U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended May 31, 1996.
Commission file number 0-10783
BSD MEDICAL CORPORATION
DELAWARE 75-1590407
(State of Incorporation)(IRS Employer Identification Number)
2188 West 2200 South
Salt Lake City, Utah 84119
(Address of principal executive offices)(Zip Code)
Registrant's telephone number: (801) 972-5555
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
(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 [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of July 12, 1996
Common stock, $.01 Par Value 16,177,004
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
BSD MEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
As of:
May 31, 1996 August 31, 1995
(Unaudited) (Unaudited)
___________________________________________________________________________
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents 52,455 46,124
Receivables:
Trade Accounts 104,621 110,978
Employee and other Receivables 8,103 7,771
Allowance for doubtful accounts (10,000) (10,000)
___________ ___________
Total Net Receivables 102,724 108,749
Inventories:
Raw Materials 164,331 196,589
Work-in-Process 247,698 247,527
Finished Goods 78,938 79,048
Inventory Reserve (20,000) (20,000)
___________ ___________
Total Net Inventories 470,967 503,164
Prepaid Expenses and other assets 15,266 29,890
___________ ___________
Total Current Assets 641,412 687,927
Property and Equipment
Furniture and Fixtures 297,743 297,743
Equipment 468,648 466,234
Building 415,300 415,300
Reserve for Impairment (181,534) (181,534)
___________ ___________
Total property and equipment 1,000,157 997,743
Less accumulated depreciation (747,711) (732,384)
___________ ___________
Net property and equipment 252,446 265,359
Other assets, principally patents,
at cost, less accumulated amortization 244,706 241,018
___________ ___________
Total assets 1,138,564 1,194,304
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
As of:
May 31, 1996 August 31, 1995
(Unaudited) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Notes Payable 75,772 129,348
Accrued Payroll and Commissions 231,589 196,712
Accounts Payable 199,292 155,870
Customer Deposits 189,859 172,427
Warranty Reserves 48,574 56,224
Accrued Expenses 79,867 165,764
Deferred Income 114,519 103,419
Accrued Dividends 90 90
___________ ___________
Total Current Liabilities 939,562 979,854
Long-Term Debt 583,898 622,607
Less Current Portion (95,876) (95,876)
___________ ___________
Total Liabilities 1,427,584 1,506,585
STOCKHOLDERS' EQUITY
Series A Preferred Stock, $1.00 par
value; authorized 5,000 shares;
issued and outstanding no shares at
August 31, 1995, and May 31,1996 0 0
Series B Preferred Stock, $1.00 par
value; authorized 2,500 shares;
issued and outstanding no shares at
August 31, 1995, and May 31, 1996 0 0
Common Stock, $.01 par value;
authorized 20,000,000 shares;
issued and outstanding 16,177,004
shares at August 31, 1995, and
May 31, 1996 161,770 161,770
Additional Paid-in-Capital 18,979,326 18,979,326
Accumulated Deficit (19,414,405) (19,433,467)
Common stock in treasury, 91,448
shares at August 31, 1995, and 71,448
shares at May 31, 1996, at cost (15,711) (19,911)
___________ ___________
Net Stockholders' Equity (289,020) (312,282)
___________ ___________
Total Liabilities and Equity 1,194,303 1,138,564
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
<TABLE>
BSD MEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended: Nine Months Ended:
May 31, May 31, May 31, May 31,
1996 1995 1996 1995
__________________________________________________________________________
<S> <C> <C> <C> <C>
Sales 327,981 258,166 855,686 905,300
Cost of Goods Sold 94,379 156,980 278,665 546,897
__________ __________ __________ __________
Gross Profit (Loss) 233,602 101,186 577,021 358,403
Operating Expenses
Selling, General and
Administrative 130,642 155,274 336,812 484,076
Research and
Development 143,363 56,396 305,219 179,773
__________ __________ __________ __________
Total Operating 274,005 211,670 642,031 663,849
Expenses
Operating Income (Loss) (40,403) (110,484) (65,010) (305,446)
Other Income (Expenses)
Gain on Settlement of
Accounts Payable 0 0 0 133,392
Interest Income 265 355 566 896
Interest Expense (10,877) (160) (32,097) (10,194)
Other, net 23,529 7,029 115,603 8,641
__________ __________ _________ _________
Total Other Income 12,917 7,224 84,072 132,735
(Expenses)
Net Income (Loss) (27,486) (103,260) 19,062 (172,711)
Net Income (Loss) Per
Share of Common Stock (.002) (.007) .001 (.011)
Weighted Average Number
of Common Shares
Outstanding 16,177,004 14,856,770 16,177,0004 14,856,770
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
<TABLE>
BSD MEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
May 31,
Increase (Decrease) in Cash and Cash 1996 1995
Equivalents
_________________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) 19,062 (172,710)
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation and Amortization 30,240 33,346
Gain on settlement of accounts payable 0 (2,737)
W/O Bad Debt Reserve 0 0
W/O of Expired Reserves (88,220) 0
W/O of Expired Warranties 0 (130,655)
Issuance of Treasury Stock as Bonus 4,200 0
Change in assets and liabilities:
(Increase) decrease in receivables (12,575) 77,316
(Increase) decrease in inventories 32,197 177,054
(Increase) decrease in prepaid and deposits 14,624 13,041
Increase (decrease) in accounts payable 59,922 88
Increase (decrease) in accrued payroll 34,877 68,496
Increase (decrease) in customer deposits 41,988 8,642
Increase (decrease) in warranty reserves (7,652) 2,416
Increase (decrease) in accrued expenses (85,897) (34,006)
Increase (decrease) in deferred income 11,100 (928)
________ _________
Total adjustments 34,804 212,073
Net cash provided by (used in) operating 53,866 39,363
activities
Cash flows from investing activities:
Additions to property, plant and equipment (2,414) (1,911)
Purchase of other assets 0 4,214
________ ________
Net cash provided by (used in) investing
activities (2,414) 2,303
Cash flows from financing activities:
Financing of account payable 0 0
Short-term loan 0 0
Net payment on Debt (45,121) (53,321)
Proceeds from issuance of preferred stock 0 0
________ ________
Net cash provided (used) by financing (45,121) (53,321)
activities
Increase (decrease) in cash and cash 6,331 (11,655)
cash equivalents
Cash and cash equivalents, beginning of period 46,124 40,936
Cash and cash equivalents, end of period 52,455 29,281
</TABLE>
<TABLE>
<CAPTION>
Supplemental Schedule of Non-Cash Investing and Financing Activities
___________________________________________________________________________
<S> <C> <C>
Dividends accrued on preferred stock 0 4,864
Preferred stock issued as dividend in lieu
of cash 0 85,600
Conversion of preferred stock to common stock 0 57,304
</TABLE>
See accompanying notes to condensed consolidated financial
statements
<PAGE>
BSD MEDICAL CORPORATION AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
Note 1. Basis of Presentation
The Condensed Balance Sheet as of May 31, 1996, and the
Statements of Operations and the Condensed Consolidated
Statements of Cash Flow for the quarters and nine months ended
May 31, 1996, and May 31, 1995, have been prepared by the
Company, without audit. In the opinion of management, all
adjustments to the books and accounts (which include only normal
recurring adjustments) necessary to present fairly the financial
position, results of operations, and changes in financial
position of the Company as of May 31, 1996, have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The results of operations for the periods ended May 31, 1996, are
not necessarily indicative of the results to be expected for the
full year.
Note 2. Net Income (Loss) per Common Share
Net income (net loss) per common share for the periods ended
May 31, 1996, and May 31, 1995, are based on the weighted average
number of shares outstanding during the respective periods.
Note 3. Federal Income Taxes
No provision has been made for income tax expense because of
the utilization of operating loss carry forwards.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources:
Total assets decreased by $55,740, a decrease of 4.67% from
August 31, 1995, to May 31, 1996. The decrease was primarily a
result of typical periodic business fluctuations in the following
areas: Trade Receivables decreased $6,357, a decrease of 5.73%;
and Inventories decreased by $32,197, a decrease of 6.4% (see
Fluctuations in Operating Results below).
Total liabilities decreased by $79,001, a decrease of 5.24%
from August 31, 1995, to May 31, 1996. The decrease was
primarily caused by decreases in notes payable, accrued expenses,
and warranty and service contract reserves. During 1995, the
Company settled certain of its accounts payable for amounts
significantly less than the sums included on previous balance
sheets. Similar settlements of other accounts payable may take
place in the future. While such settlements result in "paper
income" for the Company and reduce Company liabilities and
potential liabilities, they also may require cash that might
otherwise be used for other purposes.
As shown in the accompanying financial statements, as of May
31, 1996, the Company had current liabilities in excess of
current assets, and a net stockholders' deficit.
Fluctuations in Operating Results:
Due to risks associated with international operations,
budgeting considerations of the Company's customers, the nature
of the medical capital equipment market, the inability of the
Company to predict the timing of various approvals required from
the Food and Drug Administration and other governmental agencies,
the relatively large per unit sales prices of the Company's
products, the typical fluctuations in the mix of orders for
different systems and system configurations, the limited unit
sales volumes, the Company's limited cash resources, changes in
Medicare and other third-party reimbursement policies,
competition, and other factors, the Company's sales and operating
results historically have varied (and will likely continue to
vary) greatly on a quarter-to-quarter and year-to-year basis.
For these and other reasons, the results of operations for a
particular fiscal period may not be indicative of results to be
expected for any other period.
Results of Operations:
Nine months ended May 31, 1996
Net Sales for the nine months ended May 31, 1996, decreased by
$49,614, a decrease of 5.48% as compared with the nine months
ended May 31, 1995. The increase was primarily caused by typical
periodic fluctuations in sales.
Gross profit increased by $218,618, an increase of 60.99%, as
compared with the fiscal 1995 period, primarily caused by a
decrease in Cost of Goods Sold and cost cutting by the Company as
part of an overall program of conservative financial management.
Selling, General and Administrative Expenses decreased by
$147,264, a decrease of 30.42% as compared with the corresponding
nine months in the previous fiscal year. The decrease was
primarily caused by cost cutting by the Company as part of an
overall program of conservative financial management.
Research and Development Expenses increased by $125,446, an
increase of 69.78%. The increase was caused by expenses
associated with a Small Business Innovative Research project and
expenses associated with the development of new equipment needed
for other research projects.
Total Operating Expenses decreased by $21,818, a decrease of
3.29%, as compared with the corresponding nine months in the
previous fiscal year. This decrease was caused by the
aforementioned decrease in Selling, General and Administrative
Expenses as part of an overall program of conservative financial
management.
The Operating Loss in the nine months ended May 31, 1996,
decreased by $240,436, a decrease of 78.72%, as compared with the
corresponding nine months last year. This decrease was caused by
an overall program of conservative financial management.
During the nine months ended May 31, 1995, the Company realized
a Gain on Settlement of Accounts Payable of $133,392 by settling
certain accounts payable for less than the sums listed for such
accounts on the August 31, 1994, Balance Sheet. There was no
Gain on Settlement of Accounts Payable for the nine months ended
May 31, 1996.
Interest Expense in the nine months ended May 31, 1996, was
$32,097, as compared with the $10,194 of Interest Expense in the
nine months ended May 31, 1995. The increase was caused by
typical periodic business fluctuations and interest expense
associated with a capitalized lease for purchase of the CompanyOs
facilities.
The Company had a Net Income of $19,062 for the nine months
ending May 31, 1996, as compared to a Net Loss of $172,711 for
the nine months ending May 31, 1995, a decrease in Net Loss of
$191,773, because of cost cutting by the Company as part of an
overall program of conservative financial management and
reduction in Cost of Goods Sold and the writing off of some
Expired Reserves.
Three Months ended May 31, 1996
Net Sales for the three months ended May 31, 1996, increased by
$69,815, an increase of 27.04% as compared with the three months
ended May 31, 1995. The increase was primarily caused by typical
periodic fluctuations in sales (see Fluctuations in Operating
Results above).
Gross profit increased by $132,416, an increase of 130.86%, as
compared with the fiscal 1995 period, as a result of higher sales
in the fiscal 1996 period and a reduction in Cost of Goods Sold.
Selling, General and Administrative Expenses decreased by
$24,632, a decrease of 15.86% as compared with the corresponding
three months in the previous fiscal year. Such decrease was
caused by an overall program of conservative financial
management.
Research and Development Expenses increased by $86,967, an
increase of 154.20%. The increase was caused by increased
efforts on a Small Business Innovative Research project and
expenses associated with the development of new equipment needed
for other research projects.
Total Operating Expenses increased by $62,335, an increase of
29.45%, as compared with the corresponding three months in the
previous fiscal year. This increase was caused by the
aforementioned increase in Research and Development Expenses.
The Operating Loss decreased by $70,081, a decrease of 63.43%
in the May 31, 1996, quarter as compared with the corresponding
quarter in the previous year. This decrease was caused by an
increase in sales combined with an overall program of
conservative financial management.
Interest Expense in the three months ended May 31, 1996, was
$10,877, as compared with the $160.00 of Interest Expense in the
three months ended May 31, 1995. The increase was caused by a
capitalized lease for purchase of the CompanyOs facilities.
In the quarter ending May 31, 1996, the Company experienced a
Net Loss of $27,486, as compared with the $103,260 Net Loss
during the corresponding quarter in the previous year, a decrease
of 73.38%. The decrease in Net Loss was caused by reduction in
Cost of Goods Sold, cost cutting by the Company as part of an
overall program of conservative financial management, and the
writing off of Expired Reserves and higher Sales with lower Cost
of Goods Sold.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - Exhibit 27, Financial Data Schedule
b) Reports on Form 8-K -- During the quarter, no reports on Form 8-K
were filed by the Company.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, BSD Medical Corporation, the registrant, has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BSD MEDICAL CORPORATION
Date: July 12, 1996 by: Paul F. Turner
Paul F. Turner
Chairman of the Board, Acting
President, and Senior Vice President
of Research
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 52,455
<SECURITIES> 0
<RECEIVABLES> 112,724
<ALLOWANCES> (10,000)
<INVENTORY> 470,967
<CURRENT-ASSETS> 641,412
<PP&E> 1,000,157
<DEPRECIATION> (747,711)
<TOTAL-ASSETS> 1,138,564
<CURRENT-LIABILITIES> 939,562
<BONDS> 0
<COMMON> 161,770
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,138,564
<SALES> 855,686
<TOTAL-REVENUES> 855,686
<CGS> 278,665
<TOTAL-COSTS> 278,665
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,097
<INCOME-PRETAX> 19,062
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,062
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,062
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
