-----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, QZO2x/YGZ1EIGfVHZOHAatKJ70ffJumu6cgZyK46NPDv4/yFgVOXr0USCHrmtaPk 8gBFe+Zdy13TN/hzJbnLwQ== 0000950135-97-004603.txt : 19971117 0000950135-97-004603.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950135-97-004603 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-16257 FILM NUMBER: 97719052 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 FORM 10QSB FORM 10-QSB 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, 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 November 14, 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
SEPTEMBER 30, 1997 DECEMBER 31, 1996 ------------------ ----------------- (Unaudited) (See note below) ASSETS - ------ Current assets: Cash and cash equivalents $ 1,233,644 $ 1,029,666 Accounts receivable 379,191 421,769 Inventories: Raw materials 239,928 254,238 Work-in-process 110,276 175,003 Finished goods 109,734 151,300 ----------- ----------- 459,938 580,541 Other current assets 53,058 48,418 ----------- ----------- Total current assets 2,125,831 2,080,394 Plant and equipment, net 71,797 29,413 Other assets 5,571 48,987 ----------- ----------- TOTAL ASSETS $ 2,203,199 $ 2,158,794 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 112,598 $ 167,602 Due to officer 3,911 6,872 Accrued expenses 24,477 48,712 Accrued royalties -- 193,932 ----------- ----------- Total current liabilities 140,986 417,118 Shareholders' equity: Common stock 34,009 34,009 Additional paid-in capital 3,147,151 3,147,151 Cumulative translation adjustment 63,592 108,625 Accumulated deficit (1,182,539) (1,548,109) ----------- ----------- 2,062,213 1,741,676 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,203,199 $ 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 nine months ended September 30 ended September 30 --------------------- ------------------ 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Net Sales $ 512,807 471,519 $ 1,658,021 $ 1,588,298 Cost of sales 242,899 262,920 811,262 829,330 ----------- ----------- ----------- ----------- 269,908 208,599 846,759 758,968 Other operating expenses 164,506 153,432 511,630 517,361 ----------- ----------- ----------- ----------- Income from operations 105,402 55,167 335,129 241,607 Other income (10,386) (8,030) (30,441) (23,796) ----------- ----------- ----------- ----------- Net income before taxes 115,788 63,197 365,570 265,403 Provision for income taxes 0 0 0 0 ----------- ----------- ----------- ----------- Net income $ 115,788 $ 63,197 $ 365,570 $ 265,403 =========== =========== =========== =========== Net income per common and common equivalent share $ .03 $ .02 $ .10 $ .07 =========== =========== =========== =========== Average number of common shares and common equivalent shares outstanding 3,528,620 3,632,404 3,556,141 3,565,976
See accompanying notes to consolidated condensed financial statements. - 4 - 5 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED ----------------- SEPTEMBER 30 ------------ 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 365,570 $ 265,403 Adjustments to reconcile net income to net cash used in operations: Depreciation and amortization (1,798) (2,699) Change in assets and liabilities, net: (119,210) (21,330) ----------- ----------- Net cash provided by operating activities 244,562 241,374 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (40,584) (42,340) ----------- ----------- Net cash used in investing activities (40,584) (42,340) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from exercise of options and warrants -- 5,000 ----------- ----------- Net cash provided by financing activities -- 5,000 NET INCREASE IN CASH 203,978 204,034 ----------- ----------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,029,666 772,006 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,233,644 $ 976,040 =========== ===========
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 September 30, 1997 and the results of their operations for the three and nine months ended September 30, 1997 and 1996 and their cash flows for the nine months ended September 30, 1997 and 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 September 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 September 30, 1997 and September 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 nine months ended September 30, 1997 and 1996 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 September 30, 1997, the Company had cash and cash equivalents of $1,233,644 and working capital of $1,984,845. The working capital increase from the position at December 31, 1996 is attributable almost entirely to the nine months profit from operations of $365,570. The Company's cash flows have historically tracked its operational results. The Company expects to maintain a sound financial base for the balance of 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 SEPTEMBER 30, 1997 VERSUS THE THREE MONTHS ENDED SEPTEMBER 30, 1996. Sales in the third quarter of 1997 increased approximately 9% over sales posted in the third 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 third quarter were higher than those achieved in 1996 (from 44% in 1996 to 52% in 1997). This occurred due to a change in product mix. It should be noted that pricing continued to remain firm on all products. Operating expenses remained relatively consistent between 1996 and 1997. This relative stability reflects management's commitment to contain costs. 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 September 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 $115,788 or $.03 per share in contrast to $63,197 or $.02 per share in the third quarter of 1996 and reflected continued demand for the Company's products. FINANCIAL RESULTS - NINE MONTHS ENDED SEPTEMBER 30, 1997 VERSUS THE NINE MONTHS ENDED SEPTEMBER 30, 1996. Sales in the nine months ended September, 1997 increased slightly over those seen in the nine months ended in September, 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 were slightly higher than those of last year due to a change in product mix. Operating expenses were slightly lower for the nine months ended September 30, 1997 verses the nine months ended September 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 nine months ended September 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 nine month period ended September 30, 1997 was $365,570, or $.10 per share, representing an increase of 38% from the nine month period ended September 30, 1996. This substantial improvement was attributable to higher revenues and higher margins which were achieved without an increase in operating expenses. 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 September 30, 1997 and September 30, 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 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: November 14, 1997 By: /s/ Ralph E. Hanson -------------------- -------------------------------- Ralph E. Hanson, President and Chief Executive Officer (principal executive officer) Date: November 14, 1997 By: /s/ Ralph E. Hanson -------------------- -------------------------------- Ralph E. Hanson, Chief Financial Officer (principal financial officer) - 11 - EX-11 2 EXHIBIT 11 COMPUTATION OF EARNINGS 1 EXHIBIT 11 PACE MEDICAL, INC. AND WHOLLY-OWNED SUBSIDIARY STATEMENT RE COMPUTATION OF PER SHARE EARNINGS - --------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30 ENDED SEPTEMBER 30 ------------------ ------------------ 1997 1996 1997 1996 ---------- ---------- ---------- ---------- CALCULATION OF PRIMARY EARNINGS PER SHARE Net Income $ 115,788 $ 63,197 $ 365,570 $ 265,403 ---------- ---------- ---------- ---------- Number of shares: Weighted average shares outstanding 3,400,850 3,385,805 3,400,850 3,385,805 Incremental shares for outstanding stock options and warrants 127,770 246,599 155,291 180,171 ---------- ---------- ---------- ---------- Total shares outstanding for purpose of earnings per share computation 3,528,620 3,632,404 3,556,141 3,565,976 ---------- ---------- ---------- ---------- Income per share as calculated $ .03 $ .02 $ .10 $ .07 ---------- ---------- ---------- ---------- CALCULATION OF FULLY DILUTED EARNINGS PER SHARE Net Income $ 115,788 $ 63,197 $ 365,570 $ 265,403 ---------- ---------- ---------- ---------- Number of shares: Weighted average shares outstanding 3,400,850 3,385,805 3,400,850 3,385,805 Incremental shares for outstanding stock options and warrants 127,770 246,599 155,291 246,599 ---------- ---------- ---------- ---------- Total shares outstanding for purpose of earnings per share computation 3,528,620 3,632,404 3,556,141 3,632,404 ---------- ---------- ---------- ---------- Income per share as calculated $ .03 $ .02 $ .10 $ .07 ---------- ---------- ---------- ----------
- 12 - EX-27 3 EX-27 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 9-MOS DEC-31-1997 SEP-30-1997 1 1,233,644 0 379,191 0 459,938 2,125,831 71,797 0 2,203,199 140,986 0 0 0 2,062,213 0 2,203,199 1,658,021 1,658,021 811,262 1,322,892 0 0 0 365,570 0 365,570 0 0 0 365,570 .10 .10
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