------- ----------- NET INCOME $ 1,484,910 $ 1,261,240 =========== =========== NET INCOME PER COMMON SHARE AND COMMON EQUIVALENT SHARE $ 0.07 $ 0.07 =========== =========== WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING 20,860,213 18,817,093 =========== ===========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 5 6 PSYCHEMEDICS CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 1995 1994 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,484,910 $1,261,240 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 411,916 310,500 Changes in assets and liabilities: Receivables (284,328) (196,208) Laboratory supplies (93,020) (5,024) Prepaid expenses and other current assets (74,897) (43,152) Accounts payable 48,408 (66,729) Accrued expenses 61,966 13,028 ----------- ---------- Net cash provided by operating activities 1,554,955 1,273,655 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term investments - net (89,538) - Purchases of equipment and leasehold improvements (813,945) (261,996) Increase in other assets - net (44,473) (29,097) ----------- ---------- Net cash used in investing activities (947,956) (291,093) ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net principal payments on obligations under capital leases (113,616) (103,559) Net proceeds from the issuance of common stock 1,005,198 4,148,394 Net cash used to repurchase common stock (1,634,179) - ----------- ---------- Net cash (used in) provided by financing activities (742,597) 4,044,835 ----------- ---------- NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (135,598) 5,027,397 CASH AND CASH EQUIVALENTS, beginning of period 544,776 1,001,939 ----------- ---------- CASH AND CASH EQUIVALENTS, end of period $ 409,178 $6,029,336 =========== ==========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 6 7 PSYCHEMEDICS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1995 1. The financial information furnished herein is unaudited; however, in the opinion of management, it reflects all adjustments which are necessary to fairly state the Company's financial position at September 30, 1995 and December 31, 1994 and the results of its operations and cash flows for the periods ended September 30, 1995 and 1994. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances, and included in the financial statements are certain amounts based on management's estimates and judgments. The financial information herein is not necessarily representative of a full year's operations because levels of sales, capital additions and other factors fluctuate throughout the year. These same considerations apply to all year to year comparisons. See the Company's Annual Report on Form 10-KSB for the year ended December 31, 1994 for additional information not required by this report (Form 10-QSB). 2. Net income per common share and common equivalent share is based upon the weighted average number of common shares and common share equivalents outstanding as computed using the treasury stock method. 3. The following presents supplementary cash flow data:
Nine Months Ended September 30, ------------------- 1995 1994 ---- ---- Cash paid for interest $ 8,500 $19,847 Cash paid for income taxes $86,695 $15,628
Page 7 8 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- REVENUE Revenue for the third quarter of 1995 was $2,667,417, an increase of 5% over the $2,547,508 reported for the third quarter of 1994. Revenue for the nine month period ended September 30, 1995 was $7,735,816 an increase of 20% over the $6,420,766 reported for the comparable period of 1994. The revenue increases result primarily from the addition of new customers and expanding volume from the Company's existing customer base. DIRECT COSTS AND EXPENSES The following table sets forth the direct costs of revenue, general and administrative expenses, marketing and selling expenses and research and development expenses as a percentage of revenue.
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Direct costs 45% 40% 45% 42% General and administrative 17% 14% 17% 16% Marketing and selling 20% 17% 18% 18% Research and development 4% 4% 4% 5%
Direct Costs Direct costs were $1,208,335 $1,018,053, $3,453,336 and $2,711,604 for the three and nine month periods ended September 30, 1995 and 1994, respectively. The increase in direct costs in 1995 is attributable to increased production space and staffing in 1995 to position the Company to handle anticipated volume increases in future periods. Direct costs as a percentage of revenue were higher for the three and nine month periods ended September 30, 1995 as compared to the comparable periods in 1994 primarily due to increased production space and staffing undertaken in response to expanded business and anticipated growth for the balance of 1995 and 1996. Page 8 9 General and Administrative Expenses General and Administrative expenses were $440,945, $357,299, $1,279,635, and $998,493 for the three and nine month periods ended September 30, 1995 and 1994, respectively. The increase in general and administrative expenses in the 1995 periods as compared to the same periods in 1994 is primarily due to higher expenses incurred as a result of expansion of the Company' s business during the periods. Marketing and Selling Expenses Marketing and selling expenses were $536,276, $421,765, $1,356,536, and $1,181,768 for the three and nine month periods ended September 30, 1995 and 1994, respectively. Marketing and selling expenses increased in each period in 1995 as compared to 1994 due primarily to increased marketing activities related to our core corporate services and the introduction of the Company's new personal drug testing service, PDT-90. Other Income (Expense) - Net Other income for the three and nine month periods ended September 30, 1995 and 1994 results primarily from interest income from the Company's invested cash balances. The increase in both the three and nine month periods ended September 30, 1995, as compared to comparable periods in 1994, is due primarily to the larger invested balances in 1995. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company's cash and investment balances at September 30, 1995 amounted to $6,619,169. Cash generated from operations in the first nine months of 1995 was $1,554,955. The Company also received $4,213,194 and $1,005,198 of net proceeds from the exercise of warrants and stock options during the year ended December 31, 1994 and the nine month period ended September 30, 1995, respectively. Management believes that cash generated from operations, together with proceeds from such warrants and option exercises, should be adequate to fund anticipated working capital requirements. Depending upon the Company's results of operations, its future capital needs and available marketing opportunities, the Company may use various financing sources to raise additional capital. Working capital at September 30, 1995 amounted to $8,051,234 as compared to $7,657,838 at December 31, 1994. Page 9 10 The Company's capital expenditures were $813,945 for the first nine months of 1995. Capital expenditures for 1995 are expected to be approximately $1,000,000 and are expected to be funded through cash generated from operations and from existing cash reserves. In December 1994, the Company's Board of Directors authorized the repurchase of up to one million shares of the Company's common stock. This program is a direct result of the Company's solid financial condition and cash-generating capability, and it was authorized after evaluating various alternatives to enhance long-term shareholder value. As of September 30, 1995, the Company had purchased 499,487 shares of common stock for approximately $1,634,000. Page 10 11 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The Exhibits filed as part of this Form 10-QSB are listed on the Exhibits Index immediately preceding such Exhibits, which Exhibit Index is incorporated herein by reference. (b) Reports on Form 8-K - None. Page 11 12 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. Psychemedics Corporation Date: November 14, 1995 By: /s/ Raymond C. Kubacki, Jr. --------------------------- Raymond C. Kubacki, Jr. President and Chief Executive Officer Date: November 14, 1995 By: /s/ Bruce M. Stillwell ---------------------- Bruce M. Stillwell Vice President, Controller Page 12 13 PSYCHEMEDICS CORPORATION 10-QSB EXHIBIT INDEX -------------
Exhibit Number Description ------ ----------- 11 Calculation of shares used in determining net income per share 27 Financial Data Schedule
EX-11 2 CALCULATION OF SHARES 1 EXHIBIT 11 CALCULATION OF SHARES USED IN DETERMINING INCOME PER SHARE
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 1995 1994 1995 1994 ----------------------- ----------------------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DURING PERIOD 19,782,101 19,418,005 19,561,551 17,368,113 EFFECT OF COMMON STOCK EQUIVALENTS COMPUTED IN ACCORDANCE WITH THE TREASURY STOCK METHOD 1,855,279 1,630,638 1,298,662 1,448,980 ---------- ---------- ---------- ---------- 21,637,380 21,048,643 20,860,213 18,817,093 ---------- ---------- ---------- ----------
EX-27 3 FINANCIAL DATA SCHEDULE
5 1 U.S DOLLAR 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 409,178 6,209,991 1,702,029 0 0 8,757,505 3,651,807 1,685,599 11,142,409 706,271 0 101,396 0 0 10,334,742 11,142,409 0 7,735,816 3,453,336 3,453,336 2,962,136 0 8,500 1,589,210 104,300 0 0 0 0 1,484,910 0.07 0
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