FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1996
Commission File Number 000-20175
NYER MEDICAL GROUP, INC
(Exact name of registrant as specified in its charter)
Florida 01-0469607
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1292 Hammond Street, Bangor, Maine 04401
(Address of principal executive offices) (Zip Code)
(207) 942-5273
(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 twelve 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 .
As of November 14, 1996, there were outstanding, 3,216,093 shares of common
stock, par value $.0001 per share.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 3-4
Consolidated Statements of Operations, Three Months
Ended September 30, 1996 and September 30, 1995 5
Consolidated Statements of Operations, Nine Months
Ended September 30, 1996 and September 30, 1995 6
Consolidated Statements of Cash Flows, Nine Months
Ended September 30, 1996 and September 30, 1995 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Third Quarter 1996 Results 10-14
PART II - OTHER INFORMATION
Item 3. Other Information 14-15
Signatures 15
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
September 30, December 31,
1996 1995
Current assets:
Cash $6,487,427 $ 262,099
Accounts receivable, less allowance for
doubtful accounts of $99,585 at
September 30, 1996, and at December 31,
1995, respectively 2,406,317 1,076,299
Receivable from officer 5,001
Receivable from related company 15,788 27,028
Inventories, net 3,246,652 1,250,434
Prepaid expenses 117,460 55,585
Total current assets 12,278,645 2,671,445
Property, plant and equipment, net 739,873 764,031
Other assets:
Goodwill, net of accumulated
amortization of $107,047 at September 30,
1996, and $71,460 at December 31, 1995 563,811 220,921
Advances due from related companies 43,561 41,825
Other 451,608 106,765
Total other assets 1,058,980 369,511
Total assets $14,077,498 $3,804,987
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
September 30, December 31,
1996 1995
Current liabilities:
Notes payable due related parties $ 312,324 $ 486,324
Current portion of long-term debt 328,667 181,991
Accounts payable 2,271,164 926,597
Accrued payroll and related taxes 210,764 185,681
Accrued expenses and other liabilities 394,677 181,906
Total current liabilities 3,517,596 1,962,499
Long-term debt, net of current portion 1,327,988 451,401
Minority interest 110,045 31,372
Shareholders' equity:
Class A Preferred stock, par value
$.0001, Authorized, issued, and
outstanding: 2000 shares 1 1
Class B Treasury stock, par value
$.0001, Authorized, issued, and
outstanding: 300,000 shares 30 30
Common Stock, par value $.0001
Authorized: 10,000,000 shares;
issued and outstanding; 3,151,093
shares at September 30, 1996, and
2,183,000 at December 31, 1995 2,040 218
Additional paid-in capital 12,181,863 4,354,165
Stock subscription receivable (150,000)
Accumulated deficit (3,176,895) (2,844,699)
Total shareholders' equity 9,007,038 1,359,715
Total liabilities and
shareholders' equity $14,077,498 $3,804,987
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
September 30, September 30,
1996 1995
Net sales and other revenues $5,447,238 $2,637,800
Expenses:
Cost of goods sold 4,346,705 2,067,032
Selling, general and administrative 1,330,521 625,579
Research and development 52,323
Interest 22,198 18,553
Total expenses 5,751,747 2,711,164
Income (loss) before
minority interest (304,509) (73,364)
Minority interest (20,535)
Net income (loss) $ (283,974) $ ( 73,364)
Net (loss) income per common share $ (.09) $ (.04)
Weighted average number of common shares
outstanding 2,844,887 1,893,000
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended
September 30, September 30,
1996 1995
Net sales and other revenues $12,857,055 $6,639,195
Expenses:
Cost of goods sold 10,045,625 5,107,356
Selling, general and administrative 3,070,633 1,886,952
Research and development 52,324 21,000
Interest 55,574 45,004
13,224,156 7,060,312
Loss before
minority interest (367,101) (421,117)
Minority interest (26,365)
Net loss $ ( 340,736) $ (421,117)
Net loss per common share $ (.11) $ (.20)
Weighted average number of common shares
outstanding 2,964,932 1,901,465
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30, September 30,
1996 1995
Cash flows from operating activities:
Net (loss) income $ (340,736) $ (421,117)
Adjustments to reconcile net loss
to net cash (used) provided by
operating activities:
Depreciation and amortization 78,974 91,897
Minority interest 5,830
(Increase) decrease in inventories (76,879) 8,885
(Increase) decrease in receivables
and prepayments (583,407) (74,608)
Increase in accounts payable
and accrued expenses 165,328 96,161
Net cash (used) provided by operating
activities (466,916) (298,782)
Cash flows from investing activities:
Acquisition of property, plant and
equipment (7,616) (32,365)
Acquisition of subsidiary (420,145) (1,000)
Net repayments from (advances to)
related companies 4,461 4,851
Net cash used in investing activities (423,300) (33,365)
Cash flows from financing activities:
Issuance of notes payable to an
affiliate 138,124
Repayments of notes payable to an
affiliate (8,783)
Repayment of notes payable, including
shareholder (162,000)
Repayments of long-term debt (162,739) (73,597)
Repayment of demand note payable (75,000)
Deferred Stock offering costs (13,293)
Proceeds from issuance of common stock 5,640,248 475,000
Net cash provided by
financing activities 5,315,509 447,302
Net increase (decrease) in cash 4,425,293 115,155
Cash at beginning of period 262,099 98,021
Cash at end of period $4,687,392 $ 213,176
See accompanying notes in consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Supplemental disclosures of cash flow information
Nine Months Ended
September 30, September 30,
Cash paid during the first six months: 1996 1995
Interest $ 55,574 $ 26,451
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principals have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not to be misleading. In
the opinion of management, the amounts shown reflect all adjustments
necessary to present fairly the financial position and results of
operations for the periods presented. All such adjustments are of a
normal recurring nature.
Earnings per share of common stock have been determined by dividing
net earnings by the weighted average number of shares of common stock
outstanding. The assumed conversions of existing Common Stock Warrants
and Class B Treasury Stock have been excluded since they are anti-
dilutive.
It is suggested that the financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's 10-KSB.
2. Property, Plant, and Equipment
Property, plant, and equipment consists of the following:
(Unaudited)
September 30, December 31,
1996 1995
Land $ 92,800 $ 92,800
Building 623,274 623,274
Leasehold improvements 2,703 2,703
Machinery and equipment 56,826 51,576
Transportation equipment 188,506 159,360
Office furniture, fixtures, and equipment 430,970 397,745
1,395,079 1,327,458
Less accumulated depreciation and
amortization (655,206) (563,427)
$ 739,873 $ 764,031
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Results of Operations
Total revenues for the first nine months of 1996 increased over 93% over
the first nine months of 1995 to approximately $12,857,000, representing an
increase of $6,217,860. The main reasons for the increase were the purchase
of Conway Associates ("Conway") in February of 1996 and Eaton/DAW (a drug store
chain) in August 1996. Conway is a distributor of fire and rescue equipment
and supplies. Conway contributed net sales of$3,633,335 for the first nine
months of 1996. Eaton/DAW contributed almost $2.5 million in net sales.
Anton Investments ("Anton") had an increase of approximately $240,000 or 18%
of net sales over the first nine months of 1995 to $2,180,455. Anton is a
distributor of fire police and rescue equipment and supplies. Anton's reasons
for the increase were: the sale of five fire trucks in the first three quarters
of 1996 as compared to the sale of one fire truck over the same comparable
period in 1995, and a division of Anton's in Massachusetts had increased
sales of $122,000 over the first nine months of 1995. The medical distribution
company, ADCO Surgical Supply,("ADCO"), located in Maine, had increased sales
of approximately $105,000 over the first nine months of 1995. ADCO's increase
in sales is mainly due to increasing business in the long-term care market.
The medical distribution company, ADCO South Medical Supplies, ("ADCO South"),
located in South Florida, had a decrease of approximately $20,000 in net sales
for the first nine months of 1996 as compared to the same period in 1995. The
decrease was the result of decreased equipment sales as compared to the first
nine months of 1995.
Net sales and other revenues for the second quarter were $5,447,238
as compared to $2,637,800 for the same period of 1995. The main reasons
for the increases are as stated above.
The Company's overall gross profit margin was 21.8% for the first nine
months of 1996, as compared to gross margin of 23.1% for the comparable period
in 1995. One of the main reasons for the decline in the gross profit margin
was the margin of the newly purchased company, Conway and Eaton/DAW. Conway's
had a gross profit margin of 13.9%. Fire trucks and equipment are sold at
lower gross margins. Approximately 53% of Conway's sales were fire trucks and
equipment. Eaton's gross profit margin was 21.4% .Anton's gross margin
remained about the same as compared to the same period of 1995. ADCO's gross
margin was 26.1% for the first nine months of 1996 and 1995. ADCO South had
an increase in their gross margin to approximately 28.7% as compared to 24.5%
for the first nine months of 1995. This is the result of a continuing effort
to raise gross profit margins.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Results of Operations: continued,
During the first nine months of 1996, selling, general, and administrative
expenses increased 62.0% for the first nine months of 1996 to $3,070,633. The
Company had an overall increase of approximately $1,183,681 in expenses over the
comparable period of 1995. Conway and Eaton added new overhead expenses.
Genetic Vectors ("Vectors") had an increase in overhead expenses of
$175,000 for 1996 as compared to $129,764. The reason for this increase is
general operating expenses with no offsetting sales. Genetic Vectors is
incurring expenses relating to them going public. The other companies combined
for a net reduction of $10,000. These reductions are the result of continuing
efforts of lowering overhead and the continued use of subsidiary personnel as
much as possible.
Net interest expense as a percentage of sales was .01% in the first nine
months of 1996 and 1995, respectively.
A net loss of ($340,736) occurred in the first nine months of 1996, 2.7%
of net sales. This compares to a net loss of ($421,117) for the first nine
months of 1995, or 6.3% of net sales. The losses in 1996 are a combination
of Genetic Vectors, Anton Enterprises and corporate overhead. Their combined
losses totalled ($345,000).
The third quarter of 1996, showed a net loss of ($283,974) as compared to
a net loss of ($73,364) for the same period of 1995. The main reason for the
losses are stated above. The reason for the increase in cash is described
below in the Liquidity and Capital Resources section of this report.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Results of Operations: continued,
The Company expects its gross margin to decrease during the balance of
fiscal year 1996 as a result of anticipated increased high dollar but lower
margin fire truck sales.
Liquidity and Capital Resources
The Company's primary sources of working capital this year has been the
receipt of funds from the sales of stock pursuant to Regulation S under the
Securities Act of 1933. In the first nine months of 1996, the Company sold
610,885 shares of common stock and received net proceeds of $3,318,733. In
connection with the common stock issuance, 314,478 warrants were granted to
purchase common stock at $6.625 per share exercisable over a two-year period.
All of the warrants were exercised in the second quarter of 1996 and the
Company received net proceeds of $1,963,703.
The current ratio at September 30, 1996, was 4.3 as compared to 1.1 at
September 30, 1995. Working capital for the first nine months of 1996 was
$6,061,438 or 64.9% of total assets. Working capital for the first nine
months of 1995 was $278,225 or 8.0% of total assets. At December 31, 1995,
the current ratio was 1.4, while working capital was $708,946 or 18.6% of total
assets.
The Company values its inventories using the FIFO method.
As of September 30, 1996, cash and cash items increased to $6,487,427, as
compared to $262,099 at December 31, 1995. The main reason for this increase
in cash was the sale of 907,293 shares of the Company's common stock. The
Company believes it has adequate cash and cash equivalents to meet its
working capital needs. Additionally, the cash balance and equivalents at
June 30, 1996, included approximately $184,000 from Genetic Vectors, arising
from its bridge financing as described in Item 3 of this report.
On August 5, 1996, the Company acquired 80% of the stock of a corporation,
D.A.W., Inc. ("D.A.W."), which owns nine pharmacies located in Massachusetts,
six of which are located in northeast Massachusetts, and the other three in the
suburbs of Boston. The Company paid the selling shareholders of D.A.W. $325,000
in cash and 20,000 shares of its common stock. Additionally, the Company
contributed $200,000 in capital to D.A.W. and paid $800,000 to acquire 80% of
an affiliated corporation which owns the license rights and the intellectual
property rights to the name of "Eaton Apothecary" under which name the pharmacy
transacts business. The $800,000 was paid to the affiliated corporation and
will be used for working capital and to expand the pharmacy chain's business.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Liquidity and Capital Resources, continued
The purchase price also provides that if D.A.W.'s net income for the initial
twelve months following the closing is not at least $300,000 before provision
of income taxes, the purchase price shall be reduced by an amount up to
$100,000. D.A.W entered into long-term employment agreements with its five
principal pharmacists who were four of the selling shareholders and the
husband of the fifth, and the D.A.W. shareholders, including the Company,
entered into a shareholder's agreement providing for joint control of the
board of directors of D.A.W. and the affiliated company.
Business in the first nine months of 1996 continues to be very competitive
but encouraging. Anton and Conway are expecting to deliver six fire trucks for
the third quarter of 1996. Anton has hired additional sales representatives to
cover Massachusetts, New York, Louisiana, and Florida. Anton has enlarged its
Scarborough service center to better handle refurbishing of fire trucks.
ADCO continues to focus on its long-term care market and is pursuing
more business with physician groups. ADCO's sales of its accessibility
equipment continue to increase as ADA compliance is being acted on throughout
the State of Maine. ADCO South continues to explore entering the high volume
incontinence and glove markets in long-term care facilities in South Florida.
Forward-Looking Statements
The statements made above in the last under "Result of Operations" are
forward-looking statements within the meaning of Sections 27A of the Securities
Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act"). Similarly, the statements made under
"Liquidity and Capital Resources" (i) relating to the spin-off of Vectors and
initial public offering of Vectors, and (ii) in the last two paragraphs relating
to the future business of the Company's business segments, are also forward-
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. The results anticipated by any or all
of these forward-looking statements may not occur. Important factors that
may cause actual results to differ materially from the forward-looking
statements include the following:
(1) The Company may not sell as many high dollar fire trucks as
it anticipates;
(2) The selling prices of any of the fire trucks may be lower
than anticipated;
(3) The failure of anticipated orders for fire trucks to materialize
due to budgetary and other factors;
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Forward-Looking Statements, continued
(4) Unforeseen political factors in the local communities in New
England where Conway and Anton do business;
(5) The general state of the economy in New England and South Florida
may reduce purchases of the Company's medical distribution
products and/or fire trucks;
(6) The gross margins at the medical distribution companies could be
affected by increased usage of buying groups and increased
competition;
(7) Shamrock Partners, Ltd. may be unable to sell the common stock of
Vectors in either the private placement or the initial public
offering for reasons internal to it or relating to the past
operations and future prospects of Vectors;
(8) The future condition of the securities markets in general or the
market for initial public offerings;
(9) The future condition of the securities markets for biotechnology
companies such as Vectors;
(10) The inability of Vectors to finalize its registration statement
with the Securities and Exchange Commission;
(11) Unanticipated problems with the Securities and Exchange Commission
declaring effective a registration statement for Vectors;
(12) The failure of suppliers to timely deliver products.
PART II
Item 3: Other information
In 1995, the Company decided to spin-off Vectors. This is expected to
occur in conjunction with Vector's proposed initial public offering as
described below. Following this decision, lengthy periodic discussions ensued
with Vectors' management which culminated in a March 1996 agreement whereby the
president of Vectors and his wife conveyed back to the Company all of its Class
B Preferred Stock in exchange for 20% of Vectors. The Company paid $7,000 to
Vectors and agreed to continue paying Vectors $1,000 per week thereafter until
earlier of (i) receipt by Vectors of in bridge financing, or (ii) completion of
the spin-off. In July 1996, Vectors sold 110,000 shares of common stock at
$5.00 per share and the Company terminated its support of Vectors. From the
proceeds of its bridge offering, Vectors repaid $50,000 to the Company and
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 3: Other information, continued
agreed to discuss, with the Company, the remaining indebtedness. Currently,
the Company owns 1,279,920 shares Vectors' common stock, the bridge investors
own 110,000 shares, and the founders of Vectors own 319,980 shares. The Company
has been advised by Vectors' counsel, in August 1996, that they intend to file
a registration statement with the Securities and Exchange Commission for the
sale to the public of 400,000 shares of common stock at an estimated public
offering price of $10.00 per share subject to the underwriter's option to
purchase an additional 60,000 shares solely to cover over-allotments. Shamrock
Partners, Ltd. has signed a letter of intent with Vectors to act as managing
underwriter of the initial public offering. The Company anticipates that the
registration process will take six to eight weeks at which time the Company
intends to effect the spin-off in conjunction with the initial public offering
of Vectors.
The Company is still actively seeking to acquire medical related companies.
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.
NYER MEDICAL GROUP, INC.
Date: November 19, 1996 // William Clifford, Jr.
William Clifford, Jr.
Vice-President
Date: November 19, 1996 // Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Accounting Officer)
