SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______ to ______
Commission file number 0-9065
Golden Pharmaceuticals, Inc.
(Exact name of small business issuer
as specified in its charter)
Colorado 84-0645174
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1313 Washington Avenue, Golden, Colorado 80401
(Address of principal executive offices)
(303-279-9375)
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports),and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the issuers Common Stock, no par value as
of April 15, 1996 was 106,259,945 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
Part I
Item 1. FINANCIAL STATEMENTS
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
February 29, August 31,
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 906 $ 49,557
Receivables
Trade, net of allowance for doubtful
accounts of $36,972 and $63,700 at
February 29, 1996 and August 31, 1995 1,225,542 1,255,475
Inventories 990,481 674,955
Prepaid expenses 200,019 131,613
Deferred Taxes 380,000 380,000
Note Receivable 165,000 165,000
TOTAL CURRENT ASSETS 2,961,948 2,656,600
PROPERTY, PLANT AND EQUIPMENT- AT COST 3,109,224 2,736,714
Less accumulated depreciation
and amortization 1,869,032 1,659,768
1,240,192 1,076,946
OTHER ASSETS
Goodwill, less accumulated amortization
of $99,258 and $16,543 at February 29,
1996 and August 31, 1995, respectively 3,934,133 3,953,735
Non-compete Agreement 155,362 172,624
Deferred income taxes 220,000 220,000
TOTAL OTHER ASSETS 4,309,495 4,346,359
$8,511,635 $8,079,905
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
February 29, August 31,
1996 1995
CURRENT LIABILITIES:
Note payable $ 1,097,978 $ 343,454
Current maturities of long-term debt 235,200 276,179
Current maturities of capitalized lease
obligations 33,375 33,375
Accounts payable 1,015,674 1,198,689
Accrued liabilities
Salaries, wages and other compensation 21,088 133,192
Interest 111,820 36,183
Other 104,147 19,859
TOTAL CURRENT LIABILITIES 2,619,282 2,040,931
LONG-TERM OBLIGATIONS, less current
maturities 4,308,331 4,314,936
CAPITALIZED LEASE OBLIGATIONS, less
current maturities 149,677 178,745
STOCKHOLDERS' EQUITY
Common stock - no par value; 200,000,000
shares authorized; and 94,259,945 and
93,967,583 issued and outstanding, at
February 29,1996, and August 31, 1995,
respectively 21,393,851 21,288,851
Treasury stock (90,562) -
Preferred stock- no par value; 10,000,000
shares authorized Class A 15%/30% cumulative
convertible 29,653 shares, issued and
outstanding at February 29, 1996, and
August 31, 1995 292,558 292,558
Dividends accrued on preferred stock 433,393 433,393
Accumulated deficit (20,594,895) (20,469,509)
TOTAL STOCKHOLDERS' EQUITY 1,434,345 1,545,293
$ 8,511,635 $ 8,079,905
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
February 29,
1996 1995
REVENUES:
Net sales $ 4,741,014 $ 1,780,369
Cost of Sales 3,179,902 809,003
GROSS MARGIN: 1,561,112 971,366
Selling, general and administrative 1,286,944 569,943
OPERATING INCOME 274,168 401,423
OTHER INCOME/(EXPENSE)
Interest Expense (385,746) (29,002)
Other Income 7,592 5,478
TOTAL OTHER INCOME/(EXPENSE) (378,154) (23,524)
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (104,029) 377,899
INCOME TAX (BENEFIT) EXPENSE 21,400 5,606
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS (125,386) 372,293
EXTRAORDINARY ITEM
Settlement of trade accounts payable - 99,677
NET INCOME (LOSS) $ (125,386) $ 471,970
PRIMARY EARNINGS PER SHARE
Before extraordinary item * *
Extraordinary item * *
PRIMARY EARNINGS PER SHARE * *
Continued on following page.ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
February 29,
1996 1995
FULLY DILUTED EARNINGS PER SHARE
Before extraordinary item $ * $ *
Extraordinary item * *
FULLY DILUTED EARNINGS PER SHARE $ * $ *
WEIGHTED AVERAGE SHARES OUTSTANDING 89,548,240 105,723,962
* Less than $.01 per share
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
February 29,
1996 1995
REVENUES:
Net sales $2,476,241 $ 881,809
Cost of Sales 1,740,022 439,024
GROSS MARGIN: 736,219 442,785
Selling, general and administrative 575,943 229,231
OPERATING INCOME 160,276 213,554
OTHER INCOME/(EXPENSE)
Interest Expense (205,555) (12,612)
Other Income 5,444 4,282
TOTAL OTHER INCOME/(EXPENSE) (200,111) (8,330)
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (39,835) 205,224
INCOME TAX (BENEFIT) EXPENSE - 1,400
INCOME BEFORE EXTRAORDINARY ITEMS (39,835) 203,824
EXTRAORDINARY ITEM
Settlement of trade accounts payable - -
NET INCOME $ (39,835) $ 203,824
PRIMARY EARNINGS PER SHARE
Before extraordinary item * *
Extraordinary item * *
PRIMARY EARNINGS PER SHARE * *
Continued on following page.ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
February 29,
1996 1995
FULLY DILUTED EARNINGS PER SHARE
Before extraordinary item $ * $ *
Extraordinary item * *
FULLY DILUTED EARNINGS PER SHARE $ * $ *
WEIGHTED AVERAGE SHARES OUTSTANDING 89,589,999 105,723,962
* Less than $.01 per share
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
February 29,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $(125,386) $471,970
Adjustments to reconcile net income to
net cash provided (used) by operations
Gain on settlement of note payable - (99,677)
Common Stock issued for consulting services - 37,500
Depreciation and amortization 325,784 42,602
Gain on sale of assets - (2,400)
(Increase) decrease in -
Accounts receivable 29,933 (55,475)
Inventory (315,526) (21,404)
Note receivable - (231,881)
Prepaid expenses and other (68,406) (14,344)
Increase (decrease) in -
Accounts payable (183,015) 113,961
Accrued interest and other 47,821 (12,616)
Note payable-related party - 41,327
TOTAL ADJUSTMENTS (163,409) (202,407)
NET CASH PROVIDED BY OPERATING
ACTIVITIES (288,795) 269,563
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (372,510) (67,156)
Purchase of treasury stock (90,562) -
Addition to goodwill (79,656) -
Proceeds from sale of equipment - 2,400
NET CASH (USED) BY INVESTING ACTIVITIES (542,728) (64,756)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of note payable (119,152) (284,116)
Increase in line of credit 754,524 -
Long term borrowings 42,500 -
Issuance of common stock 105,000 -
NET CASH (USED) BY FINANCING ACTIVITIES 782,872 (284,116)
Continued on following page.
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
February 29,
1996 1995
NET INCREASE (DECREASE) IN CASH (48,651) (79,309)
CASH, Beginning of period 49,557 94,792
CASH, End of period $ 906 $ 15,483
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
Interest paid $ 273,926 $ 29,002
Income taxes paid $ 21,400 $ 5,606
NON-CASH TRANSACTIONS
Settlement of note payable $ - $ 99,677
Issuance of Stock for Consulting
Services $ - $ 37,500
GOLDEN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited financial statements of Golden Pharmaceuticals,
Inc. and its consolidated subsidiaries (collectively, the "Company") have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of
the information and notes required by generally accepted accounting principles
for annual financial statements.
The accompanying unaudited condensed financial statements and disclosures
reflect all adjustments which, in the opinion of the management, are necessary
for a fair presentation of the results of operations, financial position, and
cash flow of the Company. The results of operations for the periods indicated
are not necessarily indicative of the results for the full year.
The financial statements should be read in conjunction with the audited
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended August 31, 1995 as filed with the
Securities and Exchange Commission.
Net Income Per Common Share - Net income per common share was determined by
dividing net income, as adjusted below, by applicable weighted average shares
outstanding.
Six months Ended
February 29,
1996 1995
Income before extraordinary
item as reported ($125,386) $372,293
Extraordinary item -0- 99,677
Accrual of dividends on 15%/30%
cumulative convertible preferred
stock - (44,358)
NET INCOME ($ 125,386) $ 427,612
Weighted average number of
shares outstanding 89,548,240 105,723,962
Common stock equivalents and stock held in escrow have been included in the
computation for the six months ended February 29, 1996 and 1995. The common
stock equivalents that have been included in the computation for earnings per
share are common stock and treasury stock. Stock options, Class A Convertible
Preferred Stock, 15%/30% Cumulative Convertible Preferred Stock, and accrued
dividends on the 15%/30% Cumulative Convertible Preferred Stock are considered
antidilutive and accordingly, are not included in the computation of earnings
per share.
Reclassification - Certain reclassifications have been made to conform prior
years' information with the current year presentation.
Note 2. ACQUISITION OF QUALITY CARE PHARMACEUTICALS, INC.
On August 7, 1995, the Company purchased all of the issued and outstanding
capital stock of Quality Care Pharmaceuticals, Inc., a California corporation
("QCP") pursuant to a Stock Purchase Agreement (the "Agreement") among the
Company, QCP and the shareholders of QCP. The Company paid a total of
$3,718,750 in cash for QCP, of which $222,065 is being held in escrow to
secure the indemnification obligations of certain shareholders of QCP.
QCP is engaged in the repackaging and distribution of pharmaceutical products.
QCP's customers include physicians, hospitals, group practices, managed care
programs and other legally constituted medical facilities throughout the
United States. QCP's assets include, but are not limited to, (I) contracts
with pharmaceutical suppliers and distributors, (ii) certain building and
equipment leases, (iii) licenses and permits, and (iv) certain intellectual
property. In connection with the Agreement, the Company entered into
employment agreements with Daniel B. Guinn and Gary A. Klingsheim, the
President and Executive Vice President, respectively, of QCP. Mr. Klingsheim
resigned from the Company in February 1996 and his employment agreement
terminated upon his resignation.
To facilitate the financing of the acquisition of QCP, the Company obtained
from a national bank (the "Bank") a $4,000,000 term loan (the "Term Loan"), a
$2,500,000 revolving line of credit (the "Revolving Facility") and a $400,000
term loan. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS -
Liquidity and Capital Resources."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Six Months Ended February 29, 1996 Compared to Six Months Ended February 28,
1995
Net Sales - Net sales totaled $4,741,014 for the six months ended February 29,
1996, as compared to $1,780,369 for the six months ended February 28, 1995.
The increase of $2,960,645 or 166% was primarily attributable to the
consolidation of QCP's operations with the Company's, of which QCP represented
$2,888,385 of the increase. Net sales for QCP over the same six month period
last year was $2,781,281. This represents a $107,104 increase during the first
two quarters of Fiscal 1996 when compared to the same period in 1995.
Cost of Sales - Cost of sales as a percent of net sales for the six months
ended February 26, 1996 was 67% as compared to 45.4% for the six months ended
February 28, 1995. The increase was primarily the result of the consolidation
of QCP's operations with the Company's. QCP's cost of sales are higher than
the Company's due to the fact that QCP purchases pharmaceuticals in bulk from
third parties for repackaging and distribution. The Company's cost of sales
are lower than QCP's because the Company manufactures its products from raw
materials which have higher margins. Cost of sales for the Company for the
six months ended February 29, 1996 was 48% prior to the consolidation which is
comparable to the six months ended February 28, 1995.
Selling General and Administration - Selling, general and administrative
expenses ("SG&A") for the six months ended February 29, 1996 were $1,286,944
as compared to $569,943 for the six months ended February 28, 1995. This
increase of $717,001 or 126% is primarily the result of the consolidation of
QCP's operations with the Company's. The Company's SG&A for the six months
ended February 28, 1996 were $718,805 prior to the consolidation. The
Company's increase of 148,862 is primarily the result of freight delivery
costs being reclassified from cost of sales in 1995 to SG&A in 1996. QCP SG&A
for six months ended February 29, 1996 was $801,354 as compared with $732,148
for the six months ended February 28, 1995. The $69,206 increase is mainly
due to the hiring of staff, ie: purchasing director, to prepare for the
increase in sales expected in future quarters.
Interest Expense - Interest expense for the six months ended February 29, 1996
was $385,746 as compared to $29,002 for the six months ended February 28,
1995. The increase of $356,744 was primarily the result of the increase in
the Company's total debt in connection with the acquisition of QCP and the
establishment of the Revolving Facility.
Extraordinary Item - During the six months ended February 28, 1995, the
Company recorded extraordinary income of $99,677 resulting from settlement of
a note payable to the Company's supplier of raw material.
Net income (loss) - The Company reported a net loss of $125,386 for the six
months ended February 29, 1996 compared to net income of $471,970 for the same
period in 1995. The net loss for the six months ended February 29, 1996 was
primarily a result of the interest expense on funds used in connection with
the acquisition of QCP. The Company had a net loss of $104,684 prior to the
consolidation, which was primarily a result of (I) approximately $270,500 in
cash interest expenses; (ii) the accrual of approximately $69,500 in
contingent interest expenses; and (iii) $133,000 for amortization of goodwill
and noncompete agreements. QCP had a net loss of $20,745 for the six months
ended February 29, 1996 as compared to net income of $33,140 for the same
period in Fiscal 1995. The $53,885 decrease was primarily due to the increase
in staff in 1996.
Three Months Ended February 29, 1996 Compared to Three Months Ended
February 28, 1995
Net Sales - Net sales totaled $2,476,241 for the three months ended
February 29, 1996, as compared to $881,809 for the three months ended
February 28, 1995. The increase of $1,594,432 or 181% was primarily
attributable to the consolidation of QCP's operations with the Company's, of
which QCP represented $1,561,273 of the increase. The increase in the
Company's sales is due to additional pharmacies being added by the Company's
main distributor. QCP had sales of $1,561,273 for the three months ended
February 29, 1996, as compared to $1,539,320 for the three months ended
February 28, 1995.
Cost of Sales - Cost of sales as a percent of net sales for the three months
ended February 29, 1996 was 70% as compared to 50% for the three months ended
February 28, 1995. The increase was primarily the result of the consolidation
of QCP's operations with the Company's. QCP's cost of sales are higher than
the Company's due to the fact that QCP purchases pharmaceuticals in bulk from
third parties for repackaging and distribution. The Company's cost of sales
are lower than QCP's because the Company manufactures its products from raw
materials which have higher margins. Cost of sales for the Company for the
three months ended February 29, 1996 was 50% prior to the consolidation which
is comparable to the three months ended February 28, 1995.
Selling General and Administration - Selling, general and administrative
expenses ("SG&A") for the three months ended February 29, 1996 were $575,943
as compared to $229,231 for the three months ended February 29, 1996. This
increase of $346,712 or 151% is primarily the result of the consolidation of
QCP's operations with the Company's. The Company's SG&A for the three months
ended February 29, 1996 were $350,768 prior to the consolidation. The
Company's increase of $121,537 is primarily the result of freight delivery
costs being reclassified from cost of sales in 1995 to SG&A in 1996. SG&A
costs for QCP for the second quarter of Fiscal 1996 were $456,859 as compared
to $389,592 for the same quarter in Fiscal 1995. The increase of $67,267 is
primarily the result of the hiring of a purchasing director and sales support
staff at the beginning of the quarter in 1996.
Interest Expense - Interest expense for the three months ended February 29,
1996 was $205,555 as compared to $12,612 for the three months ended
February 28, 1995. The increase of $192,943 was primarily the result of the
increase in the Company's total debt in connection with the acquisition of QCP
and the establishment of the Revolving Facility.
Net income (loss) - The Company reported a net loss of $39,835 for the three
months ended February 29, 1996 compared to net income of $203,824 for the same
period in 1995. The net loss was a result of the flat sales of QCP and
increased expenses described above resulting from the consolidation of QCP's
operations with the Company's for the three months ended February 29, 1996.
The Company had a net loss of $39,394 prior to the consolidation, which was
primarily a result of(I) approximately $170,000 in cash interest expenses;
(ii) the accrual of approximately $34,500 in contingent interest expenses
(non-cash); and (iii) $66,891 for non-cash amortization of goodwill and
noncompete agreements. QCP had a net loss of $304 for the three months ended
February 29, 1996 compared to net income of $11,527 for the same period in
1995.
LIQUIDITY AND CAPITAL RESOURCES
The following table is presented to facilitate the discussion of the Company's
current liquidity and sets forth the Company's liquidity position as of
February 29, 1996 as compared to August 31, 1995.
February 29, August 31,
1996 1995
Current Assets *$2,961,948 *$2,656,600
Current Liabilities 2,619,282 2,040,931
Net Working Capital (Deficiency) $ 342,666 $ 615,669
*Includes $380,000 of deferred taxes per FASB 109 resulting from the Company's
substantial Net Operating Loss Carry forward.
At February 29, 1996, the Company had $906 in cash and $2,961,042 in other
current assets as compared to $49,557 in cash and $2,607,043 in other current
assets for the year ended August 31, 1995. Current liabilities were
$2,619,282 at February 29, 1996 compared to $458,605 at February 28, 1995
which resulted in a working capital position of $342,666 and a current ratio
of 1.1:1. The increase in current liabilities was a result of the
consolidation of the current liabilities of QCP with the Company's at
February 29, 1996. For the six months ended February 29, 1996, the Company
generated cash flow from operations of ($288,795) as compared to $269,563 for
the six months ended February 28, 1995. The $558,358 decrease in cash flow
is primarily attributable to (1) the net loss for the current period;(2) the
payment of approximately $200,000 in old QCP Accounts Payable and (3) the
increase in QCP inventory of $300,000 during the first six month period. The
amount of finished goods Inventory was increased to reduce labor costs by
increasing the size of the production batches.
To facilitate the financing of the acquisition of QCP, to refinance existing
debt of the Company and QCP and to provide working capital for the Company and
QCP, the Company obtained the Term Loan and the Revolving Facility. Interest
on the Term Loan is payable at the Bank prime plus 3% (which totaled 11.25% at
February 29, 1996). The Term Loan is payable in sixteen quarterly
installments of $125,000 to be made August 1, 1996 through August 1, 2000 with
a lump sum payment of $2,000,000 due in August 2000. The Revolving Facility
is payable at the Bank prime plus 2% (which totaled 10.25% at February 29,
1996) and expires in August, 2000. At February 29, 1996 the balance on the
Revolving Facility was $1,097,978. The Company has an additional term loan of
$400,000 with an interest rate at the Bank prime plus 3% (which totaled 11.25%
at February 29, 1996) and which is payable in monthly installments of $6,667
through August 1, 2000. The balance at February 29, 1996 was $359,998. On
March 15, 1996, the Third Ammendment to the Credit and Security Agreement with
the bank was signed which revised the covenenats and waived all prior
defaults. The Company is in compliance with the ammended bank covenants.
As of February 29, 1996, the Company has two prommisory notes in the principal
amounts of $85,000 and $80,000, respectively from Harvey G. Mozer, an
individual. Mr. Mozer is a principal of New Crawford, and an officer and
director of Gulch Holdings Company. The notes provide for interest on the
unpaid principal balance at the prime rate plus 1% as charged by the Company's
bank (totaling 9.25% at February 29, 1996). The notes matured on December 31,
1995 and February 29, 1996, respectively. The notes were ammended on February
27, 1996 to extend to July 31, 1996.
The Company's long term debt at February 29, 1996 consisted of notes payable
to the Bank, including the current portion thereof, totaling $4,543,531
incurred primarily as a result of the acquisition of QCP.
The Company has capitalized leases and operating leases for equipment,
facilities and vehicles used in its business. Minimum lease payments for its
capitalized and operating leases are expected to approximate $52,000 and
$80,000, respectively, for the fiscal year ending August 31, 1996.
As of February 29, 1996, the Company had net operating loss carry forwards of
approximately $17,467,000 available to reduce taxable income through 2006 for
federal and state income tax reporting purposes.
Future Capital Requirements
The Company believes that the Revolving Facility with the Bank, proceeds from
the exercise of certain options and warrants and the anticipated positive
impact of changes in operations will provide sufficient sources of liquidity
to fund the Company's future financial requirements. In the event that the
Company should require significant expansion of its business resulting in
additional capital requirements or if the Revolving Line andcash from
operations are inadequate to fund the Company's financial acquirements, the
Company would attempt to raise additional capital through the placement of
debt or equity. However, there can be no assurance that the Company would be
able to secure such financing, or, if so, that the terms of such financing
would be acceptable to the Company.
The Company's long-term capital expenditure requirements will depend upon
numerous factors, including the demand for the Company's product and any
expansion activities. The Company anticipates that QCP will need approximately
$700,000 for capital expenditures in the current fiscal year to upgrade its
production line. The Company expects that the majority of these expenditures
will be in the form of capital leases and will be funded through operations
and the Revolving Facility. However, the Company does not have any
commitments for capital leases and there are no assurances that the Company
will be able to secure such financing or, if so, that the terms of such
financing would be acceptable to the Company.
Although the Company experienced a net loss for the six months ended
February 29, 1996 for the reasons discussed above, the Company is currently
experiencing its highest level of sales to date. While QCP's sales have
remained constant for the past six months, Management has taken several steps
to increase sales, such as, the resent hiring of a new V.P. of Marketing,
doubling the sales staff, implementing collateral marketing materials and
increasing the in-house marketing efforts. Management has also, taken steps
to reduce QCP's costs by consolidating manufacturing and storage into a newer,
efficient and more modern facility, and hiring a Purchasing Director to pursue
the best possible pricing on the purchasing of pharmaceuticals products, which
is the largest component of QCP's cost of sales. Although QCP is currently
generating a net loss, the Company's management believes that QCP will operate
on a break-even basis for the third quarter and become profitable in the
fourth quarter. However, QCP's actual operating results are highly dependent
upon the ongoing negotiations with several large clinics, physician groups and
drug manufacturers. Further, QCP's actual results will also depend upon when
sales actually commence, assuming such negotiations are successful.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit 11 Statement Regarding Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
1. A Current Report on Form 8-K dated October 2, 1995 was filed
under Item 8.
2. An Amendment to the Current Report on Form 8-K dated
October 2, 1995 was filed under Item 8.
3. An amendment to the Current Report on Form 8-K dated
August 7, 1995 was filed on October 23, 1995 under Item 7.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLDEN PHARMACEUTICALS, INC.
(Registrant)
DATED: April 15, 1996 BY: /s/ Glen H. Weaver
Glen H. Weaver,
Vice President, Finance
Chief Financial OfficerExhibit No. 11
To The Form 10-QSB
For The Quarterly Period Ended February 29, 1996
EXHIBIT NO. 11
GOLDEN PHARMACEUTICALS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Six months Ended
February 29,
1996 1995
Shares of common stock and
equivalents outstanding at
beginning of period 91,589,946 105,324,724
Weighted-average shares or
equivalents issued during
the period 837,415 399,238
Weighted-average shares or
equivalents canceled during
the period (2,879,121) 0
Weighted-average shares assumed
issued under stock option plans
during the period 0 0
Average common and common
stock equivalents
outstanding 89,548,240 105,723,962
Income before extraordinary
item $(104,029) $372,293
Extraordinary Item 0 99,677
Accrual of dividends on 15%/30%
convertible preferred stock 0 (44,358)
Net Income $ (104,029) $ 427,612
Earnings per share:
Income before extraordinary
item $ * $ *
Extraordinary Item * *
Accrual of dividends on 15%/30%
convertible preferred stock * *
Earnings per share $ * $ *
* Less than $.01 per share
Exhibit No. 27
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's financial statements for the quarter ended February 29, 1996
contained in its quarterly report on Form 10-QSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> AUG-31-1996 AUG-31-1995 AUG-31-1996 AUG-31-1995
<PERIOD-END> FEB-29-1996 FEB-28-1995 FEB-29-1996 FEB-28-1995
<CASH> 906 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 1262514 0 0 0
<ALLOWANCES> 36972 0 0 0
<INVENTORY> 990481 0 0 0
<CURRENT-ASSETS> 2961948 0 0 0
<PP&E> 3109224 0 0 0
<DEPRECIATION> 1869032 0 0 0
<TOTAL-ASSETS> 8511635 0 0 0
<CURRENT-LIABILITIES> 2619282 0 0 0
<BONDS> 0 0 0 0
<COMMON> 21393851 0 0 0
0 0 0 0
292558 0 0 0
<OTHER-SE> (20594895) 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 8511635 0 0 0
<SALES> 4741014 1780369 2476241 881809
<TOTAL-REVENUES> 4741014 1780369 2476241 881809
<CGS> 3179902 809003 1740022 439024
<TOTAL-COSTS> 3179902 809003 1740022 439024
<OTHER-EXPENSES> 1286944 569943 575943 229231
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 385746 29002 205555 12612
<INCOME-PRETAX> (104029) 377899 (39835) 205224
<INCOME-TAX> 21400 5606 0 1400
<INCOME-CONTINUING> (125386) 372293 (39835) 203824
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 99677 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (125386) 471970 (39835) 203824
<EPS-PRIMARY> 0 0 0 0
<EPS-DILUTED> 0 0 0 0
</TABLE>
