UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 11 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995 Commission File Number Q-3052
Diapulse Corporation of America
(Exact name of registrant as specified on its charter)
Delaware 13-5671991
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number)
321 East Shore Road
Great Neck, New York 11023
(Address of principal offices) (Zip Code)
Registrant's telephone number
including area code (516) 466-3030
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
As of September 30, 1995 there were 3,907,732 shares of common stock
outstanding
Accountants' Compilation Report
To the Board of Directors
Diapulse Corporation of America and Subsidiary
Great Neck, New York
We have compiled the accompanying balance sheet of Diapulse Corporation of
America and Subsidiary (a Delaware corporation) as of September 30, 1995, and
the related statements of income for the nine months and the three months
ended September 30, 1995 and 1994, and cash flows for the nine months ended
September 30, 1995 and 1994 in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required
by generally accepted accounting principles. If the omitted disclosures were
included in the financial statements , they might influence the user's
conclusions about the Company's financial position, results of operations and
cash flows. Accordingly, these financial statements are not designed for
those who are not informed about such matters.
The balance sheet for the year ended December 31, 1994, were audited by us,
and we expressed an unqualified opinion on it in our report dated March 16,
1995, but we have not performed any auditing procedures since that date.
Great Neck, New York
November 7, 1995
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Sep. 30,
1995 Dec. 31,
(Unaudited) 1994
------------- --------------
A S S E T S
Current assets:
Cash and cash equivalents $ 136,802 $ 148,503
Commissions advances 426,483 379,713
Accounts receivable, net of allowances
for doubtful accounts of $60,000 at
September 30, 1995 and December 31, 1994 1,121,611 856,005
Inventories 558,248 533,055
------------- -------------
Total current assets 2,243,145 1,917,276
Equipment, net of accumulated
depreciation and amortization of
of $119,850 at September 30, 1995 and
$111,248 at December 31, 1994 164,078 170,880
Other assets - sundry 28,254 27,254
------------- -------------
Total Assets $ 2,435,477 $ 2,115,410
============= ==============
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Sep. 30,
1995 Dec. 31,
(Unaudited) 1994
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 450,440 $ 489,340
Due to officers and former officer 553,197 612,948
Accrued income taxes 135,280 -
Bank line of credit - 19,000
------------- -------------
Total current liabilities 1,138,917 1,121,288
Due to officer- long term portion 977,350 977,350
------------- -------------
Total liabilities 2,116,267 2,098,638
------------- -------------
Stockholders' equity:
Common stock - $.025 par value;
authorized 6,000,000 shares, issued
3,907,732 shares 97,593 97,593
Additional paid-in capital 2,132,744 2,132,744
Accumulated deficit (1,901,785) (2,204,223)
------------- -------------
328,552 26,114
Less: Treasury stock of 1,328 shares
at June 30, 1995 and 5,328 shares
at December 31, 1994, at cost 9,342 9,342
------------- -------------
Total stockholders' equity 319,210 16,772
------------- -------------
Total Liabilities and
Stockholders' Equity $ 2,435,477 $ 2,115,410
============= =============
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ending Three Months Ending
September 30, September 30,
1995 1994 1995 1994
----------- ----------- ---------- ----------
Sales and rentals (see
management discussion note) $ 1,262,765 $ 1,151,204 $ 424,163 $ 443,626
Cost of sales and rentals 39,654 89,394 20,673 63,440
----------- ----------- ---------- ----------
Gross margin 1,223,111 1,061,810 403,490 380,186
----------- ----------- ---------- ----------
Operating expenses:
Selling, general and
administrative 695,680 600,212 176,331 169,347
Interest expense 132,767 100,312 44,084 34,336
----------- ----------- ---------- ----------
Total operating expenses 828,447 700,524 220,415 203,683
----------- ----------- ---------- ----------
Operating profit 394,664 361,286 183,075 176,503
Interest and other income 17,484 1,331 16,479 772
----------- ----------- ---------- ----------
Net income before
provision for
income taxes 412,148 362,617 199,554 177,275
Provision for income taxes 140,523 - 59,163 -
----------- ----------- ---------- ----------
Net Income $ 271,625 $ 362,617 $ 140,391 $ 177,275
=========== =========== ========== ==========
Earnings Per Share $ 0.070 $ 0.093 $ 0.036 $ 0.045
=========== =========== ========== ==========
Weighted Average Number Of
Common Shares Outstanding 3,907,732 3,903,732 3,907,732 3,903,732
========== ========== ========== ==========
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ending
September 30,
1995 1994
---------- ----------
Cash flows from operating activities:
Net income $ 271,625 $ 362,617
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,602 8,600
Prior period adjustment of accounting error 30,813 -
Changes in operating assets and liabilities:
Increase in accounts receivable (265,606) 369,358)
Increase in commission advance (46,770) -
Increase in inventories (25,193) (2,054)
Increase in other assets (1,000) (105,985)
Increase (decrease) in accounts payable
and accrued expenses (38,900) 23,300
Increase in accrued income taxes 135,280 -
---------- ----------
Total adjustments (202,775) (445,497)
---------- ----------
Net cash provided by operating activities 68,850 (82,880)
---------- ----------
Cash flows from investing activities:
Capital expenditures (1,800) (3,032)
Proceeds from treasury stock - 2,455
Additional paid-in-capital - (355)
---------- ----------
Net cash provided by investing activities (1,800) (932)
---------- ----------
Cash flows from financing activities:
Net increase (decrease) in due to officers'
and former officer (59,751) 100,815
Net borrowings under bank line of credit (19,000) -
---------- ----------
Net cash provided (used) by financing
activities (78,751) 100,815
---------- ----------
Net increase in cash and cash equivalents (11,701) 17,003
Cash and cash equivalents at the beginning of year 148,503 65,758
---------- ----------
Cash and cash equivalents on September 30, $ 136,802 $ 82,761
========== ==========
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
SELECTED INFORMATION -- SUBSTANTIALLY ALL DISCLOSURES REQUIRED
BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
1. Basis of presentation
The consolidated balance sheet of Diapulse Corporation of America and
Subsidiary as of September 30, 1995, and December 31, 1994 and the related
consolidated statements of operations for the three months and nine months
ended September 30, 1995 and cash flows for the nine months ended
September 30, 1995 and 1994, have been prepared by the Company without
audit. The balance sheet for the year ended December 31, 1994, was audited
by us, and we expressed an unqualified opinion on it in our report dated
March 16, 1995, but we have not performed any auditing procedures since
that date. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in cash flows at
September 30, 1995 and for all periods presented have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's December 31, 1994
annual report to shareholders. There have been no changes of significant
accounting policies since December 31, 1994. Results of operations for the
nine month period are not necessarily indicative of results of operations
for the corresponding years.
2. Inventories
Inventories at September 30, 1995 and December 31, 1994
consisted of the following:
September 30, Dec. 31,
1995 1994
------------ ------------
Parts, components and subassemblies $ 325,738 $ 316,317
Finished goods 279,510 263,738
Finished goods, rental and loaner machines 202,349 202,349
------------ ------------
Total inventories 807,597 782,404
Less: Inventories in fixed assets (202,349) (202,349)
------------ ------------
Total inventories for resale 605,248 580,055
Less: Inventory reserve 47,000 47,000
------------ ------------
Total Inventories $ 558,248 $ 533,055
============ ============
DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
Net sales for the current nine months increased by $111,561 to $1,262,765 from
last year's comparable nine months of $1,151,204. This increase is due to an
increase in the amount of sales and rentals and also a recovery of previously
written off bad debt.
Operating expenses for the current nine months increased to $828,447 from last
year's comparable nine months of $700,524. Interest expense represents the
accrual of interest on the debt to officers, former officer and employees.
Liquidity and capital resources
As of September 30, 1995, the Company had working capital of approximately
$1,104,228 and a current ratio of 1.970 to 1. This represents an increase in
working capital since December 31, 1994 of $308,240.
The Company expanded its distribution channels in the United States and
therefore realized an improvement in revenues and profitability. The Company
intends to fund its future operations, pursue research and development of
current and future products and expand operations through product rental and
sales.
SIGNATURES
Pursuant to the requirements of Section 11 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DIAPULSE CORPORATION OF AMERICA
Registrant
By \\S Jesse Ross
- -------------------------------------- ------
Jesse Ross, President
By \\S Gladys Ross
- --------------------------------------------
Gladys Ross, Acting Corporate Secretary
Date: November 10, 1995
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 136,802
<SECURITIES> 0
<RECEIVABLES> 1,181,611
<ALLOWANCES> 60,000
<INVENTORY> 558,248
<CURRENT-ASSETS> 2,243,145
<PP&E> 283,928
<DEPRECIATION> 119,850
<TOTAL-ASSETS> 2,435,477
<CURRENT-LIABILITIES> 1,138,917
<BONDS> 0
<COMMON> 97,593
0
0
<OTHER-SE> 221,617
<TOTAL-LIABILITY-AND-EQUITY> 2,435,477
<SALES> 1,262,765
<TOTAL-REVENUES> 1,280,249
<CGS> 39,654
<TOTAL-COSTS> 735,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 132,767
<INCOME-PRETAX> 412,148
<INCOME-TAX> 140,523
<INCOME-CONTINUING> 271,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271,625
<EPS-PRIMARY> .070
<EPS-DILUTED> .070
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