-----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, Gm96bQf8cEf70N7eSYdVuwf3lcIwKo0cQHz82V7jYqLiBTAvnGR/u+scac4YRaYn fHQ8pV8XhutjtICNH1pZUg== /in/edgar/work/0000912057-00-049839/0000912057-00-049839.txt : 20001115 0000912057-00-049839.hdr.sgml : 20001115 ACCESSION NUMBER: 0000912057-00-049839 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACE MEDICAL INC CENTRAL INDEX KEY: 0000814057 STANDARD INDUSTRIAL CLASSIFICATION: [3845 ] IRS NUMBER: 042867416 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16257 FILM NUMBER: 765849 BUSINESS ADDRESS: STREET 1: 391 TOTTEN POND RD CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6178905656 MAIL ADDRESS: STREET 1: 391 TOTTEN POND ROAD CITY: WALTHAM STATE: MA ZIP: 02154 10QSB 1 a2031147z10qsb.txt 10QSB FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (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, 2000 -------------------------- OR [ ] 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 0-16257 --------- PACE MEDICAL, INC. (Exact name of small business issuer as specified in its charter) MASSACHUSETTS 4-2867416 ------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 391 TOTTEN POND ROAD, WALTHAM, MASSACHUSETTS 02451 -------------------------------------------------- (Address of principal executive offices ) (781) 890-5656 --------------- (Issuer's telephone number, including area code) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of November 10, 2000. 3,375,870 shares of Common Stock, par value $.01 per share -1- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. a) Condensed Consolidated Balance Sheets b) Condensed Consolidated Statements of Operations c) Condensed Consolidated Statements of Cash Flows d) Notes to Condensed Consolidated Financial Statements -2- PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 DECEMBER 31, 1999 ------------------ ----------------- (Unaudited) (See note below) ASSETS Current assets: Cash and cash equivalents $1,339,915 $1,513,514 Accounts receivable 279,280 321,084 Inventories: Raw materials 259,392 211,026 Work-in-process 100,987 78,038 Finished goods 215,945 218,981 ---------- ----------- 576,324 508,045 Other current assets 14,905 42,775 ----------- ------------ Total current assets 2,210,424 2,385,418 Plant and equipment, net 106,682 53,350 Other assets 22,597 73,280 ----------- ------------ TOTAL ASSETS $2,339,703 $2,512,048 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $38,809 $77,788 Accrued expenses 24,186 69,699 ----------- ----------- Total current liabilities 62,995 147,487 ----------- ----------- Shareholders' equity: Common stock 34,009 34,009 Additional paid-in capital 3,147,151 3,147,151 Cumulative translation adjustment 32,077 89,606 Accumulated deficit (917,842) (887,518) ----------- ----------- 2,295,395 2,383,248 ----------- ----------- Less Treasury Stock, at Cost (18,687) (18,687) ----------- ----------- Total Shareholders' Equity 2,276,708 2,364,561 ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,339,703 $2,512,048 =========== ==========
Note: The balance sheet at December 31, 1999 has been taken from the audited financial statements at that date. See accompanying notes to condensed consolidated financial statements. -3- PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months For the Nine Months Ended September 30 Ended September 30 ----------------------------------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Net Sales $233,007 $ 500,975 $921,478 $1,452,119 Cost of sales 121,759 215,572 405,115 553,963 --------- --------- --------- --------- 111,248 285,403 516,363 898,156 Other operating expenses 184,430 245,313 586,565 675,426 --------- --------- --------- --------- Income (loss) from operations (73,182) 40,090 (70,202) 222,730 Other income 10,196 10,996 39,878 32,129 --------- --------- --------- --------- Net income (loss) $(62,986) $ 51,086 $(30,324) $ 254,859 ========= ========= ========= ========= Net income (loss) per share: Basic $(.02) $ .02 $(. 01) $ .08 ========= ========= ========= ========= Diluted $(.02) $ .01 $(. 01) $ .07 ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements. -4- PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($30,324) $254,859 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 12,922 12,301 Change in assets and liabilities, net: (137,516) (31,856) ---------- -------- Net cash (used in) provided by operating activities (154,918) 235,304 CASH FLOWS FROM INVESTING ACTIVITIES - Purchases of property and equipment (18,681) (89,491) NET INCREASE (DECREASE) IN CASH (173,599) 145,813 AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $1,513,514 1,257,700 ----------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,339,915 $1,403,513 ========== ==========
See accompanying notes to condensed consolidated financial statements. -5- PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements and these notes have been condensed and do not contain all disclosures required by generally accepted accounting principles. See notes to audited consolidated financial statements contained in the Company's annual report. 2. In the opinion of the Company, the accompanying unaudited condensed financial statements contain all adjustments, all of which are normal and recurring, necessary to present fairly the financial position of the Company and its wholly-owned subsidiary as of September 30, 2000 and the results of their operations for the three and nine months ended September 30, 2000 and September 30, 1999 and their cash flows for the nine months ended September 30, 2000 and September 30, 1999. 3. The Company prepares its financial information using the same accounting principles as for its annual financial statements except that no physical inventories were taken during either of the periods ended September 30, 2000 or 1999. Cost of sales for such periods was calculated primarily using standard cost methods. 4. The results of operations for the three and nine months ended September 30, 2000 are not necessarily indicative of the results to be expected for the full year. 5. The denominator used to determine basic net income (loss) per share includes the weighted average common shares outstanding during the quarter. The denominator used to determine diluted net income per share includes the shares used in the calculation of basic net income per share plus the weighted average options outstanding during the period using the treasury-stock method. -6-
Three Months Ended Nine Months Ended September 30 September 30 2000 1999 2000 1999 ---- ---- ---- ---- Net Income (loss) $(62,986) $ 51,086 $(30,324) $ 254,859 ========= ========= ========= =========== Weighted-average shares outstanding 3,375,870 3,375,870 3,375,870 3,375,870 Effect of dilutive securities - 76,929 - 57,913 ---------- --------- ----------- --------- Total shares 3,375,870 3,452,799 3,375,870 3,433,783 ========== ========= =========== ========= Basic net income (loss) per share $ (.02) $ 0.02 $ (.01) $ 0.08 ========= ========= ========= =========== Diluted net income (loss) per share $ (.02) $ 0.01 $ (.01) $ 0.07 ========= ========= ========= ===========
6. The Company has adopted the provisions of SFAS No. 130, "Reporting Comprehensive Income". Comprehensive income includes net income (loss) and foreign currency translation adjustments. Comprehensive income for the three and nine months ended September 30, 2000 and 1999 is as follows:
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Net Income (loss) $(62,986) $51,086 $(30,324) $254,859 Currency Translation Adjustment (13,464) 27,830 (57,529) (241) ----------- ------- --------- ---------- Total $(76,450) $78,916 $(87,853) $254,618 ========= ======= ========= ========
-7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION As of September 30, 2000, the Company had cash and cash equivalents of $1,339,915 and working capital of $2,147,429. Working capital has decreased slightly since December 31, 1999 owing to the Company's slight net loss over the first nine months of the year. The Company expects to maintain a sound financial base for the balance of fiscal 2000. Management continues to believe that the current level of working capital, coupled with the flexibility of the Company's cost structure, should suffice to ensure that on-going operations are financed adequately. FINANCIAL RESULTS - THREE MONTHS ENDED SEPTEMBER 30, 2000 VERSUS THREE MONTHS ENDED SEPTEMBER 30, 1999 Sales in the third quarter of 2000 decreased 53% from the sales posted in the third quarter of 1999. The decrease in sales was due to an decrease in our OEM business and unfavorable foreign exchange conversion rates. The Company's margins in the third quarter decreased from those seen in 1999 (from 57% in 1999 to 48% in 2000). This occurred due to a change in the product mix and unfavorable production variances. It should be noted that pricing is continuing to remain firm on all products. Operating expenses were lower in the three months ended September 30, 2000 versus the three months ended September 30, 1999 due to decreased administration and marketing related expenses. Management anticipates some increase in its operating expenditures during the balance of 2000. This level will also suffice to maintain the Company's research and development efforts in developing new products in the temporary pacing field. No tax provision was recorded for the three months ended September 30, 2000 owing to the Company's loss and concerns about its ability to use net operating loss carryforwards in both the U.S. and United Kingdom. Net loss for the quarter was $(62,986) or $(.02) per share. This represents a substantial decrease in profitability over the results achieved in the third quarter of 1999. -8- FINANCIAL RESULTS - NINE MONTHS ENDED SEPTEMBER 30, 2000 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1999 Sales in the nine months ended September 30, 2000 decreased 37% from the amount posted in the nine months ended in September 30, 1999. This decrease is attributable to our receiving decreased orders from our OEM accounts and unfavorable foreign exchange conversion rates. The Company's margins for the year-to-date period decreased 6% from those of last year (from 62% in 1999 to 56% in 2000). This occurred due to a change in the product mix and unfavorable production variances. Operating expenses were lower for the nine months ended September 30, 2000 versus the nine months ended September 30, 1999 due to decreased administration and marketing related expenses. Management anticipates some increase in its operating expenditures during the balance of 2000. This level will also suffice to maintain the Company's research and development efforts in developing new products in the temporary pacing field. No tax provision was recorded for the nine months ended September 30, 2000 owing to the Company's loss and concerns about its ability to use net operating loss carryforwards in both the U.S. and U.K. Net loss for the nine months was $(30,324) or $(.01) per share, versus a net profit of $254,859 or $.08 per share for the comparable period in 1999. FACTORS THAT MAY AFFECT FUTURE RESULTS From time to time, information provided by the Company or statements made by its employees may contain "forward-looking" information which involves risks and uncertainties. In particular, statements contained in this report which are not historical facts (including but not limited to the Company's expectations regarding business strategy, pricing, anticipated operating results, operating expenses and anticipated working capital) may be "forward-looking" statements. The Company's actual results may differ from those stated in any forward-looking statements. Factors that may cause such differences include, but are not limited to, risks associated with the introduction of new products, development of markets for new products offered by the Company, the Company's relationships with distributors and OEM's, the economic health of such OEM's, government regulation, competition and general economic conditions. -9- PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27. Financial Data Schedule (b) Reports on Form 8-K: None -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. PACE MEDICAL, INC. (Registrant) Date: NOVEMBER 14, 2000 /s/ Ralph E. Hanson -------------------- Ralph E. Hanson, President and Chief Executive Officer (principal executive officer) Date: NOVEMBER 14, 2000 /s/ Ralph E. Hanson --------------------- Ralph E. Hanson, Chief Financial Officer (principal financial officer) -11- EX-27 2 a2031147zex-27.txt EXHIBIT 27
5 3-MOS 9-MOS DEC-31-2000 DEC-31-2000 JUL-01-2000 JAN-01-2000 SEP-30-2000 SEP-30-2000 1,339,915 0 0 0 279,280 0 0 0 576,324 0 2,210,424 0 106,682 0 0 0 2,339,703 0 62,995 0 0 0 0 0 0 0 34,009 0 2,242,699 0 2,339,703 0 233,007 921,478 233,007 921,478 121,759 405,115 121,759 405,115 184,430 586,565 0 0 0 0 (62,986) (30,324) 0 0 (62,986) (30,324) 0 0 0 0 0 0 (62,986) (30,324) (.02) (.01) (.02) (.01)
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