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 March 31, 1996 Commission File Number Q-3052
- ------------------------------------ ------------------------------
Diapulse Corporation of America
--------------------------------------
(Exact name of registrant as specified on its charter)
Delaware 13-5671992
-------------------------------- -------------------
(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 March 31, 1996 there were 3,956,448 shares of common stock outstanding.
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Accountants' Compilation Report
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To the Board of Directors
Diapulse Corporation of America and Subsidiary
Great Neck, New York
We have compiled the accompanying consolidated balance sheet of Diapulse
Corporation of America and Subsidiary (a Delaware corporation) as of March
31, 1996, and the related consolidated statements of operations and cash
flows for the three months ended March 31, 1996 and 1995, 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 consolidated financial statements and, accordingly,
do not express an opinion or any other form of assurance on them.
Management has elected to omit the consolidated statements of accumulated
deficit and substantially all of the disclosures required by generally
accepted accounting principles. If the omitted statements and 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 consolidated financial statements are not
designed for those who are not informed about such matters.
The consolidated balance sheet as of December 31, 1995, was audited by us,
and we expressed an unqualified opinion on it in our report dated March 7,
1996, but we have not performed any auditing procedures since that date.
/s/ Schwaeber Sloane Schulman & Co., P.C.
Great Neck, New York
May 9, 1996
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
----------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
March 31, Dec. 31,
1996 1995
(Unaudited) (Audited)
----------- ---------
A S S E T S
-----------
Current assets:
Cash and cash equivalents $ 150,278 $ 222,318
Commission advances 306,999 238,543
Accounts receivable, net of allowances
for doubtful accounts of $60,000 at March
31, 1996 and December 31, 1995 967,382 777,873
Inventories 458,513 458,720
---------- -----------
Total current assets 1,883,172 1,697,454
Commission advances, net of current
portion 198,948 198,948
Equipment, net of accumulated depreciation
and amortization of $136,928 at March 31,
1996 and $134,061 at December 31, 1995 184,985 187,851
Other assets - sundry 27,254 28,254
---------- ----------
Total Assets $2,294,359 $2,112,507
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 507,187 $ 450,658
Due to officers and former officer 691,811 650,688
---------- ----------
Total current liabilities 1,198,998 1,101,346
Due to officer - long term portion 977,350 977,350
---------- ----------
Total liabilities 2,176,348 2,078,696
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Stockholders' equity:
Common stock - $.025 par value;
authorized 6,000,000 shares, issued
3,956,448 shares 98,911 98,911
Additional paid-in capital 2,131,426 2,131,426
Accumulated deficit (2,102,984) (2,187,184)
---------- ----------
127,353 43,153
Less: Treasury stock of 5,328 shares
at March 31, 1996 and December 31, 1995,
at cost 9,342 9,342
---------- ----------
Total stockholders' equity 118,011 33,811
---------- ----------
Total Liabilities and
Stockholders' Equity $2,294,359 $2,112,507
========== ==========
See accountants' compilation report.
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
Three Months Ended
March 31,
1996 1995
----------- -----------
Net sales and rentals (see management
discussion note) $ 435,172 $ 255,253
Cost of sales and rentals 18,483 10,869
----------- ----------
Gross margin 416,689 244,384
----------- ----------
Operating expenses:
Selling, general and administrative 252,954 164,173
Interest expense 49,110 44,328
----------- ----------
Total operating expenses 302,064 208,501
----------- ----------
Net operating income 114,625 35,883
Interest and other income 12,951 437
----------- ----------
Net income before provision for
income taxes 127,576 36,320
Provision for income taxes 43,376 25,000
----------- ----------
Net Income $ 84,200 $ 11,320
=========== ==========
Earnings Per Share $ 0.021 $ 0.003
=========== ==========
Weighted Average
Number Of Common
Shares Outstanding 3,956,448 3,956,448
=========== ==========
See accountants' compilation report.
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
----------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
-----------
Three Months Ended
March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 84,200 $ 11,320
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,866 2,297
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable (189,509) 42,022
Increase in commission advances (68,456) (96,855)
Decrease in inventories 207 2,279
Decrease in other assets 1,000 1,300
Increase in accounts payable and
accrued expenses 56,529 18,218
--------- ---------
Total adjustments (197,363) (30,739)
Net cash (provided) used by
operating activities (113,163) (19,419)
--------- ---------
Cash flows from financing activities:
Net increase (decrease) in due to
officers' and former officer 41,123 (742)
--------- ---------
Net cash provided (used) by
financing activities 41,123 (742)
--------- ---------
Net decrease in cash and cash
equivalents (72,040) (20,161)
Cash and cash equivalents - beginning of
period 222,318 148,503
--------- ---------
Cash and Cash Equivalents - End of Period $ 150,278 $ 128,342
========= =========
See accountants' compilation report.
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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SELECTED INFORMATION -- SUBSTANTIALLY ALL DISCLOSURES REQUIRED
--------------------------------------------------------------
BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED
------------------------------------------------------------
1. Basis of presentation
---------------------
The consolidated balance sheet of Diapulse Corporation of America and
Subsidiary as of March 31, 1996, and the related consolidated statements
of operations and cash flows for the three months ended March 31, 1996
and 1995, have been prepared by the Company without audit. The balance
sheet for the year ended December 31, 1995, were audited by us, and we
expressed an unqualified opinion on it in our report dated March 7, 1996,
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 for the three months ended
March 31, 1996 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, 1995
annual report to shareholders. There have been no changes of significant
accounting policies since December 31, 1995. Results of operations for
the three month period are not necessarily indicative of results of
operations for the corresponding years.
2. Inventories
-----------
March 31, Dec. 31,
1996 1995
---------- ---------
Parts, components and subassemblies $ 204,177 $ 204,384
Finished goods 301,336 301,336
Finished goods, rental and loaner
machines 236,481 236,481
--------- ---------
Total inventories 741,994 742,201
Less: Inventories in fixed assets (236,481) (236,481)
--------- ---------
Total inventories for resale 505,513 505,720
Less: Inventory reserve 47,000 47,000
--------- ---------
Total Inventories $ 458,513 $ 458,720
========= =========
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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 three months increased by $179,919 to $435,172 from
last year's comparable three months of $255,253.Operating expenses for the
current three months increased to $302,064 from last year's comparable three
months of $208,501. Interest expense represents the accrual of interest on
the debt to officers, former officer and employees.
Liquidity and capital resources
- -------------------------------
As of March 31, 1996, the Company had working capital of $684,174 and a
current ratio of approximately 1.57 to 1. This represents an increase in
working capital since December 31, 1995 of $88,066.
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.
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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
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Registrant
/s/ Jesse Ross
- ----------------------------
Jesse Ross, President
/s/ Gladys Ross
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Gladys Ross, Acting Corporate Secretary
Date: May 9, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 150,278
<SECURITIES> 0
<RECEIVABLES> 967,382
<ALLOWANCES> 60,000
<INVENTORY> 458,513
<CURRENT-ASSETS> 1,883,172
<PP&E> 184,985
<DEPRECIATION> 136,928
<TOTAL-ASSETS> 2,294,359
<CURRENT-LIABILITIES> 1,198,998
<BONDS> 0
0
0
<COMMON> 98,911
<OTHER-SE> 28,442
<TOTAL-LIABILITY-AND-EQUITY> 2,294,359
<SALES> 435,172
<TOTAL-REVENUES> 435,172
<CGS> 18,483
<TOTAL-COSTS> 252,954
<OTHER-EXPENSES> 36,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,110
<INCOME-PRETAX> 127,576
<INCOME-TAX> 43,376
<INCOME-CONTINUING> 84,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,200
<EPS-PRIMARY> .021
<EPS-DILUTED> .021
</TABLE>
