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, 1998
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 20, 1998, 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, 1998
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, March 31, 1998
and December 31, 1997 3-4
Consolidated Statements of Operations, Three Months
Ended March 31, 1998 and March 31, 1997 5
Consolidated Statements of Cash Flows, Three Months
Ended March 31, 1998 and March 31, 1997 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
First Quarter 1998 Results 9-11
PART II - OTHER INFORMATION
Item 3. Other Information 11
Signatures 12
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, December 31,
1998 1997
Current assets:
Cash and cash equivalents $3,762,164 $ 4,497,010
Accounts receivable, less
allowance for doubtful accounts
of $163,884 at March 31, 1998
and $159,023 at December 31, 1997 3,068,145 2,952,555
Inventories, net 4,417,626 4,187,779
Prepaid expenses 122,026 118,559
Receivables from related parties 46,128 18,176
Total current assets 11,416,089 11,774,079
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 638,624 638,624
Leasehold improvements 112,984 112,984
Machinery and equipment 226,412 225,994
Transportation equipment 246,496 243,555
Office furniture, fixtures,
and equipment 665,037 613,101
1,982,353 1,927,058
Less accumulated depreciation
and amortization (733,227) (668,383)
1,249,126 1,258,675
Goodwill and other deferred assets,
net of accumulated amortization of
$284,746 and $256,794 at March 31,
1998 and December 31, 1997,
respectively 970,350 919,683
Advances due from related companies 35,212 37,499
Investment in unconsolidated
subsidiary 1,854,760 1,972,190
Other 145,970 145,914
3,006,292 3,075,286
Total assets $15,671,507 $16,108,040
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
1998 1997
Current liabilities:
Notes payable due related parties $ 652,776 $ 658,776
Current portion of long-term debt 224,557 227,527
Taxes payable 7,743 7,743
Accounts payable 2,447,455 2,409,436
Accrued payroll and related taxes 37,426 59,095
Accrued expenses and other
liabilities 163,723 339,988
Total current liabilities 3,533,680 3,702,565
Long-term debt, net of current
portion 596,932 533,991
Minority interest 701,199 674,095
Deferred credits 163,333 173,333
Shareholders' equity:
Class A Preferred stock, par value
$.0001, Authorized, issued and
outstanding: 2,000 shares 1 1
Class B Preferred stock, series 1,
par value $.0001, Authorized:
2,500,000; issued and outstanding:
1,000 shares at March 31, 1998 and
December 31, 1997, respectively
Common stock, par value $.0001
Authorized: 10,000,000 shares;
issued and outstanding:
3,407,093 shares at March 31,1998
and December 31, 1997, respectively 341 341
Additional paid-in capital 15,337,126 15,337,126
Stock sale receivable (115,500) (115,500)
Accumulated deficit (4,545,605) (4,197,912)
Total shareholders' equity 10,676,363 11,024,056
Total liabilities and
shareholders' equity $15,671,507 $16,108,040
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
March 31, March 31,
1998 1997
Net sales $7,899,806 $6,816,244
Cost and expenses:
Cost of goods sold 6,195,379 5,359,791
Selling and retail 1,313,309 1,146,285
Warehouse and delivery 89,221 87,984
Administrative 617,400 517,558
8,215,309 7,111,618
Operating loss (315,503) (295,374)
Other income (expense):
Interest expense (28,118) (16,542)
Interest income 98,758 52,350
Other 77,779
Total other income 70,640 113,587
Loss before
minority interest (244,863) (181,787)
Minority interest 27,105 50,164
Loss from continuing operations
before income taxes (217,758) (131,623)
Income taxes (12,504) (115,000)
Loss from continuing operations
after income taxes (230,262) (246,623)
Discontinued operations
Loss from operations of discontinued
subsidiary-Genetic Vectors (117,431) (34,600)
Net Loss $ (347,693) $ (281,223)
Basic and diluted loss per common
share from continuing operations $ (.07) $ (.08)
Basic and diluted loss per common
share from discontinued operations (.03) (.01)
Basic and diluted loss per common
share $ (.10) $ (.09)
Weighted average common shares
outstanding 3,407,093 3,228,992
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
1998 1997
Cash flows from operating
activities:
Net loss $ (347,693) $ (281,223)
Adjustments to reconcile to net cash
used in operating activities:
Loss of unconsolidated
subsidiary 117,431 34,600
Depreciation and amortization 92,884 51,633
Compensation expense in connection
with common stock option exercise 71,399
Gain on disposal of property, plant
and equipment 1,700
Minority interest 27,105 (50,164)
Changes in certain working capital
elements (546,771) 146,354
Net cash flows used in
operating activities (655,344) (27,401)
Cash flows from investing activities:
Purchase of property, plant and
equipment (56,995) (34,327)
Net change in advances due from
related companies 2,287 2,000
Increase in other assets, net (78,765) (5,705)
Net cash used in investing
activities (133,473) (38,032)
Cash flows from financing activities:
Proceeds from issuance of
long-term debt 106,424 13,806
Payments of long-term debt (46,453) (755,592)
Net (repayments to)proceeds from
notes due related parties (6,000) 44,444
Proceeds from exercise of stock
options 32,340
Net cash provided by
financing activities 53,971 (665,002)
Net decrease in cash
and cash equivalents (734,846) (730,435)
Cash and cash equivalents at
beginning of period 4,497,010 6,392,888
Cash and cash equivalents at
end of period $3,762,164 $5,662,453
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
1998 1997
Changes in certain working capital
elements:
Accounts receivable, net $ (115,590) $ 74,165
Inventories (229,847) (38,289)
Prepaid expenses (3,467) (3,542)
Receivables from related parties (27,952) 44,525
Decrease in deferred credits (10,000)
Accounts payable 38,019 164,502
Accrued payroll and related taxes (21,669) (26,158)
Accrued expenses and other liabilities (176,264) (68,849)
Net change $ (546,770) $ 146,354
Three Months Ended
March 31, March 31,
1998 1997
Cash paid during the first three months:
Interest $26,101 $13,142
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 1998
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.
Basic and diluted loss per share of common stock has 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 Form 10-KSB for the year ended December 31, 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations
Total revenues for the first quarter of 1998 increased 16% over the
first quarter of 1997 to $7,899,806, representing an increase of $1,083,562.
The following table shows revenues of the Company's principal subsidiaries:
March 31, March 31,
Subsidiary 1998 1997 % increase (decrease)
Eaton $5,023,245 $4,028,499 24.7%
Anton 741,013 554,102 33.7
ADCO 1,298,842 1,325,294 (2.0)
ADCO South 281,334 263,099 7.0
Conway 547,094 629,074 (13.0)
$7,891,528 $6,800,068
The major reason for this increase in revenues was due to the Company's
pharmacy chain, Eaton. Eaton acquired two pharmacies in June and September
of 1997 and one in March 1998. This contributed to the increase in revenues
over the first quarter of 1997. Anton's sales increased due to the opening
of a new location in New Hampshire in the middle of the first quarter of
1997, moved and expanded its Massachusetts division and the hiring of a full-
time salesman in New York in May 1997. ADCO's sales decreased due to the
lower than expected government and equipment sales.
The Company's overall gross margins were approximately 21.6% in 1998 as
compared 21.4% for the first quarter of 1997.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Results of Operations: continued,
The following is a table of gross margins of the Company's principal
subsidiaries for the first quarter of 1998 and 1997:
March 31, March 31,
Subsidiary 1998 1997
Eaton 21.8% 21.1%
Anton 14.6 15.6
ADCO 24.6 25.1
ADCO South 24.4 30.3
Conway 14.5 14.8
Eaton's gross margins increased due to increased purchasing power with
the addition of two pharmacies. Anton's gross margins decreased due to a
fire truck sale in the first quarter of 1998 as compared to $0 in 1997.
Fire truck sales have lower margins than other products sold by Anton.
ADCO South's gross margins decreased due to increased equipment sales
which have lower margins.
Selling, general, and administrative expenses increased approximately
16% in 1998 to $2,019,930 from $1,751,827 in 1997. The following table
shows the breakdown by subsidiary (and corporate expenses) as follows:
March 31, March 31,
Subsidiary 1998 1997
Eaton $ 1,043,856 $ 796,804
Anton 193,543 154,983
ADCO 344,154 321,794
SCBA 694 1,339
ADCO South 64,986 75,753
Corporate 87,240 129,154
Conway 173,036 169,670
Nyle Home Health 183 682
Nyer Nutritional 112,238 101,648
$ 2,019,930 $ 1,751,827
The main increases came from Eaton's acquisition of two additional drug
stores and Anton's expansion in New Hampshire, Massachusetts, and New York.
In total, the Company experienced a net loss of $347,693 in 1998 as
compared to a net loss of $281,223 in 1997. The Company sustained a loss
from continuing operations before taxes of $217,758 in 1998 as compared to a
loss of $131,623 in 1997.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1998
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,
The following table summarizes the income (loss) from operations by
subsidiary:
March 31, March 31,
Subsidiary 1998 1997
Eaton $ 53,966 $ 85,884
Anton (72,313) (58,705)
ADCO (29,729) 11,160
SCBA 1,728 8,290
ADCO South (913) 860
Corporate 32,265 (28,186)
Conway (79,295) (65,913)
Nyle Home Health (183) (682)
Nyer Nutritional (123,284) (84,331)
$ (217,758) $ (131,623)
The majority of the loss came from the Company's subsidiary, Nyer
Nutritional, which showed a loss of $123,284 for the first quarter of 1998 as
compared to a loss of $84,331 for the same period of 1997. Nyer Nutritional
generated no revenues for the first quarter of 1998 and is still incurring
start up costs and overhead costs associated with its AMTFTM product. Eaton
incurred new overhead costs associated with its two new two pharmacies
acquired in the second and third quarter of 1997. ADCO's loss of $29,729 as
compared to a net income of $11,160 can be attributed to lower than expected
government and equipment sales and lower margins. Corporate's net income of
$32,265 as compared to a net loss of $28,186 is attributable to decreased
overhead costs and increased interest income.
The Company recognized a loss from Genetic Vectors, Inc. "(Vectors")
of $117,431 for the first quarter of 1998 as compared to a loss of $34,600
in 1997. The Company currently owns 32.9% of outstanding common stock in
Vectors but it is not involved in its management and cannot affect its
results of operations. The Company accounts for 32.9% of Vectors loss on
their consolidated financial statements as a discontinued operation.
Net interest expense as a percentage of sales was less than 1% in the
first three months of 1998 and 1997, respectively.
During the three months ended March 31, 1997, the Company recorded an
estimated provision for income taxes amounting to $115,000. In the second
quarter of 1997, management subsequently concluded that such provision
was unnecessary and reversed the entire amount.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1998
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
In March 1998, the Company acquired certain assets of a pharmacy,
including goodwill, for cash of $25,000 and a note of $106,000.
In May 1998, the Company commenced buying back its shares of common
stock in the open market in accordance with the Securities and Exchange
Commission rules. The Company has been purchasing the maximum allowable
amount on the 1,000 shares per day and intends to continue doing so until
it has purchased an aggregate of 10,000 shares of common stock.
In May 1998, the Company sold 22,000 shares of its Genetic Vectors,
Inc. common stock resulting in an aggregate net proceeds to the Company
of $198,342.
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.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
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 20, 1998 /s/ Samuel Nyer
Samuel Nyer,
President
Date: May 20, 1998 /s/ Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Financial Officer)
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
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<RECEIVABLES> 3,278,157
<ALLOWANCES> (163,884)
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<BONDS> 760,265
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<COMMON> 341
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