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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended June 29, 1996 Commission File No. 0-11484
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MARQUEST MEDICAL PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-0785259
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11039 EAST LANSING CIRCLE, ENGLEWOOD, COLORADO 80112
(Address of principal executive offices, including zip code)
(303) 790-4835
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changes since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceeding 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
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Number of shares of common stock, no par value, of Registrant outstanding at
July 18, 1996.
14,206,006
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
THE FOLLOWING DISCUSSION CONTAINS, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE
NOT LIMITED TO, THOSE DISCUSSED BELOW AND IN THE COMPANY'S FISCAL 1996 ANNUAL
REPORT ON FORM 10-K.
RESULTS OF OPERATIONS
Sales for the first quarter of fiscal 1997 were $5,152,000, a decrease of
$132,000 or 2.5% compared to sales for the first quarter of the previous
year. The slight decrease in sales was due to the timing of sales orders.
Orders expected in June 1996 were received in July 1996.
The gross margin decreased from 30% in the first quarter of fiscal 1996 to
27% in the first quarter of fiscal 1997 due to a combination of the decrease
in sales discussed above and overtime incurred for rework of certain products
and to increase the level of inventory.
General and administrative expenses of $521,000 for the first quarter of
fiscal 1997 decreased 6.4% compared to the first quarter of fiscal 1996
primarily due to the elimination in the second quarter of fiscal 1996 of the
management fee charged by Scherer Healthcare of approximately $20,000 per
month and a decrease in legal fees due to the settlement of several pieces of
litigation in fiscal 1996.
Interest expense increased 12.6% in the first quarter of fiscal 1997 compared
to the same quarter in the prior fiscal year due to the accrual of interest
expense to the Internal Revenue Service for settlements reached in fiscal
1996. During fiscal 1996, the Company sold its 10% investment in Seabrook
Medical Systems, Inc. for a $200,000 gain.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES: Cash used in operations was $609,000 for the first
quarter of fiscal 1997. In the first quarter, inventories increased
approximately $225,000 due to the Company's commitment to stocking inventory
for improved customer service. Also, in May 1996, the Company paid $170,000
to settle a lawsuit with an insurance company. Receivables and payables both
declined in the first quarter due to normal seasonal selling patterns.
FINANCING ACTIVITIES: During fiscal 1996, the Company and Scherer Capital,
LLC. signed a loan agreement under which the Company may borrow up to
$1,500,000 at 1-1/2% over prime, secured by inventory and equipment. At June
29, 1996, there is $800,000 of borrowing capacity available to the Company.
On March 29, 1996, Scherer Capital purchased $1,000,000 of common stock of
the Company at a rate of $0.485 per share.
The Company has obtained a three-year revolving line of credit commitment
from Norwest Business Credit., Inc. ("Norwest") secured by receivables with
an interest rate of 2.25% over Norwest's prime rate. The maximum line of
credit to be extended is 80% of eligible accounts receivable or $2,000,000,
whichever is less.
Management of the Company believes that it can fund its current operating
levels and capital expenditures from the funds from the sale of common stock
in March 1996 and from available borrowings under the loan agreement with
Scherer Capital and the committed line of credit. To the extent that Fiscal
1997 operations and borrowings are not sufficient to support anticipated
capital expenditures, the Company's planned investment in capital projects will
be reduced.
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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.
Dated: August 13, 1996 MARQUEST MEDICAL PRODUCTS, INC.
/s/ William J. Thompson
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William J. Thompson
President
/s/ Margaret Von der Schmidt
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Margaret Von der Schmidt
Vice President -- Finance and Chief
Financial Officer
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