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, 1997 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 principle 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 June 30, 1997 there were 3,961,852 shares of common stock outstanding.
============================================================================
DIAPULSE CORPORATION OF AMERICA
BALANCE SHEETS
June 30, Dec. 31,
1997 1996
(Unaudited) (Audited)
------------ ----------
A S S E T S
------------
Current assets:
Cash and cash equivalents 851,585 150,316
Current portion Commissions advances 247,225 181,172
Current portion Accounts receivable, net
of allowance for doubtful accounts
of $18,985 at June 30, 1997
and $18,985 as of Dec. 31, 1996 620,528 315,089
Inventories 406,033 455,461
Other current assets 8,263 21,878
----------- ----------
Total Current Assets 2,133,634 1,123,916
----------- ----------
Property & equipment @ Cost, net of
accumulated depreciation 111,131 115,762
----------- ----------
Other Assets:
Commissions Advanced Net Current Portion 105,954 232,932
Accounts Receivable, Net Current Portion 645,321 620,569
Security Deposits 16,695 16,695
----------- ----------
Total Other Assets 767,970 870,196
----------- ----------
Total Assets 3,012,735 2,109,874
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
Current liabilities
Accounts payable and accrued expenses 270,133 253,176
Due to officers and former officers 571,711 469,275
Bank line of credit 0 110,000
----------- ----------
Total current liabilities 841,844 832,451
Due to officer/principal stockholder,
long term portion 1,293,212 1,227,350
----------- ----------
Total liabilities 2,135,056 2,059,801
Stockholders' equity:
Common stock - $.025 par value; authorized
15,000,000 shares, issued
3,961,852 shares 99,046 99,046
Additional paid-in capital 2,124,227 2,124,277
Accumulated deficit (1,343,266) (2,170,922)
----------- ----------
877,679 52,401
Less: Treasury stock of 1,328 shares at
March 31, 1997 and December 31, 1996,
at cost (2,328) (2,328)
------------ ----------
Total stockholders' equity 870,665 50,073
------------ ----------
Total Liabilities and Stockholders' Equity 3,012,735 2,109,874
============ ==========
=============================================================================
DIAPULSE CORPORATION OF AMERICA
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30, June 30,
1997 1996
----------- -----------
Net sales and rentals 2,193,153 915,835
Cost of sales and rentals 107,135 35,886
----------- -----------
Gross margin 2,086,018 879,949
Operating expenses:
Selling, general and administrative 715,031 578,248
Interest expense 102,295 99,094
----------- -----------
Total operating expenses 817,326 677,342
----------- -----------
Operating income 1,268,692 202,607
Interest and other income 5,584 13,815
----------- -----------
Income before provision for
income taxes 1,274,276 216,422
Provision for income taxes 445,996 73,583
----------- -----------
Net Income 828,280 142,839
=========== ===========
Earnings Per Share 0.21 0.04
=========== ===========
Weighted Average
Number of Common
Shares Outstanding 3,961,852 3,961,852
----------- -----------
=============================================================================
DIAPULSE CORPORATION OF AMERICA
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
1997 1996
----------- -----------
Cash flows from operating activities:
Net Income 828,280 142,839
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,995 2,733
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (330,191) (394,118)
(Increase) decrease in commission advances 60,925 (40,504)
(Increase) decrease in inventories 49,428 339
(Increase) decrease in other assets 13,615 1,000
Increase accounts payable and accrued expenses 16,957 128,188
----------- -----------
Total adjustments (185,271) (29,362)
----------- -----------
Net cash provided (used) by
operating activities 643,009 (156,523)
----------- -----------
Cash flow from financing activities:
Net increase (decrease) in due to
officers' and former officer 168,298 70,475
Decrease Bank Line of cerdit (110,000) 0
----------- -----------
Net cash provided by financing activities 58,298 70,475
----------- -----------
Net (decrease) increase in cash and
cash equivalents 701,307 (86,048)
Cash and cash equivalents - beginning
of period 150,278 222,318
----------- -----------
Cash and Cash Equivalents - End of Period 851,585 136,270
=========== ===========
=============================================================================
DIAPULSE CORPORATION OF AMERICA
SELECTED INFORMATION - SUBSTANTIALLY ALL DISCLOSURES REQUIRED
BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED
1. Basis of presentation
----------------------
The balance sheet of Diapulse Corporation of America as of June 30,
1997, and the related statements of operations and cash flows for the six
months ended June 30, 1997, and 1996, have been prepared by the Company
without audit. The balance sheet for the year ended December 31, 1996,
was audited and an unqualified opinion was expressed in the report dated
March 7, 1997, but no auditing procedures have been performed 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, 1997 have been made. Certain information and foot-
note disclosure normally included in financial statements prepared in
accordance with generally accepted principles have been omitted. It is
suggested that this statement be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's December
31, 1996 annual report to shareholders. There have been no changes of
significant accounting policies since December 31, 1996. 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,
1997 1996
----------- -----------
Parts, components and subassemblies 281,309 129,995
Finished goods 324,724 325,466
----------- -----------
Total inventories 606,033 455,461
=========== ===========
===========================================================================
DIAPULSE CORPORATION OF AMERICA
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
- -----------------------
Net sales for the current six months increased by $1,277,318 to $2,193,153
from last year's comparable six months of $915,835. Operating expenses for
the current six months increased to $817,326 from last year's comparable
six months of $677,342. Interest expense represents the accrual of interest
on the debt to officers, former officers and employees.
Liquidity and capital resources
- --------------------------------
As of June 30, 1997, the Company had working capital of $1,284,776 and a
current ratio of approximately 2.51 to 1. This represents an increase in
working capital since December 31, 1996 of $993,311.
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 8/14/97
===========================================================================
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 851,585
<SECURITIES> 0
<RECEIVABLES> 1,265,849
<ALLOWANCES> 18,985
<INVENTORY> 406,033
<CURRENT-ASSETS> 2,133,634
<PP&E> 111,131
<DEPRECIATION> 150,947
<TOTAL-ASSETS> 3,012,735
<CURRENT-LIABILITIES> 841,844
<BONDS> 0
0
0
<COMMON> 99,046
<OTHER-SE> 771,619
<TOTAL-LIABILITY-AND-EQUITY> 3,012,735
<SALES> 2,193,153
<TOTAL-REVENUES> 2,198,737
<CGS> 107,135
<TOTAL-COSTS> 107,135
<OTHER-EXPENSES> 715,031
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,295
<INCOME-PRETAX> 1,274,276
<INCOME-TAX> 445,996
<INCOME-CONTINUING> 828,280
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 828,280
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
