-----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, R8Yxk2SHE3eiTZsM3oSbWHtI2AnvttT6Y3EnUJ/Yf2GKKBu5fumKcIyTuwdxwo6R tuhmXHM8cnBV3wiDpKgbuA== 0000912057-97-003811.txt : 19970221 0000912057-97-003811.hdr.sgml : 19970221 ACCESSION NUMBER: 0000912057-97-003811 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUMED SURGICAL INC CENTRAL INDEX KEY: 0000921878 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 341755390 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24362 FILM NUMBER: 97521719 BUSINESS ADDRESS: STREET 1: 6505 ROCKSIDE RD STREET 2: STE 425 CITY: INDEPENDENCE STATE: OH ZIP: 44131 BUSINESS PHONE: 2165736522 MAIL ADDRESS: STREET 1: 6505 ROCKSIDE RD STREET 2: STE 425 CITY: INDEPENDENCE STATE: OH ZIP: 44131 10QSB 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-24362 NuMED SURGICAL, INC. (Exact name of small business issuer in its charter) STATE OF NEVADA 34-1755390 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6505 Rockside Road Suite 425, Independence, OH 44131 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (216) 573-6522 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 --- --- The number of shares outstanding of the Issuer's common stock at $.001 par value as of February 7, 1997, was 8,775,685. Form 10-QSB 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS NuMED SURGICAL, INC. BALANCE SHEETS (UNAUDITED) ASSETS DECEMBER 31 MARCH 31 CURRENT ASSETS 1996 1996 ----------- -------- Cash and Cash Equivalents $4,712 $7,229 Accounts Receivable - Trade 53,549 43,687 Prepaid Expenses 11,985 300 Inventories 61,070 77,221 ----------- -------- TOTAL CURRENT ASSETS 131,316 128,437 PROPERTY AND EQUIPMENT, NET 0 1,842 OTHER ASSETS Intangible Assets, net of accumulated amortization of $114,371 and $137,537 respectively 44,777 65,074 Prototype Equipment, Net 920 1,689 ----------- -------- TOTAL OTHER ASSETS 45,697 66,763 ----------- -------- TOTAL ASSETS $177,013 $197,042 ----------- -------- ----------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payables $37,894 $39,095 Accrued Expenses 3,748 27,344 Short Term Borrowings 64,544 41,544 ----------- -------- TOTAL CURRENT LIABILITIES 106,186 107,983 ----------- -------- STOCKHOLDERS' EQUITY Preferred Stock, Authorized 2,000,000, None Issued 0 0 Common Stock, $.001 Par Value, Authorized 48,000,000 Shares, 8,775,685 Issued and Outstanding 8,776 8,776 Paid in Capital 473,222 473,222 Accumulated Deficit (411,171) (392,939) ----------- -------- TOTAL STOCKHOLDERS' EQUITY 70,827 89,059 ----------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $177,013 $197,042 ----------- -------- ----------- -------- SEE NOTES TO FINANCIAL STATEMENTS FORM 10-QSB 2 NuMED SURGICAL, INC. STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED DECEMBER 31 1996 1995 ------------ ----------- Sales $145,118 $107,638 Cost of Sales 65,803 57,896 ------------ ----------- GROSS PROFIT 79,315 49,742 GENERAL AND ADMINISTRATIVE EXPENSES Salary and Benefits 25,348 64,446 Professional Fees 9,132 10,940 Travel and Entertainment 2,348 5,508 Occupancy 2,626 5,014 Advertising and Marketing 4,552 2,175 Shareholder Relations 1,819 695 Director's Fees 0 0 Office Expense 3,660 1,374 Amortization and Depreciation 8,041 9,080 ------------ ----------- TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 57,526 99,232 ------------ ----------- OPERATING INCOME (LOSS) 21,789 (49,490) OTHER INCOME (EXPENSES) Interest Income 0 640 Interest Expense (1,590) (170) ------------ ----------- TOTAL OTHER INCOME (EXPENSES) (1,590) 470 ------------ ----------- NET INCOME (LOSS) $20,199 ($49,020) ------------ ----------- ------------ ----------- PER SHARE: Net Loss $0.00 ($0.01) ------------ ----------- ------------ ----------- Shares Used in Computing Per Share Information 8,775,685 8,775,685 SEE NOTES TO FINANCIAL STATEMENTS FORM 10-QSB 3 NuMED SURGICAL, INC. STATEMENTS OF OPERATIONS (UNAUDITED) NINE MONTHS ENDED DECEMBER 31 1996 1995 ------------ ----------- Sales $376,133 $282,223 Cost of Sales 207,182 138,904 ------------ ----------- GROSS PROFIT 168,951 143,319 GENERAL AND ADMINISTRATIVE EXPENSES Salary and Benefits 88,084 165,275 Professional Fees 18,273 45,498 Travel and Entertainment 6,858 10,748 Occupancy 8,090 13,704 Advertising and Marketing 17,445 10,127 Shareholder Relations 3,286 2,417 Director's Fees 0 4,500 Office Expense 14,401 4,479 Amortization and Depreciation 25,610 27,239 ------------ ----------- TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 182,047 283,987 ------------ ----------- OPERATING LOSS (13,096) (140,668) OTHER INCOME (EXPENSES) Interest Income 3 1,111 Interest Expense (5,140) (339) ------------ ----------- TOTAL OTHER INCOME (EXPENSES) (5,137) 772 ------------ ----------- NET LOSS ($18,233) ($139,896) ------------ ----------- ------------ ----------- PER SHARE: Net Loss ($0.00) ($0.02) ------------ ----------- ------------ ----------- Shares Used in Computing Per Share Information 8,775,685 8,775,685 SEE NOTES TO FINANCIAL STATEMENTS FORM 10-QSB 4 NuMED SURGICAL, INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
COMMON STOCK ADDITIONAL ------------ PAID-IN ACCUMULATED SHARES DOLLARS CAPITAL DEFICIT TOTAL ----------- -------- ------------ ----------- ---------- BALANCE AT APRIL 1, 1994 5,175,685 5,176 183,674 (72,895) 115,955 Private Placement of Common Stock, Net of Commissions and Fees 3,600,000 3,600 288,048 291,648 Net Loss (124,781) (124,781) ----------- -------- ------------ ----------- ---------- BALANCE AT MARCH 31, 1995 8,775,685 8,776 471,722 (197,676) 282,822 ----------- -------- ------------ ----------- ---------- Write-off of Agent Fees 1,500 1,500 Net Loss (195,263) (195,263) ----------- -------- ------------ ----------- ---------- BALANCE AT MARCH 31, 1996 8,775,685 8,776 473,222 (392,939) 89,059 ----------- -------- ------------ ----------- ---------- ----------- -------- ------------ ----------- ---------- Net Loss (18,232) (18,232) ----------- -------- ------------ ----------- ---------- BALANCE AT DECEMBER 31, 1996 8,775,685 $8,776 $473,222 ($411,171) $70,827 ----------- -------- ------------ ----------- ---------- ----------- -------- ------------ ----------- ----------
SEE NOTES TO FINANCIAL STATEMENTS FORM 10-QSB 5 NuMED SURGICAL, INC. STATEMENTS OF CASH FLOWS
(UNAUDITED) NINE MONTHS ENDED DECEMBER 31 1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net Loss ($18,233) ($139,896) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activies: Depreciation and Amortization 25,610 27,239 (Decrease) Increase in Cash Due to Net Changes in Operating Assets and Liabilities: Accounts Receivable (9,862) (7,809) Inventories 16,151 (17,709) Prepaid Expenses and Other Assets (11,685) (3,403) Accounts Payable (1,201) (5,971) Accrued Expenses (23,596) (245) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (22,816) (147,794) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Intangibles (2,870) 0 Purchase of Property and Equipment (169) (1,096) ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (2,701) (1,096) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Short-Term Borrowings 23,000 40,500 Payments on Short-Term Borrowings 0 (12,000) ----------- ----------- NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 23,000 28,500 ----------- ----------- Decrease in Cash and Cash Equivalents (2,517) (120,390) Cash and Cash Equivalents at Beginning of Period 7,229 123,289 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $4,712 $2,899 ----------- ----------- ----------- -----------
SEE NOTES TO FINANCIAL STATEMENTS FORM 10-QSB 6 NuMED SURGICAL, INC. NOTES TO FINANCIAL STATEMENTS - (UNAUDITED) DECEMBER 31, 1996 NOTE A- BASIS OF PREPARATION GENERAL The accompanying interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of the Company's management necessary to present fairly the financial position as of December 31, 1996, and the results of operations and cash flows for the nine months ended December 31, 1995 and 1996. The results for the nine months ended December 31, 1996, are not necessarily indicative of results to be expected for the full year. References should be made to the Company's Form 10-KSB for the year ended March 31, 1996, for additional disclosures. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. INTRODUCTION The following is an analysis of the operations of NuMED Surgical for the three and nine months ended December 31, 1996 and 1995 and should be read in conjunction with the Company's financial statements that appear elsewhere in this report. RESULTS OF OPERATIONS: Net revenues for the three and nine months ended December 31, 1996 were $145,118 and $376,133 as compared to $107,638 and $282,223 for the same periods one year ago. This represents an increase of $37,480 and $56,431 or 26% and 25% over the same periods one year ago. This increase was due mainly to the introduction of two new products; Liftmate and Infinity Stirrups. The Company is uncertain whether the revenue growth will continue due to pressure on controlling hospital and healthcare budgets and increasing competition from alternative distribution channels, mainly catalog sales. The gross profit for the three and nine months ended December 31, 1996, were $79,315 and $168,951 or 55% and 45% of revenues as compared to $49,742 and $143,319 or 46% and 51% the same periods one year ago. The decreases for nine month period in gross profit as a percentage of revenues was due to a shift in product mix, penetration pricing strategy on the Infinity Stirrup, additional discounting to obtain sales, and a price increase from a major supplier. The Company anticipates further downward pressure on gross profit due to continued price competition driven by catalog sales, large buying groups and continued political pressures on the health care industry. Total general and administrative expenses as a percentage of revenues for the three and nine months ended December 31, 1996 decreased to 40% and 48% as compared to 92% and 101% for the same periods one year ago. This is a decrease of $41,706 and $101,940 or 72% and 56% for the same periods one year ago. Expenditures for salaries and benefits for the three and nine months ended December 31, 1996 were $25,348 and $88,084 as compared to $64,446 and $165,275 for the same Form 10-QSB 7 periods one year ago. This represents a decrease of $39,098 and $77,191 or 154% and 88% as compared to the same periods one year ago. This decrease was primarily due to the change in the Company's corporate management structure. Professional fees for the three and nine months ended December 31, 1996 were $9,132 and $18,273 as compared to $10,940 and $45,498 for the same periods one year ago. This decrease is due to the cancellation of the management services contract for management, corporate funding, finance, accounting services and marketing. The operating loss decreased approximately 974% or $127,572 from ($140,668) to ($13,096). This decrease was primarily due to the change in the Company's corporate management structure and the cancellation of the management services contract and overall tighter controls on spending. As a result of the foregoing, the Company had a net loss of $18,233 for the nine months ended December 31, 1996, as compared to a net loss of $139,896 for the nine months ended December 31, 1995. The Company is evaluating its position in the market to determine strategic direction. Under consideration is the selling of some or all of its assets. Significant resources will be required to continue the promotion of the two newly introduced products and efforts are underway to obtain these resources. However, there is no assurance that these resources will be available. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES: The Company's cash and cash equivalents decreased to $4,712 at December 31, 1996 from $7,229 at March 31, 1996, which is a net decrease of $2,517. The Company financed operations from cash flow and the funds available under its line of credit. At December 31, 1996, the Company had $64,544 outstanding on its line of credit. The Company continues to experience negative cash flow from operating losses and the relatively long collection cycle for its receivables, resulting from sales subject to customer evaluation and acceptance. It is anticipated that the Company will begin to experience positive cash flows. If the Company is unable to fund its new product line, it may have to sell or lease certain tangible and intangible assets. Additionally, NuMED Surgical will have to cease product development and acquisition programs and devote funding to current operations until cash reserves are sufficient to continue product development and acquisition programs. If NuMED Surgical is not able to introduce the newly acquired products as planned or delays occur in production, it may be necessary to obtain additional bank financing, seek a joint venture, and/or issue additional stock in order to finance the commercialization of the two product lines. Over the long term it is anticipated that NuMED Surgical will fund operations through profits, if any, derived from acquired businesses, sales of internally developed products and sales from currently distributed products. There can be no assurance that the Company will achieve profitability, and additional funding through the sale of debt or equity securities may be necessary. While the Company believes that a ready market exists for its products, there are other companies that sell similar products, some of which are more adequately funded. PART II: OTHER INFORMATION ITEM 1-5. NOT APPLICABLE Form 10-QSB 8 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: None. b. Reports on Form 8-K: None. Form 10-QSB 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATE: FEBRUARY 7, 1997 /s/Michael J. Diroff --------------------------- Michael J. Diroff President, Chief Accounting Officer and Director Form 10-QSB 10 EX-27 2 EXHIBIT 27-FINANCIAL DATA SCHEDULE
5 9-MOS MAR-31-1997 OCT-01-1996 DEC-31-1996 4,712 0 53,549 0 61,070 131,316 0 0 177,013 106,186 0 0 0 8,776 70,827 177,013 376,133 376,133 207,182 207,182 182,047 0 5,140 0 0 (18,233) 0 0 0 (18,233) 0 0
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