-----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, A5YycGkZxsj2PZJ+LfTBXDrfbdlY23xCzOwqtomZKJ+NzHFgJm9ulJACypff3T16 kE3AwTe46EfxQuYfG95iiA== 0000950135-97-003428.txt : 19970814 0000950135-97-003428.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950135-97-003428 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACE MEDICAL INC CENTRAL INDEX KEY: 0000814057 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042867416 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16257 FILM NUMBER: 97658443 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 PACE MEDICAL, INC. 1 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 June 30, 1997 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 04-2867416 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 391 Totten Pond Road, Waltham, Massachusetts 02154 (Address of principal executive offices) (617) 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 stock, as of August 5, 1997. 3,409,870 shares of Common Stock, par value $.01 per share 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. a) Consolidated Condensed Balance Sheets b) Consolidated Condensed Statements of Income c) Consolidated Condensed Statements of Cash Flows d) Notes to Consolidated Condensed Financial Statements -2- 3 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, 1997 DECEMBER 31, 1996 ------------- ----------------- (Unaudited) (See note below) ASSETS Current assets: Cash and cash equivalents $1,154,743 $1,029,666 Accounts receivable 411,415 421,769 Inventories: Raw materials 273,763 254,238 Work-in-process 73,985 175,003 Finished goods 112,825 151,300 ---------- ---------- 460,573 580,541 Other current assets 52,409 48,418 ---------- ---------- Total current assets 2,079,140 2,080,394 Plant and equipment, net 64,608 29,413 Other assets 5,810 48,987 ---------- ---------- TOTAL ASSETS $2,149,558 $2,158,794 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 133,227 $ 167,602 Due to officer - 6,872 Accrued expenses 40,156 48,712 Accrued royalties - 193,932 ---------- ---------- Total current liabilities 173,383 417,118 Shareholders' equity: Common stock 34,009 34,009 Additional paid-in capital 3,147,151 3,147,151 Cumulative translation adjustment 93,342 108,625 Accumulated deficit (1,298,327) (1,548,109) ---------- ---------- 1,976,175 1,741,676 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,149,558 $2,158,794 ========== ==========
Note: The balance sheet at December 31, 1996 has been taken from the audited financial statements at that date. See accompanying notes to consolidated condensed financial statements. -3- 4 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
For the three months For the six months ended June 30 ended June 30 ------------------------------- ------------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net Sales $ 683,373 $ 519,698 $ 1,145,214 $ 1,116,779 Cost of sales 329,238 257,812 568,363 566,410 ----------- ----------- ----------- ----------- 354,135 261,886 576,851 550,369 Other operating expenses 191,183 198,467 347,123 363,929 ----------- ----------- ----------- ----------- Income from operations 162,952 63,419 229,728 186,440 Other income (10,338) (7,762) (20,054) (15,766) ----------- ----------- ----------- ----------- Net income before taxes 173,290 71,181 249,782 202,206 Provision for income taxes 0 0 0 0 ----------- ----------- ----------- ----------- Net income $ 173,290 $ 71,181 $ 249,782 $ 202,206 =========== =========== =========== =========== Net income per common and common equivalent share $ .05 $ .02 $ .07 $ .06 =========== =========== =========== =========== Average number of common shares and common equivalent shares outstanding 3,561,465 3,647,389 3,568,193 3,598,141
See accompanying notes to consolidated condensed financial statements. -4- 5 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED ---------------- JUNE 30 ------- 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 249,782 $ 202,206 Adjustments to reconcile net income to net cash used in operations: Depreciation and amortization 53 (1,643) Change in assets and liabilities, net: (89,511) 66,906 ----------- ----------- Net cash provided by operating activities 160,324 267,469 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (35,247) (43,361) ----------- ----------- Net cash used in investing activities (35,247) (43,361) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from exercise of options and warrants - 4,999 ----------- ----------- Net cash provided by financing activities - 4,999 NET INCREASE IN CASH 125,077 229,107 ----------- ----------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,029,666 772,006 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,154,743 $ 1,001,113 =========== ===========
See accompanying notes to consolidated condensed financial statements. -5- 6 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED 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 June 30, 1997 and the results of their operations for the three and six months ended June 30, 1997 and June 30, 1996 and their cash flows for the six months ended June 30, 1997 and June 30, 1996. 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 June 30, 1997 or 1996. Cost of sales for such periods was calculated primarily using standard cost methods. 4. In February, 1997, the Financial Accounting Standards Board released Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which the Company will adopt in the fourth quarter of 1997. Had SFAS No. 128 been effective for the quarters ended June 30, 1997 and June 30, 1996, basic and diluted earnings per share under SFAS 128 would have been approximately the same as the reported income per share. 5. The results of operations for the three and six months ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. -6- 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 June 30, 1997, the Company had cash and cash equivalents of $1,154,743 and working capital of $1,905,757. Working capital has increased since December 31, 1996 owing to the profitable operations of the Company over the first half of the year. The Company's cash position has also increased significantly over December 31, 1996 because of these profitable operations. The Company expects to maintain a sound financial base for the balance of fiscal 1997. 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 JUNE 30, 1997 VERSUS THREE MONTHS ENDED JUNE 30, 1996 Sales in the second quarter of 1997 increased 32% over the sales posted in the second quarter of 1996. The increase in sales reflects an increase in market penetration by the Company's distributors and OEM accounts. A broader base of products and increased customer awareness of the product offerings is allowing this to happen. The Company's margins in the second quarter increased over those seen in 1996 (from 50% in 1996 to 52% in 1997). This occurred due to a change in the product mix. It should be noted that pricing is continuing to remain firm on all products. Operating expenses were slightly lower in the three months ended June 30, 1997 versus the three months ended June 30, 1996. Management does not anticipate any significant increases in its operating expenditures during the balance of 1997. 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 June 30, 1997 owing to the Company's ability to use net operating loss carryforwards in both the U.S. and U.K. -7- 8 Net income for the quarter was $173,290 or $.05 per share. This is substantially greater than that seen in the second quarter of 1996 and reflects the continued demand for the Company's products. FINANCIAL RESULTS - SIX MONTHS ENDED JUNE 30, 1997 VERSUS SIX MONTHS ENDED JUNE 30, 1996 Sales in the six months ended June 30, 1997 increased slightly over those seen in the six months ended in June 30, 1996. This increase is attributable to the Company being able to maintain a consistent level of sales in 1997. The Company's margins for the year-to-date period are slightly more than those of last year. This occurred due to a change in the product mix. Operating expenses were slightly lower for the six months ended June 30, 1997 versus the six months ended June 30, 1996. Management also does not anticipate any significant increases in its operating expenditures during the balance of 1997. 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 six months ended June 30, 1997 owing to the Company's ability to use net operating loss carryforwards in both the U.S. and U.K. Net income for the six months was $249,782 or $.07 per share, representing an increase of 24% over the 1996 period. This is a substantial improvement over the first six months of 1996 and is attributable to the factors described above. 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, government regulation, competition and general economic conditions. -8- 9 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In February, 1997, the Financial Accounting Standards Board released Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which the Company will adopt in the fourth quarter of 1997. Had SFAS No. 128 been effective for the quarters ended March 31, 1997 and March 31, 1996, basic and diluted earnings per share under SFAS 128 would have been the same as the reported income per share. -9- 10 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders held on May 22, 1997, the following members were elected to the Board of Directors: - -------------------------------------------------------------------------------- Votes Votes For Withheld - -------------------------------------------------------------------------------- Ralph E. Hanson 2,851,191 4,000 George F. Harrington 2,851,191 4,000 Derrick Ebden 2,851,191 4,000 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11. Statement re: Computation of Per Share Earnings 27. Financial Data Schedule (b) Reports on Form 8-K: None -10- 11 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: August 13, 1997 RALPH E. HANSON ----------------- ------------------------------- Ralph E. Hanson, President and Chief Executive Officer (principal executive officer) Date: August 13, 1997 RALPH E. HANSON ----------------- ------------------------------- Ralph E. Hanson, Chief Financial Officer (principal financial officer) -11- EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY STATEMENT RE COMPUTATION OF PER SHARE EARNINGS - --------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 -------------------- ----------------------- 1997 1996 1997 1996 ---- ---- ---- ---- CALCULATION OF PRIMARY EARNINGS PER SHARE Net Income $ 173,290 $ 71,181 $ 249,782 $ 202,206 ---------- ---------- ---------- ---------- Number of shares: Weighted average shares outstanding 3,400,850 3,394,183 3,400,850 3,390,850 Incremental shares for outstanding stock options and warrants 160,615 253,206 167,343 207,291 ---------- ---------- ---------- ---------- Total shares outstanding for purpose of earnings per share computation 3,561,465 3,647,389 3,568,193 3,598,141 ---------- ---------- ---------- ---------- Income per share as calculated $ .05 $ .02 $ .07 $ .06 ---------- ---------- ---------- ---------- CALCULATION OF FULLY DILUTED EARNINGS PER SHARE Net Income $ 173,290 $ 71,181 $ 249,782 $ 202,206 ---------- ---------- ---------- ---------- Number of shares: Weighted average shares outstanding 3,400,850 3,394,183 3,400,850 3,390,850 Incremental shares for outstanding stock options and warrants 160,615 253,206 167,343 207,291 ---------- ---------- ---------- ---------- Total shares outstanding for purpose of earnings per share computation 3,561,465 3,647,389 3,568,193 3,598,141 ---------- ---------- ---------- ---------- Income per share as calculated $ .05 $ .02 $ .07 $ .06 ---------- ---------- ---------- ----------
-12- EX-27 3 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 1,154,743 0 411,415 0 460,573 2,079,140 64,608 0 2,149,558 173,383 0 0 0 1,976,175 0 2,149,558 1,145,214 1,145,214 568,363 568,363 347,123 0 0 249,782 0 249,782 0 0 0 249,782 .07 .07
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