<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
-----------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
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Commission file number 000-18448
AMERICAN CONSOLIDATED LABORATORIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2624130
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6416 PARKLAND DRIVE, SARASOTA, FLORIDA 34243
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(941) 753 - 0383
--------------------------------------------------
Registrant's telephone number, including area code
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 number of shares outstanding of the registrants Common Stock, par value
$0.05 per share, at August 10, 1995 was 4,226,927 shares.
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1995
(UNAUDITED)
(Begins on the following page)
Page 2
<PAGE> 3
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30,
1995 DECEMBER 31
(UNAUDITED) 1994
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 96,209 $ 320,948
Accounts receivable, less allowance for
doubtful accounts of $ 82,100 ($105,000 at
1994)........................................ 1,423,733 1,073,907
Inventories, at lower of cost (first in,
first-out) or market.......................... 1,054,910 803,859
Other current assets........................... 179,834 92,487
------------ ------------
Total current assets 2,754,686 2,291,201
------------ ------------
Property and equipment at cost:
Land........................................... 50,000 50,000
Buildings and improvements..................... 205,000 205,000
Laboratory equipment........................... 1,109,789 998,911
Office equipment............................... 353,453 323,360
Leasehold improvements......................... 60,150 60,150
------------ ------------
1,778,392 1,637,421
Less accumulated depreciation.................. 1,139,221 1,065,236
------------ ------------
Total property and equipment 639,171 572,185
------------ ------------
Other assets:
Cost in excess of fair value of assets
acquired...................................... 828,419 813,419
Other intangible assets........................ 865,000 740,000
Deferred loan costs............................ 52,318 73,781
------------ ------------
1,745,737 1,627,200
Less accumulated amortization.................. 211,664 90,098
------------ ------------
1,534,073 1,537,102
Miscellaneous.................................... 55,828 55,828
------------ ------------
Total other assets 1,589,901 1,592,930
------------ ------------
Total assets $ 4,983,758 $ 4,456,316
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3
<PAGE> 4
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30,
1995 DECEMBER 31
(UNAUDITED) 1994
------------ ------------
<S> <C> <C>
Current liabilities:
Accounts payable............................. $ 1,585,681 $ 903,000
Accrued expenses............................. 152,063 250,930
Notes payable to stockholders................ 305,000 1,040,000
Current maturities of long-term debt and
obligation under capital lease.............. 120,499 115,523
------------ ------------
Total current liabilities 2,163,243 2,309,453
------------ ------------
Long term debt:
Notes payable to stockholders................ 805,000 -0-
Obligation under capital lease............... -0- 34,565
Long-term debt other......................... 21,200 297,900
------------ ------------
Total long term debt 826,200 332,465
------------ ------------
Deferred rent 59,754 61,046
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Stockholders'equity:
Common stock, $.05 par value, 20,000,000
shares authorized: shares issued and
outstanding 4,168,175...................... 208,409 191,153
Capital in excess of par value............... 5,650,022 5,282,708
Deficit...................................... (3,923,870) (3,720,509)
------------ ------------
Total stockholders' equity 1,934,561 1,753,352
------------ ------------
Total liabilities and equity $ 4,983,758 $ 4,456,316
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE> 5
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ---------------------
JUNE 30, JUNE 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales............... $ 2,641,113 $ 1,060,357 $ 4,829,641 $ 2,012,677
Cost of Sales....... 1,748,661 488,713 3,191,438 972,667
------------ ------------ ------------ ------------
Gross Profit...... 892,452 571,644 1,638,203 1,040,010
------------ ------------ ------------ ------------
Selling expenses.... 229,969 111,008 415,423 222,314
Marketing expenses.. 40,052 21,301 53,509 44,508
Research and
development....... 14,413 17,968 29,703 31,835
General and
administrative.... 717,926 335,386 1,303,628 644,002
------------ ------------ ------------ ------------
Total Operating
Expenses......... 1,002,360 485,663 1,802,263 942,659
------------ ------------ ------------ ------------
Operating
income(loss)..... (109,908) 85,981 (164,060) 97,351
Interest Expense.... (37,358) (21,974) (72,955) (43,235)
Other Income........ 17,818 4,250 33,654 20,523
------------ ------------ ------------ ------------
Net income (loss). (129,448) 68,257 (203,361) 74,639
Deficit
at beginning of
period............. (3,794,422) (3,818,365) (3,720,509) (3,824,747)
------------ ------------ ------------ ------------
Deficit
at end of period... $(3,923,870) $(3,750,108) $(3,923,870) $(3,750,108)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5
<PAGE> 6
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JUNE 30 JUNE 30
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss)
per share - primary $ (0.03) $ 0.06 $ (0.05) $ 0.07
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 6
<PAGE> 7
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net income (loss)............................ $(203,361) $ 74,639
Adjustments to reconcile net income (loss) to
net cash provided by (used in)
operating activities:
Depreciation............................... 73,985 78,317
Provision for bad debts.................... (12,396) 19,557
Amortization............................... 143,029 27,688
(Increase) in accounts receivable.......... (173,311) (88,894)
(Increase) decrease in inventories......... (52,619) 79,463
(Increase) decrease in other current assets (82,758) 13,822
(Increase) in other assets................. -0- (3,150)
Increase (decrease) in accounts payable.... 411,026 (51,452)
(Decrease) in accrued expenses............. (102,017) (1,107)
Increase (decrease) in deferred rent....... (1,292) 31
---------- ----------
Net cash provided by
operating activities........................ 286 148,914
---------- ----------
Cash flows used in investing activities:
Purchase of Philcon Laboratories, Inc....... (246,972) -0-
Additions to property and equipment......... (126,334) -0-
Issuance of common stock.................... 384,570 -0-
---------- ----------
Net cash provided by investing activities..... 11,264 -0-
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Cash flows used in financing activities:
Borrowings from short-term debt............. 125,000 -0-
Principal payments on long-term debt........ (331,700) (132,500)
Principal payments under capital leases..... (29,589) (24,476)
---------- ----------
Net cash used in
financing activities........................ (236,289) (156,976)
---------- ----------
Net (decrease) in cash and
cash equivalents............................ (224,739) (8,062)
Cash and cash equivalents
beginning of period......................... 320,948 200,368
---------- ----------
Cash and cash equivalents
end of period............................... $ 96,209 $ 192,306
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 7
<PAGE> 8
AMERICAN CONSOLIDATED LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
I. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and disclosures included
The consolidated balance sheet as of June 30, 1995 and the related
consolidated statements of operations and deficit for the three and
six-month periods ended June 30, 1995 and 1994 and the consolidated
statements of cash flows for the six-month periods ended June 30,
1995 and 1994 are unaudited; in the opinion of management, all
adjustments necessary for a fair presentation of such consolidated
financial statements have been included. Such adjustments consisted
only of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by
Form 10-QSB, and do not contain certain information included in the
Company's annual consolidated financial statements and notes.
2. INVENTORIES
<TABLE>
<CAPTION>
June 30,
1995 December 31,
Inventories consist of the following: (Unaudited) 1994
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<S> <C> <C>
Raw materials................................ $ 67,170 $ 172,988
Work in process.............................. 35,260 36,165
Finished goods............................... 952,480 594,706
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$ 1,054,910 $ 803,859
============= ============
</TABLE>
3. COMMITMENTS
On June 8, 1995, the company signed a Letter of Intent to purchase
Memphis-based Mid-South Contact Lens, Inc. Mid- South is a leading
manufacturer of rigid gas permeable (RGP) contact lenses and distributor of
soft contact lenses, with operations in Memphis and Nashville, Tennessee,
Little Rock, Arkansas, and New Orleans, Louisiana. On July 3, 1995, a $175,000
mortgage loan was received from Cornhusker Bank on Lincoln, Nebraska property.
4. PHILCON ACQUISITION
Effective May 1, 1995, the Company acquired certain assets of Philcon
Laboratories, Inc. ("Philcon"). The purchase price was approximately $247,000
plus assumed liabilities. The transaction was accounted for under the purchase
accounting method with the purchase price allocated to the assets acquired
based on fair market values at the date of acquisition. The excess of the
purchase price over the value of the assets has been allocated to certain
intangible assets. The accompanying consolidated financial statements include
the results of operations for Philcon since the acquistion date.
Page 8
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5. EARNINGS PER SHARE
The Company calculates primary earnings per share including the dilutive
effect of stock options and warrants. Fully diluted earnings per share is not
presented as it is anti-dilutive.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1995 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1994
Net sales for the three months ended June 30, 1995 ("1995") compared to the
three months ended June 30, 1994 ("1994") increased 149% to $2,641,113 due
entirely to the acquisitions of Carolina Contact Lens, Inc. ("CCL") in
December, 1994 and inclusion of its results for the full 1995 period, and
Philcon in May and inclusion of its results for May and June, 1995.
The Company incurred a net loss of $(129,448) for the 1995 period, compared
to a net profit of $68,257 for the 1994 period. Management attributes the loss
for the current period to: (i) increased general and administrative expenses
related to payroll and travel costs, (ii) new acquisitions related amortization
expenses, (iii) lower margins in the newly acquired soft lens distribution
business, and (iv) expansion of sales force.
Sales of soft contact lenses and lens care products increased 279% in the
1995 period to $1,835,706, compared to $484,681 for the 1994 period. The
increase in sales is due mainly to the acquisitions of CCL and Philcon.
Sales of rigid gas permeable ("RGP") contact lenses increased by 40% in the
1995 period to $805,407, compared to $575,676 for the 1994 period. This
increase in sales is due mainly to the acquisitions of CCL and Philcon.
In addition, the Company continues to experience a decline in one segment of
its RGP products due to the decline of contract manufacturing orders from a
contract manufacturing customer.
1995 gross profit was $892,452, or 34% of sales, compared to $571,644, or
54% of sales for the 1994 period. While gross profits will continue to
increase in absolute terms, the growing impact of distributed soft lenses and
their correspondingly lower gross margins may lead to lower gross margin
percentages in future periods. The Company's goal is to manage this business
efficiently with sophisticated order entry, order fulfillment, and shipping
procedures so as to maximize net profits.
Selling expenses increased 107% in the 1995 period to $229,969 from $111,008
in 1994, as a result of the CCL and Philcon acquisitions. General and
administrative expenses increased 114% in 1995 to $717,926 compared to $335,386
in 1994. This increase is attributable to CCL and Philcon integration related
expenses, payroll and travel expenses, and acquisitions related amortization
expense.
Interest expense increased to $37,358 in 1995 from $21,974 in 1994 due to
additional borrowings related to the CCL acquisition.
Page 9
<PAGE> 10
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS
ENDED JUNE 30,1994
Net sales for the six months ended June 30, 1995 ("1995") compared to the
six months ended June 30, 1994 ("1994") increased 140% to $4,829,641 due
entirely to the acquisitions of Carolina Contact Lens, Inc. ("CCL") in
December, 1994 and inclusion of its results for the full 1995 period, and
Philcon in May and inclusion of its results for May and June, 1995.
The company incurred a net loss of $(203,361) for the 1995 period, compared
to a net profit of $74,639 for the 1994 period. Management attributes the loss
for the current period to: (i) increased general administrative expenses
related to payroll and travel costs, (ii) new acquisitions related amortization
expenses, and (iii) lower margins in the newly acquired soft lens distribution
business, and (iv) expansion of sales force.
Sales of soft contact lenses and lens care products increased 269% in the
1995 period to $3,321,075, compared to $900,963 for the 1994 period. The
increase in sales is due mainly to the acquisitions of CCL and Philcon.
Sales of rigid gas permeable ("RGP") contact lenses increased by 36% in the
1995 period to $1,508,566, compared to $1,111,714 for the 1994 period. This
increase in sales in due mainly to the acquisitions of CCL and Philcon. In
addition, the Company experienced a decline in one segment of its RGP products
due to the decline of contract manufacturing orders from a contract
manufacturing customer.
1995 gross profit was $1,638,203, or 34% of sales, compared to $1,040,010,
or 52% of sales for the 1994 period. While gross profits will continue to
increase in absolute terms, the growing impact of distributed soft lenses and
their correspondingly lower gross margins may lead to lower gross margin
percentages in future periods. The Company's goal is to manage this business
efficiently with sophisticated order entry, order fulfillment, and shipping
procedures so as to maximize net profits.
Selling expenses increased 87% in the 1995 period to $415,423 from $222,314
in 1994, as a result of the CCL and Philcon acquisitions. General and
administrative expenses increased 102% in 1995 to $1,303,628, compared to
$644,002 in 1994. This increase is attributable to CCL and Philcon integration
related expenses, payroll and travel expenses, and acquisitions related
amortization expense.
Interest expense increased to $72,955 in 1995 from $43,235 in 1994 due to
the additional borrowings related to the CCL acquisition.
Page 10
<PAGE> 11
FINANCIAL CONDITION
Cash provided by operating activities during the 1995 period totaled $286
compared to cash provided of $148,914 in 1994. For the 1995 period, cash and
cash equivalents decreased $224,739 to a period end balance of $96,209.
Working capital at March 31, 1995 was approximately $591,000, compared to an
$(18,000) deficit at December 31, 1994. Tullis-Dickerson Capital Focus, L.P.
("TDCFLP") extended their $800,000 secured convertible term promissory note to
long-term. This was partially offset by a $125,000 note payable to Joseph
Kelly for the Philcon acquisition.
The $250,000 of long-term convertible subordinated promissory notes payable
to CCL sellers were converted to common stock in June, 1995. In addition,
approximately $60,000 in common stock was issued and sold during the second
quarter, 1995.
The Company continues to aggressively negotiate with various lenders to
provide financing to pay off maturing obligations, and put in place a credit
facility for working capital and future acquisition requirements.
On May 1, 1995, the Company completed its previously announced acquisition
of the business and assets of Philcon Laboratories, Inc. This acquisition will
bring annualized Company sales to over $10 million. The Company anticipates
making additional acquisitions of other regional contact lens labs. Consistent
with the Company's focus on the manufacturing of RGP lenses and distribution of
soft lenses manufactured by others; on January 5, 1995, the Company created a
subsidiary, Salvatori Ophthalmics Manufacturing Corporation ("SOMC"), to
encompass all of its soft contact lens manufacturing operation in Sarasota,
Florida. Management anticipates that it may divest SOMC if it finds an
interested buyer.
Management believes that achievement of new financing and additional
acquisitions will result in increased sales and improved liquidity. However,
no assurance can be given that the financing will be obtained or that
additional acquisitions will be consummated.
Page 11
<PAGE> 12
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 8, 1995, the Company held its Annual Meeting of Shareholders. At
that meeting, the shareholders voted to approve the following items:
1. The election of five directors to hold office until the 1996
annual meeting.
2. The adoption by the company of the 1994 Incentive and Non-
statutory Stock Option Plan.
3. The ratification of the appointment of Deloitte & Touche LLP
to serve as the Company's independent auditors for the year
ending December 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27 - Financial Data Schedule (for SEC use only)
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<PAGE> 13
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.
American Consolidated Laboratories, Inc.
-----------------------------------------
Date: August 10, 1995 By: /s/Wayne Upham Smith
------------------------- --------------------------
Wayne Upham Smith
Chairman & Chief Executive
Officer
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 96,209
<SECURITIES> 0
<RECEIVABLES> 1,423,733
<ALLOWANCES> 82,100
<INVENTORY> 1,054,910
<CURRENT-ASSETS> 2,754,686
<PP&E> 1,778,392
<DEPRECIATION> 1,139,221
<TOTAL-ASSETS> 4,983,758
<CURRENT-LIABILITIES> 2,163,243
<BONDS> 0
<COMMON> 208,409
0
0
<OTHER-SE> 5,650,022
<TOTAL-LIABILITY-AND-EQUITY> 4,983,758
<SALES> 4,829,641
<TOTAL-REVENUES> 0
<CGS> 3,191,438
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,955
<INCOME-PRETAX> (203,361)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (203,361)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
