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 September 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
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(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
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As of Sept. 30, 1997 there were 3,961,852 shares of common stock outstanding.
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DIAPULSE CORPORATION OF AMERICA
BALANCE SHEETS
Sept. 30, Dec. 31,
1997 1996
(Unaudited) (Audited)
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A S S E T S
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Current assets:
Cash and cash equivalents $747,392 $150,316
Current portion of commissions advances 185,952 181,172
Current portion of accounts receivable, net
of allowance for doubtful accounts
of $18,985 at September 30, 1997
and December 31, 1996 709,030 315,089
Inventories 399,901 455,461
Other current assets 15,575 21,878
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Total current assets 2,057,850 1,123,916
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Property and equipment, at cost, net of
accumulated depreciation 133,951 115,762
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Other assets:
Commissions advances, net of current portion 261,598 232,932
Accounts receivable, net of current portion 620,569 620,569
Security deposits 16,695 16,695
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Total other assets 898,862 870,196
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Total Assets $3,090,663 $2,109,874
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
Current liabilities
Accounts payable and other current
liabilities $528,207 $253,176
Due to officers and former officers 522,623 469,275
Bank line-of-credit - 110,000
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Total current liabilities 1,050,830 832,451
Due to officer/principal stockholder,
long-term portion 1,304,528 1,227,350
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Total liabilities 2,355,358 2,059,801
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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 2,124,277 2,124,277
Accumulated deficit (1,485,690) (2,170,922)
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737,633 52,401
Less: Treasury stock of 1,328 shares at
September 30, 1997 and December 31, 1996,
at cost (2,328) (2,328)
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Total stockholders' equity 735,305 50,073
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Total Liabilities and Stockholders'
Equity $3,090,663 $2,109,874
========== ==========
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DIAPULSE CORPORATION OF AMERICA
STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Three Months Nine Months
Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30,
1997 1997 1996
------------ ---------- ------------
Net sales and rentals $2,595,328 $402,175 $1,269,987
Cost of sales and rentals 118,849 11,714 44,412
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Gross margin 2,476,479 390,461 1,225,575
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Operating expenses:
Selling, general and administrative 1,148,431 433,400 803,708
Interest expense 118,103 15,808 149,738
---------- -------- ----------
Total operating expenses 1,266,534 449,208 953,446
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Operating income (loss) 1,209,945 (58,747) 272,129
Interest and other income 18,250 12,666 14,598
---------- -------- ----------
Income (loss) before provision
for income taxes 1,228,195 (46,081) 286,727
Provision for income taxes 542,963 96,967 97,487
---------- -------- --------
Net Income (Loss) $685,232 $(143,048) $189,240
========== ======== ========
Earnings Per Share $0.17 $(0.04) $0.05
========== ======== ========
Weighted Average
Number of Common
Shares Outstanding 3,956,448 3,956,448 3,956,448
========== ========== ==========
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DIAPULSE CORPORATION OF AMERICA
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
1997 1996
----------- -----------
Cash flows from operating activities:
Net income $685,232 $189,240
Adjustments to reconcile net income
to net cash provided from (used by) operating
activities:
Depreciation and amortization 8,601 8,601
Changes in operating assets and liabilities:
(Increase) in accounts receivable (392,941) (428,659)
(Increase) in commission advances (33,446) (114,474)
(Increase) decrease in inventories 55,560 (20,114)
Decrease in other assets 6,303 -
Increase (decrease) in accounts payable and
other current liabilites 275,031 (177,675)
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Total adjustments (81,892) (376,971)
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Net cash provided from (used by)
operating activities 603,340 (187,731)
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Cash flows from investing activities:
Purchase of property and equipment (26,790) -
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Cash flows from financing activities:
Net increase in due to officers and
former officer 130,526 91,768
Net repayments under bank line-of-credit (110,000) -
-------- --------
Net cash provided from financing
activities 20,526 91,768
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Net increase (decrease) in cash and
cash equivalents 597,076 (95,963)
Cash and cash equivalents - beginning
of period 150,316 222,318
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Cash and Cash Equivalents - End of Period $747,392 $126,355
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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 September 30,
1997, and the related statements of operations for the nine months ended
September 30, 1997 and 1996, and the three months ended September 30, 1997,
and the related statements of cash flows for the nine months ended September
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 auditors' 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 nine months ended
September 30, 1997 and for all periods presented have been made. Certain
information and footnote disclosures normally included in financial state-
ments prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these 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 nine month period are not necessarily
indicative of results of operations for the corresponding years.
2. Inventories
Sept. 30, Dec. 31,
1997 1996
----------- -----------
Parts, components and subassemblies $81,854 $129,995
Finished goods 318,047 325,466
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Total inventories $399,901 $455,461
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DIAPULSE CORPORATION OF AMERICA
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
- -----------------------
Net sales and rentals for the current nine months increased by $1,325,341
to $2,595,328 from last year's comparable nine months of $1,269,987.
Net sales and rentals for the three months ended September 30, 1997 was
$402,175. Operating expenses for the current nine months increased to
$1,266,534 from last year's comparable nine months of $953,446. Interest
expense represents the accrual of interest on the debt to officers, former
officers and employees.
Liquidity and capital resources
- --------------------------------
As of September 30, 1997, the Company had working capital of $1,007,020 and
a current ratio of approximately 1.96 to 1. This represents an increase in
working capital since December 31, 1996 of $715,555.
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
---------------------------------
Registrant
By /s/ Jesse Ross
- -----------------------------
Jesse Ross, President
By /s/ Gladys Ross
- -----------------------------
Gladys Ross, Acting Corporate Secretary
Date 1/6/98
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 747,392
<SECURITIES> 0
<RECEIVABLES> 709,030
<ALLOWANCES> 18,895
<INVENTORY> 399,901
<CURRENT-ASSETS> 2,057,850
<PP&E> 133,951
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<COMMON> 99,046
<OTHER-SE> 636,259
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<SALES> 2,595,328
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<CGS> 118,849
<TOTAL-COSTS> 1,267,280
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<INCOME-PRETAX> 1,228,195
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