<PAGE>
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 MARCH 31, 1995
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( ) 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 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
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(Address of principal executive offices) (Zip Code )
(813) 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 April 30, 1995 was 3,923,048 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS FOR THE PERIODS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
(Begins on the following page)
Page 2
<PAGE>
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
MARCH 31,
1995 DECEMBER 31,
(UNAUDITED) 1994
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 138,795 $ 320,948
Accounts receivable, less allowance for
doubtful accounts of $87,000 ($90,000 at
1994)........................................ 1,154,102 1,073,907
Inventories, at lower of cost (first in,
first-out) or market.......................... 848,016 803,859
Other current assets........................... 119,196 92,487
----------- -----------
Total current assets 2,260,109 2,291,201
----------- -----------
Property and equipment at cost:
Land........................................... 50,000 50,000
Buildings and improvements..................... 205,000 205,000
Laboratory equipment........................... 1,077,409 998,911
Office equipment............................... 324,486 323,360
Leasehold improvements......................... 60,150 60,150
----------- -----------
1,717,045 1,637,421
Less accumulated depreciation 1,102,210 1,065,236
----------- -----------
614,835 572,185
----------- -----------
Other assets:
Cost in excess of fair value of assets
acquired...................................... 813,419 813,419
Other intangible assets........................ 740,000 740,000
Deferred loan costs............................ 63,049 73,781
----------- -----------
1,616,468 1,627,200
Less accumulated amortization................. 169,432 90,098
----------- -----------
1,447,036 1,537,102
Miscellaneous.................................... 55,828 55,828
----------- -----------
1,502,864 1,592,930
----------- -----------
$ 4,377,808 $ 4,456,316
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 3
<PAGE>
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
MARCH 31,
1995 DECEMBER 31,
(UNAUDITED) 1994
------------ ------------
<S> <C> <C>
Current liabilities:
Accounts payable.............................. $ 952,287 $ 903,000
Accrued expenses.............................. 205,377 250,930
Notes payable to stockholders................. 985,000 1,040,000
Current maturities of long - term debt and
obligation under capital lease............... 103,299 115,523
------------ ------------
Total current liabilities.................... 2,245,963 2,309,453
------------
Long - term debt:
Obligation under capital lease................ 32,345 34,565
Long - term debt other........................ 284,550 297,900
------------ ------------
Total long term debt........................ 316,895 332,465
------------ ------------
Deferred rent................................... 60,511 61,046
Commitments and contingencies
Stockholders'equity:
Common stock, $.05 par value, 20,000,000
shares authorized; 3,923,048 shares issued... 196,153 191,153
Capital in excess of par value................ 5,352,708 5,282,708
Deficit....................................... (3,794,422) (3,720,509)
------------ ------------
Total stockholders' equity.................. 1,754,439 1,753,352
------------ ------------
$ 4,377,808 $ 4,456,316
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4
<PAGE>
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Sales................................. $ 2,188,528 $ 952,320
Cost of sales......................... 1,442,777 483,954
-------------- --------------
Gross profit........................ 745,751 468,366
Selling expenses...................... 185,454 111,306
Marketing expenses.................... 13,457 23,207
Research and development.............. 15,290 13,867
General and administrative expenses... 585,702 308,616
-------------- --------------
Total operating expenses............ 799,903 456,996
-------------- --------------
Operating income (loss)............ (54,152) 11,370
Interest expense...................... (35,597) (21,261)
Other income.......................... 15,835 16,273
-------------- --------------
Net income (loss)..................... (73,913) 6,382
-------------- --------------
Deficit at beginning
of period............................ (3,720,509) (3,824,747)
-------------- --------------
Deficit at end
of period............................ $ (3,794,422) $ (3,818,365)
============== ==============
Net income (loss)
per common share - primary in 1994... $ (0.02) $ 0.01
============== ==============
Net income (loss) per common share
fully diluted in 1995................ $ (0.02)
==============
Weighted average shares
outstanding - primary in 1995........ 4,353,464 1,148,686
============== ==============
Weighted average shares
outstanding - fully diluted in 1995 4,423,787
==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 5
<PAGE>
*****
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Net income (loss).............................. $ (73,913) $ 6,382
Adjustments to reconcile net income (loss) to
net cash provided by (used in)
operating activities:
Depreciation................................. 36,974 43,988
Provision for bad debts...................... - 5,400
Amortization................................. 52,760 13,864
(Increase) in accounts receivable............ (80,195) (73,713)
(Increase) decrease in inventories........... (44,157) 51,320
(Increase) decrease in other current assets.. (26,709) 9,490
Decrease in other assets..................... 37,306 --
Increase (decrease) in accounts payable...... 49,287 (11,997)
Decrease in accrued expenses................. (45,553) (36,341)
(Decrease) increase in deferred rent......... (535) 123
------------- -------------
Net cash provided by (used in)
operating activities......................... (94,735) 8,516
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Cash flows used in investing activities:
Additions to property and equipment......... (79,624)
Issuance of common stock.................... 75,000 --
------------- --------------
Net cash used in investing activities.......... (4,624) --
------------- --------------
Cash flows used in financing activities:
Principal payments on long term debt........ (68,350) (58,750)
Principal payments under capital leases..... (14,444) (11,948)
------------ --------------
Net cash used in financing activities.......... (82,794) (70,698)
------------ --------------
Net decrease in cash and
cash equivalents............................. (182,153) (62,182)
Cash and cash equivalents
beginning of period.......................... 320,948 200,368
------------ ------------
Cash and cash equivalents
end of period................................ $ 138,795 $ 138,186
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 6
<PAGE>
AMERICAN CONSOLIDATED LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and disclosures included
The consolidated balance sheet as of March 31, 1995, and the related
consolidated statements of operations and deficit and cash flows for
the three-month periods ended March 31,1995 and 1994 are unaudited;
in the opinion of management, all adjustments necessary for a fair
presentation of such 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
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Raw Materials........................................ $ 207,558 $ 172,988
Work in process...................................... 35,260 36,165
Finished goods....................................... 605,198 594,706
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$ 848,016 $ 803,859
============= ============
</TABLE>
3. COMMITMENTS
On January 18, 1995, the Company signed a Letter of Intent to acquire the
business and assets of Philcon Laboratories, Inc., a manufacturer of rigid
gas permeable ("RGP") contact lenses and a distributor of major brands of
soft contact lenses in the greater Philadelphia area. This acquisition was
completed on May 1, 1995.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO
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THREE MONTHS ENDED MARCH 31,1994
- - --------------------------------
Net sales for the three months ended March 31, 1995 ("1995") compared to the
three months ended March 31, 1994 ("1994") increased 130% to $2,188,528 due
entirely to the acquisition of Carolina Contact Lens, Inc. ("CCL") in
December, 1994 and inclusion of its results for the full 1995 period.
The Company incurred a net loss of $(73,913) for the 1995 period compared
to a net profit of $6,382 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 acquisition related
amortization expenses, and (iii) lower margins in the newly acquired soft lens
distribution business.
Sales of soft contact lenses and lens care products increased 257% in the
1995 period to $1,485,369, compared to $416,282 for the 1994 period. The
increase in sales is due mainly to the acquisition of CCL and its historical
sales pattern of 65% distributed soft lenses and 35% manufactured RGP lenses.
Sales of rigid gas permeable ("RGP") contact lenses increased by 31% in the
1995 period to $703,159, compared to $536,038 for the 1994 period. Although
this increase in sales is due mainly to the acquisition of CCL, management
believes the RGP category was flat during the first quarter of 1995. 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 $745,751, or 34% of sales, compared to $468,366, or
49% 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 mange this business efficiently
with sophisticated order entry, order fulfillment, and shipping procedures so
as to maximize net profits.
Selling expenses increased 67% in the 1995 period to $185,454 from $111,306
in 1994, as a result of the CCL acquisition. General and administrative expenses
increased 90% in 1995 to $585,702 compared to $308,616 in 1994. This increase is
attributable to CCL integration related expenses, payroll and travel expenses,
and acquisition related amortization expense.
Interest expense increased to $35,597 in 1995 from $21,261 in 1994 due to
additional borrowings related to the CCL acquisition.
Page 8
<PAGE>
FINANCIAL CONDITION
-------------------
CASH USED IN OPERATING ACTIVITIES DURING THE 1995 PERIOD TOTALED $(94,735)
compared to cash provided of $8,516 in 1994. For the 1995 period, cash and cash
equivalents decreased $182,153 to a period end balance of $138,795.
Working capital at March 31, 1995 was approximately $14,000 compared to an
($18,000) deficit at December 31, 1994. Tullis-Dickerson Capital Focus, L.P.
("TDCFLP") exercised 100,000 common share warrants at $0.75 per share in March,
1995. In doing so, TDCFLP converted $55,000 of its $510,000 Term Loan, with the
remaining $5,000 balance due in August, 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. The Company
presently has a commitment from a regional financing institution and efforts are
currently underway to finalize a credit facility.
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 9
<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.
American Consolidated Laboratories, Inc.
-----------------------------------------
Date: May 15, 1995 By: /s/ Wayne Upham Smith
----------------------- ------------------------------
Wayne Upham Smith
Chairman and Chief Executive
Officer
Page 10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit No. Exhibit Page No.
- - ----------- ------- ----------
<S> <C> <C>
11.1 Computations of Earnings Per Share
Three Months Ended March 31, 1995 and 1994 12
27 Financial Data Schedule
</TABLE>
Page 11
<PAGE>
Exhibit 11.1
AMERICAN CONSOLIDATED LABORATORIES, INC.
COMPUTATION OF EARNINGS PER SHARE (A)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net income (loss)....................... $ (73,913) $ 6,382
=========== ===========
Common Stock:
Weighted average shares outstanding
outstanding - primary.............. 4,353,464 1,148,686
Dilutive effect of outstanding
options, convertible debt, and
warrants ( as determined
by the application of
the treasury stock method)........... 70,328 --
---------- ----------
4,423,787 1,148,686
=========== ==========
Net income (loss) per
common share - fully diluted............ $ (0.02) $ 0.01
=========== =========
</TABLE>
(a) This calculation is submitted in accordance with Regulation S - B item
601(b)(11).
(b) Reduction of loss for interest expense of $22,907 on assumed debt converted
is not considered in the computation as it is anti-dilution
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 138,795
<SECURITIES> 0
<RECEIVABLES> 1,241,102
<ALLOWANCES> 87,000
<INVENTORY> 848,016
<CURRENT-ASSETS> 2,260,109
<PP&E> 1,717,045
<DEPRECIATION> 1,102,210
<TOTAL-ASSETS> 4,377,808
<CURRENT-LIABILITIES> 2,245,963
<BONDS> 377,406
<COMMON> 196,153
0
0
<OTHER-SE> 1,558,286
<TOTAL-LIABILITY-AND-EQUITY> 4,377,808
<SALES> 2,188,528
<TOTAL-REVENUES> 2,188,528
<CGS> 1,442,777
<TOTAL-COSTS> 2,242,680
<OTHER-EXPENSES> 15,835
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,597
<INCOME-PRETAX> (73,913)
<INCOME-TAX> 0
<INCOME-CONTINUING> (73,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (73,913)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
