-----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, Dp9nPkrJLnlehLX1gbOGM36XRHn+WN462a64DXogmXDtqNsQXuRpD89EtD4eI2jW 1k6b4YucZtd2QL05iO2AtQ== 0000912057-96-025672.txt : 19961113 0000912057-96-025672.hdr.sgml : 19961113 ACCESSION NUMBER: 0000912057-96-025672 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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: 96659360 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 FORM 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 September 30, 1996 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 L3R 9R2 Markham, Ontario, Canada ------- (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 November 4, 1996 ---------------- Common Stock, $.01 par value 20,595,463 Alpha Pro Tech, Ltd. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ITEM 1 Consolidated Financial Statements Page No. a) Balance Sheet- September 30, 1996 (Unaudited) and December 31, 1995 1 b) Statement of Operations for the unaudited three months and unaudited nine months ended September 30, 1996 and September 30, 1995. 2 c) Statement of Shareholders' Equity for the unaudited nine months ended September 30, 1996 3 d) Statement of Cash Flows for the unaudited nine months ended September 30, 1996 and September 30, 1995 4 e) Notes to Consolidated Financial Statements (Unaudited) 5 - 6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 8 SIGNATURES 9 Alpha Pro Tech, Ltd. CONSOLIDATED BALANCE SHEET - -------------------------------------------------------------------------------- (Unaudited) SEPTEMBER 30,DECEMBER 31, 1996 1995 ASSETS Current Assets: Cash $ 453,000 $ 344,000 Marketable Securities-restricted 38,000 36,000 Accounts receivable, net of allowance for doubtful accounts of $62,000 and $61,000 2,261,000 2,071,000 Income taxes receivable 6,000 172.000 Inventories 2,814,000 2,098,000 Prepaid expenses and other assets 296,000 139,000 ----------- ----------- 5,868,000 4,860,000 Property and equipment, net of accumulated depreciation and amortization of $774,000 and $609,000 1,628,000 1,350,000 Intangible assets, net of accumulated amortization of $47,000 and $28,000 227,000 167,000 Other 34,000 33,000 ----------- ----------- $ 7,757,000 $ 6,410,000 ----------- ----------- ----------- ----------- LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 1,794,000 $ 1,351,000 Accrued liabilities 699,000 751,000 Notes payable, current portion 52,000 152,000 Loans payable, current portion 1,178,000 890,000 Capital leases, current portion 37,000 22,000 ----------- ----------- 3,760,000 3,166,000 Notes payable, less current portion - 10,000 Loans payable, less current portion 126,000 167,000 Capital leases, less current portion 113,000 49,000 Minority interest - 14,000 ----------- ----------- 3,999,000 3,406,000 ----------- ----------- SHAREHOLDERS' EQUITY Common stock Authorized 50,000,000 with par value of $0.01; 20,595,463 and 19,911,130 issued and outstanding 206,000 199,000 Additional paid-in capital 19,324,000 18,673,000 Accumulated deficit (15,772,000) (15,868,000) ----------- ----------- 3,758,000 3,004,000 ----------- ----------- $ 7,757,000 $ 6,410,000 ----------- ----------- ----------- ----------- Alpha Pro Tech, Ltd. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------------------------ FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, 1996 1995 1996 1995 (Note 2) (Note 2) Sales $3,772,000 3,177,000 $11,231,000 $9,893,000 Cost of goods sold, excluding depreciation 2,449,000 2,242,000 7,328,000 6,402,000 ---------- ---------- ----------- ---------- 1,323,000 935,000 3,903,000 3,491,000 Expenses Selling, general and administrative 1,159,000 1,086,000 3,415,000 3,010,000 Depreciation and amortization 66,000 154,000 184,000 453,000 ---------- ---------- ----------- ---------- Income (loss) from operations 98,000 (305,000) 304,000 28,000 ---------- ---------- ----------- ---------- Interest 72,000 95,000 212,000 411,000 Other - - 0 (2,000) ---------- ---------- ----------- ---------- 72,000 95,000 212,000 409,000 ---------- ---------- ----------- ---------- Income (loss) before provision for income taxes and minority interest 26,000 (400,000) 92,000 (381,000) Minority interest - - (4,000) 4,000 Provision for income taxes (Note 7) - - - - ---------- ---------- ----------- ---------- Net Income (loss) $26,000 ($400,000) $96,000 $(385,000) ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- Net Income (loss) per share (Note 6) $0.00 ($0.02) $0.00 ($0.02) ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- Weighted average number of shares outstanding (Note 6) 20,512,130 19,840,937 20,163,671 18,832,883 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ----------
2 Alpha Pro Tech, Ltd. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
- ----------------------------------------------------------------------------------------------- COMMON ADDITIONAL ACCUMULATED SHARES STOCK PAID-IN DEFICIT TOTAL CAPITAL Balance at December 31, 1995 19,911,130 $199,000 $18,673,000 $(15,868,000) $3,004,000 Stock issued for cash 684,333 7,000 588,000 595,000 Options/warrants issued for services - 63,000 63,000 Net Income 96,000 96,000 ---------- -------- ----------- ------------ ---------- Balance at September 30, 1996 20,595,463 $206,000 $19,324,000 $(15,772,000) $3,758,000 ---------- -------- ----------- ------------ ---------- ---------- -------- ----------- ------------ ----------
3 Alpha Pro Tech, Ltd. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - ------------------------------------------------------------------------------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 OPERATING ACTIVITIES: Net income (loss) $96,000 ($385,000) Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization 184,000 453,000 Minority interest in earnings (14,000) 4,000 Securities issued for services 15,000 49,000 Changes in assets and liabilities: Accounts receivable (190,000) (154,000) Income tax receivable 167,000 - Marketable securities (2,000) - Inventories (716,000) 34,000 Prepaid and other assets (109,000) 63,000 Accounts payable and accrued liabilities 391,000 (548,000) --------- --------- Net cash provided by (used for) operating activities (178,000) (484,000) --------- --------- INVESTING ACTIVITIES: Acquisition of business (Note 8) (49,000) (354,000) Purchase of property and equipment (364,000) (170,000) Purchase of intangible assets (30,000) (131,000) Purchase of other assets (2,000) - --------- --------- Net cash used for investing activities (445,000) (655,000) --------- --------- FINANCING ACTIVITIES: Issuance of common stock 595,000 1,755,000 Net proceeds (payments) on loans payable 247,000 (313,000) Net payments on notes payable (110,000) (382,000) --------- --------- Net cash provided by financing activities 732,000 1,060,000 --------- --------- Increase (decrease) in cash during the period 109,000 (79,000) Cash, beginning of period $344,000 $340,000 --------- --------- Cash, end of period $453,000 $261,000 --------- --------- 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, and apparel products, and woundcare products. Most of the Company's 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 1996 adjustments made are of a normal recurring nature. The consolidated statement of operations for the three months ended September 30, 1995, and the nine months ended September 30, 1995 have been restated to reflect the adjustment described in note 16 of the Company's 1995 annual report FORM 10-K. 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 SEPTEMBER 30, DECEMBER 31, 1996 1995 Raw materials $1,598,000 $1,308,000 Work in progress 136,000 140,000 Finished goods 1,080,000 650,000 ----------- ----------- $2,814,000 $2,098,000 ----------- ----------- ----------- ----------- 4. ACCRUED LIABILITIES SEPTEMBER 30, DECEMBER 31, 1996 1995 Professional fees $ 329,000 $ 439,000 Payroll and payroll taxes 208,000 185,000 Other 143,000 127,000 Ludan Acquisition (Note 8) 19,000 - ----------- ----------- $ 699,000 $ 751,000 ----------- ----------- ----------- ----------- 5 Alpha Pro Tech, Ltd. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 5. NOTES PAYABLE SEPTEMBER 30, DECEMBER 31, 1996 1995 Note payable due in monthly installments of $4,900, interest at 7.5%, maturing July 31, 1996 - $ 41,000 Note payable due in monthly installments of $1,500, interest at 8.0%, maturing July 31, 1997 $13,000 26,000 Note payable due in monthly installments of $4,000 due May 31, 1997 26,000 62,000 Notes payable to related parties, interest at 20% payable quarterly, due on demand 13,000 33,000 52,000 162,000 Less: Current portion 52,000 152,000 Notes payable, less current portion $ - $10,000 --------- --------- --------- --------- 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 nine months ended September 30, 1996, as taxable income has been eliminated as a result of the utilization of net operating loss carry forwards. 8. ACQUISITION OF LUDAN CORPORATION On June 30, 1996, the Company acquired the outstanding 20% interest in Ludan Corporation from the minority shareholder for $68,000. The Company paid $49,000 of the purchase price in July 1996 and the remaining $19,000 is due in March 1997. The Company recorded $58,000 of goodwill in connection with this acquisition. 6 Alpha Pro Tech, Ltd. ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------- RESULTS OF OPERATIONS Three months and nine months ended September 30, 1996, compared to the three months and nine months ended September 30, 1995 SALES: Consolidated net sales were $3,772,000 for the three months ended September 30, 1996, as compared to $3,177,000 for the three months ended September 30, 1995, representing an increase of $595,000 or 18.7%. Net sales for the Apparel Division for the three months ended September 30, 1996 were $2,121,000 as compared to $1,464,000 for the three months ended September 30, 1995. The Apparel Division sales increase of $657,000 or 44.9% was primarily due to increased sales to its largest customer. Mask and eye shield sales were $1,131,000 for the third quarter ended September 30, 1996 as compared to $1,129,000 for the same quarter for 1995. Mask and eye shield sales are expected to continue to be relatively flat through 1996. Sales from the Company's Unreal Lambskin-Registered Trademark- and other related products decreased by 11.0% to $520,000 for the three months ended September 30, 1996 from $584,000 for the three months ended September 30, 1995. There have been a number of new products introduced in the Unreal Lambskin line of products with an expectation of increased sales in the future. Consolidated sales were $11,231,000 and $9,893,000 for the nine months ended September 30, 1996 and 1995, respectively representing an increase of 13.5%. The increase is attributable to an increase in apparel sales of 54.1%, offset by a decrease in mask and shield products of 3.4% and a decrease in Unreal Lambskin-Registered Trademark- of 22.1%. COST OF GOODS SOLD: Cost of goods sold increased to $2,449,000, for the three months ended September 30, 1996 from $2,242,000 for the three months ended September 30, 1995. As a percentage of net sales, cost of goods sold decreased to 64.9% from 70.6%. For the nine months ended September 30, 1996 as compared to 1995, cost of goods sold increased to $7,328,000 from $6,402,000. As a percentage of net sales for the nine months, cost of goods sold increased to 65.2% from 64.7%. Gross profit margin decreased slightly as a result of sales mix to 34.8% from 35.3% for the nine months ended September 30, 1996 and 1995 respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses increased by $73,000 to $1,159,000 for the three months ended September 30, 1996, from $1,086,000 for the three months ended September 30, 1995. As a percentage of net sales, the ratio decreased to 30.7% in the third quarter 1996 from 34.2% in the third quarter 1995. The increase in selling, general and administrative expenses is primarily due to increases in Apparel Division costs. Selling, general and administrative expenses increased by $405,000 to $3,415,000 for the nine months ended September 30, 1996 from $3,010,000 for the nine months ended September 30, 1995. As a percentage of net sales, selling, general and administrative expenses remained consistent with the previous year at 30.4%. DEPRECIATION & AMORTIZATION: Depreciation and amortization expense decreased by $88,000, to $66,000 for the three months ended September 30, 1996 from $154,000 for the same period in 1995, and decreased by $269,000 for the nine months ended September 30, 1996 compared to 1995. These decreases are attributable to the 1995 fourth quarter write off of impaired intangible assets related to the acquisition of its wholly-owned subsidiary, Alpha Pro Tech, Inc. 7 INTEREST: Interest expense decreased by $23,000, or 24.2%, to $72,000 for the third quarter 1996 from $95,000 for the third quarter 1995. Interest expense decreased by 48.4% for the nine months ended September 30, 1996 compared to 1995. These decreases are due to the Company obtaining asset based financing at lower interest rates effective March 31, 1995, and to $830,000 of notes payable being converted to common stock during the second quarter 1995. INCOME FROM OPERATIONS: Income from operations increased by $403,000 to income of $98,000 for the three months ended September 30, 1996, from a loss of $305,000 for the three months ended September 30, 1995. Income from operations increased by $276,000 for the nine months ended September 30, 1996 compared to the same period in 1995. These increases are primarily due to a decrease in depreciation and amortization expense in the third quarter and year to date. In addition, the third quarter increase is also attributable to the improved gross profit percentage. NET INCOME: Net Income for the three months ended September 30, 1996 was $26,000 compared to a loss of $400,000 for the three months ended September 30, 1995, an increase of $426,000. Net income for the nine months ended September 30, 1996 was $96,000 compared to a loss of $385,000 for the nine months in 1995. The net income increase of $481,000 is comprised of an increase of income from operations of $276,000 and a decrease of interest of $199,000. Net income (loss) as a percentage of sales increased to 0.9% in the first nine months of 1996 compared to (3.9%) in the same period 1995. LIQUIDITY AND CAPITAL RESOURCES: As of September 30, 1996 the Company had cash of $453,000 and working capital of $2,108,000. 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 September 30, 1996, the maximum line of credit available was $1,354,000 for accounts receivable, inventory, and equipment, of which, $1,336,000 has been used. Net cash used by operations was $178,000 for the nine months ended September 30, 1996, compared to $484,000 used for operations for the same period in 1995. The Company's use of cash for operations for the nine months ended September 30, 1996 have been due primarily to increases in accounts receivable, inventories, and other assets, partially offset by a decrease in income tax receivable and an increase in accounts payable and accrued liabilities. The Company's investing activities have consisted primarily of expenditures for fixed assets for the food service business, acquisition of businesses and the purchase of intangibles which totalled $445,000 for the nine months ended September 30, 1996, and $655,000 for the same period of 1995. The Company has no significant capital commitments, but currently anticipates that additions to property and equipment for the balance of 1996 could be approximately $50,000. For the nine months ended September 30, 1996 the Company's financing activities consisted primarily of raising $595,000 through the exercise of options and warrants. The Company expects to continue to raise funds through the exercise of options and warrants. The Company believes that it has adequate resources through its existing credit facility, working capital, and expected cash provided by operations and through the anticipated exercise of outstanding options and warrants to meet future cash requirements for at least a twelve month period. 8 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 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 This Schedule contains summary financial information extracted from the Consolidated Balance Sheet as of September 30, 1996 and December 31, 1995 and the Statement of Operations for the three and nine months ended September 30, 1996 and September 30, 1995 and is qualified in its entirety by reference to such financial statments. 1,000 9-MOS DEC-31-1996 JUL-01-1996 SEP-30-1996 453,000 38,000 2,323,000 (62,000) 2,814,000 5,868,000 2,402,000 (774,000) 7,757,000 3,760,000 0 0 0 206,000 19,324,000 7,757,000 3,772,000 3,772,000 2,449,000 1,225,000 0 0 72,000 26,000 0 26,000 0 0 0 26,000 0.00 0.00
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