-----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, S66UD9t5181qkH04gjsnHOpiUic7/rvakd/gkr7sMQ8GI/lJDCcXYIzyh70VHkXq c1T+HqByyn1vW5aGXovuJA== 0000912057-97-018014.txt : 19970520 0000912057-97-018014.hdr.sgml : 19970520 ACCESSION NUMBER: 0000912057-97-018014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALPHA PRO TECH LTD CENTRAL INDEX KEY: 0000884269 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 631030494 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19893 FILM NUMBER: 97608170 BUSINESS ADDRESS: STREET 1: 60 CENTURIAN DR STREET 2: SUITE 112 CITY: MARKHAM ONTARIO CANA STATE: A6 BUSINESS PHONE: 9054790654 MAIL ADDRESS: STREET 1: 60 CENTURION DR STREET 2: STE 112 CITY: MARKHAM ON STATE: A6 FORMER COMPANY: FORMER CONFORMED NAME: BFD INDUSTRIES INC DATE OF NAME CHANGE: 19930328 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 10-Q -------------------- Quarterly Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended March 31, 1997 Commission File No. 0-19893 --------------------------- Alpha Pro Tech, Ltd. (formerly BFD INDUSTRIES, INC.) ------------------------------------------------------ (exact name of registrant as specified in its charter) Delaware, U.S.A. 63-1009183 - ---------------- ---------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation) Suite 112, 60 Centurian Drive Markham, Ontario, Canada L3R 9R2 - ------------------------ -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (905) 479-0654 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 3 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 May 9, 1997 Common stock, $.01 par value..... 24,047,449 ALPHA PRO TECH, LTD. Table of Contents PART I. FINANCIAL INFORMATION ITEM 1 Consolidated Financial Statements (Unaudited) Page No. a) Balance Sheet - March 31, 1997 (Unaudited) and December 31, 1996 1 b) Statement of Operations for the unaudited three months ended March 31, 1997 and March 31, 1996 2 c) Statement of Shareholder's Equity for the unaudited three months ended March 31, 1997 3 d) Statement of Cash Flows for the unaudited three months ended March 31, 1996 and March 31, 1997 4 e) Notes to Consolidated Financial Statements 5-6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 SIGNATURES 10 ALPHA PRO TECH, LTD. CONSOLIDATED BALANCE SHEET - -----------------------------------------------------------------------------
(UNAUDITED) MARCH 31, DECEMBER 31, 1997 1996 ASSETS Current Assets: Cash $ 1,613,000 $ 275,000 Marketable Securities-restricted 22,000 39,000 Accounts receivable, net of allowance for doubtful accounts of $122,000 2,234,000 2,170,000 Income taxes receivable 5,000 5,000 Inventories 3,136,000 2,942,000 Prepaid expenses and other assets 254,000 183,000 ------------ ---------- 7,264,000 5,614,000 Property and equipment, net of accumulated depreciation and amortization of $899,000 and $836,000 1,729,000 1,615,000 Intangible assets, net of accumulated amortization of $62,000 and $55,000 221,000 219,000 Other 33,000 33,000 ------------ ---------- $ 9,247,000 $7,481,000 ------------ ---------- ------------ ---------- LIABILITIES & SHAREHOLDER'S EQUITY Current Liabilities: Accounts payable $ 1,091,000 $ 1,600,000 Accrued liabilities 509,000 647,000 Due to related parties 19,000 19,000 Notes payable, current portion 7,000 31,000 Loans payable, current portion 1,129,000 1,081,000 Capital leases, current portion 58,000 36,000 ------------ ---------- 2,813,000 3,414,000 Loans payable, less current portion 99,000 112,000 Capital leases, less current portion 171,000 105,000 ------------ ---------- 3,083,000 3,631,000 ------------ ---------- SHAREHOLDERS' EQUITY Common stock, $.01 par value, 50,000,000 shares authorized, 23,730,116 and 20,755,463 issued and outstanding at March 31, 1997 and December 31, 1996 237,000 207,000 Additional paid-in capital 23,874,000 21,656,000 Accumulated deficit (17,947,000) (18,013,000) ------------ ---------- 6,164,000 3,850,000 ------------ ---------- $ 9,247,000 $7,481,000 ------------ ---------- ------------ ----------
1 ALPHA PRO TECH, LTD. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - ------------------------------------------------------------------------------ FOR THE THREE MONTHS ENDED MARCH 31, 1997 1996 Sales $ 3,985,000 $ 3,586,000 Cost of goods sold, excluding depreciation 2,445,000 2,299,000 ----------- ----------- 1,540,000 1,287,000 Expenses Selling, general and administrative 1,323,000 1,115,000 Depreciation and amortization 70,000 58,000 ----------- ----------- Income from operations 147,000 114,000 Interest 81,000 81,000 Other - (13,000) ----------- ----------- 81,000 68,000 ----------- ----------- Income before provision for income taxes 66,000 46,000 Provision for income taxes 0 0 ----------- ----------- Net Income $ 66,000 $ 46,000 ----------- ----------- ----------- ----------- Net Income per share $ 0.00 $ 0.00 ----------- ----------- ----------- ----------- Weighted average number of shares outstanding 22,216,718 19,963,963 ----------- ----------- ----------- ----------- 2 ALPHA PRO TECH, LTD. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) - --------------------------------------------------------------------- COMMON ADDITIONAL ACCUMULATED SHARES STOCK PAID-IN CAPITAL DEFICIT TOTAL ---------- -------- --------------- ------------ ---------- Balance at December 31, 1996 20,755,463 $207,000 $21,656,000 ($18,013,000) $3,850,000 Stock issued for cash 2,974,653 30,000 2,161,000 2,191,000 Options/warrants issued for services 57,000 57,000 Net Income 66,000 66,000 ---------- -------- ----------- ------------ ---------- Balance at March 31, 1997 23,730,116 $237,000 $23,874,000 ($17,947,000) $6,164,000 ---------- -------- ----------- ------------ ---------- ---------- -------- ----------- ------------ ----------
3 ALPHA PRO TECH, LTD. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - --------------------------------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, ------------------------ 1997 1996 ---------- -------- OPERATING ACTIVITIES: Net Income (loss) $ 66,000 $ 46,000 Adjustments to reconcile net income to cash used for operating activities: Depreciation and amortization 70,000 58,000 Changes in assets and liabilities: Accounts receivable (64,000) (247,000) Marketable securities 17,000 (3,000) Inventories (194,000) (135,000) Prepaid and other assets(1) (14,000) 8,000 Accounts payable and accrued liabilities (647,000) 214,000 ---------- -------- Net cash provided by (used for) operating activities: (766,000) (59,000) ---------- -------- INVESTING ACTIVITIES: Purchase of property and equipment (177,000) (96,000) Purchase of intangible assets (9,000) (17,000) ---------- -------- Net cash used for investing activities (186,000) (113,000) ---------- -------- FINANCING ACTIVITIES: Issuance of common stock(1) 2,191,000 153,000 Net proceeds (payments) on loans payable 35,000 (3,000) Net proceeds (payments) on notes payable (24,000) 73,000 Net proceeds (payments) on capital leases 88,000 (6,000) ---------- -------- Net Cash provided by financing activities 2,290,000 217,000 ---------- -------- Increase (decrease) in cash during the period 1,338,000 45,000 Cash, beginning of period $ 275,000 $344,000 ---------- -------- Cash, end of period $1,613,000 $389,000 ---------- -------- ---------- -------- - -------------- (1) Non-cash item: Options and warrants were issued to consultants for $57,000. This is reflected on the Cash Flow Statement as a deduction in common stock and prepaid expenses. 4 ALPHA PRO TECH, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - --------------------------------------------------------------------- 1. THE COMPANY Alpha Pro Tech, Ltd. (the Company) manufactures and distributes a variety of disposable mask, shield, shoe cover, and apparel products, and woundcare products. Most of the Company's disposable apparel, mask and shield products, and woundcare products are distributed to medical, dental, industrial, and clean room markets, predominantly in the United States. 2. BASIS OF PRESENTATION The unaudited interim financial statements reflect all adjustments which are in the opinion of management necessary for a fair presentation of the results for the interim period presented. All such adjustments made are of a normal recurring nature. There have been no significant changes since December 31, 1995 in accounting principles and practices utilized in the presentation of these financial statements. 3. INVENTORIES MARCH 31, DECEMBER 31, 1997 1996 ---------- ---------- Raw Materials $1,666,000 $1,511,000 Work in process 109,000 76,000 Finished goods 1,361,000 1,355,000 ---------- ---------- $3,136,000 $2,942,000 ---------- ---------- ---------- ---------- 4. ACCRUED LIABILITIES MARCH 31, DECEMBER 31, 1997 1996 ---------- ---------- Professional fees $ 226,000 $ 286,000 Payroll and payroll taxes 187,000 203,000 Other 96,000 158,000 ---------- ---------- $ 509,000 $ 647,000 ---------- ---------- ---------- ---------- 5 ALPHA PRO TECH, LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - --------------------------------------------------------------------- 5. NOTES PAYABLE MARCH 31, DECEMBER 31, 1997 1996 ------- ------- Note payable due in monthly installments of $1,500, interest at 8.0%, maturing July 31, 1997 $ 5,000 $ 9,000 Notes payable due in monthly installments balance due in April, 1997 2,000 Notes payable to related parties, interest at 15% payable quarterly, due on demand 14,000 Notes payable to related parties, interest at 20% payable quarterly, due on demand 8,000 ------- $ 7,000 $31,000 ------- ------- Less: Current portion $ 7,000 $31,000 ------- ------- Notes Payable, less current portion $ - $ - ------- ------- ------- ------- 6. NET INCOME/(LOSS) PER SHARE Net income/(loss) per share of common stock is based on the weighted average number of shares of common stock outstanding during the quarter. Common stock equivalents have been excluded from the earnings per share calculation as no material dilutive effect would result. 7. PROVISION FOR INCOME TAX No provision for income tax has been recorded in the Statement of Operations for the three months ended March 31, 1997, as taxable income has been eliminated as a result of the utilization of net operating loss carry forwards. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS FROM OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997, COMPARED TO MARCH 31, 1996 Alpha Pro Tech, Ltd. ("Alpha" or the "Company") reported a net income for the three months ended March 31, 1997 of $66,000 as compared to a net income of $46,000 for the three months ended March 31, 1996, representing an improvement of $20,000 or 43.5%. SALES Consolidated net sales for the three months ended March 31, 1997 increased $3,985,000 from $3,586,000 in 1996, representing an increase of $399,000 or 11.1%. Net sales for the Apparel Division for the first quarter ended March 31, 1997 were $2,280,000 as compared to $1,566,0000 for the same period of 1996. The Apparel Division sales increase of $714,000 or 45.6% was primarily due to increased sales to its largest customer. Mask, and eye shield sales decreased by 21.9%, to $1,078,000 for the first quarter 1997 from $1,381,000 in the first quarter 1996. Mask, and eye shield sales to dentists were virtually unchanged while the decrease can be attributed to lower medical sales. Sales from the Company's Unreal Lambskin-Registered Trademark- and other related products which includes a line of pet beds, remained relatively constant at $627,000 in the first quarter 1997 compared to $639,000 in the same period 1996. The Company's Unreal Lambskin-Registered Trademark- line of products is a mature line which is no longer an area for significant growth although sales of pet products is expected to improve. COST OF GOODS SOLD Cost of goods sold increased to $2,445,000 for the three months ended March 31, 1997 from $2,299,000 for the same period in 1996. As a percentage of net sales, cost of goods sold decreased to 61.4% from 64.1%. Gross profit margin increased to 38.6% for the three months ended March 31, 1997 from 35.9% for the three months ended March 31, 1996. 7 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by $208,000 to $1,323,000 for the three months ended March 31, 1997 from $1,115,000 for the three months ended March 31, 1996. As a percentage of net sales, selling, general and administrative expenses increased to 33.2% in the first quarter of 1997 from 31.1% in the same period in 1996. The increase in selling, general and administrative expenses is primarily in the areas of payroll related costs of $186,000; and travel expenses of $30,000 offset by a decrease in commission expenses of $17,000. Of the $186,000 increase in payroll related costs, $166,000 is due to the Apparel Division which had an increase in sales of 45.6%. As a percentage of net Apparel Division sales, selling, general and administrative expenses for the Apparel division increased to 22% for the first quarter of 1997 as compared to 20% in the first quarter of 1996. DEPRECIATION & AMORTIZATION Depreciation and amortization expense increased by $12,000, to $70,000 for the three months ended March 31, 1997 from $58,000 for the same period in 1996. This increase is primarily attributable to an increase in the purchase of equipment through capital leases. NET INTEREST Interest expense of $81,000 remained the same for the three months ended March 31, 1997 and 1996. Borrowings were relatively constant for both of these periods. INCOME FROM OPERATIONS Income from operations increased by $33,000 to $147,000 for the three months ended March 31, 1997 from $114,000 for the three months ended March 31, 1996. The increased income from operations is primarily due to the increase in gross profit of $253,000 offset by an increase in selling, general and administrative expenses of $208,000 and an increase in depreciation and amortization of $12,000. NET INCOME Net Income for the three months ended March 31, 1997 was $66,000 compared to a net income of $46,000 for the three months ended March 31, 1996, an increase of $20,000. The net income increase of $20,000 is comprised of an increase in income from operations of $33,000 offset by other income in 1996 of $13,000. The Company does not have any pension, profit sharing or similar plans established for its employees, however, the chief executive officer and president are entitled to a combined bonus equal to 10% of the pre-tax profits of the company. No bonus was earned in 1996 or 1995. 8 LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, the Company had cash of $1,613,000 and working capital of $4,451,000. The Company currently has a secured asset based lender's line of credit of $3,000,000, based upon the level of eligible accounts receivable, inventory and equipment which expires in March 1998. At March 31, 1997, the maximum line of credit available was $1,455,000 for accounts receivable, inventory and equipment. Net cash used for operations was $766,000 for the three months ended March 31, 1997 and $59,000 for the same period of 1996. The Company's use of cash from operations for the three months ended March 31, 1997 have been due primarily to increases in accounts receivable, inventories, prepaid and other assets and a decrease in accounts payable and accrued liabilities. The Company's investing activities have consisted primarily of expenditures for fixed assets and intangible assets which totalled $186,000 for the three months ended March 31, 1997 and $113,000 for the same period of 1996. The Company has no significant capital commitments but currently anticipates that additions to property and equipment for 1997 could be approximately $600,000 depending on the Company's success in the food industry. During the three months ended March 31, 1997, the Company's financing activities consisting primarily of warrants and options, and increases in the asset based loan of $35,000 and capital leases of $88,000 offset by repayments of borrowings totaling $24,000 which resulted in the net cash provided by financing activities of $2,290,000. With the exercise of warrants and options, accounts payable and accrued liabilities were reduced significantly to a level that is expected to remain constant. Management believes that it has available cash and borrowings to finance all known financial commitments for at least 24 months. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION The Private Securities Litigation Reform Act of 1995 ("Act") provides a safe harbor for forward-looking information made on behalf of the Company. All statements, other than statements of historical facts which address the Company's expectations of sources of capital or which express the Company's expectation for the future with respect to financial performance or operating strategies can be identified as forward-looking statements. Such statements made by the Company are based on knowledge of the environment in which it operates, but because of the factors previously listed, as well as other factors beyond the control of the Company, actual results may differ materially from the expectations expressed in the forward-looking statements. 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Alpha Pro Tech, Ltd. DATE: BY: --------------------- ------------------------------------- SHELDON HOFFMAN CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 AND DECEMBER 31, 1996 AND THE STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1,613,000 22,000 2,356,000 122,000 3,136,000 7,264,000 2,628,000 899,000 9,247,000 2,813,000 0 0 0 237,000 23,874,000 9,247,000 3,985,000 3,985,000 2,445,000 1,393,000 0 0 81,000 66,000 0 66,000 0 0 0 66,000 0.00 0.00
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