-----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, PpG3DSp3JUihQOdofbQm+THlQVewqSW+rPV9v1oMeAvBPNWLNwt5EU2ghf3P7Tb7 U3iMCbtRvsPDGntJnEQY2Q== 0000950135-96-002148.txt : 19960517 0000950135-96-002148.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950135-96-002148 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13738 FILM NUMBER: 96566990 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 10-Q 1 PSYCHEMEDICS CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE ----- SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended MARCH 31, 1996 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 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 May 13, 1996: Common Stock $.005 par value (21,412,600 shares). Page 1 of 11 2 PSYCHEMEDICS CORPORATION Part I FINANCIAL INFORMATION Page No. ------- Item 1 Financial Statements Condensed Balance Sheets as of March 31, 1996 and December 31, 1995 3 Condensed Statements of Operations for the three month periods ended March 31, 1996 and 1995 4 Condensed Statements of Cash Flows for the three month periods ended March 31, 1996 and 1995 5 Notes to Condensed Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 6-8 Part II OTHER INFORMATION Item 6 Exhibits and Reports on Form 8K 9 Page 2 of 11 3 PSYCHEMEDICS CORPORATION CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, DECEMBER 31, 1996 1995 ----------- ----------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,698,880 $ 193,787 Short-term investments 4,558,157 5,279,596 Receivables 2,035,956 1,722,770 Laboratory supplies 240,009 253,216 Prepaid expenses and other current assets 245,052 72,247 ----------- ----------- Total current assets 9,778,054 7,521,616 ----------- ----------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS 4,254,259 4,106,980 Less-accumulated depreciation and amortization 2,009,021 1,864,398 ----------- ----------- 2,245,238 2,242,582 ----------- ----------- OTHER ASSETS - NET 451,309 453,295 ----------- ----------- $12,474,601 $10,217,493 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of obligations under capital leases $ 1,535 $ 16,459 Accounts payable 412,097 466,412 Accrued expenses 244,448 250,232 ----------- ----------- Total current liabilities 658,080 733,103 ----------- ----------- 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 21,226,955 and 20,288,280 shares in 1996 and 1995, respectively 106,135 101,441 Paid-in capital 17,606,186 15,728,033 Accumulated deficit (3,219,007) (3,668,291) Treasury stock, at cost; 699,387 shares in 1996 and 1995 (2,676,793) (2,676,793) ----------- ----------- Total shareholders' equity 11,816,521 9,484,390 ----------- ----------- $12,474,601 $10,217,493 =========== ===========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 3 of 11 4 PSYCHEMEDICS CORPORATION CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ------------------------------ 1996 1995 ------------ ----------- REVENUE $ 2,674,665 $ 2,321,157 DIRECT COSTS 1,184,008 1,072,644 ------------ ----------- Gross profit 1,490,657 1,248,513 ------------ ----------- EXPENSES: General and administrative 533,261 421,579 Marketing and selling 479,142 384,305 Research and development 89,867 104,010 ------------ ----------- 1,102,270 909,894 ------------ ----------- INCOME FROM OPERATIONS 388,387 338,619 OTHER INCOME (EXPENSE) - NET 65,497 91,361 ------------ ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 453,884 429,980 PROVISION FOR INCOME TAXES 4,600 26,000 ----------- ----------- NET INCOME $ 449,284 $ 403,980 =========== =========== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.02 $ 0.02 =========== =========== WEIGHTED AVERAGE COMMON AND COMMON SHARE EQUIVALENTS OUTSTANDING 21,586,984 20,706,058 =========== ===========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 4 of 11 5 PSYCHEMEDICS CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ---------------------------- 1996 1995 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 449,284 $ 403,980 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 159,623 138,300 Changes in assets and liabilities: Receivables (313,186) (106,112) Laboratory supplies 13,207 67,181 Prepaid expenses and other current assets (172,805) (155,202) Accounts payable (54,315) 149,449 Accrued expenses (5,784) 63,582 ---------- --------- Net cash provided by operating activies 76,024 561,178 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Sales of short-term investments - net 721,439 32,027 Purchases of equipment and leasehold improvements (147,279) (258,815) Increase in other assets - net (13,014) (18,357) ---------- --------- Net cash provided by (used in) investing activities 561,146 (245,145) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net principal payments on obligations under capital leases (14,924) (37,105) Net proceeds from the issuance of common stock 1,882,847 46,550 Net cash used in stock repurchases - (426,519) ---------- --------- Net cash provided by (used in) financing activities 1,867,923 (417,074) ---------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,505,093 (101,041) CASH AND CASH EQUIVALENTS, beginning of period 193,787 544,776 ---------- --------- CASH AND CASH EQUIVALENTS, end of period $2,698,880 $ 443,735 ========== =========
See accompanying notes to financial statements and management's discussion and analysis of financial condition and results of operations. Page 5 of 11 6 PSYCHEMEDICS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 1996 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 March 31, 1996 and the results of its operations and cash flows for the periods ended March 31, 1996 and 1995. 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, 1995 for additional information not required by this report (Form 10-Q). 2. Net income per common and common share equivalents is based upon the weighted average number of common and common share equivalents outstanding as computed using the treasury stock method. Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- REVENUE Revenue for the first quarter of 1996 was $2,674,665, an increase of 15% over the $2,321,157 reported for the first quarter of 1995. The revenue increase results primarily from the addition of new customers and expanding volume from the Company's existing customer base. Page 6 of 11 7 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 Ended March 31, ------------------- 1996 1995 ---- ---- Direct costs 44% 46% General and administrative 20% 18% Marketing and selling 18% 17% Research and development 3% 4%
Direct Costs Direct costs were $1,184,008 and $1,072,644 for the three month periods ended March 31, 1996 and 1995, respectively. The increase in direct costs in 1996 is attributable to the increase in revenue for the period. Direct costs as a percentage of revenue for the three month period ended March 31, 1996 were less than the comparable period in 1995. The decrease of direct costs as a percentage of revenue in 1996 resulted primarily from laboratory efficiencies. General and Administrative Expenses General and Administrative expenses were $533,261 and $421,579 for the three month periods ended March 31, 1996 and 1995, respectively. The increase in general and administrative expenses in 1996 as compared to the same period in 1995 is due primarily to the higher costs incurred by the Company as a result of additional personnel and increased legal expenses. Marketing and Selling Expenses Marketing and selling expenses were $479,142 and $384,305 for the three month periods ended March 31, 1996 and 1995, respectively. Marketing and selling expenses increased in 1996 as compared to 1995 due primarily to the Company's increased marketing activities. Page 7 of 11 8 Other Income - Net Other income for the three month periods ended March 31, 1996 and 1995 represents primarily interest income from investments and cash equivalents which has been partially offset by interest expense related to equipment capital leases. The decrease in other income for the three month period ended March 31, 1996 is due primarily to a decrease in yields on investments. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company's cash and investment balances at March 31, 1996 amounted to $7,257,037. Cash generated from operations in the first quarter of 1996 was $76,024. The Company received $1,882,847 of net proceeds from the exercise of warrants and stock options during the first quarter of 1996. Management believes that the proceeds from such transactions, together with future operating profits, 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 March 31, 1996 amounted to $9,119,974 as compared to $6,788,513 at December 31, 1995. The Company's capital expenditures were $147,279 in first quarter of 1996. Capital expenditures for 1996 are expected to be approximately $600,000 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 share owner value. As of March 31, 1996, the Company had purchased 699,387 shares of common stock for $2,676,793. Page 8 of 11 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 11. Calculation of Shares used in Determining Income Per Share (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter for which this report is filed. Page 9 of 11 10 SIGNATURES 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: May 13, 1996 By: /s/ Raymond C. Kubacki, Jr. ---------------------------------- Raymond C. Kubacki, Jr. President and Chief Executive Officer Date: May 13, 1996 By: /s/ Bruce M. Stillwell ---------------------------------- Bruce M. Stillwell Vice President, Controller & Treasurer Page 10 of 11 EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 CALCULATION OF SHARES USED IN DETERMINING INCOME PER SHARE
THREE MONTHS ENDED MARCH 31, -------------------------- 1996 1995 -------------------------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING DURING PERIOD 20,441,490 19,517,590 EFFECT OF COMMON STOCK EQUIVALENTS COMPUTED IN ACCORDANCE WITH THE TREASURY STOCK METHOD 1,145,494 1,188,468 ---------- ---------- 21,586,984 20,706,058 ---------- ----------
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000806517 PSYCHEMEDICS CORP. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 2,698,880 4,558,157 2,035,956 0 240,009 9,778,054 4,254,259 2,009,021 12,474,601 658,080 0 106,135 0 0 12,368,466 12,474,601 2,674,665 2,674,665 1,184,008 2,286,278 65,497 0 0 453,884 4,600 449,284 0 0 0 449,284 0.02 0.02
-----END PRIVACY-ENHANCED MESSAGE-----