<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ -------------------
Commission File Number: 0-14210
COMPUMED, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2860434
- - -------------------------------- ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1230 Rosecrans Avenue, Suite 1000, Manhattan Beach, CA 90266
- - ----------------------------------------------------------------------------
(Address of principal executive officers) (Zip Code)
(310) 643-5106
- - ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - ----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if change since last report)
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 X No
-------- -------
The registrant had 6,263,270 shares of common stock ($.01 par value)
issued and outstanding and to be issued as of May 8, 1995.
Total sequentially number pages in this document: 11
<PAGE>
INDEX
COMPUMED, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated condensed balance sheets - March 31, 1995 and
September 30, 1994.
Consolidated condensed statement of operations - three and
six months ended March 31, 1995 and 1994.
Consolidated condensed statements of changes of cash flows -
six months ended March 31, 1995 and 1994.
Notes to interim unaudited consolidated condensed financial
statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 4. Submission of Matters to a Vote of Security Holders
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
2
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
COMPUMED, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
----------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 334,000 $ 16,000
Interest receivable 7,000
Accounts receivable, less allowance of
$210,000 March (1995) and
$178,000 September (1994) 437,000 424,000
Other receivables 21,000 55,000
Inventories 258,000 247,000
Prepaid expenses and other current assets 9,000 12,000
--------- ---------
TOTAL CURRENT ASSETS 1,059,000 761,000
PROPERTY AND EQUIPMENT
Land 1,380,000 1,380,000
Buildings 3,820,000 3,820,000
Machinery and equipment 3,260,000 2,964,000
Furniture, fixtures and leasehold
improvements 198,000 198,000
Equipment under capital leases 537,000 537,000
--------- ---------
9,195,000 8,899,000
Less allowance for depreciation and
amortization 3,562,000 3,351,000
--------- ---------
5,633,000 5,548,000
OTHER ASSETS
Reacquired franchises, net of accumulated
amortization of $93,000 (March 1995)
and $70,000 (September 1994) 233,000 256,000
Other assets 404,000 301,000
--------- ---------
$7,329,000 $6,866,000
========== ==========
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
COMPUMED, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
----------- ----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 9,000 $ 21,000
Accounts payable 398,000 269,000
Deferred revenue 377,000 240,000
Other accrued liabilities 429,000 388,000
Current portion of long term debt 199,000 232,000
Current portion of capital lease obligations 22,000 22,000
---------- -----------
TOTAL CURRENT LIABILITIES 1,434,000 1,172,000
TRUST DEED NOTES PAYABLE, less current portion 3,426,000 3,466,000
CAPITAL LEASE OBLIGATIONS, less current portion 52,000 62,000
OTHER LIABILITIES 313,000 253,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value--authorized
1,000,000 shares
Class A $3.50 cumulative convertible voting
preferred stock, issued and outstanding --
8,400 shares (March 1995) and
(September 1994) 1,000 1,000
Class B $3.50 convertible voting preferred
stock, issued and outstanding - 52,333
(March 1995) and (September 1994) 5,000 5,000
Common stock, $.01 par value--authorized
60,000,000 shares, issued and outstanding--
6,113,920 shares (March 1995) and
4,642,493 shares (September 1994) 61,000 46,000
Additional paid in capital 18,951,000 17,988,000
Retained deficit (16,914,000) (16,127,000)
----------- -----------
STOCKHOLDERS' EQUITY 2,104,000 1,913,000
----------- -----------
$ 7,329,000 $ 6,866,000
=========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
COMPUMED, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------------ -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES FROM OPERATIONS
ECG service $ 409,000 $ 370,000 $ 810,000 $ 700,000
Osteo services, net 95,000 101,000 269,000 259,000
Product sales 65,000 59,000 120,000 127,000
Rental property 106,000 238,000
Other income 2,000 1,000 3,000 2,000
---------- ---------- ---------- ----------
677,000 531,000 1,440,000 1,088,000
COSTS AND EXPENSES
Cost of services 349,000 369,000 664,000 689,000
Cost of sales 36,000 39,000 65,000 76,000
Cost of property operations 78,000 147,000
Selling expenses 128,000 142,000 205,000 257,000
Research and Development 58,000 326,000 105,000 364,000
General and administrative expenses 389,000 536,000 838,000 845,000
Acquisition of Detoxahol rights 1,569,000 1,569,000
Interest expense 94,000 62,000 200,000 139,000
---------- ---------- ---------- ----------
1,132,000 3,043,000 2,224,000 3,939,000
NET LOSS $ (455,000) $(2,512,000) $(784,000) $(2,851,000)
========== =========== ========= ============
NET LOSS PER SHARE: $ (.08) $ (.60) $ (.15) $ (.76)
========== =========== ========= ============
Weighted average number
of common shares outstanding 5,599,600 4,188,300 5,204,400 3,736,500
========== =========== ========= ============
</TABLE>
See notes to interim consolidated condensed financial statements
5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
COMPUMED, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
March 31, March 31,
1995 1994
---------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (784,000) $(2,851,000)
Adjustment to reconcile loss to net
cash used in operating activities:
Depreciation and amortization 258,000 138,000
Cost of Detoxahol Rights 1,569,000
Changes in operating assets and liabilities:
Interest receivable 7,000 12,000
Notes receivable 230,000
Accounts receivable (13,000) (29,000)
Other receivables 34,000 66,000
Inventories and prepaid expenses (8,000) 24,000
Accounts payable and other liabilities 367,000 129,000
---------- -----------
NET CASH USED IN OPERATING ACTIVITIES (139,000) (712,000)
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (176,000) (10,000)
Increase in other assets (19,000) (66,000)
---------- -----------
NET CASH USED IN INVESTING ACTIVITIES (195,000) (76,000)
FINANCING ACTIVITIES:
Net proceeds from sale of stock 750,000 1,232,000
Dividends on Class A preferred stock ( 3,000) (3,000)
Proceeds from short term borrowings 175,000 (401,000)
Payments on short-term borrowings (175,000)
Principal payments on capital lease
obligations (10,000) (8,000)
Principal payments on trust deeds payable (73,000)
Principal payments on notes payable (12,000) (4,000)
Exercise of stock options and warrants 119,000
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 652,000 935,000
---------- -----------
INCREASE IN CASH 318,000 147,000
Cash at beginning of period 16,000 20,000
---------- -----------
CASH AT END OF PERIOD $ 334,000 $ 167,000
========== ===========
Cash paid for interest: $ 115,000 $ 139,000
========== ===========
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE>
NOTES TO INTERIM UNAUDITED CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
COMPUMED, INC. AND SUBSIDIARIES
NOTE A--BASIS OF PREPARATION
The balance sheet at September 30, 1994 has been abstracted from the Company's
year-end audited financial statements.
The accompanying interim unaudited consolidated financial statements 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 footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the period
ended March 31, 1995 are not necessarily indicative of the results that may
be expected for the year ending September 30, 1995. For further information,
refer to the consolidated financial statements for the year ended September 30,
1994 and the notes thereto included in the Annual Report on Form 10-KSB.
NOTE B--PER SHARE DATA
Net loss income per share is calculated using the net loss less preferred stock
dividends, divided by the weighted average common shares outstanding. Shares
from the assumed conversion of outstanding warrants, options and effect of the
conversion of the Class A Preferred Stock and Class B Preferred Stock are
omitted from the computations because the effect would be antidilutive.
NOTE C--ACQUISITION OF DISTRIBUTION AND SOFTWARE RIGHTS FOR CARDIAC
MONITORING PRODUCTS
In February 1995, the Company acquired the rights to market ambulatory cardiac
monitoring products and use certain software to establish a telemetry center
in the U.S. through the end of 1999, provided that yearly sales increase by
20% a year. The Company issued 400,000 shares of common stock to Jacob Meller
from whom the distribution rights were purchased. The value of the shares
issued was $228,000 of which a majority was allocated to software acquired.
The distribution agreement is with Aerotel Ltd. a medical device and
telecommunications company based in Holon, Israel.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net revenues for the second quarter and six months ended March 31, 1995,
increased by 27% and 31% respectively, as compared to the same periods last
year, primarily because of the rental property income resulting from the
acquisition of Irsco Development Company, Inc. Previous declines in the ECG
revenues have been halted and management believes there is a future in this
market.
Net loss for operations for the second quarter and six months ended March 31,
1995, decreased 52% and 39% respectively, as compared to the same periods last
year. This comparison does not include $1,569,000 of expenses in this quarter
of 1994 that resulted from the acquisition and immediate write-off of the
rights to Detoxahol. The Company had a decrease in expenses of $365,000 in
Detoxahol this year as compared to last year, which made up most of the loss
reduction.
FINANCIAL CONDITION AND LIQUIDITY
The Company's ratio of current assets to current liabilities was 0.7 to 1.0
as compared to 0.6 to 1.0 at September 30, 1994. While the increase in current
ratio remained nearly the same the cash balance increased by $318,000 from the
same quarter last year from the $750,000 received upon the sale of 1,316,465
shares of common stock in a Regulation "S" agreement. Current liabilities
increased $137,000 in deferred revenues and the accrual of $126,000 in attorney
fees for the law suit relating to Detoxahol. Equipment purchases of $102,000
were made in conjunction with the start-up of TeleCor in March.
A short-term borrowing facility was established in December 1992, that allows
borrowings up to $500,000 on accounts receivable at an interest rate of 4.5%
to 6.0% a month. At March 31, 1995, nothing is borrowed against this line.
Management believes that the cash received from collections of accounts
receivable generated operations and ability to use its short-term borrowing
facility will be sufficient to fund existing operating requirements. The
Company's primary capital resource commitments at March 31, 1995 consist of
remaining lease commitments, primarily for computer and office equipment and
the commitments with regards to liabilities assumed pursuant to the rental
property (Irsco) acquired. The Company currently does not have, and does not
anticipate significant commitments for capital expenditures.
8
<PAGE>
The Company's ongoing research and development activities associated with
Detoxahol, its current manufacture of its ECG terminals and the marketing of
its OsteoGram are all subject to federal, state, local, and in some instances,
foreign authorities. The regulatory approval process for Detoxahol can take
years and require expenditure of substantial resources. The Company intends
to file patent applications on Detoxahol in 1995. Subject to this filing, the
Company would then seek strategic partners to help fund the research and
development at the University of Georgia.
Management is continuing to seek additional funding through capital raises,
principally through placements of securities. There is no assurance that such
placements will be consummated, and if so whether the terms will be diluting
to current shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on March 24, 1995. The
following seven directors, consisting of all the directors of the Company, were
elected to serve until the next Annual Meeting of Shareholders and thereafter,
until their successors are elected and qualified.
<TABLE>
<CAPTION>
Name Votes "FOR" Votes "WITHHELD"
------------------ ----------- ----------------
<S> <C> <C>
Robert Funari 3,416,864 308,095
Robert Goldberg 3,414,776 310,183
Howard Mark,M.D. 3,065,948 659,011
John Minnick 3,415,394 309,565
Winston Millet 3,679,276 45,683
Robert Stuckelman 3,324,202 400,757
Russell Walker 3,682,266 42,693
</TABLE>
The shareholders also approved an amendment to the Company's 1992 Stock Option
Plan increasing the number of shares available for option from 360,000 shares
to 480,000 shares by the following vote:
<TABLE>
<S> <C> <C>
FOR : 3,098,829
AGAINST : 213,919
ABSTAIN : 412,211
</TABLE>
The shareholders also ratified the appointment of Ernst & Young as the
Company's independent accountants for the 1995 fiscal year by the
following vote:
<TABLE>
<S> <C> <C>
FOR : 3,679,919
AGAINST : 29,106
ABSTAIN : 16,422
</TABLE>
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPUMED, INC.
BY /s/ Rod N. Raynovich
Rod N. Raynovich, President and
Chief Executive Officer
May 15, 1995
BY /s/ DeVere B. Pollom
DeVere B. Pollom, Chief Financial Officer
May 15, 1995
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND ON PAGES 3, 4 & 5 OF THE COMPANY'S FORM 10-Q FOR THE SIX MONTHS ENDED
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-30-1995
<CASH> 334
<SECURITIES> 0
<RECEIVABLES> 437
<ALLOWANCES> 0
<INVENTORY> 258
<CURRENT-ASSETS> 1,059
<PP&E> 9,195
<DEPRECIATION> 3,562
<TOTAL-ASSETS> 7,329
<CURRENT-LIABILITIES> 1,434
<BONDS> 3,625
<COMMON> 5
0
6
<OTHER-SE> 2,037
<TOTAL-LIABILITY-AND-EQUITY> 7,329
<SALES> 1,437
<TOTAL-REVENUES> 1,440
<CGS> 876
<TOTAL-COSTS> 876
<OTHER-EXPENSES> 1148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 200
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (784)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> 0
</TABLE>
