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 June 30 , 1996 Commission File Number Q-3052
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Diapulse Corporation of America
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(Exact name of registrant as specified on its charter)
Delaware 13-5671992
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(State or other jurisdiction of) (I.R.S. Employer
incorporation of organization) Identification Number)
321 East Shore Road
Great Neck, New York 11023
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(Address of principal offices) (Zip Code)
Registrant's telephone number,
including area code (516) 466-3030
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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
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As of June 30, 1996 there were 3,956,448 shares of common stock outstanding.
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, Dec. 31,
1996 1996
(Unaudited) (Audited)
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A S S E T S
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Current assets:
Cash and cash equivalents $ 136,270 $ 222,318
Commission advances 279,047 238,543
Accounts receivable, net of allowances
for doubtful accounts of $60,000 at June
30, 1996 and December 31, 1995 1,171,991 777,873
Inventories 458,381 458,720
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Total current assets 2,045,689 1,697,454
Commission advances, net of current portion 198,948 198,948
Equipment, net of accumulated depreciation
and amortization of $139,795 at June 30,
1996 and $134,061 at December 31, 1995 182,118 187,851
Other assets - sundry 27,254 28,254
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Total Assets $2,454,009 $2,112,507
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LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 578,846 $ 450,658
Due to officers and former officer 721,163 650,688
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Total current liabilities 1,300,009 1,101,346
Due to officer - long term portion 977,350 977,350
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Total liabilities 2,277,359 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 (2,044,345) (2,187,184)
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185,992 43,153
Less: Treasury stock of 5,328 shares at
June 30, 1996 and December 31, 1995, at cost 9,342 9,342
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Total stockholders' equity 176,650 33,811
---------- ----------
Total Liabilities and
Stockholders' Equity $2,454,009 $2,112,507
========== ==========
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF OPERATIONS
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Six Months Ended
June 30,
1996 1995
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Net sales and rentals (see management
discussion note) $ 915,835 $ 838,602
Cost of sales and rentals 35,886 18,981
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Gross margin 879,949 819,621
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Operating expenses:
Selling, general and administrative 578,248 519,349
Interest expense 99,094 88,683
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Total operating expenses 677,342 608,032
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Net operating income 202,607 211,589
Interest and other income 13,815 1,005
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Net income before provision for
income taxes 216,422 212,594
Provision for income taxes 73,583 81,360
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Net Income $ 142,839 $ 131,234
=========== ==========
Earnings Per Share $ 0.036 $ 0.034
=========== ==========
Weighted Average Number Of Common
Shares Outstanding 3,956,448 3,907,732
=========== ==========
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Six Months Ended
June 30,
1996 1995
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Cash flows from operating activities:
Net income $ 142,839 $ 131,234
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,733 5,735
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable (394,118) (100,553)
Increase in commission advances (40,504) 4,771
Decrease in inventories 339 (25,241)
Decrease in other assets 1,000 7,830
Increase in accounts payable and
accrued expenses 128,188 41,491
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Total adjustments (29,362) 4,649
Net cash (provided) used by
operating activities (156,523) 135,883
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Cash flows from financing activities:
Net increase (decrease) in due to
officers' and former officer 70,457 (3,928)
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Net cash provided (used) by
financing activities 70,475 (22,928)
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Net decrease in cash and cash
equivalents (86,048) 115,155
Cash and cash equivalents - beginning of
period 222,318 148,503
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Cash and Cash Equivalents - End of Period $ 136,270 $ 263,658
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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SELECTED INFORMATION -- SUBSTANTIALLY ALL DISCLOSURES REQUIRED
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BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED
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1. Basis of presentation
---------------------
The consolidated balance sheet of Diapulse Corporation of America and
Subsidiary as of June 30, 1996, and the related consolidated statements
of operations and cash flows for the six months ended June 30, 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 six months ended
June 30, 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 six month period are not necessarily indicative of results of
operations for the corresponding years.
2. Inventories
-----------
June 30, Dec. 31,
1996 1995
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Parts, components and subassemblies $ 204,045 $ 204,384
Finished goods 301,336 301,336
Finished goods, rental and loaner
machines 236,481 236,481
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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
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Total Inventories $ 458,381 $ 458,720
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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MANAGEMENT DISCUSSION AND ANALYSIS OF
-------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of operations
- ---------------------
Net sales for the current six months increased by $208,257 to $915,835 from
last year's comparable six months of $707,578. Operating expenses for the
current six months increased to $677,342 from last year's comparable six
months of $496,840. Interest expense represents the accrual of interest on
the debt to officers, former officer and employees.
Liquidity and capital resources
- -------------------------------
As of June 30, 1996, the Company had working capital of $745,680 and a
current ratio of approximately 1.57 to 1. This represents an increase in
working capital since December 31, 1995 of $149,572.
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
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Jesse Ross, President
/s/ Gladys Ross
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Gladys Ross, Acting Corporate Secretary
Date: August 14, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 136,270
<SECURITIES> 0
<RECEIVABLES> 1,231,991
<ALLOWANCES> 60,000
<INVENTORY> 458,381
<CURRENT-ASSETS> 2,045,689
<PP&E> 321,913
<DEPRECIATION> 139,795
<TOTAL-ASSETS> 2,454,009
<CURRENT-LIABILITIES> 1,300,009
<BONDS> 0
0
0
<COMMON> 98,911
<OTHER-SE> 87,081
<TOTAL-LIABILITY-AND-EQUITY> 2,454,009
<SALES> 915,835
<TOTAL-REVENUES> 929,650
<CGS> 35,886
<TOTAL-COSTS> 35,886
<OTHER-EXPENSES> 578,248
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,094
<INCOME-PRETAX> 216,422
<INCOME-TAX> 73,583
<INCOME-CONTINUING> 142,839
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,839
<EPS-PRIMARY> .036
<EPS-DILUTED> .036
</TABLE>
