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 March 31, 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 May 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 MARCH 31, 1997
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, March 31, 1997
and December 31, 1996 3-4
Consolidated Statements of Operations, Three Months
Ended March 31, 1997 and March 31, 1996 5
Consolidated Statements of Cash Flows, Three Months
Ended March 31, 1997 and March 31, 1996 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
First Quarter 1997 Results 9-14
PART II - OTHER INFORMATION
Item 3. Other Information 15
Signatures 15
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, December 31,
1997 1996
Current assets:
Cash and cash equivalents $5,662,453 $ 6,392,888
Accounts receivable, less
allowance for doubtful accounts
of $167,502 at March 31, 1997
and December 31, 1996 2,555,682 2,629,847
Inventories, net 3,200,214 3,161,925
Prepaid expenses 122,119 118,577
Receivables from related parties 21,717 66,242
Total current assets 11,562,185 12,369,479
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 638,624 638,624
Leasehold improvements 306,474 290,606
Machinery and equipment 65,120 65,120
Transportation equipment 219,108 213,006
Office furniture, fixtures,
and equipment 425,490 413,133
1,747,616 1,713,289
Less accumulated depreciation
and amortization (714,692) (692,490)
1,032,924 1,020,799
Goodwill and other deferred assets,
net of accumulated amortization of
$155,946 and $135,043 at March 31,
1997 and December 31, 1996,
respectively 889,504 910,030
Advances due from related companies 40,438 42,438
Investment in unconsolidated
subsidiary 1,608,710 2,683,112
Other 121,676 115,971
2,660,328 3,751,551
Total assets $15,255,437 $17,141,829
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
1997 1996
Current liabilities:
Notes payable due related parties $ 309,372 $ 309,372
Current portion of long-term debt 212,861 324,208
Accounts payable 2,480,030 2,315,528
Accrued payroll and related taxes 96,464 122,622
Accrued expenses and other
liabilities 436,979 239,866
Total current liabilities 3,535,706 3,311,596
Long-term debt, net of current
portion 602,598 1,246,843
Minority interest 626,652 648,003
Shareholders' equity:
Class A Preferred stock, par value
$.0001, Authorized, issued and
outstanding: 2,000 shares 1 1
Common stock, par value $.0001
Authorized: 10,000,000 shares;
issued and outstanding:
3,407,093 and 3,400,093 shares
at March 31,1997 and December
31, 1996, respectively 342 341
Additional paid-in capital 14,150,371 15,314,055
Stock sale receivable (115,500) (115,500)
Accumulated deficit (3,544,733) (3,263,510)
Total shareholders' equity 10,490,481 11,935,387
Total liabilities and
shareholders' equity $15,255,437 $17,141,829
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
March 31, March 31,
1997 1996
Net sales $6,816,244 $3,336,083
Cost and expenses:
Cost of goods sold 5,359,791 2,677,241
Selling, general, and
administrative 1,751,827 633,128
Operating expenses-Vectors 2,481
7,111,618 3,312,850
Operating(loss) income (295,374) 23,233
Other income (expense):
Equity in loss of unconsolidated
subsidiary (34,600)
Interest expense (16,542) (15,176)
Interest income 52,350
Other 77,779
Total other income (expense) 78,987 (15,176)
(Loss) income before
minority interest (216,387) 8,057
Minority interest 50,164 (4,441)
Net (loss) income before
income taxes $ (166,223) $ 3,616
Provision for income taxes (115,000)
Net (loss) income $ (281,223) $ 3,616
Loss per common share $ (.09) $ .00
Weighted average number of common
stock and common stock equivalents
outstanding 3,228,992 2,110,665
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
1997 1996
Cash flows from operating
activities:
Net loss $ (281,223) $ 3,616
Adjustments to reconcile to net cash
used in operating activities
Loss of unconsolidated
subsidiary 34,600
Depreciation and amortization 51,633 36,963
Compensation expense in connection
with common stock option exercise 71,369
Minority interest (50,164) 4,441
Changes in certain working capital
elements 146,354 (388,585)
Net cash flows used in
operating activities (27,401) (343,565)
Cash flows from investing activities:
Acquisition of subsidiaries, net of
cash acquired (420,145)
Purchase of property, plant and
equipment (34,327) (6,977)
Net change in advances due from
related companies 2,000 2,767
Increase in other assets, net (5,705)
Net cash used in investing
activities (38,032) (424,355)
Cash flows from financing activities:
Proceeds from issuance of
long-term debt 13,806
Payments of long-term debt (755,592) (154,571)
Net (repayments to)proceeds from
notes due related parties 44,444
Proceeds from issuance of common
stock 2,872,964
Proceeds from exercise of stock
options 32,340
Net cash provided by
financing activities (665,002) 2,718,393
Net (decrease) increase in cash
and cash equivalents (730,435) 1,950,473
Cash and cash equivalents at
beginning of period 6,392,888 262,099
Cash and cash equivalents at
end of period $5,662,453 $2,212,572
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31, March 31,
1997 1996
Cash paid during the first three months:
Interest $13,142 $11,386
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.
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,
1997 1996
Land $ 92,800 $ 92,800
Building 638,624 638,624
Leasehold improvements 306,474 290,606
Machinery and equipment 65,120 65,120
Transportation equipment 219,108 213,006
Office furniture, fixtures,
and equipment 425,490 413,133
1,747,616 1,713,289
Less accumulated depreciation and
amortization (714,692) (692,490)
$1,032,924 $1,020,799
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1997
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 1997 increased 104% over the
first quarter of 1996 to approximately $6,816,244, representing an
increase of $3,480,161. The primary reason for the increase was the
purchase of Eaton Apothecary ("Eaton") in August of 1996. Eaton added
approximately $4,000,000 in net sales. Eaton is a nine-store chain of
pharmacies. Anton Investments ("Anton") and Conway Associates ("Conway")
had combined sales of approximately $1,200,000 or a decrease of 36%
of net sales of $1,800,000 in the first quarter of 1996. Anton and
Conway are distributors of fire police and rescue equipment and supplies.
The reason for the decrease in sales is attributed to no fire truck sales
in the first quarter. The medical distribution company, ADCO Surgical
Supply, ("ADCO"), located in Maine, had increased sales of approximately
$172,700 over the first quarter of 1996 or 15% of net sales, to $1,325,000.
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
$70,500, or 21.0% of net sales for the first quarter of 1997, to $263,100
as compared to the same period in 1995. The decrease is due to less
capital equipment sales.
The Company's overall gross margin was 21.4% for the first quarter
in 1997, as compared to gross margin of 19.7% for the comparable period
in 1996. The main reason for this increase was no fire truck sales were
recorded for the first quarter of 1997. Fire trucks and equipment are
sold at lower gross margins. Their average gross profit margin is between
3-7%. Eaton's gross margin was 21.1% for the first quarter. ADCO's gross
margin had a decrease to 25.6% as compared to a gross margin of 25.6% for
the comparable period of 1996. 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 and the long-term care market.
ADCO South's remained constant at 30% for the first quarter of 1997 and
1996.
During the first three months of 1997, selling, general, and admin-
istrative expenses increased 1,118,699 for the first quarter of 1997 from
633,128 for the same comparable period in 1996. The main components of
the increase are as follows: Eaton added selling, general, and
administrative expenses of $796,804; Nyer Nutritional Systems, Inc.,
("Nyer Nutritional") added approximately $102,000; and the fire truck
companies, Anton and Conway, had an additional expenses of approximately
$110,000. Conway added new overhead expenses due to being purchased in
mid-February 1996. ADCO had an increase of approximately $36,000 which
can be attributed to their sales increase. ADCO South has a slight
decrease which can be attributed to lower sales.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations: continued,
Net interest expense as a percentage of sales was less than 1% in the
first three months of 1997 and 1996, respectively.
The Company experienced a net loss of ($281,223) for the first quarter
of 1997, or 4.1% of net sales. This compares to a net income of $3,616
for the first quarter of 1996, or .1% of net sales. The net loss for
the first quarter of 1997 is the result of the following: Conway had a net
loss of approximately ($65,000) as compared to a net income for the
first quarter of 1996 of $43,000; Anton experienced a net loss of ($58,705)
as compared to net loss of approximately ($25,178) for the first quarter
of 1996; Eaton has a net income of $107,355; ADCO had a net income for the
first quarter of $11,160 as compared to a net income of $4,700 for the first
quarter of 1996; ADCO South had a net income of $860 as compared to a net
income of $13,555 for the first quarter of 1996; the Company recognized
a net loss of ($34,600) from its unconsolidated subsidiary Genetic Vectors
for the first quarter of 1997 as compared to a minimal net loss of ($2,481)
for the first quarter of 1996. Nyer Nutritional added a loss of ($105,413)
which is attributed to overhead. Nyer Nutritional is still in its start-
up phase and sales are expected in the third quarter of 1997.
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.
Liquidity and Capital Resources
In January 1997, the Company completed its spin-off of
Vector's common stock which resulted in 512,071 shares of common
stock being distributed as a dividend to shareholders of Nyer.
After the completion of the spin-off, Nyer holds 34.6% of the
outstanding common stock of Vectors. This transaction qualifies
as a taxable event, under Internal Revenue Service rules.
Accordingly, the Company has recorded as taxable gain of
approximately $2,500,000, offset by a net operating loss
carryforward, which results in an estimated tax liability of
approximately of $325,000. Under the Statement of Financial Accounting
Standards No. 109, the difference between the financial statement carrying
value and the cash basis of the stock, which was spun-off, is reflected
in the Statement of Operations as income tax in the amount of $115,000.
Likewise, the difference between the fair market value and the financial
statement carrying value has been reflected as a reduction in equity of
$210,000.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Liquidity and Capital Resources, continued
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's sales
of its accessibility equipment continue to increase as compliance
is being acted on throughout the State of Maine. ADCO South is
currently looking to hire a local sales representative to actively
solicit business in its local market area. ADCO South is also
continue to explore entering the high volume incontinence
and glove markets in long-term care facilities in South Florida.
Anton has enlarged its Scarborough service center to better handle
refurbishing of fire trucks. Anton, Conway, and SCBA are looking
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. The company has
received several trial orders. Nyer Nutritional is expecting
to have sales in the third quarter of 1997.
The Company anticipates at current cash levels is adequate
to fund the operating needs and potential acquisitions for the
foreseeable future.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1997
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
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, 1997 /s/ Samuel Nyer
Samuel Nyer,
President
Date: May 14, 1997 /s/ Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Accounting Officer)
[ARTICLE] 5
[CIK] 0000884647
[NAME] NYER MEDICAL GROUP, INC
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-END] MAR-31-1997
[CASH] 5,662,453
[SECURITIES] 0
[RECEIVABLES] 2,723,184
[ALLOWANCES] 167,502
[INVENTORY] 3,200,214
[CURRENT-ASSETS] 11,562,185
[PP&E] 1,747,616
[DEPRECIATION] 714,692
[TOTAL-ASSETS] 15,255,437
[CURRENT-LIABILITIES] 3,535,706
[BONDS] 602,598
[PREFERRED-MANDATORY] 0
[PREFERRED] 1
[COMMON] 342
[OTHER-SE] 10,490,481
[TOTAL-LIABILITY-AND-EQUITY] 15,255,437
[SALES] 6,816,244
[TOTAL-REVENUES] 6,816,244
[CGS] 5,359,791
[TOTAL-COSTS] 5,359,791
[OTHER-EXPENSES] 1,606,134
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 16,542
[INCOME-PRETAX] (166,223)
[INCOME-TAX] (115,000)
[INCOME-CONTINUING] (281,223)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (281,223)
[EPS-PRIMARY] (.08)
[EPS-DILUTED] 0
</TABLE>
