-----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, V1svBbq7jutWiF/xPgQCPSkXwNd29byJT+WpLt+aKjc/F9j6Q3lB7qd/iwytyuDq eT3ne6Usk++COuidcmNqcg== 0000807732-96-000018.txt : 19961107 0000807732-96-000018.hdr.sgml : 19961107 ACCESSION NUMBER: 0000807732-96-000018 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961106 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED MEDICAL PRODUCTS INC CENTRAL INDEX KEY: 0000807732 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 161284228 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16341 FILM NUMBER: 96655354 BUSINESS ADDRESS: STREET 1: 111 RESEARCH DR CITY: COLUMBIA STATE: SC ZIP: 29223 BUSINESS PHONE: 8039350906 MAIL ADDRESS: STREET 1: 111 RESEARCH DR CITY: COLUMBIA STATE: SC ZIP: 29223 10QSB 1 U.S. 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 the quarterly period ended SEPTEMBER 30, 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 0-16341 ADVANCED MEDICAL PRODUCTS, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) DELAWARE 16-1284228 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 6 WOODCROSS DRIVE, COLUMBIA, SOUTH CAROLINA 21212 (Address of Principal Executive Offices) (Zip Code) (803) 407-3044 (Issuer's Telephone Number, Including Area Code) 111 RESEARCH DRIVE, COLUMBIA, SOUTH CAROLINA 29203 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,812,495 shares at November 6, 1996 . (1) PART 1 - FINANCIAL INFORMATION Item 1 - Financial Statements ADVANCED MEDICAL PRODUCTS, INC. BALANCE SHEET SEPT. 30, 1996 JUNE 30, 1996 (unaudited) (audited) ASSETS CURRENT ASSETS: Cash $ 66,163 $ 14,631 Accounts Receivable (net of allowance for doubtful accounts of $17,699 and $42,046 respectively) 437,838 547,441 Refundable Income Taxes 82,854 82,854 Inventory (Note 2) 872,216 749,770 Other Current Assets (Note 3) 51,092 34,241 Total Current Assets 1,510,163 1,428,937 Furniture and Equipment, Net 335,221 345,993 Product Software Costs, Net 78,682 77,225 Other Assets - Deposits 1,792 1,792 Total Assets $1,925,858 $1,853,947 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Loan From Shareholder (Note 5) $ 150,000 $ -0- Accounts Payable 537,483 561,753 Current Portion Long-Term Debt (Note 6) 30,065 35,637 Accrued Wages and Commissions 106,534 121,014 Obligation - C. Groff (Note 5) 26,213 56,795 Other Current Liabilities (Note 4) 315,727 334,062 Total Current Liabilities 1,166,022 1,109,261 Dividends Payable 77,000 51,000 Long-Term Liabilities: Long-Term Debt, Net of Current Portion (Note 6) 87,069 251,107 Total Liabilities 1,330,091 1,411,368 Stockholders' Equity: Class A Preferred Stock, no par value; authorized 4,000 shares; issued and outstanding 2,273 shares (Note 7) 2,185,410 2,026,247 Common Stock, $0.01 par value; authorized 5,000,000 shares, 4,812,496 shares issued and outstanding at September 30, 1996 and 4,837,875 at June 30, 1996 48,125 48,379 Subscription Common Stock (Note 7) 102,000 102,000 Additional Paid In Capital 2,330,990 2,356,729 Accumulated Deficit (4,070,758) (4,090,776) Total Stockholders' Equity 595,767 442,579 Total Liabilities and Stockholders' Equity $1,925,858 $1,853,947 ========= ========= The accompanying notes are an integral part of these financial statements. (2) ADVANCED MEDICAL PRODUCTS, INC. STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT THREE MONTHS ENDED SEPT. 30, 1996 SEPT. 29, 1995 (unaudited) (unaudited) Net Sales $ 793,689 $1,312,879 Cost of Sales 301,314 623,855 Gross Profit 492,375 689,024 Selling, General and Administrative 413,477 567,266 Research and Development 55,153 66,429 Interest Expenses 3,727 1,872 Income Before Income Taxes 20,018 53,457 Provision For Income Taxes -0- -0- Net Income 20,018 53,457 Accumulated Deficit - Beginning of Period (4,090,776) ( 914,527) Accretion of Redeemable Preferred Stock -0- ( 3,241) Accumulated Deficit - End of Period $(4,070,758) $( 864,311) ========= ========= Net Income (Loss) Applicable to Common Shares $( 5,982) $ 25,216 ========= ========= Earnings Per Share Data: Net Income (Loss) $( 0.00) $ 0.01 ========= ========= Weighted Average Number of Common Shares Outstanding 4,812,496 2,667,325 The accompanying notes are an integral part of these financial statements. (3) ADVANCED MEDICAL PRODUCTS, INC. STATEMENT OF CASH FLOWS THREE MONTHS ENDED SEPT. 30, 1996 SEPT. 29, 1995 (unaudited) (unaudited) Cash Flows from Operating Activities: Net Income $ 20,018 $ 53,457 Adjustments To Reconcile Net Income To Net Cash Provided (Used) By Operating Activities: Depreciation and Amortization 28,925 24,969 Provision for Doubtful Accounts ( 24,347) ( 24,505) Change in Assets and Liabilities: Accounts Receivable 133,956 ( 26,062) Inventory ( 122,446) 134,903 Other Assets ( 16,851) ( 72,190) Accounts Payable ( 24,270) ( 55,562) Other Current Liabilities ( 63,397) ( 18,485) Total Adjustments ( 88,430) ( 36,932) Net Cash Provided (Used) By Operating Activities ( 68,412) 16,525 Cash Flows Used By Investing Activities: Capital Expenditures ( 11,769) ( 22,867) Capitalization of Software Costs ( 7,840) ( 7,500) Net Cash Used by Investing Activities ( 19,609) ( 30,367) Cash Flows Provided (Used) By Financing Activities: Proceeds From Loan From Shareholder 150,000 -0- Payments on Long-Term Debt ( 10,447) ( 14,796) Net Cash Provided (Used) By Financing Activities 139,553 ( 14,796) Net Increase (Decrease) In Cash 51,532 ( 28,638) Cash, Beginning Of Period 14,631 32,411 Cash, End Of Period $ 66,163 $ 3,773 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 3,727 $ 1,872 Income Taxes -0- -0- The accompanying notes are an integral part of these financial statements. (4) ADVANCED MEDICAL PRODUCTS, INC. NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-QSB and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principals 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 September 30, 1996 are not necessarily indicative of the results that may be expected for fiscal year 1997. The unaudited condensed financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended June 30, 1996. 2. Inventory Inventory consisted of: SEPT. 30, 1996 JUNE 30, 1996 (unaudited) (audited) Raw Materials and Work In Process $ 506,089 $ 453,849 Finished Goods 366,127 295,921 $ 872,216 $ 749,770 ========= ========= 3. Other Current Assets Prepaid Expenses $ 38,304 Deposits - Current 12,788 $ 51,092 ========= 4. Other Current Liabilities Accrued Royalties $ 48,097 Accrued Vacation Pay 20,153 Deferred Service Contract Revenue 141,783 Warranty Reserve 31,041 Accrued Sales Tax Liability 74,653 $ 315,727 ========= 5. Related Party Transactions On January 12, 1996, Clarence P. Groff, the Company's former largest stockholder resigned.At that time Mr. Groff entered into a termination agreement with the Company whereby he agreed to waive his rights and terminate a prior employment agreement and the Company agreed to pay Mr. Groff a severance package. The Balance on this obligation as of September 30, 1996 was $26,213. Also as part of the agreement, the Company agreed to indemnify Mr. Groff for actions as an officer, director, employee, and agent of the Company to the fullest extent permitted under the General Corporation Law of Delaware. In Consideration of the above, Mr. Groff agreed to a Confidentiality and Non-Disclosure; Non-Compete; No Recruiting Covenant. (5) 5. Related Party Transactions Continued Carolina Medical, a stockholder of the Company entered into a Licensing Agreement to utilize, for a fee the technology embodied in the Company's Micros QV portable hand-held ultrasound product line for other applications that will not be directly competitive with the Company's current applications. Royalties will be paid to the Company by Carolina Medical on any future sales of Carolina Medical's products utilizing the Micros QV technology. Effective July 1, 1996, the Company entered into a 90 day loan agreement with BIOTEL International, the Company's majority shareholder, under which the Company borrowed $150,000 at 12 percent annual rate of interest. This note, originally set to mature September 30, 1996 was extended to December 31, 1996. 6. Long-Term Debt On March 2, 1996, the Company restructured eight operating leases and its short-term note with Onbank of Syracuse, New York into one long- term note. The note will be repaid in 48 monthly installments of $2,000, accrued interest at 11 percent, and is secured by furniture, fixtures, and equipment. The balance as of September 30, 1996 was $70,089. On June 1, 1996, the Company restructured five operating leases with Syracuse Supply Company of Syracuse, New York into one short-term note. The note will be repaid in 12 monthly installments of $913, accrued interest at 11 percent and is secured by equipment, furniture and fixtures. The balance as of September 30, 1996 was $6,065. 7. Capital Stock Transactions On August 29, 1996, the Company was released from a fifteen year lease with SCANA, the Company's landlord. SCANA received 160 shares of the Company's Class A Preferred Stock as payment in full of the delinquent lease payments of approximately $160,000. Nishimoto Sangyo, one of the Company's preferred stockholder, entered into an agreement to convert $102,000 of their accrued dividend and interest into 300,000 shares of common stock at $0.34 per share as of March 31, 1996 to be issued by December 31, 1996. If the shares are not issued by December 31, 1996, the Company is obligated to repay in full the $100,000 dividend that remains unpaid and interest thereon at 10 percent. 8. Subsequent Events On October 21, 1996, the Company entered into an asset based credit agreement with Emergent Financial Corporation of Atlanta, Georgia. Under this agreement the Company may borrow 80 percent of eligible accounts receivable (as defined in the agreement) and 30 percent of eligible inventory (as defined in the agreement) up to a total loan balance of $750,000 at an annual percentage rate of Prime plus 2% as defined by NationsBank of Georgia, N.A. and monthly fees as a percentage of the balance outstanding as follows: .75% of the average daily balance for the first 60 days, .50% for the next 60 days, and .375% thereafter. This sliding fee scale is contingent upon certain performances as defined in the agreement. (6) 9. Earnings Per Share Earnings per common share were computed by dividing net income by the weighted average number of common shares outstanding during the period. Earnings per share did not include the impact of outstanding options since it was not significant. (7) ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS Net sales of $793,689 for the three months ended September 30,1996 represent a 40% decrease from sales of $1,312,879 in the comparable quarter in 1995. This decrease is due principally to lower sales to existing OEM/ International customers, as well as, the delay in the completion of Windows based software. Current efforts to expand the OEM/International sales are in process and the Windows based software has been released. It is expected that these will result in increased future sales. The Company's gross profit margin increased from 58% of net sales in the comparable quarter of fiscal 1996 to 62% of net sales for the three months ended September 30, 1996. This increase is a result of a change to a standard cost system and efforts to reduce cost of sales. Selling, general and administrative expenses of $413,477 for the three months ended September 30, 1996 were 52% of net sales for the period compared to expenses of $567,266 or 43% of net sales for the same period last year. Even though these expenses are a higher percentage of net sales over the comparable quarter, actual expenses were 27% less than they were in the first quarter of fiscal 1995. This is due to lower commissions and efforts to cut and control costs company wide. Research and development costs during the first quarter of fiscal 1997 decreased 17% from last year. This is a result of efforts to decrease expenses company wide. Net income for the quarter ended September 30, 1996 was $20,018 down from $53,457 for the same period last year. The net income for the first quarter of fiscal 1997 is primarily a result of the increase in gross margin and decrease in operating expenses. The decrease in net income compared to the first quarter last year was primarily due to the substantially lower OEM/International sales. During the first three months of fiscal 1997, accounts receivable decreased from $547,441 to $437,838. Inventory increased from $749,770 to $872,216, primarily due to materials purchased for the new Micros QV product line. LIQUIDITY AND CAPITAL RESERVES Operating activities used $68,412 of cash during the quarter ended September 30, 1996 compared with $16,525 provided during the quarter eended September 30, 1995. In the first quarter of fiscal 1997, $19,609 was used for capital expenditures, compared to $30,367 for the same period last year. On March 12, 1996 the Company restructured 8 of it's operating leases, as well as, a long-term unsecured note with a Syracuse, New York bank into one long-term note. On June 1, 1996 the Company restructured 5 of it's operating leases with a Syracuse, New York leasing company into a twelve month note (See Note 6 to the financial statements). The past due lease payments on these two notes totaling approximately $100,500 were forgiven and recorded in the Company's audited June 30, 1996 financial statements as an extraordinary item in accordance with generally accepted accounting principals. (8) On July 1, 1996, BIOTEL International, a shareholder of the Company provided the Company with a short-term credit facility of $150,000 (See Note 5 to the financial statements). On August 29,1996, the Company was released from a fifteen year lease, as of October 31, 1996, with SCANA, the Company's landlord. The annual lease payments on the Company's principal place of business under this lease were $156,100 and were scheduled to escalate over the remaining term of the lease representing a future long-term lease liability of $1,676,272. SCANA received 160 shares of the Company's Class A Preferred Stock (See Note 7 to the financial statements) as payment in full of the delinquent lease payments of approximately $160,000. At that same time the Company entered into a five-year lease agreement including an option to purchase with T & L A Partnership to commence November 1, 1996. The annual lease payments total approximately $89,000 (an annual savings of approximately $67,000) and represent a future long-term liability of approximately $355,000. Subsequent to quarter end, the Company was released from a factoring agreement with Global Acceptance Corporation of Ann Arbor, Michigan and entered into an asset based credit agreement with Emergent Financial Corporation of Atlanta, Georgia (See Note 8 to the financial statements). The Company believes that internally generated funds and existing borrowing resources should provide sufficient working capital to meet present commitments. However, in order to improve its cash flow position, the Company has undertaken steps internally to improve gross margins and fixed costs. The Company currently does not have specific plans for major capital expenditures in fiscal 1997. Should needs arise, the Company may consider additional capital sources to obtain funding. (9) PART II - OTHER INFORMATION ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - None (b) Reports on Form 8-K - No reports on Form 8-K have been filed during the quarter for which this report is filed. (10) 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. ADVANCED MEDICAL PRODUCTS, INC. (REGISTRANT) BY:S/ RONALD G. MOYER RONALD G. MOYER PRESIDENT DATED: NOVEMBER 6, 1996 (11) 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. ADVANCED MEDICAL PRODUCTS, INC. (REGISTRANT) BY: RONALD G. MOYER PRESIDENT DATED: NOVEMBER 6, 1996 (12) EX-27 2
5 3-MOS JUN-30-1997 SEP-30-1996 66,163 0 455,537 17,699 872,216 1,510,163 1,104,650 769,429 1,925,858 1,166,022 0 48,125 0 2,185,410 (1,637,768) 1,925,858 793,689 793,689 301,314 301,314 468,630 0 3,727 20,018 0 20,018 0 0 0 20,018 0.00 0.00
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