<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 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 November 14,1997, there were outstanding, 3,407,093 shares of common
stock, par value $.0001 per share.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations, Three Months
Ended September 30, 1997 and September 30, 1996 5
Consolidated Statements of Operations, Nine Months
Ended September 30, 1997 and September 30, 1997 6
Consolidated Statements of Cash Flows, Nine Months
Ended September, 1997 and September 30, 1996 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Third Quarter 1997 Results 10-13
PART II - OTHER INFORMATION
Signatures 13
</PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
September 30, December 31,
1997 1996
Current assets:
Cash $4,597,027 $6,392,888
Accounts receivable, less allowance for
doubtful accounts of $166,989 at
September 30, 1997, and $167,502 at
December 31, 1996, respectively 3,070,489 2,629,847
Inventories, net 3,545,240 3,161,925
Prepaid expenses 146,611 118,577
Receivable from related company 8,498 66,242
Total current assets 11,367,865 12,369,479
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 638,624 638,624
Leasehold improvements 394,040 290,606
Machinery and equipment 222,713 65,120
Transportation equipment 228,221 213,006
Capital equipment-lease 15,899
Office furniture, fixtures,
and equipment 295,378 413,133
1,887,675 1,713,289
Less accumulated depreciation
and amortization (585,818) (692,490)
1,301,857 1,020,799
Other assets:
Goodwill and other deferred assets,
net of accumulated amortization of
$221,549 and $135,043 at September 30,
1997 and December 31, 1996,
respectively 928,901 910,030
Advances due from related companies 37,081 42,438
Net asset of discontinued operations 2,200,081 2,683,112
Other 149,671 115,971
Total other assets 3,315,734 3,751,551
Total assets $15,985,456 $17,141,829
See accompanying notes to consolidated financial statements.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30,1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
September 30, December 31,
1997 1996
Current liabilities:
Notes payable due related parties $ 309,100 $ 309,372
Current portion of long-term debt 249,844 324,208
Current portion of capital lease 4,007
Accounts payable 2,677,718 2,315,528
Accrued payroll and related taxes 53,920 122,622
Accrued expenses and other liabilities 213,741 239,866
Total current liabilities 3,508,330 3,311,596
Long-term debt, net of current portion 761,846 1,246,843
Capital lease obligation, net of
current portion 11,892
Minority interest 558,434 648,003
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 September 30, 1997, and
3,400,093 at December 31, 1996 341 341
Additional paid-in capital 15,314,597 15,314,055
Stock subscription receivable (115,500) (115,500)
Accumulated deficit (4,054,485) (3,263,510)
Total shareholders' equity 11,144,954 11,935,387
Total liabilities and
shareholders' equity $15,985,456 $17,141,829
See accompanying notes to consolidated financial statements.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30,1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
September 30, September 30,
1997 1996
Net sales and other revenues $8,307,415 $5,621,012
Expenses:
Cost of goods sold 6,618,750 4,285,636
Selling, general and administrative 1,951,589 1,441,143
8,570,339 5,726,779
Operating loss (262,924) (105,767)
Other income (expense):
Interest expense (27,734) (22,198)
Interest income 82,516 81,795
Other (919) 2,199
Total other income 53,863 61,796
Loss before
minority interest (209,061) (43,971)
Minority interest 76,601 8,147
Loss from continuing operations $(132,460) $ (35,824)
Discontinued operations
Loss from operations of discontinued
subsidiary-Genetic Vectors (note 2) (413,831) (143,645)
Net loss $(546,291) (179,469)
Net loss per common share:
Continuing operations $ (.04) $ (.03)
Discontinued operations (.12) (.05)
Net loss $ (.16) $ (.08)
Weighted average number of common shares
outstanding 3,399,821 3,142,075
See accompanying notes to consolidated financial statements.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended
September 30, September 30,
1997 1996
Net sales and other revenues $24,406,192 $12,732,326
Expenses:
Cost of goods sold 19,525,209 9,984,556
Selling, general and administrative 5,492,265 2,853,641
25,017,474 12,838,197
Operating loss (611,282) (105,871)
Other income (expense):
Interest expense (71,213) (55,574)
Interest income 181,690 130,843
Other 103,293 2,199
Total other income 213,770 77,468
Loss before
minority interest (397,512) (28,403)
Minority interest 89,569 (2,317)
Loss from continuing operations (307,943) (26,086)
Discontinued operations
Loss from operations of discontinued
subsidiary-Genetic Vectors (note 2) (483,031) (210,145)
Net loss $ (790,975) $ (236,231)
Net loss per common share:
Continuing operations $ (.09) $ (.01)
Discontinued operations (.14) (.08)
Net loss $ (.23) $ (.09)
Weighted average number of common shares
outstanding 3,399,821 2,649,762
See accompanying notes to consolidated financial statements.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30, September 30,
1997 1996
Cash flows from operating activities:
Net loss $ (790,975) $ (236,231)
Adjustments to reconcile net loss
to net cash used by operating activities:
Loss from operations of discontinued
subsidiary 483,031
Depreciation and amortization 223,369 149,244
Minority interest (89,569) 2,317
Changes in certain working capital
elements (526,884) (282,467)
Net cash used by operating activities (701,028) (367,137)
Cash flows from investing activities:
Acquisition of property, plant and
equipment (402,022) (67,621)
Acquisition of subsidiaries, net of
cash acquired (808,229)
Increase in deferred charges (105,377)
Net change in advances due from
related companies 5,357 1,737
Increase in other assets, net (33,700)
Net cash used in investing activities (535,742) (874,113)
Cash flows from financing activities:
Repayments of notes payable due
related parties (272) (174,000)
Net proceeds from repayment of notes
payable, 26,020
Repayments of long-term debt (559,361) (169,193)
Proceeds from stock subscription
receivable 150,000
Proceeds from issuance of common stock 5,340,042
Proceeds from exercise of common
stock warrants 2,293,709
Proceeds from exercise of stock
options 542
Net cash provided by (used in)
financing activities (559,091) 7,466,578
Net increase (decrease) in cash (1,795,861) 6,225,328
Cash at beginning of period 6,392,888 262,099
Cash at end of period $4,597,027 $6,487,427
See accompanying notes in consolidated financial statements.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30,1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30, September 30,
1997 1996
Changes in working capital elements
Accounts receivable and prepayments $ (410,932) $ (390,045)
Inventories (383,315) (670,868)
Accounts payable and accrued expenses 267,363 778,446
$ (526,884) $ (282,467)
Supplemental disclosures of cash flow information
Nine Months Ended
September 30, September 30,
Cash paid during the first nine months: 1997 1996
Interest $ 67,401 $ 55,574
The Company entered into a capital lease of $15,899 in 1997.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Consolidated financial statements
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
have been excluded since they are antidilutive.
It is suggested that the financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31,
1997.
2. Discontinued Operations
In August 1997, the Board of Directors approved a plan for the disposal
of its investment in Genetic Vectors, Inc. ("Vectors"), a biotechnology
company located in Florida, for which the Company owns 790,616 or
approximately 34% of Vector's outstanding stock. This investment is
being accounted for as a discontinued operation, and accordingly, the
Company's share of losses in Vectors is segregated in the accompanying
consolidated statements of operations. As of September 30, 1997, the
estimated proceeds to be received for the future disposal of this
investment is greater than the carrying value in the Company's
consolidated balance sheet. Pursuant to an agreement with Vectors, the
Company is restricted from selling or transferring this stock until
January 1998.
3. New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No.128-Earnings per
Share. This Statement is effective for financial statements issued for
periods ending after December 15, 1997 with earlier application not
permitted. The Statement requires dual presentation of basic and diluted
earnings per share on the income statement. The Company's basic earnings
per share for fiscal 1997 will be calculated similar to its currently
disclosed earnings per share. Diluted earnings per share will not be
materially different from basic earnings per share.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. New Accounting Pronouncements, continued
In June 1997, the FASB issued SFAS No.130-Reporting Comprehensive
Income, which requires the separate reporting of all changes to shareholders'
equity, and SFAS No.131-Disclosures about Segments of an Enterprise and
Related Information, which revises existing guidelines about the level of
financial disclosure of a Company's operations. Both Statements are
effective for financial statements issued for fiscal years beginning after
December 15, 1997. The Company has not determined the impact of the new
standards, but does not expect them to have a material impact to existing
financial reporting.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE THIRD QUARTER RESULTS
Results of Operations
Total revenues for the first nine months of 1997 increased $11,673,866
over the first nine months of 1996 to approximately $24,406,000, representing
an increase of 91.7%. The main reason for the increase was the purchase
of D.A.W., Inc. dba Eaton Apothecary ("Eaton") in August of 1996. Eaton
added approximately $13,000,000 in net sales. Eaton is a nine-store chain of
pharmacies in the Boston area. Anton Investments, Inc. ("Anton") and Conway
Associates, Inc. ("Conway") had combined sales of approximately $6,400,000 or
an increase of 12% on net sales of $5,728,512 for the first nine months of
1996. Anton and Conway are distributors of fire, police, and rescue equipment
and supplies. The medical distribution company, ADCO Surgical Supply, Inc.
("ADCO"), located in Maine, had increased sales of approximately $571,000 over
the first nine months of 1996 or 16% of net sales, to $4,154,491. ADCO's
increase in sales continues to come from long-term care market. The medical
distribution company, ADCO South Medical Supplies, Inc. ("ADCO South"), located
in Southern Florida, had a decrease of approximately $149,000, or 16.3% of net
sales for the first nine months of 1997, to $766,477 as compared to $915,551
for the same period in 1996. The decrease is due to less capital equipment
sales.
Net sales and other revenues for the third quarter were $8,307,415
as compared to $5,621,012 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 nine
months of 1997, as compared to gross margin of 21.6% for the comparable
period in 1996. Eaton's gross profit margin was 21.1% Anton and Conway
had a combined gross profit margin of 13.1% as compared to 17.6% for the
same period of 1996. The margin was down due to fire truck sales with lower
than average gross profit margins in 1997. ADCO's gross margin was 25.5% for
the first nine months of 1997 as compared to 25.9% for the same period of 1996.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
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,
ADCO South's gross margin was 27.2% for the first nine months as compared to
28% for the comparable period in 1996.
The Company's gross profit margin for the third quarter of 1997 was 20.3%
as compared to the third quarter of 1996 of 23.7%.
During the first nine months of 1997, selling, general, and adminis-
trative expenses increased by $2,638,624 to $5,492,265 as compared to
$2,853,641 for the first nine months of 1996. The main components of
the increase are as follows: Eaton added selling, general, and
administrative expenses of $2,064,778; Nyer Nutritional Systems, Inc.,
("Nyer Nutritional") added approximately $322,650; and ADCO had an increase
of $126,463. Eaton's overhead is new for the first seven months of 1997 due
to being purchased in August of 1996. ADCO's increases can be attributed to
their sales increase. Anton and Conway had a combined increase of
approximately $99,000.
During the third quarter of 1997, selling, general and administration
expenses were approximately $1,951,589 as compared to approximately $1,441,143
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 nine
months of 1997 and 1996, respectively.
A net loss of ($790,975) occurred in the first nine months of 1997, or
3.2% of net sales. This compares to a net loss of ($236,231) for the first
nine months of 1996, or 1.9% of net sales. The net loss for the first nine
months of 1997 is the combination of the following: Genetic Vectors had a
loss of approximately ($1,400,000) of which the Company has to recognize 34%
of their loss of ($483,031); Eaton had a net income of approximately $148,500;
Conway Associates had a net loss of ($79,600) as compared to a net income of
$120,000 for the first nine months of 1996; Anton experienced a net loss of
($167,300) as compared to net loss of ($105,500) for the nine months of 1996;
ADCO had a net income for the first nine months of $34,900 as compared to a net
income of $20,000 for the comparable period 1996; ADCO South had a net loss of
($20,7000) for the first nine months of 1997 as compared to a net loss of
($10,700) for the first nine months of 1996; Nyer Nutritional had a net loss of
($281,700). Nyer Nutritional began operations in December of 1996. Nyer
Nutritional is still in its start-up phase; SCBA, Inc. (SCBA), (this company
repairs breathing apparatus equipment for cities,towns, and fire departments)
contributed a net income of approximately $21,800. Currently, the Company's
interest income off-sets the corporate overhead expenses.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
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 third quarter of 1997 showed a net loss of ($546,291) as compared
to a net loss of ($179,469) for the same period of 1996. Vectors contributed
a loss of ($413,831) for this period. During the third quarter, the Company had
interest income of approximately $82,500 as the result of the cash balance on
hand.
The Company expects its gross margin to decrease in the last quarter of
1997 due to anticipated high dollar fire truck sales. The expected
gross profit dollars will be significantly higher and will more than off-set
the lower gross operating margin. The gross margins at the medical
distribution company located in Maine and the pharmacy chain should stay
relatively stable for 1997 and increasing sales should result in continued
profitability of these companies.
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.
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.
Liquidity and Capital Resources
As of September 30, 1997, cash and cash items decreased to $4,597,027,
as compared to $6,392,888 at December 31, 1996. The Company anticipates its
current cash levels are adequate to fund the operating needs and potential
acquisitions for the foreseeable future. The Company is still actively seeking
to acquire medical related companies.
</PAGE>
<PAGE>
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 1997
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 Company has budgeted $25,000 per month to loan to Nyer Nutritional
for its working capital needs. Nyer Nutritional has signed an agreement
with a major medical cooperative purchasing group to distribute Nyer
Nutritional's products nationwide. The Company previously reported Mr.
Michael Anton, director of the Company, and president of Anton, had advised
the Company that he intended to resign effective September 30, 1997 to pursue
other interests unrelated to Anton's business. After further discussions with
the Company's management, Mr. Anton has reconsidered and advised the
Company that he intends to remain with the Company in all capacities.
PART II
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 14, 1997 // Samuel Nyer
Samuel Nyer,
President
Date: November 14, 1997 // Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Financial Officer)
</PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 4,597,027
<SECURITIES> 0
<RECEIVABLES> 3,242,884
<ALLOWANCES> (166,989)
<INVENTORY> 3,545,240
<CURRENT-ASSETS> 11,367,865
<PP&E> 1,887,675
<DEPRECIATION> (585,818)
<TOTAL-ASSETS> 15,985,456
<CURRENT-LIABILITIES> 3,508,330
<BONDS> 773,434
0
1
<COMMON> 341
<OTHER-SE> 11,144,612
<TOTAL-LIABILITY-AND-EQUITY> 15,985,456
<SALES> 24,406,192
<TOTAL-REVENUES> 24,406,192
<CGS> 19,525,209
<TOTAL-COSTS> 19,525,209
<OTHER-EXPENSES> 5,492,265
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,213
<INCOME-PRETAX> (790,975)
<INCOME-TAX> 0
<INCOME-CONTINUING> (307,943)
<DISCONTINUED> (483,031)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (790,975)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
