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 June 30, 1997
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 August 14, 1997, there were outstanding, 3,407,093 shares of common stock,
par value $.0001 per share.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations, Three Months
Ended June 30, 1997 and June 30, 1996 5
Consolidated Statements of Operations, Six Months
Ended June 30, 1997 and June 30, 1997 6
Consolidated Statements of Cash Flows, Six Months
Ended June 30, 1997 and June 30, 1996 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Second Quarter 1997 Results 10-13
PART II - OTHER INFORMATION
Item 3. Other Information 13
Signatures 13
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
June 30, December 31,
1997 1996
Current assets:
Cash $5,135,185 $6,392,888
Accounts receivable, less allowance for
doubtful accounts of $172,395 at
June 30, 1997, and $167,502 at
December 31, 1996, respectively 2,761,312 2,629,847
Inventories, net 3,303,102 3,161,925
Prepaid expenses 164,649 118,577
Receivable from related company 28,428 66,242
Total current assets 11,392,676 12,369,479
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 638,624 638,624
Leasehold improvements 363,086 290,606
Machinery and equipment 222,956 65,120
Transportation equipment 249,011 213,006
Office furniture, fixtures,
and equipment 509,861 413,133
2,076,338 1,713,289
Less accumulated depreciation
and amortization (764,842) (692,490)
1,311,496 1,020,799
Other assets:
Goodwill and other deferred assets,
net of accumulated amortization of
$184,875 and $135,043 at June 30,
1997 and December 31, 1996,
respectively 935,575 889,504
Advances due from related companies 36,259 40,438
Investment in unconsolidated
subsidiary 1,692,328 1,608,710
Other 123,771 121,676
Total other assets 2,787,933 3,751,551
Total assets $15,492,105 $15,255,437
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
June 30, December 31,
1997 1996
Current liabilities:
Notes payable due related parties $ 309,100 $ 309,372
Current portion of long-term debt 649,643 324,208
Accounts payable 2,504,068 2,315,528
Accrued payroll and related taxes 48,775 122,622
Accrued expenses and other liabilities 64,499 239,866
Total current liabilities 3,576,085 3,311,596
Long-term debt, net of current portion 405,742 1,246,843
Minority interest 637,010 648,003
Shareholders' equity:
Class A Preferred stock, par value
$.0001, Authorized, issued, and
outstanding: 2000 shares 1 1
Common Stock, par value $.0001
Authorized: 10,000,000 shares;
issued and outstanding; 3,407,093
shares at June 30, 1997, and
3,400,093 at December 31, 1996 342 341
Additional paid-in capital 14,496,180 15,315,055
Stock subscription receivable (115,500) (115,500)
Accumulated deficit (3,507,755) (3,544,733)
Total shareholders' equity 10,873,268 11,935,387
Total liabilities and
shareholders' equity $15,492,105 $17,141,829
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
June 30, June 30,
1997 1996
Net sales and other revenues $9,282,533 $3,824,279
Expenses:
Cost of goods sold 7,546,668 3,021,679
Selling, general and administrative 1,788,849 843,390
9,335,517 3,865,069
Operating (loss) (52,984) (40,790)
Other income (expense):
Equity in loss of unconsolidated
subsidiary (34,600)
Interest expense (26,937) (18,199)
Interest income 46,824
Other 26,433
Total other income (expense) 11,720 (18,199)
(Loss) income before
minority interest (41,264) (58,989)
Minority interest 37,197 (1,389)
Net (loss) $ (4,067) $ (60,378)
Net (loss) per common share $ (.02) $ (.02)
Weighted average number of common shares
outstanding 3,012,142 2,744,887
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended
June 30, June 30,
1997 1996
Net sales and other revenues $16,098,777 $7,160,362
Expenses:
Cost of goods sold 12,906,459 5,698,920
Selling, general and administrative 3,540,676 1,478,998
16,447,135 7,177,918
Operating(loss) income (348,358) (17,556)
Other income (expense):
Equity in loss of unconsolidated
subsidiary (69,200)
Interest expense (43,479) (33,376)
Interest income 99,175
Other 104,212
Total other income (expense) 90,708 (33,376)
(Loss) income before
minority interest (257,650) (50,932)
Minority interest 12,967 (5,830)
Net (loss) $ (244,683) $ (56,762)
Net loss per common share $ (.07) $ (.02)
Weighted average number of common shares
outstanding 3,352,971 2,364,932
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30, June 30,
1997 1996
Cash flows from operating activities:
Net (loss) income $ (244,683) $ (56,762)
Adjustments to reconcile net loss
to net cash (used) provided by
operating activities:
Loss of unconsolidated
subsidiary 69,638
Depreciation and amortization 88,041 78,974
Compensation expense in connection
with common stock option exercise 71,369
Minority interest (10,993) 5,830
Changes in certain working capital
elements (341,573) (494,958)
Net cash (used) provided by operating
activities (368,201) (466,916)
Cash flows from investing activities:
Acquisition of property, plant and
equipment (329,283) (7,616)
Acquisition of subsidiary (420,145)
Increase in deferred charges (75,000)
Net change in advances due form
related companies 6,179 4,461
Increase in other assets, net (7,800)
Net cash used in investing activities (405,904) (423,300)
Cash flows from financing activities:
Repayments of notes payable to a
related parties (272)
affiliate
Repayment of notes payable, including
shareholder (162,000)
Repayments of long-term debt (515,667) (162,739)
Proceeds from exercise of stock
options 32,340
Net cash provided by
financing activities 483,599 5,315,509
Net increase (decrease) in cash 1,257,704 4,425,293
Cash at beginning of period 6,392,888 262,099
Cash at end of period $5,135,184 $4,687,392
See accompanying notes in consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30,1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Supplemental disclosures of cash flow information
Six Months Ended
June 30, June 30,
Cash paid during the first six months: 1997 1996
Interest $ 40,079 $ 33,376
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
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)
June 30, December 31,
1997 1996
Land $ 92,800 $ 92,800
Building 638,624 638,624
Leasehold improvements 363,086 290,606
Machinery and equipment 222,956 65,120
Transportation equipment 249,011 213,006
Office furniture, fixtures, and equipment 509,861 413,133
2,076,338 1,713,289
Less accumulated depreciation and
amortization (764,842) (692,490)
$1,311,496 $1,020,799
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS
Results of Operations
Total revenues for the first six months of 1997 increased 125% over the
first six months of 1996 to approximately $16,098,177, representing an
increase of $8,938,415. The main reason for the increase was the purchase
of Eaton Apothecary ("Eaton") in August of 1996. Eaton added approximately
$8,400,000 in net sales. Eaton is a nine-store chain of pharmacies.
Anton Investments ("Anton") and Conway Associates ("Conway") had combined
sales of approximately $4,495,000 or an increase of 4% on net sales of
$4,341,000 for the first six months of 1996. Anton and Conway are
distributors of fire police and rescue equipment and supplies. The medical
distribution company, ADCO Surgical Supply, ("ADCO"), located in Maine, had
increased sales of approximately $388,000 over the first six months of 1996
or 17%of net sales, to $2,661,000. ADCO's increase in sales continues to
come from long-term care market. The medical distribution company, ADCO South
Medical Supplies, ("ADCO South"), located in Southern Florida, had a decrease
of approximately $90,000, or 18.0% of net sales for the first six months
of 1997, to $506,000 as compared to $ 596,000 for the same period in 1996.
The decrease is due to less capital equipment sales.
Net sales and other revenues for the second quarter were $9,252,533
as compared to $3,824,279 for the same period of 1996. The reason for the
increase in sales is as stated above.
The Company's overall gross profit margin was 20.0% for the first six
months of 1997, as compared to gross margin of 20.4% for the comparable
period in 1996. Eaton's gross profit margin was 21.3% Anton and Conway
had a combined gross profit margin of 8.7% as compared to 14.7%. The margin
was down due to fire truck sales with lower than average gross profit margins.
ADCO's gross margin was 25.2% for the first six months of 1996 and as
compared to 26.1% for the same period of 1996. ADCO South's gross margin
was 28.7% for the first six months as compared to 30% for the comparable
period in 1996.
The Company's gross profit margin for the second quarter of 1997
was 18.7% as compared to the second quarter of 1996 of 20.1%.
During the first six months of 1997, selling, general, and admin-
istrative expenses increased 2,061,678 to $3,540,676 for an increase of
139% over for the first two quarters of 1997. The main components of
the increase are as follows: Eaton added selling, general, and
administrative expenses of $1,626,500; Nyer Nutritional Systems, Inc.,
("Nyer Nutritional") added approximately $223,300; and ADCO had an increase
of $111,000. Eaton overhead is new for the first two quarters of 1997 due
to being purchased in August of 1996. ADCO's increases can be attributed to
their sales increase.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS
Results of Operations: continued,
During the second quarter of 1997, selling, general and administration
expenses were approximately $1,788,849 as compared to approximately $843,000 for
the same period in 1996. The reasons for this increase are as stated above.
Net interest expense as a percentage of sales was .01% in the first six
months of 1997 and 1996, respectively.
A net loss of ($244,683) occurred in the first six months of 1997, 1.5%
of net sales. This compares to a net loss of ($56,762) for the first six
months of 1996, or 1.0% of net sales. The losses in 1997 are a combination
of all of the companies. The net loss for the first six months of 1997
is the result of the following: Eaton had a net income of approximately
170,000; Conway Associates had a net loss of ($46,700) as compared to a net
income of $120,000 for the first six months of 1996; Anton experienced a net
loss of ($104,400) as compared to net loss of ($91,090) for the six months
of 1996; ADCO had a net income for the first six months of $10,900 as
compared to a net income of $3,200 for the comparable period 1996; ADCO South
had a net loss of ($11,000) for the first six months of 1996 as compared to a
net loss of ($1,200) for the first six months of 1996; The Company recognized
($69,200) net loss due to their share of ownership in Genetic Vectors as
compared to a net loss of ($31,500) for the first six months of 1996. Nyer
Nutritional had a net loss of ($195,200) as compared to $0 for the first
six months of 1996. Nyer Nutritional began operations in December of 1996.
Nyer Nutritional is still in its start-up phase and sales are expected in the
third quarter of 1997. Currently, the Company's interest income off-sets the
corporate overhead expenses. SCBA, Inc. "SCBA", (this company repairs
breathing apparatus equipment for cities,towns, and fire departments)
contributed a net income of approximately $13,000.
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 and the pharmacy chain should stay relatively stable
for 1997 and increasing sales should continue the profitability of these
companies.
The second quarter of 1996, showed a net loss of ($4,067) as compared to
a net loss of ($60,377) for the same period of 1996. During the second
quarter, the Company had interest income of approximately $52,000 as the result
of the cash balance on hand. 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 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS
Liquidity and Capital Resources
Business in the first quarter of 1997 continues to be very
competitive. ADCO continues to focus on its long-term care market
and is pursuing more business with physician groups. ADCO has
established a new physician distribution center in Las Vegas, Nevada.
This new location will emphasize pharmaceutical, vaccines, injectables,
as well as traditional medical equipment and supplies. Sales expected
from this location will be approximately $400,000 for 1997. ADCO has also
established a government contract sales division for medical equipment
and supplies to various state and federal agencies. Anticipated sales
from this division should be approximately $200,000. This division
should generate more revenues in the future as the federal government
requires vendors to transact business via EDI. ADCO's sales of its
accessibility equipment continues as compliance is being acted on throughout
the State of Maine. ADCO had record sales for the first six months of
1997, an increase of 17% over the same period of 1996.
Anton, Conway, and SCBA are continuing to look at ways to better utilize
their combined products and service capabilities in order to increase sales
and gross profit dollars in 1997.
Eaton is continuing to look at potential acquisitions to further
enhance its position as the leading independent pharmacy chain in the
greater North Shore area of Massachusetts. Eaton will also try to
expand its marketing and sales of home health care products and
accessibility products. This will continue to enhance its
reputation as a leading provider of professional pharmacy supplies
and equipment.
Nyer Nutritional's products are actively being marketed to
home health care providers and agencies throughout the United
States. Nyer Nutritional also is working on developing world wide
contracts on its patented nutritional products. Nyer Nutritional
is expecting to have sales in the third quarter of 1997. The Company
announced in July that Nyer Nutritional was awarded a patent by the
government of India. Nyer Nutritional has been awarded similar patents
in the United States and certain other foreign countries.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS
Liquidity and Capital Resources, continued
As of June 30, 1997, cash and cash items decreased to $5,135,184, as
compared to $6,392,888 at December 31, 1996. The Company anticipates at
current cash levels is adequate to fund the operating needs and potential
acquisitions for the foreseeable future.
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: August 14, 1997 // Samuel Nyer
Samuel Nyer,
President
Date: August 14, 1997 // Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Accounting Officer)
