-----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, MrRnOLOZvF8pGW7WXykmFdNWzDWeSGruliSUnndiY55bV/hISODvybgtBd6bshaW hLWY3abFrqfG2JLj8vxOjQ== 0000950112-96-001392.txt : 19960625 0000950112-96-001392.hdr.sgml : 19960625 ACCESSION NUMBER: 0000950112-96-001392 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORLAND MEDICAL SYSTEMS INC CENTRAL INDEX KEY: 0000946428 STANDARD INDUSTRIAL CLASSIFICATION: 5047 IRS NUMBER: 061387931 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26206 FILM NUMBER: 96558888 BUSINESS ADDRESS: STREET 1: 106 CORPORATE PARK DRIVE STREET 2: SUITE 106 CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 914-694-2285 MAIL ADDRESS: STREET 1: 106 CORPORATE PARK DRIVE STREET 2: SUITE 106 CITY: WHITE PLAINS STATE: NY ZIP: 10604 FORMER COMPANY: FORMER CONFORMED NAME: OSTECH INC DATE OF NAME CHANGE: 19950608 10-Q 1 NORLAND MEDICAL SYSTEMS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 0-26206 _____________________________________________________ Norland Medical Systems, Inc. ____________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 06-1387931 __________________________________ ____________________________________ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 106 Corporate Park Drive, Suite 106 White Plains, New York 10604 ____________________________________________________________________________ (Address of principal executive offices) (Zip Code) (914) 694-2285 ____________________________________________________________________________ (Registrant's telephone number, including area code) 142 Temple Street New Haven, Connecticut 06510 ____________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 ----- ----- As of May 1, 1996, 4,576,192 shares of the registrant's Common Stock, $0.0005 par value, were outstanding. - 1 - NORLAND MEDICAL SYSTEMS, INC. TABLE OF CONTENTS FOR FORM 10-Q ------------------------------- Page ---- Title Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Document Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 2 PART I FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 3 Item 1. Condensed Financial Statements . . . . . . . . . . . . . . . . . . 3 Condensed Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Statements of Income . . . . . . . . . . . . . . . . . . . . 4 Condensed Statements of Changes in Stockholders' Equity . . . . . . . 5 Condensed Statements of Cash Flows . . . . . . . . . . . . . . . . . . 6 Notes to Condensed Financial Statements . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 9 PART II OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . 11 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . 11 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . 11 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Statement Regarding Computation of Earnings Per Share . . . . . . . . . . . . 14 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 - 2 - PART I FINANCIAL INFORMATION Item 1. Condensed Financial Statements ------------------------------ Norland Medical Systems, Inc. Condensed Balance Sheets
March 31, 1996 December 31, 1995 -------------- ----------------- (Unaudited) ASSETS Current assets: Cash $ 17,639,970 $ 19,218,865 Accounts receivable - trade, less allowance for doubtful accounts of $150,000 at March 31, 1996 and December 31, 1995 5,708,930 4,571,520 Accounts receivable - affiliate 142,395 180,253 Inventories 879,132 798,484 Prepaid expenses and other current assets 157,415 68,989 ------------ ------------ Total current assets 24,527,842 24,838,111 ------------ ------------ Property and equipment 84,013 -- Product development loan receivable - affiliate 75,906 48,519 ------------ ------------ Total assets $ 24,687,761 $ 24,886,630 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: $ 1,685,351 $ 2,139,656 Accounts payable - Stratec 892,975 493,424 Accounts payable - Norland -- 32,000 Accounts payable - trade 374,156 361,003 Accrued expenses 485,837 1,305,037 Income taxes payable 40,072 34,664 Customer deposits ------------ ------------ 3,478,391 4,365,784 Total current liabilities ------------ ------------ Stockholders' equity: Common stock, par value of $0.0005 per share, 10,000,000 shares authorized, 4,465,500 shares issued at March 31, 1996 2,233 2,000 Additional paid-in capital 18,347,348 18,350,313 Retained earnings 2,859,789 2,168,533 ------------ ------------ Total stockholders' equity 21,209,370 20,520,846 ------------ ------------ Total liabilities and stockholders' equity $ 24,687,761 $ 24,886,630 ============ ============
See accompanying notes to condensed financial statements. - 3 - Norland Medical Systems, Inc. Condensed Statements of Income (Unaudited) Three Months Ended ---------------------------------- March 31, 1996 March 31, 1995 -------------- -------------- Revenue $ 5,218,290 $ 3,895,921 Cost of revenue 3,415,911 2,600,531 ----------- ----------- Gross profit 1,802,379 1,295,390 Sales and marketing expense 575,348 334,553 General and administrative expense 305,716 225,453 ----------- ----------- Operating income 921,315 735,384 Other income 242,941 2,515 ----------- ----------- Income before taxes 1,164,256 737,899 Provision for taxes 473,000 299,587 ---------- ----------- Net income $ 691,256 $ 438,312 =========== =========== Earnings per share $ 0.15 $ 0.16 =========== =========== Weighted average number of common and common equivalent shares 4,704,673 2,668,000 =========== =========== See accompanying notes to condensed financial statements. - 4 - Norland Medical Systems, Inc. Condensed Statements of Changes in Stockholders' Equity For the Three Months Ended March 31, 1996 and 1995 (Unaudited)
Common Paid-In Stock Retained Total Shares Stock Capital Subscriptions Earnings ------------ ---------- ------- ------------- ------------- ----------- Balance as of December 31, 1995 $ 20,520,846 4,000,000 $ 2,000 $ 18,350,313 -- $ 2,168,533 Issuance of shares for stock options exercised 270 465,500 233 37 -- -- Cost and expenses directly related to the stock offering (3,002) -- -- (3,002) -- -- Net income 691,256 -- -- -- -- 691,256 -------------- --------- ------- ----------- ----------- ----------- Balance as of March 31, 1996 $ 21,209,370 4,465,500 $ 2,233 $ 18,347,348 -- $ 2,859,789 ============== ========= ======= ============ =========== =========== Balance as of December 31, 1994 $ 68,044 2,000,000 $ 1,000 -- $ (1,000) $ 68,044 Proceeds from common stock subscriptions 500 -- -- -- 500 -- Net income 438,312 -- -- -- -- $ 438,312 -------------- --------- ------- ----------- ----------- ----------- Balance as of March 31, 1995 $ 506,856 2,000,000 $ 1,000 -- $ (500) $ 506,356 ============== ========= ======= ============ =========== ===========
See accompanying notes to condensed financial statements. - 5 - Norland Medical Systems, Inc. Condensed Statements of Cash Flows (Unaudited)
Three Months Ended -------------------------------- March 31, 1996 March 31, 1995 -------------- -------------- Cash flows from operating activities: Net income $ 691,256 $ 438,312 Adjustments to reconcile net income to net cash provided by operating activities: Amortization expense 12,933 -- Inventory obsolescence expense 15,000 -- Changes in: Accounts receivable (1,099,552) (493,475) Inventories (108,581) -- Prepaid expenses and other current assets (88,426) (13,190) Accounts payable (86,754) (48,370) Accrued expenses 13,153 155,273 Income taxes payable (819,200) 268,587 Customer deposits 5,408 20,937 ------------ ------------ Total adjustments (2,156,019) (13,498) ------------ ------------ Net cash (used in) provided by operating activities (1,464,763) 424,814 ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (84,013) -- Product development loan to affiliate (27,387) -- ------------ ------------ Net cash used in investing activities (111,400) -- ------------ ------------ Cash flows from financing activities: Notes payable to stockholders -- (500,000) Cost and expenses of issuance of common stock (3,002) -- Proceeds from stock options exercised 270 -- Proceeds from common stock subscriptions -- 500 ------------ ------------ Net cash used in financing activities (2,732) (499,500) ------------ ------------ Net decrease in cash (1,578,895) (74,686) Cash at beginning of period 19,218,865 554,732 ------------- ------------- Cash at end of period $ 17,639,970 $ 480,046 ============== ==============
See accompanying notes to condensed financial statements. - 6 - NORLAND MEDICAL SYSTEMS, INC. Notes to Condensed Financial Statements (Unaudited) (1) BASIS OF PRESENTATION The condensed financial statements of Norland Medical Systems, Inc. (the "Company") presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 1995, which were audited by Coopers & Lybrand L.L.P., and included in the Company's Form 10-K as filed with the Securities and Exchange Commission on March 28, 1996. The condensed balance sheet as of March 31, 1996, the condensed statements of income, changes in stockholders' equity and cash flows for the three months then ended are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 1996. (2) INVENTORIES As of March 31, 1996, inventories consist of the following: Rental systems $ 433,680 Demonstration systems, less accumulated amortization of $30,348 276,368 Spare parts and sub-assemblies, less an obsolescence reserve of $15,000 85,597 Product kits 83,487 ---------- $ 879,132 ========== Systems used in the Company's short-term rental and pay-per-scan programs are carried in inventory at the lower of cost or net realizable value until the time of sale. - 7 - Notes to Condensed Financial Statements, continued: (2) INVENTORIES, continued: The Company maintains an inventory of demonstration systems to support its marketing efforts. Such systems are carried in inventory at the lower of cost or net realizable value until the time of sale. From time to time, the Company may judge it desirable for marketing purposes to provide a device to a prominent scientist or research institution specializing in the study of bone disease. In such cases, the Company will carry the device in demonstration system inventory at cost less amortization expense calculated on a straight-line basis over thirty-six months. Spare parts and sub-assemblies inventories are stated at the lower of cost or market; cost is determined principally by the first-in, first-out method. Inventory includes product kits purchased from Stratec which are recorded in inventory at purchase cost until the time of sale or rental of the assembled product. (3) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Primary income per share is calculated by dividing net income by the average shares of common stock and common stock equivalents outstanding during the period. Common stock equivalents are stock options which have been included using the treasury stock method only when their effect is dilutive. - 8 - Item 2. Management's Discussion and Analysis of Financial Condition and ---------------------------------------------------------------- Results of Operations --------------------- Results of Operations - - --------------------- Revenue for the three months ended March 31, 1996 increased $1,322,369 (33.9%) to $5,218,290 from $3,895,921 for the comparable period of 1995. The increase was largely a result of greater sales volume in the United States following the introduction of the pDEXA in the fourth quarter of 1995 and increased customer interest in the Company's other products. In October 1995, following the clearance by the FDA of Merck's Fosamax(R) for the non-hormonal treatment of osteoporosis in post-menopausal women, the Company began marketing the pDEXA in the United States. Sales in Japan and the United States represented 50.9% and 28.5%, respectively, of total revenue for the three months ended March 31, 1996. Sales in Japan and the United States represented 81.5% and 6.3%, respectively, of total revenue for the three months ended March 31, 1995. Sales of complete bone densitometry systems represented 92.9% and 93.2% of total revenue for the three months ended March 31, 1996 and 1995, respectively. Sales of parts and services and rental income comprised the balance of revenues for such periods. Cost of revenue as a percentage of revenue was 65.5% and 66.8% for the three months ended March 31, 1996 and 1995, respectively, resulting in a gross margin of 34.5% for the three months ended March 31, 1996 compared to 33.2% for the comparable period of 1995. Sales and marketing expense increased $240,795 (72.0%) to $575,348 for the three months ended March 31, 1996 from $334,553 for the three months ended March 31, 1995, and increased as a percentage of revenue to 10.9% from 8.6%. The increases were primarily due to increased salaries, commissions and incentive payments related to the increased sales staff and sales volume, increased expenses related to customer service and marketing expenses related to United States market introduction of the pDEXA. General and administrative expense increased $80,263 (35.6%) to $305,716 for the three months ended March 31, 1996 from $225,453 for the three months ended March 31, 1995 and increased as a percentage of revenue to 5.9% from 5.8%. The increases were primarily due to increased expenses of new and existing personnel and legal, accounting and other expenses attributable to the Company being a public company. Other income in the three months ended March 31, 1996 consisted primarily of $246,747 of interest earned on the initial public offering proceeds and other cash balances, which amount was reduced by $3,806 of other expenses, which consisted primarily of bank charges and other fees related to bank transfers. In the three months ended March 31, 1995, other income consisted primarily of interest earned on cash balances which was reduced by charges and other fees related to bank transfers. - 9 - The provision for taxes for the three months ended March 31, 1996 increased by $173,413 (57.9%) to $473,000 from $299,587 for the three months ended March 31, 1995. The Company has provided for income taxes at its current effective tax rate of 40.6% for the three months ended March 31, 1996 and 1995. The increase was entirely due to the relative increase in income before taxes. The Company had net income of $691,256 for the three months ended March 31, 1996 compared to net income of $438,312 for the three months ended March 31, 1995, an increase of $252,944 (57.7%). The increase was due primarily to greater sales volume of the Company's pDEXA system and interest earned on cash balances. Liquidity and Capital Resources - - ------------------------------- Cash decreased $1,578,895 to $17,639,970 in the three months ended March 31, 1996. The decrease in cash is primarily the result of the Company making nearly $1.3 million in payments of its corporate tax liabilities related to 1995 and the first quarter of 1996. The Company's accounts receivable increased 23.1% to $5,851,325 at March 31, 1996 from $4,751,773 at December 31, 1995. The increase in accounts receivable reflects higher sales volume. Property and equipment consist of computer equipment and a management information system that were acquired during the first quarter of 1996. On April 2, 1996, the Company acquired Dove Medical Systems ("Dove") and certain assets that were licensed to Dove, and the Company gave as consideration 107,692 shares of its Common Stock and $3,600,000 in cash. Other capital expenditures in 1996 are expected to include improvements to leased facilities. The Company also expects to purchase additional systems in 1996 for its short-term rental and pay-per-scan programs and as demonstration systems. In addition, the Company expects to provide additional financing to Norland Corporation and Stratec Medizintechnik GmbH under the Product Development Loan Agreement with such manufacturers. Management believes that its current cash position, together with cash flow from operations, will be adequate to fund the Company's growth and operations for at least the next twelve months. However the nature of the Company's business is that it is subject to changes in technology, government approval and regulation, and changes in third-party reimbursement in numerous foreign markets and the United States. Significant changes in one or more of these factors in a major market for the Company's products could significantly affect the Company's ability to meet its cash needs through internal sources. - 10 - Norland Medical Systems, Inc. PART II OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Defaults Upon Senior Securities ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- No matters were submitted to a vote of stockholders during the quarter ended March 31, 1996. The Annual Meeting of Company Stockholders will be held at the Crowne Plaza Hotel, 66 Hale Avenue, White Plains, New York 10601, at 10:00 a.m. on Thursday, May 30, 1996. Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Furnished: (11) Statement Regarding Computation of Earnings Per Share (b) Reports on Form 8-K: No reports on Form 8-K were filed by the Company during the quarter ended March 31, 1996. On April 16, 1996, the Company filed a report on Form 8-K describing its acquisition of Dove. - 11 - Norland Medical Systems, Inc. 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. NORLAND MEDICAL SYSTEMS, INC. (Registrant) /s/ Ralph G. Theodore ______________________________ Date: May 9, 1996 Ralph G. Theodore Vice President, Operations /s/ Kurt W. Streams ______________________________ Date: May 9, 1996 Kurt W. Streams Vice President, Finance (Principal Financial and Accounting Officer) - 12 - Exhibit Index Number Description Page - - ------ ----------- ---- 11 Statement Regarding Computation of Earnings Per Share 14 27 Financial Data Schedule 15 - 13 - EX-11 2 Exhibit 11 Norland Medical Systems, Inc. Statement Regarding Computation of Earnings Per Share (Unaudited) Three Months Ended --------------------------------------- March 31, 1996 March 31, 1995 -------------- -------------- Primary Basis: Net income $ 691,256 $ 438,312 Weighted average shares outstanding 4,230,192 2,000,000 Stock options 474,481 668,000 Weighted average number of common and common equivalent shares outstanding 4,704,673 2,668,000 Earnings per share $ 0.15 $ 0.16 Fully Diluted Basis: Net income $ 691,256 $ 438,312 Weighted average shares outstanding 4,230,192 2,000,000 Stock options 484,048 668,000 Weighted average number of common and common equivalent shares outstanding 4,714,240 2,668,000 Earnings per share $ 0.15 $ 0.16 - 14 - EX-27 3 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Condensed Financial Statements and is qualified in its entirety by reference to such financial statements. 1 3-MOS DEC-31-1996 MAR-31-1996 17,639,970 0 5,851,325 150,000 879,132 24,527,842 84,013 0 24,687,761 3,478,391 0 0 0 2,233 21,207,137 24,687,761 5,147,461 5,218,290 3,415,911 3,415,911 881,064 0 0 1,164,256 473,000 691,256 0 0 0 691,256 0.15 0.15
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