UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 10549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 11 OR 15 (d) of
THE SECURITIES ECHANGE ACT OF 1934
FOR THE QUARTER PERIOD ENDING MARCH 31, 1998
Diapulse Corporation of America
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(Exact name of registrant as specified on its charter)
Delaware 13-5671991
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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 principle 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 March 31, 1998 there were 3,962,058 shares of common stock outstanding.
Transitional Small Business Disclosure Format:
DIAPULSE CORPORATION OF AMERICA
BALANCE SHEETS
March 31, Dec. 31,
1998 1997
Unaudited Audited
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Assets
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Current Assets:
Cash and cash equivalents $ 345,964 $ 696,282
Current portion of accounts
receivable, net of allowance
doubtful accounts of $158,000
at March 31,1998 and 418,133 149,163
December 31, 1997
Inventories 407,926 398,258
Commission advances 30,938 37,749
Other current assets 14,613 14,066
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Total current assets 1,217,574 1,295,518
Property and equipment, at cost
net of accumulated depreciation 98,865 102,228
Commission advance to related
parties 244,596 215,543
Accounts receivable, net of
current portion 1,019,948 1,019,948
Security deposits 22,765 22,765
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Total Assets $2,603,748 $2,656,002
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Liabilities and Stockholder's Equity
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Current Liabilities:
Current portion of amounts
due to officer and former
officer $ 165,897 $ 224,081
Accounts payable and accrued
liabilities including $216,950
and $212,077 to related
parties in 1998 and 1997 278,851 269,186
Accrued tax assessment and
related interest 138,000 138,000
Income taxes payable 191,967 286,839
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Total current liabilities 774,715 918,106
Long-term portion of amounts
due to officer 1,563,337 1,523,007
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Total Liabilities 2,338,052 2,441,113
Stockholders' Equity:
Common stock - $.025 par
value: authorized 15,000,000
shares, issued 3,962,058
shares in 1998 and 1997 99,051 99,051
Additional paid-in capital 2,124,272 2,124,272
Accumulated deficit (1,955,299) (2,006,106)
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268,024 217,217
Less treasury stock 1,328 shares
in 1998 and 1997 at cost (2,328) (2,328)
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Total stockholders'
equity 265,696 214,889
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Total liabilities and stock-
holders' equity $2,603,748 $2,656,002
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DIAPULSE CORPORATION OF AMERICA
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STATEMENTS OF INCOME
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(UNAUDITED)
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Three Months Ended
March 31,
1998 1997
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Net Sales and rentals $ 395,422 $ 987,328
Cost of sales and rentals 7,124 45,164
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Gross Margin 388,298 942,164
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Operating Expenses:
Selling, general and
administrative 265,633 235,420
Interest expense 50,279 52,870
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Total Operating
Expenses $ 315,912 $ 288,290
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Net Operating Income 72,386 653,874
Interest and other income 4,595 134
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Income before Provision
for Income Taxes 76,981 654,008
Provision for Income taxes 26,174 234,501
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Net Income $ 50,807 $ 419,507
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Earnings Per Share $ 0.01 $ 0.11
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Weighted Average
Number of Common
Shares Outstanding 3,962,058 3,961,852
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DIAPULSE CORPORATION OF AMERICA
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STATEMENTS OF CASH FLOWS
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(UNAUDITED)
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Three Months Ended
March 31,
1998 1997
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Cash Flows From Operating
Activities:
Net income $ 50,807 $ 419,507
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Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 4,900 2,867
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable (268,970) (412,339)
(Increase) in commission
advances (22,242) (19,602)
(Increase) decrease in
inventories (9,668) (21,634)
(Increase) decrease in other
assets (547) (4,420)
(Increase) decrease accounts
payable and accrued expenses 9,665 207,328
Income taxes payable (94,872) - 0 -
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Total adjustments (381,734) (247,800)
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Net cash provided by
(used in)operating
activities (330,927) 171,707
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Net cash used in investing
activities, capital expenditures (1,538) - 0 -
Cash flow from financing
activities
Net increase (decrease) in
due to officers' and former
officer (17,853) 2,387
Net increase (decrease) in Bank
line of credit - 0 - 60,000
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Net cash provided (used)
by financing
activities (17,853) (62,387)
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Net increase (decrease)
in cash and cash
equivalents (350,318) 109,320
Cash and cash equivalents -
Beginning of Period 696,282 150,316
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Cash and cash equivalents -
End of Period $ 345,964 $ 259,636
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DIAPULSE CORPORATION OF AMERICA
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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 balance sheet of Diapulse Corporation of America as of March 31, 1998,
and the related statements of income and cash flows for the three months
ended March 31, 1998 and 1997 have been prepared by the Company without
audit. 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, 1998 and 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 31,1997 annual report to
shareholders. There have been no changes of significant accounting
policies since December 31, 1997. 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, 1998 and December 31, 1997 consisted of the
following:
March 31, Dec. 31,
1998 1997
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Parts, components and sub-
assemblies $ 135,513 $ 125,845
Finished goods 272,413 272,413
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Total Inventories $ 407,926 $ 398,258
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DIAPULSE CORPORATION OF AMERICA AND SUBSIDIARY
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MANAGEMENT DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Results of Operations
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Net sales for the current three months decreased by $591,906 to $395,422
from last years comparable three months of $987,328. This was due primarily
to a decrease of sales of machines and rentals.
Operating expenses for the current three months increased to $315,912 from
last years comparable three months of $288,290. This was due primarily to
the recording of an accrual for commissions earned during the first quarter.
Last year the accrual for commissions earned wasn't recorded on the books
until the end of the year.
Liquidity and Capital Resources
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As of March 31, 1998, the company had working capital of $442,859 and a
current ratio of 1.57 to 1. This represents an increase in working capital
since December 31, 1997 of $65,447.
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
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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 CORPORAITON OF AMERICA
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Registrant
By______________________________
Jesse Ross, President
Date: June 8, 1998
