<PAGE>
THIS DOCUMENT IS A COPY OF THE FORM 10-QSB FILED MAY 15, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Act of 1934
For the Quarter Ended March 31, 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 (IRS 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 report(s), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X. No .
As of May 13, 1996, there were outstanding, 2,775,815 shares of common
stock, par value at $.0001 per share.
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
INDEX
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements: Page No.
Consolidated Balance Sheets, March 31, 1996 and
December 31, 1995
Consolidated Statements of Operations, Three Months
Ended March 31, 1996 and March 31, 1995
Consolidated Statements of Cash Flows, Three Months
Ended March 31, 1996 and March 31, 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of First
Quarter 1996 Results
PART II - OTHER INFORMATION
Item 3. Other Information
Signatures
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
ASSETS
<CAPTION> (Unaudited)
March 31, December 31,
1996 1995
<S>
<C> <C>
Current assets:
Cash $2,212,572 $ 262,099
Accounts receivable, less allowance for
doubtful accounts of $99,585 at
March 31, 1996 and at December 31,
1995, respectfully 1,419,934 1,076,299
Receivable from related party 16,603 27,028
Inventories, net 1,443,706 1,250,434
Prepaid expenses 72,520 55,585
Total current assets 5,165,335 2,671,445
Property, plant, and equipment, net 771,711 764,031
Other assets:
Goodwill, net of accumulated amortization
of $79,125 at March 31, 1996, and
$71,460 at December 31, 1995 583,255 220,921
Advances due from related companies 39,058 41,825
Other 106,765 106,765
Total other assets 729,078 369,511
Total assets $6,666,124 $3,804,987
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
1996 1995
<S> <C> <C>
Current liabilities:
Notes payable due related parties $ 486,324 $ 486,324
Current portion of long-term debt 38,634 181,991
Accounts payable 1,039,289 926,597
Accrued payroll and related taxes 170,061 185,681
Accrued expenses and other liabilities 114,485 181,906
Total current liabilities 1,848,793 $1,962,499
Long-term debt, net of current portion 440,186 451,401
Minority interest 145,850 31,372
Shareholders' equity:
Class A Preferred stock, par value
$.0001, Authorized, issued, and
outstanding: 2,000 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; 2,675,815
shares at March 31, 1996, and
2,183,000 at December 31, 1995 267 218
Additional paid-in capital 7,077,080 4,354,165
Stock subscription receivable (150,000)
Accumulated deficit (2,841,083) (2,844,699)
Total shareholders' equity 4,236,295 1,359,715
Total liabilities and
shareholders' equity $6,666,124 $3,804,987
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Three months ended
March 31, March 31,
1996 1995
<S> <C> <C>
Net sales and other revenues $3,336,083 $1,824,160
Expenses:
Cost of goods sold 2,677,241 1,360,470
Selling, general and administrative 635,609 662,305
Research and development 21,000
Interest 15,177 11,386
Total expenses 3,328,027 2,055,161
Income (loss) before minority
interest 8,056 (231,001)
Minority interest (4,441) 12,515
Net income (loss) $ 3,616 $ (218,486)
Net income (loss) per common share $ .00 $ (.12)
Weighted average number of common shares
outstanding 2,110,665 1,877,384
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31, March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 3,616 $ (218,486)
Adjustments to reconcile net income (loss)
to net cash (used) provided by operating
activities:
Depreciation and amortization 36,963 28,480
Minority interest 4,441 (12,515)
(Increase) in inventories (68,090) (41,206)
(Increase) decrease in receivables
and prepayments (350,145) 136,469
Increase in accounts payable and
accrued expenses 29,650 52,219
Net cash (used) provided by
operating activities (343,565) (55,039)
Cash flows from investing activities:
Acquisition of property, plant and
equipment (6,977) (3,190)
Acquisition of subsidiary (420,145)
Net repayments from (advances to)
related companies 2,767 3,378
Net cash used in investing
activities (424,355) 188
Cash flows from financing activities:
Issuance of notes payable, including
shareholder 62,000
Repayments of long-term debt (154,571) (35,913)
Proceeds from issuance of common
stock 2,872,964
Net cash provided by financing
activities 2,718,393 26,088
Net increase (decrease) in cash 1,950,473 (28,764)
Cash at the beginning of period 262,099 98,021
Cash at the end of period $2,212,572 $ 69,257
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
Supplemental disclosures of cash flow information
<CAPTION>
Three months ended
March 31, March 31,
1996 1995
<S> <C> <C>
Cash paid during the first three months:
Interest $ 11,386 $ 12,975
</TABLE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 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
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)
March 31, 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 174,360 159,360
Office furniture, fixtures, and equipment 414,472 397,745
1,364,435 1,327,458
Less accumulated depreciation and
amortization (592,724) (563,427)
$ 771,711 $ 764,031
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations
Total revenues for the first quarter of 1996 increased 83% over the
first quarter of 1995 to approximately $3,336,000, representing an
increase of $1,512,000. The primary reason for the increase was the
purchase of Conway Associates ("Conway") in February of 1996. Conway is
a distributor of fire and rescue equipment and supplies. Conway con-
tributed net sales of $1,217,000 for the first quarter of 1996. Anton
Investments ("Anton") had an increase of approximately $191,000 or 44%
of net sales over the first quarter of 1995 to $626,000. Anton is a
distributor of fire police and rescue equipment and supplies. Anton's
reasons for the increase were: the sale of a fire truck in the first
quarter of 1996 and no fire truck sales for the comparable period in
1995, and a division of Anton's in Massachusetts had increased sales of
approximately $100,000 over the first quarter of 1995. The medical
distribution company, ADCO Surgical Supply, ("ADCO"), located in Maine,
had increased sales of approximately $96,000 over the first quarter of
1995 or 9% of net sales, to $1,153,000. ADCO's increase in sales is
mainly due to increased business in the long-term care market. The
medical distribution company, ADCO South Medical Supplies, ("ADCO South"),
located in Southern Florida, had an increase of approximately $11,000 or
3.4% of net sales for the first quarter of 1996, to $333,550 over the same
period in 1995. The increase is the result of continuing market
penetration and recognition.
The Company's overall gross margin was 19.7% for the first quarter
in 1996, as compared to gross margin of 25.5% for the comparable period
in 1995. One of the reasons for the decline in the gross margin was the
gross profit margin of the newly purchased company. Conway had a gross
profit margin of 9.8%. Fire trucks and equipment are sold at lower gross
margins. Almost 2/3 of Conway's sales were fire trucks and equipment.
Their average gross profit margin is between 3-7%. Anton's gross margin
remained about the same as compared to the first quarter of 1995. ADCO's
gross margin had a decrease to 25.6% as compared to a gross margin of 26.2%
for the comparable period of 1995. This decrease continues to be the
result of reduced margins created by the impact of larger consolidated
customers using buying groups which buy at lower prices. ADCO South had
an increase in their gross margin to approximately 30% as compared to 25.3%
for the first quarter of 1995. This is the result of a continuing effort
to raise gross profit margins.
During the first three months of 1996, selling, general, and admin-
istrative expenses decreased 6.3% for the first quarter of 1996 to $650,786.
The Company had an overall decrease of approximately $44,000 in expenses
over the comparable period of 1995. Conway added new overhead expenses of
approximately $66,000. Anton had an increase of $7,000. ADCO had a
decrease of $28,000. ADCO South had a minimal increase. Genetic Vectors,
("Vectors") had a decrease of approximately $73,000 due to lack of capital
to operate (see Liquidity and Capital Resources). Corporate expenses
decreased approximately $32,000. These reductions are the result of
<PAGE>
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations, continued,
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 less than 1% in the
first three months of 1996 and 1995, respectively.
The Company experienced a net income of $3,636 for the first quarter
of 1996, or .1% of net sales. This compares to a net loss of ($218,486)
for the first quarter of 1995, or 12.0% of net sales. The net income for
the first quarter of 1996 is the result of the following: Conway had a net
income of approximately $43,000; Anton experienced a net loss of ($25,178)
as compared to net loss of approximately ($50,000) for the first quarter
of 1995; ADCO had a net income for the first quarter of $4,700 as compared
to a net loss ($26,555) for the first quarter of 1995; ADCO South had a
net income of $13,555 as compared to a net loss of ($10,340) for the first
quarter of 1995; Vectors had a minimal net loss of ($2,481) as compared to
a net loss of ($65,672) for the first quarter of 1995. Corporate overhead
was $29,539 as compared to $65,591 for the first quarter of 1995.
The Company expects its gross margin to decrease as a result of the
increase in lower margins for high dollar fire truck sales. The expected
gross profit dollars will be significantly higher and more than off-set
the lower gross operating margin. The gross margins at the medical
distribution companies should stay relatively stable for 1996 and increasing
sales should continue the profitability of these companies.
Liquidity and Capital Resources
The Company's primary sources of working capital during the last year
has been the receipt of funds from the sales of stock pursuant to Regulations
D and S under the Securities Act of 1933. In fiscal year 1995, the Company
sold 290,000 shares of common stock and received net proceeds of $775,000.
In the first quarter of 1996, the Company sold 492,815 shares of common stock
and received net proceeds of $2,722,042. Subsequent to March 31, 1996, the
Company sold an additional 100,000 shares of common stock and received net
proceeds of $559,891. In connection with the common stock issuance, 346,408
warrants were granted to purchase common stock at $6.625 per share
exercisable over a two-year period.
The current ratio at March 31, 1996, was 2.8 as compared to 1.2 at
March 31, 1995. Working capital for the first quarter of 1996 was $3,316,542
or 49.7% of total assets. Working capital for the first quarter of 1995
was $371,250 or 10.0% 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 March 31, 1996, cash and cash items increased to $2,212,572, as
compared to $262,099 at December 31, 1995. The reason for this increase in
cash was the sale of 492,815 shares of the Company's common stock. The
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1996
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Liquidity and Capital Resources, continued,
Company believes it has adequate cash and cash equivalents to meet its
working capital needs for the next twelve months and to fund a planned
acquisition which is described below.
In 1995, the Company decided to spin-off Vectors. 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 $250,000 in bridge financing, or (ii) completion
of the spin-off. The Company expects that the spin-off can be completed by
the end of the summer 1996. Shamrock Partners, Ltd. has signed a letter of
intent with Vectors to raise capital through a private placement and an
initial public offering of Vectors' stock. Without giving effect to any
dilution from the bridge financing, the proposed initial public offering or
the issuance of options and warrants, the Company will own 48% of Vectors
following the spin-off, Vectors' management will own 20% and the Company
will spin-off to its shareholders a number of shares equal to 32% of
Vectors' common stock.
Additionally, the Company has provided approximately $78,000 in
financing to Vectors. Finally, the Company granted options to Vectors'
management to purchase 8,000 shares of the Company's common stock,
exercisable over a five year term at $4-5/8 per share as compensation
for consulting services.
In February 1996, the Company acquired 80% of the outstanding stock
of Conway for approximately $420,000. The remaining 20% of the outstanding
stock was purchased by a director of the Company. Conway, based in Mass-
achusetts, is a distributor of fire and rescue equipment and supplies.
Conway had net sales of $1,217,000. Conway is expecting $4.5 million in net
sales for the year 1996. No assurances can be given that this will actually
occur.
Business in the first five months of 1996 continues to be very
competitive. Conway is expected to do approximately 1.4 million for the
second quarter of 1996. Anton is expecting to deliver three fire trucks
for the second quarter which will increase their sales over the same period
in 1995. 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.
Anton also plans on enlarging its retail operation in the summer of 1996.
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
<PAGE>
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Liquidity and Capital Resources, continued,
the State of Maine. ADCO South continues steady growth as it continues
to explore entering the high volume incontinence and glove markets in long
term care facilities in South Florida.
The Company has entered into an informal agreement to purchase 80% of
the stock of a corporation (the "Pharmacy Company") which owns eight
pharmacies located in Massachusetts, six of which are located in northeast
Massachusetts, and the other two in the suburbs of Boston. Under the terms
of the informal understanding, the Company will pay the selling stock-
holders an aggregate of $325,000 in cash and 31,000 shares of its common
stock. In addition, the Company will invest $200,000 in working capital
and place an additional $800,000 in escrow to be used as directed by the
board of directors of the Pharmacy Company. The Company and the Sellers
will jointly control the board of directors of the Pharmacy Company.
Furthermore, the purchase price will be adjusted in the event that the
Pharmacy Company does not generate at least $300,000 in adjusted pre-tax
earnings in the first year of operations after the acquisition. If this
event occurs, they shall owe the Company an amount of less than $100,000
based upon a pre-determined formula.
Forward-Looking Statements
The statements made above in the last paragraph 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 private placement and initial public offering
of Vectors, (ii) in the second paragraph and third last paragraphs relating
to the future business of the Company's business segments, and (iii) the
information relating to the Pharmacy Company 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;
(4) Unforeseen political factors in the local communities in New
England where Conway and Anton do business;
<PAGE>
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Forward-Looking Statements, continued
(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) Unanticipated problems with the Securities and Exchange Commission
declaring effective a registration statement for Vectors;
(11) The failure of suppliers to timely deliver products;
(12) Results of an audit of the Pharmacy Company may cause the Company
not to acquire its stock or acquire it on other terms and
conditions; and
(13) The inability of the Company and the Pharmacy Company to agree
upon a formal agreement which is currently being drafted.
<PAGE>
PART II
Item 3: Other Information
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: May 14, 1996 // Samuel Nyer
Samuel Nyer,
President
Date: May 14, 1996 // Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,212,572
<SECURITIES> 0
<RECEIVABLES> 1,536,122
<ALLOWANCES> 99,585
<INVENTORY> 1,443,706
<CURRENT-ASSETS> 5,165,335
<PP&E> 800,940
<DEPRECIATION> 29,229
<TOTAL-ASSETS> 6,666,124
<CURRENT-LIABILITIES> 1,848,793
<BONDS> 0
0
31
<COMMON> 267
<OTHER-SE> 4,235,997
<TOTAL-LIABILITY-AND-EQUITY> 6,666,124
<SALES> 3,336,083
<TOTAL-REVENUES> 3,336,083
<CGS> 2,677,241
<TOTAL-COSTS> 2,677,241
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,177
<INCOME-PRETAX> 3,616
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,616
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
