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 31,1997 Commission File Q-3052
----------------------------------- ----------------------
Diapulse Corporation of America
-------------------------------
(Exact name of registrant as specified on its charter)
Delaware 13-5671991
-------------------------------- -------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number)
321 East Shore Road
Great Neck, New York 11023
--------------------------------- -------------------------
Registrant's telephone
number, including area code (516)466-3030
Indicate by check 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, 1997 there were 3,961,852 shares of common stock outstanding.
- -----------------------------------------------------------------------------
DIAPULSE CORPORATION OF AMERICA
-------------------------------
BALANCE SHEETS
--------------
March 31, Dec. 31,
1997 1996
Unaudited Audited
----------- ----------
ASSETS
------
Current Assets:
Cash and cash equivalents $ 259,636 $ 150,316
Commissions advances 179,998 181,172
Accounts receivable, net of allowance for
doubtful accounts of $18,985 at March 31,
1997 and December 31, 1996 727,428 315,089
Inventories 477,095 455,461
Other current assets 26,298 21,878
---------- ---------
Total Current Assets 1,670,455 1,123,916
Commission advances, net of current portion 253,708 232,932
Accounts receivable, net of current portion 620,569 620,569
Property and equipment, at cost, net of
accumulated depreciation 112,895 115,762
Security deposits 16,695 16,695
---------- ---------
Total Assets $ 2,674,322 $ 2,109,874
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
Current Liabilities:
Accounts payable and accrued expenses $ 460,504 $ 253,176
Dues to officers and former officers 466,888 469,275
Bank line of credit 50,000 110,000
---------- ---------
Total Current Liabilities 977,392 832,451
Due to officer/principal stockholder, long term
portion 1,227,350 1,227,350
---------- ---------
Total Liabilities 2,204,742 2,059,801
---------- ---------
Stockholders' Equity:
Common stock - $0.25 par value; authorized
15,000,000 shares, issued 3,961,852 shares 99,046 99,046
Additional paid-in capital 2,124,277 2,124,277
Accumulated deficit (1,751,415) (2,170,922)
---------- ----------
471,908 52,401
Less: Treasury stock of 1,328 shares at March
31, 1997 and December 31, 1996, at cost (2,328) (2,328)
---------- ----------
469,580 50,073
---------- ----------
Total Liabilities and Stockholders' equity $2,674,322 $2,109,874
========== =========
-2-
- ---------------------------------------------------------------------------
DIAPULSE CORPORATION OF AMERICA
-------------------------------
STATEMENTS OF INCOME
--------------------
(Unaudited)
-----------
Three Months Ended
March 31,
1997 1996
---------- ----------
Net sales and rentals $ 987,328 $ 435,172
Cost of sales and rentals 45,164 18,483
--------- ---------
Gross Margin 942,164 416,689
--------- ---------
Operating Expenses:
Selling, general and administrative 235,420 252,954
Interest expense 52,870 49,110
--------- ---------
Total Operating Expenses $ 288,290 $ 302,064
--------- ---------
Net Operating Income 653,874 114,625
Interest and other income 134 12,951
--------- ---------
Income Before Provision for
Income Taxes 654,008 127,576
Provision for income taxes 234,501 43,376
--------- ---------
Net Income $ 419,507 $ 84,200
========= =========
Earnings Per Share $ 0.11 $ 0.02
========== ==========
Weighted Average
Number of Common
Shares Outstanding 3,961,852 3,961,852
========== ==========
-3-
- -----------------------------------------------------------------------------
DIAPULSE CORPORATION OF AMERICA
-------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
-----------
Three Months Ended
March 31,
1997 1996
---------- ----------
Cash Flows From Operating Activities:
Net income $ 419,507 $ 84,200
----------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,867 2,866
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (412,339) (189,509)
(Increase) in commission advances (19,602) (68,456)
(Increase) decrease in inventories (21,634) 207
(Increase) decrease in other assets (4,420) 1,000
Increase accounts payable and
accrued expenses 207,328 56,529
---------- ----------
Total adjustments (247,800) (197,363)
---------- ----------
Net cash provided (used) by operating
activities 171,707 (113,163)
---------- ----------
Cash flow from financing activities
Net increase (decrease) in due to officers'
and former officer 2,387 41,123
Net increase (decrease) in Bank line of credit 60,000 -
---------- ----------
Net cash provided (used) by financing
activities (62,387) 41,123
---------- ----------
Net increase (decrease)
in cash and cash equivalents 109,320 (72,040)
Cash and cash equivalents - beginning of period 150,316 222,318
---------- ----------
Cash and Cash Equivalents - End of Period $ 259,636 $ 150,278
========== ==========
-4-
- -----------------------------------------------------------------------------
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 March 31,
1997,and the related statements of income and cash flows for the
three months ended March 31,1997 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 report dated
April 14, 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 three
months ended March 31, 1997 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 financial statements be read in conjunction with the 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 three month period are not necessarily indicative
of operations for the corresponding years.
2. Inventories
-----------
Inventories as of March 31, 1997 and December 31, 1996 consisted
of the following:
March 31, Dec. 31,
1996 1997
----------- -----------
Parts, components and subassemblies $ 187,329 $ 129,995
Finished goods 289,766 325,466
----------- -----------
Total Inventories $ 477,095 $ 455,461
=========== ===========
-5-
- -----------------------------------------------------------------------------
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 $552,156
to $987,328 from last year's comparable three months of $435,172.
This was due primarily to an increase of sales of machines and
rentals.
Operating expenses for the current three months decreased to
$288,290 from last year's comparable three months of $302,064.
Interest expense represents the accrual of interest on the debt
to officers, former officer and employees.
Liquidity and capital resources
- -------------------------------
As of March 31, 1997, the Company had working capital of $693,063
and a current ratio of approximately 1.71 to 1. This represents an
increase in working capital since December 31, 1996 of $401,598.
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.
-6-
- -----------------------------------------------------------------------------
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
/s/ Jesse Ross
By -----------------------------
Jesse Ross, President
Date: May 12, 1997
-7-
- -----------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 259,636
<SECURITIES> 0
<RECEIVABLES> 746,413
<ALLOWANCES> 18,985
<INVENTORY> 477,095
<CURRENT-ASSETS> 1,670,455
<PP&E> 112,895
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,674,322
<CURRENT-LIABILITIES> 977,392
<BONDS> 0
0
0
<COMMON> 99,046
<OTHER-SE> 370,534
<TOTAL-LIABILITY-AND-EQUITY> 2,674,322
<SALES> 987,328
<TOTAL-REVENUES> 987,328
<CGS> 45,164
<TOTAL-COSTS> 45,164
<OTHER-EXPENSES> 235,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,870
<INCOME-PRETAX> 654,008
<INCOME-TAX> 234,501
<INCOME-CONTINUING> 419,507
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 419,507
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
