<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A-1
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997
( ) 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.)
710 14th Street, 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 29, 1997 was 122,813,347 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE> 2
PART I
Item 1. FINANCIAL STATEMENTS
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
May 31, August 31,
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $34,376 $ 34,872
Receivables
Trade, net of allowance for doubtful
accounts of $224,921 and $63,700 at
May 31, 1997 and August 31, 1996 2,039,813 1,443,684
Inventories 1,299,846 1,336,633
Prepaid expenses 249,583 168,582
Deferred taxes - 380,000
Note receivable 775,154 165,000
----------- -----------
TOTAL CURRENT ASSETS 4,398,772 3,528,771
----------- -----------
PROPERTY, PLANT AND EQUIPMENT- AT COST 3,157,828 4,339,707
Less accumulated depreciation
and amortization 787,926 1,782,400
----------- -----------
2,369,902 2,557,307
OTHER ASSETS
Goodwill, less accumulated amortization
of $154,376 and $16,543 at May 31,1997
and August 31, 1996, respectively 3,827,875 3,948,256
Intangibles-net of amortization 35,979 11,667
Non-compete agreement 354,707 425,600
Deferred income taxes 220,000 220,000
----------- -----------
TOTAL OTHER ASSETS 4,438,561 4,605,523
----------- -----------
$11,207,235 $10,691,601
=========== ===========
</TABLE>
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY May 31, August 31,
- ------------------------------------- 1997 1996
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Note payable $ 398,649 $ 532,141
Note payable- related party 75,000 -
Current maturities of long-term debt 146,517 785,835
Current maturities of capitalized lease
obligations 95,246 95,246
Accounts payable 1,415,029 921,045
Accrued liabilities
Salaries, wages and other compensation 13,874 42,450
Interest 1,818 144,148
Other 102,596 95,798
------------ ------------
TOTAL CURRENT LIABILITIES 2,248,729 2,616,663
------------ ------------
LONG-TERM OBLIGATIONS, less current
maturities 217,691 3,674,335
CAPITALIZED LEASE OBLIGATIONS, less
current maturities 601,633 299,674
EXCESS LOSS IN INVESTMENT IN JOINT VENTURE 3,521 10,776
MINORITY INTEREST 920,145 852,372
STOCKHOLDERS' EQUITY
Common stock - no par value; 200,000,000
shares authorized; and 122,813,347 and
93,967,583 issued and outstanding, at
May 31, 1997, and August 31, 1996,
respectively 23,927,384 23,867,384
Preferred stock- no par value; 10,000,000
shares authorized Class A 15%/30% cumulative
convertible 29,653 shares, issued and
outstanding at May 31, 1997, and
August 31, 1996 292,558 292,558
------------ ------------
24,219,942 24,159,942
Accumulated deficit (16,910,294) (20,828,049)
------------ ------------
7,309,648 3,331,893
Less Common stock in treasury at cost,
3,289,000 shares at August 31, 1996 94,132 94,132
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 7,215,516 3,237,761
------------ ------------
$ 11,207,235 $ 10,691,601
============ ============
</TABLE>
<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
-------------------------------------
1997 1996
----------- ----------
<S> <C> <C>
REVENUES
Net sales $10,332,049 $7,368,900
Cost of sales 6,967,340 4,908,756
----------- ----------
GROSS MARGIN 3,364,709 2,460,144
Selling, general and administrative 4,378,576 2,245,311
----------- ----------
OPERATING INCOME (LOSS) (1,013,867) 214,833
OTHER INCOME/(EXPENSE)
Interest expense (1,368,251) (602,345)
Joint venture income (loss) (55,746) -
Gain (loss) on disposal of assets (2,363) (1,698)
Gain on sale of division 6,210,435 -
Other income 595,673 9,765
----------- ----------
TOTAL OTHER INCOME/(EXPENSE) 5,379,748 (594,278)
INCOME(LOSS) BEFORE TAX (BENEFIT) EXPENSE 4,365,881 (379,445)
----------- ----------
INCOME TAX EXPENSE (BENEFIT) 382,390 21,400
INCOME (LOSS) BEFORE MINORITY INTEREST 3,983,491 (400,845)
MINORITY INTEREST (67,773) -
----------- ----------
NET INCOME (LOSS) $ 3,915,718 $ (400,845)
=========== ==========
PRIMARY EARNINGS PER SHARE .032 *
=========== ==========
FULLY DILUTED EARNINGS PER SHARE $ .032 $ *
=========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 121,662,879 112,615,914
=========== ===========
</TABLE>
* Less than $.01 per share
<PAGE> 5
Item 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES
Net sales $ 2,673,327 $ 2,627,886
Cost of sales 1,855,447 1,728,854
----------- -----------
GROSS MARGIN 817,880 899,032
Selling, general and administrative 1,821,396 958,324
----------- -----------
OPERATING INCOME (LOSS) (1,003,516) (59,292)
OTHER INCOME/(EXPENSE)
Interest expense (815,961) (216,599)
Joint venture income (18,667) -
Gain (loss) on disposal of assets - (1,698)
Gain on sale of division 6,210,435 -
Other income 319,252 2,173
----------- -----------
TOTAL OTHER INCOME/(EXPENSE) 5,695,059 (216,124)
INCOME(LOSS) BEFORE TAX (BENEFIT) EXPENSE 4,691,543 (275,416)
INCOME TAX EXPENSE (BENEFIT) 381,590 -
INCOME BEFORE MINORITY INTEREST 4,309,953 (275,416)
MINORITY INTEREST (634) -
----------- -----------
NET INCOME (LOSS) $ 4,309,319 $ (275,416)
=========== ===========
PRIMARY EARNINGS PER SHARE .035 *
=========== ===========
FULLY DILUTED EARNINGS PER SHARE $ .035 $ *
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 122,813,347 116,984,037
=========== ===========
</TABLE>
* Less than $.01 per share
<PAGE> 6
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
---------------------------
1997 1996
---------- ---------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net income(loss) $3,915,718 $(400,845)
Adjustments to reconcile net income to
net cash provided (used) by operations
Depreciation and amortization 583,309 328,606
Minority interest in earnings 67,773 3,216
Gain on sale of division (6,208,072)
(Increase) decrease in -
Accounts receivable (616,533) (82,123)
Inventory (99,030) (267,879)
Note receivable (460,154) (124,595)
Prepaid expenses and other (85,972) (96,304)
Deferred taxes 380,000 -
Increase (decrease) in -
Accounts payable 493,981 (405,795)
Accrued interest and other (164,107) 48,702
---------- ---------
TOTAL ADJUSTMENTS (6,108,805) (596,172)
---------- ---------
NET CASH USED BY OPERATING
ACTIVITIES (2,193,087) (997,017)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (505,902) (589,986)
Purchase of treasury stock - (94,132)
Excess loss in investment 55,745 -
Investment in subsidiary (63,000) -
Addition to goodwill (60,218) (121,656)
Sale of property and equipment - 4,980
Proceeds from sale of division 6,550,000 -
Proceeds from sale of equipment 2,500 850
---------- ---------
NET CASH PROVIDED(USED) BY
INVESTING ACTIVITIES 5,979,125 (799,944)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of note payable (4,032,686) (173,637)
Issuance(payments) of line of credit (133,492) 617,785
Note payable related party 75,000 -
Long term borrowings 244,645 254,562
Issuance of common stock 59,999 1,070,000
---------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES (3,786,534) 1,768,710
---------- ---------
</TABLE>
Continued on following page.
<PAGE> 7
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GOLDEN PHARMACEUTICALS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
-------------------------
1997 1996
----------- ---------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH (496) (28,251)
CASH, Beginning of period 34,872 49,557
----------- ---------
CASH, End of period $ 34,376 $21,306
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
Interest paid $ 1,368,251 $ 526,259
=========== =========
Income taxes paid $ 2,390 $ 21,400
=========== =========
</TABLE>
<PAGE> 8
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, 1996 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.
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
---------------------------------
1997 1996
----------- -----------
<S> <C> <C>
NET INCOME (LOSS) $ 3,915,718 $ (400,845)
=========== ===========
Weighted average number of
shares outstanding 121,662,879 112,615,914
=========== ===========
</TABLE>
Common stock equivalents and stock held in escrow have been included in the
computation for the nine months ended May 31, 1997 and 1996. 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.
<PAGE> 9
Note 2. RECENT ACQUISITIONS AND DISPOSITIONS
On February 12, 1996, Quality Care Pharmaceuticals, Inc. ("QCP") and
the Visiting Nurses Association of Orange County established Rx Direct, LLC
("RxD"), a mail order pharmacy.
On June 5, 1996, the Company and Pharma France, Inc. formed Pharma
Labs, LLC ("Pharma Labs"). The Company contributed a total of $1,000,000 for
52% of Pharma Labs. Pharma Labs is engaged in the manufacturing, packaging,
and distribution of nutritional supplements.
On April 7, 1997, the Company completed the sale of the assets related
to its business of manufacturing and distributing Iodine-123 capsules for a
total purchase price of $6,700,000 pursuant to the terms of an Asset Purchase
Agreement dated April 7, 1997 by and between the Company and Syncor
Pharmaceuticals, Inc.
Included in the sale was the New Drug Application for the Iodine-123
capsules, the building that contains the manufacturing facility for the
Iodine-123 capsules and all of the equipment related to the Iodine-123
business.
The proceeds from the sale were used to pay off the Company's term
loans in the principal amounts of $4,000,000 and $400,000, respectively and to
pay down a portion of its $2,500,000 revolving line of credit (the "Revolving
Facility"). The Company is currently renegotiating its covenants and terms of
the Revolving Facility due to the sale of the radiopharmaceutical division.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS - Liquidity and
Capital Resources."
Note 3. SUBSEQUENT EVENTS
On July 15, 1997, the Company and Dornoch Medical Systems, Inc.
("Dornoch") entered into a Joint Marketing Agreement, whereby the Company will
market Dornoch's Redaway Products. The Company will receive royalties on sales
of the products. In connection with the Joint Marketing Agreement, the Company
was granted an option to purchase 220 shares of common stock of Dornoch at a
purchase price of $2,000 per share which option will vest and be exercisable
upon the sale of 80 Redaway Products through the Company's marketing efforts.
In addition and in connection with the transaction, Dornoch purchased 1,000,000
shares of the Company's common stock for $.30 per share and has an option to
purchase 1,000,000 shares at $.30 which vest pursuant to the Joint Marketing
Agreement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the
selected financial data and the financial statements and notes thereto filed
herewith.
The statements contained in this report, if not historical, are
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, and involve risks and uncertainties that could
cause actual results to differ materially from the financial results described
in such forward looking statements. These risks and uncertainties include,
among others, the level and rate of growth in the Company's operations, the
capital requirements of QCP and Pharma Labs and the ability of the Company to
achieve earnings per share growth through internal investment, strategic
alliances, joint ventures and
<PAGE> 10
other methods. The success of the Company's business operations is in turn
dependent on factors such as the effectiveness of the Company's marketing
strategies to grow its customer base, the appeal of the Company's mix of
products, the Company's success at entering into and collaborating with others
to conduct effective strategic alliances and joint ventures, general
competitive conditions within the health care market and general economic
conditions. Further, any forward looking statements or statements speak only
as of the date on which such statement was made, and the Company undertakes no
obligation to update any forward looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. Therefore, forward-looking
statements should not be relied upon as a prediction of actual future results.
RESULTS OF OPERATIONS
Nine Months Ended May 31, 1997 Compared to Nine Months Ended May 31, 1996
Net Sales. Net sales from operations for the nine months ended May
31, 1997 increased to $ 10,332,049 compared to $7,368,900 for the nine months
ended May 31, 1996. The increase of 40% is primarily attributable to (i) the
consolidation of Pharma Labs operations, which represents approximately $1.4
million of the increase, and (ii) an increase of $2.1 million in QCP's sales
due to increased demand for its principal products and an expanded client base.
Selling General and Administrative. Selling, general and
administration expenses ("SG&A") were $4.3 million for the nine months ended
May 31, 1997 as compared to $2.2 million for the nine months ended May 31,
1996. The increase of $2 million or 88% is due to (i) the consolidation of
Pharma Labs' operations, which represented $636,600 of the increase; (ii)
increases in sales commissions and expenses, salaries for marketing, sales and
the information systems departments, training and travel expense; and expenses
related to the improvement and expansion of QCP's telemarketing and customer
service departments, which represented $692,000 of the increase; and (iii)
depreciation expense on additional production equipment purchased in 1997,
which represented $80,000 of the increase.
In addition, the Company incurred $285,000 in travel expenses,
consulting fees and professional services in connection with the Company's
efforts to enhance the operations and management of QCP.
Net Income. The Company reported net income of $3,915,718 for the
nine months ended May 31, 1997 as compared to a net loss of $(400,845)for the
nine months ended May 31, 1996. The net income was attributable to the sale of
the radiopharmaceutcial division which resulted in a gain of approximately $6.2
million.
Three Months Ended May 31, 1997 Compared to Three Months Ended May 31, 1996
Net Sales. Net sales for the three months ended May 31, 1997
increased to $2,673,327 compared to $2,627,886 for the three months ended May
31, 1996. The increase of $45,441 or 1.7% is primarily attributable to an
increase in QCP sales due to increased demand for its
<PAGE> 11
principal products and an expanded client base net with a loss of sales from
the sale of the radio pharmaceutical division.
Selling General and Administrative. SG&A expenses were $1,821,396 for
the three months ended May 31, 1997 as compared to $958,324 for the three
months ended May 31, 1996. The increase of $863,072 or 90% is due to (i) the
consolidation of Pharma Labs' operations, which represented $485,000 of the
increase; (ii) increases in sales commissions and expenses, salaries for
marketing, sales and the information systems departments; and expenses related
to the improvement and expansion of QCP's telemarketing and customer service
departments, which represented $350,000 of the increase; and (iii) depreciation
expense on additional production equipment purchased in 1997, which represented
$22,000 of the increase. The Company reserved an additional $160,000 for
potential uncollectible accounts which have increased due to the disruptions in
the accounts receivable administration caused by the relocation of the
corporate offices.
In addition, the Company incurred $83,000 in travel expenses,
consulting fees and professional services in connection with the Company's
efforts to enhance the operations and management of QCP.
Net Income (loss). The Company reported net income of $4,309,319 for
the three months ended May 31, 1997 as compared to a net loss of $(275,416) for
the three months ended May 31, 1996. The net income was attributable to the
sale of the radiopharmaceutcial division which resulted in a gain of
approximately $6.2 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that significant growth potential exists for its
business's, and has entered into an expansion program to capitalize on these
opportunities. The corporate office has been relocated from Golden, CO to
QCP's facility in Santa Ana, CA. A number of key management positions have
been filled, the sales force and information systems expanded and marketing
programs increased. As a result, the Company, on a consolidated basis,
experienced negative cash flows from operations for the three months ended May
31, 1997.
During the quarter, expansion and development efforts included, (i)
restructuring of QCP's sales department with the addition of a Vice President
of Sales, (ii) expansion of QCP's sales in the eastern states, (iii) the
development of a telemarketing division at QCP with the addition of a
Telemarketing Manager and (iv) the expansion of QCP's information systems and
programming department. As a result, management anticipates that the Company,
on a consolidated basis, will continue to experience negative cash flows from
operations for the remainder of fiscal 1997 and through the end of the second
quarter of fiscal 1998.
During the three months ended May 31, 1997, the borrowings under the
Revolving Facility were utilized to fund the Company's expansion efforts, such
as, the development of marketing and sales materials, the addition of sales
personnel, purchase of hardware and software for QCP's operations and funding
of Pharma Labs' operations. As a result, management does not expect QCP to
operate on a "break even" basis until the third quarter of fiscal 1998.
The Company's working capital requirements have also been impacted by
delays in collecting Pharma Labs international accounts receivable, and
increased competition and pricing pressures in the international market.
Accordingly, Pharma Labs is pursuing the domestic
<PAGE> 12
Asian markets and contract manufacturing agreements to increase its presence in
the national market.
The Revolving Facility is collateralized by the Company's accounts
receivable and inventory; and the availability under the Revolving Facility is
determined based on the Company's and QCP's eligible accounts receivable and
inventory. The Company relocated its corporate offices, including the
accounting department to Santa Ana, CA during the third quarter of fiscal year
1997. Due to disruptions and staffing changes resulting from this relocation,
accounts receivable collection activities were negatively impacted resulting in
delays in collections, which has affected their eligibility for inclusion in
the borrowing base for the Revolving Facility. As a result the Company has not
been able to fully access funds under the Revolving Facility. The Company is
in the process of making staffing changes to focus on the collection of past
due accounts receivable. In addition the Company has increased the reserve for
potential uncollectible accounts by $160,000 to $224,921 from $64,921.
The Company expects that its cash needs for the remainder of fiscal
year 1997 and into 1998 will primarily relate to the continued investment and
expansion of QCP's operations and to develop Pharma Labs operations
domestically as a repackager of unit doses. As it is not anticipated that the
Company will be able to internally generate cash in amounts sufficient to meet
its requirements through the end of the second quarter of fiscal 1998, the
Company will seek to raise additional capital in order to fund its expansion
efforts and ongoing operations. However, there can be no assurance that the
required funds will be available to the Company from external sources on
acceptable terms, or at all. In the event that the Company's plans change or
its assumptions prove to be inaccurate (due to unanticipated expenses,
operational delays, competitive constraints or other difficulties), the Company
could be required to seek additional financing sooner than currently
anticipated. The Company does not currently have any commitments with respect
to any debt or equity financing and there are no assurances that any potential
funding sources will materialize. However, if these additional funds are not
obtained management may have to curtail certain operations.
Interest on the Revolving Facility is payable at the Bank prime plus
2% and the outstanding balance on the Revolving Facility is payable in full in
August, 2000. At May 31, 1997 the balance on the Revolving Facility was
$398,649 and the interest rate was 11.5%. In November 1996, the Company and
the Bank entered into a Fourth Amendment to the Credit and Security Agreement,
which amendment revised certain covenants and waived prior defaults.
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, 1997 as compared to August 31, 1996.
<TABLE>
<CAPTION>
May 31, 1997 August 31, 1996
------------ ---------------
<S> <C> <C>
Current Assets $4,398,772 $3,528,771*
Current Liabilities 2,248,730 2,616,663
---------- ----------
Net Working Capital $2,150,042 $ 912,108
</TABLE>
<PAGE> 13
* Includes $380,000 of deferred taxes at August 31, 1996, per FASB 109
resulting from the Company's substantial net operating loss carry forwards.
Current assets were $4,398,772, an increase of $870,001 or 24.6% at
May 31, 1997 as compared to $3,528,771 at August 31, 1996. The increase was
primarily due to (i) the growth of accounts receivable which approximates
$520,000 as a result of increased sales in QCP,(ii) an increase in the note
receivable of $578,000 due to a note due from the sale of the
radiopharmaceutical division and an accrual of income for Pharma Labs as a
result of an income guarantee to the Company by the minority partner in Pharma
Labs. Current assets decreased $380,000 due the writedown of deferred taxes as
a result of the Company's sale of the radiopharamacuetical division and
continuing losses as a result of its investment and expansion in QCP's
operations.
Current liabilities were $2,248,730, a decrease of $367,933 or 14%
for the period ended May 31, 1997 compared to current liabilities of $2,616,663
for the period ended August 31, 1996. The decrease in current liabilities was
the result of the payoff of the current portion of long term debt in the amount
of $715,000, partially offset by an increase in Pharma Labs accounts payable
due to an increase in its production. The Company had working capital of
$2,150,042 and a current ratio of 1.96:1 for the period ended May 31, 1997.
The Company's long term debt, including the current portion thereof,
at May 31, 1997 consisted of a note payable totaling approximately $218,000
incurred as a final settlement of a contingent liability.
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 be $20,277 and $1,888,
respectively, for the fiscal year ending August 31, 1997.
The Company has a capital lease for approximately $250,000 to
purchase and implement a new accounting software package. This amount includes
the cost of the software as well as conversion, software modifications and
implementation costs. The software is expected to be implemented early in
1998.
As of August 31, 1996, the Company had net operating loss carry
forwards for federal income tax purposes of approximately $15,500,000. The net
operating loss carry forwards will expire in the years 1997 through 2006. The
Company's ability to utilize its net operating loss carry forwards is subject
to an annual limitation in future periods pursuant to the "change in ownership"
rules under Section 382 of the Internal Revenue Code of 1986. The gain on the
sale of the radiopharmaceutical division is expected to result in the use of
several layers of the net operating loss.
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 currently has no commitments or arrangements
for raising additional capital.
<PAGE> 14
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
No Current Reports on Form 8-K were filed during the period
covered by this report
<PAGE> 15
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 29, 1997 BY: /s/ Glen H. Weaver
------------------------------------
Glen H. Weaver,
<PAGE> 16
EXHIBIT INDEX
Exhibit
No. Description Page
- ------- ----------- ----
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
GOLDEN PHARMACEUTICALS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Nine months Ended
May 31,
------------------------------------
1997 1996
---- ----
<S> <C> <C>
Shares of common stock and
equivalents outstanding at
beginning of period 121,086,155 105,607,852
Weighted-average shares or
equivalents issued during
the period 576,724 2,342,211
Weighted-average shares or
equivalents canceled during
the period -- (134,149)
Weighted-average shares assumed
issued under stock option plans
during the period 0 4,800,000
------------ ------------
Average common and common
stock equivalents
outstanding 121,662,879 112,615,914
------------ ------------
Income before minority interest $3,983,491 $ (400,845)
Minority interest (67,733) 0
------------ ------------
Net Income $ 3,915,718 $ (400,845)
------------ ------------
Earnings per share:
Income before minority interest $ .032 $ *
Minority interest * *
------------ ------------
Earnings per share $ .032 $ *
============ ============
</TABLE>
* Less than $.01 per share
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1997
<PERIOD-END> MAY-31-1997
<CASH> 34,376
<SECURITIES> 0
<RECEIVABLES> 2,039,813
<ALLOWANCES> 224,921
<INVENTORY> 1,299,846
<CURRENT-ASSETS> 4,396,772
<PP&E> 3,157,828
<DEPRECIATION> 787,926
<TOTAL-ASSETS> 11,207,235
<CURRENT-LIABILITIES> 2,248,729
<BONDS> 0
23,927,384
0
<COMMON> 292,558
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,207,235
<SALES> 10,332,049
<TOTAL-REVENUES> 10,332,049
<CGS> 6,967,340
<TOTAL-COSTS> 6,967,340
<OTHER-EXPENSES> (5,379,748)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,368,251
<INCOME-PRETAX> 4,365,881
<INCOME-TAX> 382,390
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,915,718
<EPS-PRIMARY> .032
<EPS-DILUTED> .032
</TABLE>
