[ARTICLE] 5
[LEGEND]
This schedule contains summary financial information extracted from the
registrant financial statement for the quarter ended May 31, 1996 contained
in its report on Form 10-QSB and is qualified in its entirety by reference
to such financial statements.
[/LEGEND]
<TABLE>
<S> <C> <C> <C>
[PERIOD-TYPE] 3-MOS 3-MOS YEAR
[FISCAL-YEAR-END] AUG-31-1996 AUG-31-1995 AUG-31-1996
[PERIOD-END] MAY-31-1996 MAY-31-1995 MAY-31-1996
[CASH] 0 0 21,306
[SECURITIES] 0 0 0
[RECEIVABLES] 0 0 1,337,598
[ALLOWANCES] 0 0 38,274
[INVENTORY] 0 0 942,834
[CURRENT-ASSETS] 0 0 3,199,250
[PP&E] 0 0 3,185,381
[DEPRECIATION] 0 0 (1,681,323)
[TOTAL-ASSETS] 0 0 8,996,554
[CURRENT-LIABILITIES] 0 0 961,239
[BONDS] 0 0 0
[PREFERRED-MANDATORY] 0 0 0
[PREFERRED] 0 0 292,558
[COMMON] 0 0 22,264,719
[OTHER-SE] 0 0 0
[TOTAL-LIABILITY-AND-EQUITY] 0 0 (20,436,962)
[SALES] 2,627,886 941,491 7,368,900
[TOTAL-REVENUES] 2,627,886 941,491 7,368,900
[CGS] 1,728,854 437,517 4,908,756
[TOTAL-COSTS] 1,728,854 437,517 4,908,756
[OTHER-EXPENSES] 958,324 283,322 2,460,144
[LOSS-PROVISION] 0 0 0
[INTEREST-EXPENSE] (216,599) (12,640) (602,345)
[INCOME-PRETAX] (275,416) 211,483 (379,445)
[INCOME-TAX] 0 1,400 21,400
[INCOME-CONTINUING] (275,416) 210,083 (400,845)
[DISCONTINUED] 0 0 0
[EXTRAORDINARY] 0 0 0
[CHANGES] 0 0 0
[NET-INCOME] (275,416) 210,083 (400,845)
[EPS-PRIMARY] 0 0 0
[EPS-DILUTED] 0 0 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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 May 31,1996
[ ] 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 July 12, 1996 was 117,647,505 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
May 31, August 31,
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $21,306 $49,557
Receivables
Trade, net of allowance for doubtful
accounts of $38,274 and $63,700 May
31, 1996 and August 31, 1995 1,337,598 1,255,475
Inventories 942,834 674,955
Prepaid expenses 227,917 131,613
Deferred Taxes 380,000 380,000
Note Receivable 289,595 165,000
TOTAL CURRENT ASSETS 3,199,250 2,656,600
PROPERTY, PLANT AND EQUIPMENT
-AT COST 3,185,381 2,736,714
Less accumulated depreciation and
amortization (1,681,323) (1,659,768)
1,504,058 1,076,946
OTHER ASSETS
Goodwill, less accumulated amortization
of $165,430 and $16,543 at May 31, 1996
and August 31, 1995, respectively 3,926,505 3,953,735
Non-compete Agreement 146,731 172,624
Deferred income taxes 220,000 220,000
TOTAL OTHER ASSETS 4,293,236 4,346,359
$8,996,554 $8,079,905
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
May 31, August 31,
1996 1995
CURRENT LIABILITIES:
Note Payable $961,239 $343,454
Current maturities of long-term debt 228,734 276,179
Current maturities of capitalized lease
obligations 92,449 33,375
Accounts Payable 792,894 1,198,689
Accrued Liabilities
Salaries, wages, and other
compensation 39,375 133,192
Interest 110,712 36,183
Other 127,224 19,859
TOTAL CURRENT LIABILITIES 2,313,252 2,040,931
LONG TERM OBLIGATIONS, less current
maturities 4,288,332 4,314,936
CAPITALIZED LEASE OBLIGATIONS,
less current maturities 274,645 178,745
STOCKHOLDERS' EQUITY
Common stock - no par value; 200,000,000
shares authorized; and 114,781,505 and
93,967,583 issued and outstanding, at May
31, 1996 and August 31, 1995 respectively 22,358,851 21,288,851
Treasury stock (94,132) -
Preferred stock - no par value; 10,000,000
shares authorized Class A 15%/30% cumulative
convertible 29,656 share issued and
outstanding at May 31, 1996 and
August 31, 1995 292,558 292,558
Dividends accrued on preferred stock 433,393 433,393
Accumulated Deficit (20,870,355) (20,469,509)
TOTAL STOCKHOLDERS' EQUITY 2,120,315 1,545,293
$8,996,544 $8,079,905
ITEM 1. FINANCIAL STATEMENTS (CONTINUE)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
May 31, August 31, 1996 1995
REVENUES:
Net sales $7,368,900 $2,721,860
Cost of sales 4,908,756 1,246,520
GROSS MARGIN: 2,460,144 1,475,340
Selling, general, and administrative 2,245,311 853,265
OPERATING INCOME 214,833 622,075
OTHER INCOME /(EXPENSE)
Interest Expense (602,345) (41,642)
Other Income 9,765 8,949
Gain (loss) sale of assets (1,698) -
TOTAL OTHER INCOME /(EXPENSE) (594,278) (32,693)
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (379,445) 589,382
INCOME TAX (BENEFIT) EXPENSE 21,400 7,006
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS (400,845) 582,376
EXTRAORDINARY ITEM
Settlement of trade accounts payable - 76,560
NET INCOME ($400,845) 682,053
PRIMARY EARNINGS PER SHARE
Before Extraordinary Item * *
Extraordinary Item * *
PRIMARY EARNINGS PER SHARE * *
FULLY DILUTED EARNINGS PER SHARE
Before extraordinary item $ * $ *
Extraordinary item * *
FULLY DILUTED EARNINGS PER SHARE $ * $ *
WEIGHTED AVERAGE SHARES
OUTSTANDING 112,615,914 106,272,092
* Less than $.01 per share<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
May 31, August 31,
1996 1995
REVENUES:
Net Sales $2,627,886 $941,491
Cost of Sales 1,728,854 437,517
GROSS MARGIN: 899,032 503,974
Selling, general, and administrative 958,324 283,322
OPERATING INCOME (59,292) 220,652
OTHER INCOME /(EXPENSE)
Interest Expense (216,599) (12,640)
Other Income 2,173 3,471
Gain (loss) sale of assets (1,698) -
TOTAL OTHER INCOME / (EXPENSE) (216,124) (9,169)
INCOME BEFORE TAXES AND
EXTRAORDINARY ITEM (275,416) 211,483
INCOME TAX (BENEFIT) / EXPENSE - 1,400
INCOME BEFORE EXTRAORDINARY ITEMS (275,416) 210,083
EXTRAORDINARY ITEM
Settlement of trade accounts payable - -
NET INCOME ($275,416) $210,083
PRIMARY EARNINGS PER SHARE * *
Before Extraordinary Item * *
Extraordinary Item * *
PRIMARY EARNINGS PER SHARE * *
FULLY DILUTED EARNINGS PER SHARE
Before extraordinary item $ * $ *
Extraordinary item * *
FULLY DILUTED EARNINGS PER SHARE $ * $ *
WEIGHTED AVERAGE SHARES
OUTSTANDING 116,984,037 107,382,020
* Less than $.01 per share<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
May 31, August 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($400,845) $682,053
Adjustments to reconcile net income to
net cash provided (used) bo operations
Gain on settlement of note payable - (99,677)
Common stock issued for consulting
services - 37,500
Depreciation and amortization 328,606 65,088
Gain on sale of asset 3,216 (2,400)
(Increase) decrease in -
Accounts receivable (82,123) 16,413
Inventory (267,879) (176,000)
Note receivable (124,595) (14,217)
Prepaid expenses and other (96,304) (142,510)
Goodwill (121,656) -
Increase (decrease) in -
Accounts payable (405,795) 29,081
Accrued interest and other 48,702 8,630
Credit Line 617,785 -
TOTAL ADJUSTMENTS (100,043) (278,092)
NET CASH PROVIDED BY OPERATING
ACTIVITIES (500,888) 403,961
(Continued on Next Page)
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
May 31, August 31,
1996 1995
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (589,986) (93,503)
Purchase of treasury stock (94,132) -
Sale of property and equipment 4,980 -
Proceeds from sale of equipment 850 2,400
NET CASH (USED) BY INVESTING
ACTIVITIES (678,288) (91,103)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable (173,637) (291,877)
Long term borrowings 254,562 -
Issuance of common stock 1,070,000 -
NET CASH (USED) BY FINANCING
ACTIVITIES 1,150,925 (291,877)
NET INCREASE (DECREASE) IN CASH (28,251) 20,981
CASH, Beginning of period 49,557 94,792
CASH, End of period $21,306 115,773
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
ACTIVITIES:
Interest paid $526,259 $41,642
Income taxes paid $21,400 $7,006
NON-CASH TRANSACTIONS
Settlement of note payables - $99,677
Issuance of Stock for Consulting Services - $37,500
<PAGE>
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.
Nine Months Ended
May 31, August 31,
1996 1995
Income before extraordinary
item as reported ($400,845) $582,376
Extraordinary item -0- 99,677
Accrual of dividends on 15%/30%
cumulative convertible preferred
stock - (66,537)
NET INCOME ($ 400,845) $ 615,516
Weighted average number of
shares outstanding 112,615,914 106,272,099
Common stock equivalents and stock held in escrow have been included in the
computation for the nine months ended May 31, 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") for a total of $3,718,750 in cash. 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(HRt)Resources."
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.
Note 3. SUBSEQUENT EVENTS
In June 1996, the Company commenced a private placement to accredited investors
of up to 7,000,000 shares of common stock at a purchase price of $.25 per share.
As of July 12, 1996, the Company has raised $785,000 in the private placement.
On June 14, 1996 the Company entered into a joint venture agreement with Pharma
France, Inc. to form a new entity called Pharma Labs, LLC. This entity is a
manufacturer of vitamins, herbs, and nutritional supplements. The majority of
the sales are currently overseas, however it is anticipated that Pharma Labs will
also begin sales in the United States.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF(HRt)OPERATION
Overview
As of August 31, 1995, the financial results of the Company and QCP were reported
on a consolidated basis (the "Consolidation").
Results of Operations
Nine Months Ended May 31, 1996 Compared to Nine Months Ended May 31, 1995
Net Sales - Net sales totaled $7,368,900 for the nine months ended May 31, 1996,
as compared to $2,721,860 for the nine months ended May 31, 1995. The increase
of $4,647,040 or 171% was primarily attributable to the Consolidation, of which
QCP represented $4,498,461 of the increase. Net sales for QCP over the same nine
month period last year were $4,458,303. This represents a $40,158 increase during
the first three 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 nine months ended
May 31, 1996 was 67% as compared to 45.8% for the nine months ended May 31, 1995.
The increase was primarily the result of the Consolidation. 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, while the Company
manufactures its products from raw materials, which have higher margins, and
therefore, has lower cost of sales. Cost of sales for the Company for the nine
months ended May 31, 1996 was 48% prior to the Consolidation which is comparable
to the nine months ended May 31, 1995.
Selling General and Administration - Selling, general and administrative expenses
("SG&A") for the nine months ended May 31, 1996 were $2,245,311 as compared to
$853,265 for the nine months ended May 31, 1995. This increase of $1,392,046 or
163% is primarily the result of the Consolidation. The Company's SG&A for the
nine months ended May 31, 1996 were $1,096,911 prior to the Consolidation. The
Company's increase of $243,646 is primarily the result of freight delivery costs
being reclassified from cost of sales in 1995 to SG&A in 1996.
Interest Expense - Interest expense for the nine months ended May 31, 1996 was
$602,345 as compared to $41,642 for the nine months ended May 31, 1995. The
increase of $560,703 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 $400,845 for the nine
months ended May 31, 1996 compared to net income of $682,053 for the same period
in 1995. The net loss for the nine months ended May 31, 1996 was a result of
(I) approximately $435,492 in interest expenses; (ii) the accrual of
approximately $104,283 in contingent interest expenses; (iii) $191,320 for
amortization of goodwill and noncompete agreements; and (iv) a net loss of
$282,000 at QCP.
Three Months Ended May 31, 1996 Compared to Three Months Ended May 31, 1995
Net Sales - Net sales totaled $2,627,886 for the three months ended May 31, 1996,
as compared to $941,491 for the three months ended May 31, 1995. The increase
of $1,686,395 or 179% was primarily attributable to the Consolidation. The
Company's sales were $1,610,076 for the three months ended May 31, 1996, as
compared to $1,677,371 for the three months ended May 31, 1995, due to additional
pharmacies being added by the Company's main distributor.
Cost of Sales - Cost of sales as a percent of net sales for the three months
ended May 31, 1996 was 66% as compared to 46% for the three months ended May 31,
1995. The increase was primarily the result of the Consolidation. 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, representing higher margins. Cost of sales for the
Company for the three months ended May 31, 1996 was 48% prior to the
Consolidation which is comparable to the three months ended May 31, 1995.
Selling General and Administration - SG&A for the three months ended May 31, 1996
were $958,324 as compared to $283,322 for the three months ended May 31, 1996.
This increase of $675,002 or 238% is the result of (I) the Consolidation, (ii)
the reclassification of freight delivery costs from cost of sales in 1995 to SG&A
in 1996, and (iii) the hiring of a purchasing director, V.P.-Marketing, national
Sales Director and additional sales support staff by QCP.
Interest Expense - Interest expense for the three months ended May 31, 1996 was
$216,599 as compared to $12,640 for the three months ended May 31, 1995. The
increase of $203,959 was primarily the result of the increase in the Company's
total debt from $427,092 to $5.85 million in connection with the acquisition of
QCP.
Net income (loss) - The Company reported a net loss of $275,416 for the three
months ended May 31, 1996 compared to net income of $210,083 for the same period
in 1995. The net loss was a result of (I) approximately $172,000 in cash
interest expenses; (ii) the accrual of approximately $34,500 in contingent
interest expenses (non-cash); (iii) $58,257 for non-cash amortization of goodwill
and noncompete agreements; and (iv) a net loss of $261,142 at QCP.
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 May 31,
1996 as compared to August 31, 1995.
May 31, August 31,
1996 1995
Current Assets *$3,199,258 *$2,656,600
Current Liabilities 2,313,252 2,040,931
Net Working Capital (Deficiency) $ 579,968 $ 615,669
*Includes $380,000 of deferred taxes per FASB 109 resulting from the Company's
substantial Net Operating Loss Carry forward.
At May 31, 1996, the Company had $21,306 in cash and $3,177,944 in other current
assets as compared to $115,773 in cash and $1,174,107 in other current assets at
May 31, 1995. Current liabilities were $2,313,252 at May 31, 1996 compared to
$381,060 at May 31, 1995 which resulted in working capital of $579,958 and a
current ratio of 1.4:1. The increase in current liabilities was a result of the
consolidation of the current liabilities of QCP with the Company's at May 31,
1996. For the nine months ended May 31, 1996, the Company generated cash flow
from operations of ($500,888) as compared to $403,961 for the nine months ended
May 31, 1995. The $904,845 decrease in cash flow is primarily attributable to
(1) the net loss for the current period; (2) the payment of approximately
$400,000 in QCP accounts payable and (3) an increase in QCP inventory of $207,000
during the nine month period ended May 31, 1996. The amount of finished goods
Inventory was increased to reduce labor costs by increasing the size of the
production batches.
Interest on the Term Loan is payable at the Bank prime plus 3% (which totaled
11.25% at May 31, 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 May 31, 1996 the balance on the Revolving Facility
was $961,239. 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 May 31, 1996)
and which is payable in monthly installments of $6,667 through August 1, 2000.
The balance at May 31, 1996 was $339,997. On March 15, 1996, the Company and the
Board signed the Third Amendment to the Credit and Security Agreement which
revised certain covenants and waived all prior defaults. As of May 31, 1996, the
Company is not in compliance with the amended financial ratios and net income
covenants.
During the three months ended May 31, 1996, a total of $965,000 in cash was
received from the exercise of options and warrants by the Company's Chief
Executive Officer and by its President.
As of May 31, 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. Due to the Company's net loss
for the nine months ended May 31, 1996, the Company may not be able to realize
the Deferred Tax asset at August 31, 1996. This could result in up to a $600,000
charge to earnings, however the Company feels the actual charge, if any, will be
considerably less.
Future Capital Requirements
Cash flow has been adversely impacted by the Company's substantial investment in
the development of an adjudications software program. This program is a powerful
tool used by physicians to dispense and adjudicate medications in an easy to use,
yet comprehensive package. This state of the art software was developed in
Windows 95 to allow physicians to control inventory, maintain reorder levels,
dispense and track all prescriptions issued, and adjudicate claims to insurance
companies. In the past, point-of-care physician dispensing has been available
to cash paying patients only or about 10% of the patient base. The majority of
the insurance card carrying public had no option but to go to a pharmacy for the
dispensing of their prescription needs. Now with this software, a physician can
dispense and adjudicate a patient's prescription claim to the insurance company
right in the doctor's office. Also, the software will keep track of all
medications the patient has taken or has been prescribed to him in the past and
warn the physician if there are any possible adverse reactions that the new
prescription might have when combined with any of the patient's old medications.
This software has expanded QCP's customer's potential population base to almost
100% of their patients seen. It also insures the doctor that the patient will
be given the medication needed to complete the therapy
The Company believes that the Revolving Facility with the Bank, proceeds from the
exercise of certain options and warrants, proceeds from the private placement,
and the anticipated positive impact of changes in the operations of QCP described
below will provide sufficient sources of liquidity to fund the Company's future
financial requirements. However, for the first nine months of fiscal 1996 cash
flow from operations has not been sufficient to meet the Company's operating
requirements and debt service. These cash requirements have been met through the
exercise of options and warrants by the Company's CEO and by its President and
from the proceeds from the private placement. In the event that the Company
should require significant expansion of its business resulting in additional
capital requirements or if the Revolving Facility and cash from operations are
inadequate to fund the Company's financial requirements, the Company would have
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 additional
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 an additional
$1 million for capital expenditures in the next fiscal year to upgrade its
production line and computer equipment that will be leased to customers. This
equipment will only be necessary if QCP meets the expected large sales growth
requiring addition production capacity. 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 nine months ended May 31,
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 nine months, QCP has successfully begun two pilot programs and entered into
twelve new contracts. These new contracts have the potential to generate
substantial additional sales for QCP. However, management expects that QCP will
not see significant results from these contracts until the Second Quarter of
Fiscal 1997.
<PAGE>
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.
<PAGE>
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: July 15, 1996 BY: /s/ Glen H. Weaver
Glen H. Weaver,
Vice President, Finance
Chief Financial Officer<PAGE>
Exhibit No. 11
To The Form 10-QSB
For The Quarterly Period Ended May 31, 1996
<PAGE>
EXHIBIT NO. 11
GOLDEN PHARMACEUTICALS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Nine months Ended
May 31, August 31,
1996 1995
Shares of common stock and
equivalents outstanding at
beginning of period 105,607,852 105,723,962
Weighted-average shares or
equivalents issued during
the period 2,342,211 548,137
Weighted-average shares or
equivalents canceled during
the period (134,149) 0
Weighted-average shares assumed
issued under stock option plans
during the period 4,800,000 0
Average common and common
stock equivalents
outstanding 112,615,914 106,272,099
Income before extraordinary
item $(400,845) $582,376
Extraordinary Item 0 99,677
Accrual of dividends on 15%/30%
convertible preferred stock 0 (44,358)
Net Income $ (400,845) $ 637,695
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<PAGE>
Exhibit No. 27
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