-----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, INrELj5QMSA0ph63LgpxnZalr1GVaN/9hjCsx5Wocp0ouBwjfxTzK10viHYwIIhF PPv8OnbaTpovEkQ8VLYNXw== 0000950135-96-005034.txt : 19961120 0000950135-96-005034.hdr.sgml : 19961120 ACCESSION NUMBER: 0000950135-96-005034 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961118 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: 96668325 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. FORM 10QSB 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 September 30, 1996 ---------------------------- 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 registrant 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 ------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (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 ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 14, 1996. 3,401,770 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 Operations 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
SEPTEMBER 30, 1996 DECEMBER 31, 1995 ------------------ ----------------- (Unaudited) (See note below) ASSETS - ------ Current assets: Cash and cash equivalents $ 976,040 $ 772,006 Accounts receivable 417,683 380,781 Inventories: Raw materials 327,515 297,247 Work-in-process 120,742 96,782 Finished goods 72,274 114,039 ---------- ---------- 520,531 508,068 Other current assets 49,572 45,489 ---------- ---------- Total current assets 1,963,826 1,706,344 Plant and equipment, net 60,295 25,534 Other assets 6,525 47,832 ---------- ---------- TOTAL ASSETS $2,030,646 $1,779,710 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 112,652 $ 149,450 Accrued expenses 57,847 54,634 Accrued royalties 187,641 165,664 ---------- ---------- Total current liabilities 358,140 369,748 Excess of acquired net assets over purchase price 3,666 14,656
-3- 4 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1996 DECEMBER 31, 1995 ------------------ ----------------- (Unaudited) (See note below) Shareholders' equity: Common stock 33,809 33,809 Additional paid-in capital 3,142,351 3,137,351 Cumulative translation adjustment 60,212 57,081 Accumulated deficit (1,567,532) (1,832,935) ----------- ----------- 1,668,840 1,395,306 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,030,646 $ 1,779,710 =========== =========== Note: The balance sheet at December 31, 1995 has been taken from the audited financial statements at that date.
See accompanying notes to consolidated condensed financial statements. -4- 5 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months For the nine months ended September 30 ended September 30 ------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales $ 471,519 $ 441,832 $1,588,298 $1,222,298 Cost of sales 262,920 222,378 829,330 581,783 ---------- ---------- ---------- ---------- 208,599 219,454 758,968 640,515 Other operating expenses 153,432 162,719 517,361 483,346 ---------- ---------- ---------- ---------- Income from operations 55,167 56,735 241,607 157,169 Other income (8,030) (8,560) (23,796) (22,867) ---------- ---------- ---------- ---------- Net income $ 63,197 $ 65,295 $ 265,403 $ 180,036 ========== ========== ========== ========== Net income per common and common equivalent share $ .02 $ .02 $ .07 $ .05 ========== ========== ========== ========== Average number of common and common equivalent shares outstanding 3,632,404 3,387,600 3,565,976 3,387,600 ========== ========== ========== ==========
See accompanying notes to consolidated condensed financial statements. -5- 6 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED ---------------------- SEPTEMBER 30 ---------------------- 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $265,403 $ 180,036 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization (2,699) (1,456) Change in assets and liabilities, net: (21,330) (160,595) -------- --------- Net cash provided by operating activities 241,374 17,985 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment 42,340 47,711 -------- --------- Net cash used in investing activities 42,340 47,711 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of options and warrants 5,000 0 -------- --------- Net cash provided by financing activities 5,000 0 NET INCREASE (DECREASE) IN CASH 204,034 (29,726) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $772,006 $ 781,110 CASH AND CASH EQUIVALENTS AT END OF PERIOD $976,040 $ 751,384 ======== =========
See accompanying notes to consolidated condensed financial statements. -6- 7 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 September 30, 1996, and the results of their operations for the three and nine months ended September 30, 1996 and 1995, and their cash flows for the nine months ended September 30, 1996 and 1995. 3. The Company prepares its financial information using the same accounting principles as for its annual financial statements with the following modifications: a. No physical inventories were taken during either of the periods ended September 30, 1996 or 1995. Cost of sales for such periods was calculated primarily using standard cost methods. 4. The Company has adopted SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", in the current quarter. This adoption had no impact on the current quarter's financial statements. The Company has also elected to continue to apply the measurement provisions of APB 25, "Accounting for Stock Issued to Employees", in lieu of adopting those described in SFAS 123, "Accounting for Stock-Based Compensation". 5. The results of operations for the three and nine months ended September 30, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. -7- 8 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, 1996, the Company had cash and cash equivalents of $976,040 and working capital of $1,605,686. The working capital increase from the position at December 31, 1995 is attributable almost entirely to the nine months profit from operations of $265,403. The Company's cash flows have historically tracked its operational results. Accordingly, the Company's working capital position as of September 30, 1996 shows a marked improvement over that seen as of December 31, 1995. The Company still maintains a sound financial base for fiscal 1996. 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, 1996 VERSUS THE THREE MONTHS ENDED SEPTEMBER 30, 1995 Sales in the third quarter of 1996 increased approximately 7% over sales posted in the third quarter of 1995. This increase is attributable to the Company's ability to ship production units of its new dual-chamber pacing analyzer and to increase its sales in the international marketplace. The Company's margins in the third quarter are slightly lower than those seen in 1995. They reflect a slight change in product mix which included increased sales of the Company's newly introduced pacing analyzer. In addition, production costs are expected to decrease as production efficiencies are realized; and, it should be noted that pricing is continuing to remain firm on the product. Operating expenses remained relatively flat between 1996 and 1995. This relative stability reflects management's commitment to contain costs. Also, management does not anticipate any significant increases in its operating expenditures during the balance of 1996. This level will also suffice to maintain the Company's research and development efforts in developing new products in the temporary pacing field. -8- 9 There are no taxes provided for on the financial statements because of the presence of net operating loss carryforwards in the U.S. and U.K. The net profit for the quarter was $63,197 or $.02 per share in contrast to a net profit of $65,295 or $.02 per share in the third quarter of 1995. FINANCIAL RESULTS - NINE MONTHS ENDED SEPTEMBER 30, 1996 VERSUS THE NINE MONTHS ENDED SEPTEMBER 30, 1995 Sales in the nine months ended September, 1996 increased slightly over those seen in the nine months ended in September, 1995. This increase is attributable to the Company increasing sales of its newly introduced pacing analyzer in 1996. The Company's sales pace for the remainder of 1996 should continue to meet that seen in the first nine months of the year owing primarily to the increase in orders for its new dual-chamber pacing analyzer. The Company's cost of sales margins for the year-to-date are running slightly lower than those of last year due to increased production start-up costs concerning the newly introduced pacing analyzer. Increased product volumes should continue to increase the margins since the Company does have a cost structure that will reward higher production volumes. It should be noted that pricing is continuing to remain firm on the products offered by the Company. Operating expenses remained relatively flat between 1996 and 1995. This relative stability reflects management's commitment to contain costs. Management also does not anticipate any significant increases in its operating expenditures during the balance of 1996. This level will also suffice to maintain the Company's research and development efforts in developing new products in the temporary pacing field. There are no taxes provided for on the financial statements because of the presence of net operating loss carryforwards in the U.S. and U.K. The net profit for the year has increased to $.07 per share from a net profit of $.05 per share in 1995. Management believes that the sales increase has improved operations significantly. -9- 10 PART II - OTHER INFORMATION 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 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 18, 1996 /s/ RALPH E. HANSON -------------------------- Ralph E. Hanson, President and Principal Executive Officer Date: November 18, 1996 /s/ RALPH E. HANSON -------------------------- Ralph E. Hanson, Principal Financial and Accounting Officer -10- EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the three For the three For the nine For the nine months months months months ended ended ended ended September 30, September 30, September 30, September 30, Primary Fully diluted Primary Fully diluted Weighted average shares outstanding 3,385,805 3,385,805 3,385,805 3,385,805 Dilutive effect of common stock equivalents 246,599 246,599 180,171 246,599 Weighted average common and common equivalent shares outstanding 3,632,404 3,632,404 3,565,976 3,632,404 ===================================================================== Net Income $63,197 $63,197 $265,403 $265,403 ===================================================================== Net income per common share $ 0.02 $ 0.02 $ 0.07 $ 0.07 =====================================================================
-11- EX-27 3 PACE MEDICAL FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 976,040 0 417,683 0 520,531 1,963,826 60,295 0 2,030,646 358,140 0 1,668,840 0 0 0 2,030,646 1,588,298 1,588,298 829,330 829,330 517,361 0 0 265,403 0 265,403 0 0 0 265,403 .07 .07
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