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, 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 August 19, 1998, there were 3,396,093 outstanding shares of common
stock, par value $.0001 per share.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1998
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, June 30, 1998
and December 31, 1997 3-4
Consolidated Statements of Operations, Three Months
Ended June 30, 1998 and June 30, 1997 5
Consolidated Statements of Operations, Six Months
Ended June 30, 1998 and June 30, 1997 6
Consolidated Statements of Cash Flows, Six Months
Ended June 30, 1998 and June 30, 1997 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Second Quarter 1998 Results 10-13
PART II - OTHER INFORMATION
Item 3. Other Information 13
Signatures 14
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
June 30, December 31,
1998 1997
Current assets:
Cash and cash equivalents $4,081,588 $ 4,497,010
Accounts receivable, less
allowance for doubtful accounts
of $162,964 at June 30, 1998
and $159,023 at December 31, 1997 3,087,103 2,952,555
Inventories, net 4,240,932 4,187,779
Prepaid expenses 145,867 118,559
Receivables from related parties 37,770 18,176
Total current assets 11,593,260 11,774,079
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 641,508 638,624
Leasehold improvements 112,984 112,984
Machinery and equipment 219,107 225,994
Transportation equipment 247,958 243,555
Office furniture, fixtures,
and equipment 711,236 613,101
2,025,593 1,927,058
Less accumulated depreciation
and amortization (747,976) (668,383)
1,277,616 1,258,675
Goodwill and other deferred assets,
net of accumulated amortization of
$334,409 and $256,794 at June 30,
1998 and December 31, 1997,
respectively 928,944 919,683
Advances due from related companies 32,991 37,499
Investment in discontinued operation 1,607,600 1,972,190
Other 146,802 145,914
2,716,337 3,075,286
Total assets $15,587,213 $16,108,040
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
June 30, December 31,
1998 1997
Current liabilities:
Notes payable due related parties $ 646,776 $ 658,776
Current portion of long-term debt 220,647 227,527
Taxes payable 7,743 7,743
Accounts payable 2,516,754 2,409,436
Accrued payroll and related taxes 56,066 59,095
Accrued expenses and other
liabilities 66,644 339,988
Total current liabilities 3,514,630 3,702,565
Long-term debt, net of current
portion 640,266 533,991
Minority interest 700,883 674,095
Deferred credits 147,784 173,333
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 June 30, 1998 and
December 31, 1997, respectively
Common stock, par value $.0001
Authorized: 10,000,000 shares;
issued and outstanding:
3,396,093 shares at June 30, 1998
and December 31, 1997, respectively 340 341
Additional paid-in capital 15,337,126 15,337,126
Stock sale receivable (115,500) (115,500)
Treasury stock, 11,000 shares (52,248)
Accumulated deficit (4,586,069) (4,197,912)
Total shareholders' equity 10,583,650 11,024,056
Total liabilities and
shareholders' equity $15,587,213 $16,108,040
See accompanying notes to consolidated financial statements.
FORM 10-QSB MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
Three Months Ended
June 30, June 30,
1998 1997
Net sales $9,690,662 $9,282,533
Cost and expenses:
Cost of goods sold 7,535,193 7,546,668
Selling and retail 1,381,100 1,263,696
Warehouse and delivery 82,519 96,227
Administrative 675,142 428,926
9,673,954 9,335,517
Operating income (loss) 16,708 (52,984)
Other income (expense):
Interest expense (14,080) (26,937)
Interest income 36,870 46,824
Other 10,244 26,433
Total other income 33,034 46,320
Income (loss) before
minority interest 49,742 (6,664)
Minority interest (53,893) 37,197
(Loss) income from continuing
operations before income taxes (4,151) 30,533
Income taxes 12,504
Income from continuing operations
after income taxes 8,353 30,533
Discontinued operations:
Loss from operations of discontinued
subsidiary-Genetic Vectors (195,679) (34,600)
Gain on sale of Genetic Vectors'
stock 146,862
Loss from discontinued subsidiary
Genetic Vectors (48,817) (34,600)
Net Loss $ (40,464) $ (4,067)
Basic and diluted loss per common
share from continuing operations $ .00 $ .01
Basic and diluted loss per common
share from discontinued operations (.01) (.01)
Basic and diluted loss per common
share $ (.01) $ .00
Weighted average common shares
outstanding 3,403,467 3,012,142
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
Six Months Ended
June 30, June 30,
1998 1997
Net sales $17,590,468 $16,098,777
Cost and expenses:
Cost of goods sold 13,730,572 12,906,459
Selling and retail 2,694,409 2,409,981
Warehouse and delivery 171,740 184,210
Administrative 1,292,541 946,485
17,889,262 16,447,135
Operating loss (298,794) (348,358)
Other income (expense):
Interest expense (42,198) (43,479)
Interest income 135,628 99,175
Other 10,243 104,212
Total other income 103,673 159,908
Loss before
minority interest (195,121) (188,450)
Minority interest (26,788) 12,967
Loss from continuing operations (221,909) (175,483)
Discontinued operations
Loss from operations of discontinued
subsidiary-Genetic Vectors (313,110) (69,200)
Gain on sale of Genetic Vectors'
stock 146,862
Loss from discontinued
subsidiary-Genetic Vectors (166,248) (69,200)
Net Loss $ (388,157) $ (244,683)
Basic and diluted loss per common
share from continuing operations $ (.06) $ (.05)
Basic and diluted loss per common
share from discontinued operations (.05) (.02)
Basic and diluted loss per common
share $ (.11) $ (.07)
Weighted average common shares
outstanding 3,406,189 3,352,971
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
June 30, June 30,
1998 1997
Cash flows from operating
activities:
Net loss $ (388,157) $ (244,683)
Adjustments to reconcile to net cash
used in operating activities:
Loss of discontinued operation 313,110 69,200
Depreciation and amortization 186,148 90,455
Gain on sale of Genetic Vectors' stock (146,862)
Gain on sale of other equity securities (9,465)
Compensation expense in connection
with common stock option exercise 71,399
Minority interest 26,788 (12,967)
Changes in certain working capital
elements (441,204) (341,574)
Net cash flows used in
operating activities (459,642) (368,200)
Cash flows from investing activities:
Purchase of property, plant and
equipment (121,800) (329,283)
Cash received from sale of Genetic
Vectors' stock 198,342
Cash received from sale of other
equity securities 15,787
Increase in deferred charges (75,000)
Net change in advances due from
related companies 4,508 6,179
Increase in other assets, net (87,764) (7,800)
Net cash used in investing
activities 9,073 (405,904)
Cash flows from financing activities:
Proceeds from issuance of
long-term debt 176,971
Payments of long-term debt (77,576) (515,667)
Net repayments from notes due related
parties (12,000) (272)
Payments for purchase of treasury stock (52,248)
Proceeds from exercise of stock
options 32,340
Net cash provided by
financing activities 35,147 483,599
Net decrease in cash
and cash equivalents (415,422) (1,257,703)
Cash and cash equivalents at
beginning of period 4,497,010 6,392,888
Cash and cash equivalents at
end of period $4,081,588 $5,135,185
See accompanying notes to consolidated financial statements.
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
June 30, June 30,
1998 1997
Changes in certain working capital
elements:
Accounts receivable, net $ (134,548) $ (131,465)
Inventories (53,153) (141,177)
Prepaid expenses (27,307) (46,072)
Receivables from related parties (31,594) 37,814
Decrease in deferred credits (25,547)
Accounts payable 107,318 188,540
Accrued payroll and related taxes (3,029) (73,847)
Accrued expenses and other liabilities (273,344) (175,367)
Net change $ (441,204) $ (341,574)
Six Months Ended
June 30, June 30,
1998 1997
Cash paid during the first six months:
Interest $40,181 $40,079
FORM 10-QSB NYER MEDICAL GROUP, INC 000-20175 JUNE 30, 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 SECOND QUARTER RESULTS
Results of Operations
Total revenues for the first six months of 1998 increased 9% over the
first six months of 1997 to $17,590,468, representing an increase of
$1,491,691.
The following table shows revenues of the Company's principal subsidiaries:
For six months ended
June 30, June 30,
Subsidiary 1998 1997 % increase (decrease)
Eaton $10,743,277 $ 8,394,795 21.9%
Anton 1,7481007 2,155,021 (23.2)
ADCO 2,576,869 2,661,033 (3.0)
ADCO South 558,630 506,072 9.0
Conway 1,836,889 2,340,013 (27.0)
Nyer Nutritional 102,291 0 100.0
$17,565,962 $16,072,029
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
in contrast to the first six months of 1997. Anton's/Conway's sales
decreased due to less than expected fire truck sales. ADCO's sales decreased
due to the lower than expected government and equipment sales. ADCO South
sales increased due to higher than normal equipment sales. Nyer Nutritional
received its first substantial sales of $102,291 as compared to $0 for the
same period in 1997.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1998
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Results of Operations: continued,
The Company's overall gross margins were approximately 21.9% in 1998 for
the first six months as compared to 19.8% for the same comparable period in
1997.
Total revenues for the second quarter only of 1998 increased 4.4%
over the same period in 1997 to $9,690,662, representing an increase of
$408,129.
The following table shows revenues of the Company's principal subsidiaries:
For three months ended
June 30, June 30,
Subsidiary 1998 1997 % increase (decrease)
Eaton $5,720,032 $4,366,296 31.0%
Anton 1,006,994 1,600,919 (37.1)
ADCO 1,278,027 1,335,739 (4.0)
ADCO South 277,296 242,973 14.0
Conway 1,289,795 1,710,939 (24.6)
Nyer Nutritional 102,291 0 100.0
$9,674,435 $9,256,866
The reasons for the increases/decreases in revenues are as stated
above.
The following is a table of gross margins of the Company's principal
subsidiaries for the first six months of 1998 and 1997:
For six months ended For three months ended
June 30, June 30, June 30, June 30,
Subsidiary 1998 1997 1998 1997
Eaton 20.8% 21.3% 19.4% 21.5%
Anton 17.7 11.0 20.0 9.5
ADCO 25.0 25.2 25.3 24.9
ADCO South 23.6 28.7 22.7 27.0
Conway 26.5 14.0 31.0 13.7
Nyer Nutritional 28.7 - 28.7 -
Eaton's gross margins decreased due to lower insurance company
reimbursements. Anton's/Conway's gross margins increased due to
less fire truck sales for the first six months of 1998 as compared to
1997. Fire truck sales have lower margins than other products sold by
Anton/Conway. ADCO South's gross margins decreased due to increased
equipment sales which have lower margins.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1998
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,
Selling, general, and administrative expenses increased approximately
17.5% in 1998 to $4,158,690 from $3,540,676 in 1997. The following table
shows the breakdown by subsidiary (and corporate expenses) as follows:
For six months ended For three months ended
June 30, June 30, June 30, June 30,
Subsidiary 1998 1997 1998 1997
Eaton $ 2,088,087 $1,626,528 $1,044,231 $ 829,727
Anton 399,711 358,682 206,168 203,699
ADCO 684,928 656,525 340,774 334,731
SCBA 2,885 2,136 2,192 795
ADCO South 131,099 148,535 66,113 72,782
Corporate 185,060 149,388 97,820 20,233
Conway 387,625 374,371 214,473 204,701
Nyle Home Health 66 1,191 0 509
Nyer Nutritional 279,229 223,320 166,990 121,672
$ 4,158,690 $ 3,540,676 $2,138,761 $1,788,849
The main increases came from Eaton's acquisition of two additional drug
stores and Anton's expansion in New Hampshire, Massachusetts, and New York,
and ADCO's expansion into Nevada.
In total, the Company experienced a net loss of $388,157 in 1998 as
compared to a net loss of $244,683 in 1997. The Company sustained a loss
from continuing operations of $221,909 in 1998 as compared to a
loss of $175,483 in 1997.
The following table summarizes the income (loss) from operations by
subsidiary:
For six months ended For three months ended
June 30, June 30, June 30, June 30,
Subsidiary 1998 1997 1998 1997
Eaton $ 107,555 $ 170,153 $ 53,589 $ 82,269
Anton (79,702) (104,404) (7,773) (45,699)
ADCO (48,732) 10,943 (19,003) (217)
SCBA 7,426 13,349 5,698 5,059
ADCO South (8,686) (10,966) (7,773) (10,105)
Corporate (9,023) 53,669 58,712 81,952
Conway 71,874 (46,699) 51,169 19,215
Nyle Home Health (767) 3,366 (584) 4,048
Nyer Nutritional (261,854) (265,088) (138,570) (105,989)
$ (221,909) $ (175,483) $ 8,353 $ 30,533
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1998
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,
The majority of the loss came from the Company's subsidiary, Nyer
Nutritional, which showed a loss of $261,854 for the first six months of
1998 as compared to a loss of $265,088 for the same period of 1997. Nyer
Nutritional generated its first substantial revenues in the second quarter
of 1998 and is still incurring overhead costs associated with bringing its
AMTFTM product and other related products to market. Eaton incurred new
overhead costs associated with its two new two pharmacies acquired in the
second and third quarter of 1997 and first quarter of 1998. ADCO's loss of
$48,732 as compared to a net income of $10,943 can be attributed to lower
than expected government and equipment sales and lower margins. Conway
had income of $71,874 for the first six months of 1998 as compared to a loss
of $46,699 in the same period of 1997. This can be attributed to more of
an emphasis on raising their gross margins.
The Company recognized a loss from Genetic Vectors, Inc. ("Vectors")
of $313,110 for the first six months of 1998 as compared to a loss of $69,200
in 1997. This loss was offset by a gain of $146,862 on the sale of 22,000
shares of Vectors' stock. The Company currently owns 32.8% 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 32.8% 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 six months of 1998 and 1997, respectively.
For the second quarter, the majority of the loss came from the
Company's subsidiary, Nyer Nutritional, which showed a loss of $138,570
as compared to a loss of $105,989 for the same period of 1997. Nyer
Nutritional generated its first substantial revenues in the second quarter
of 1998 and is still incurring overhead costs associated with bringing its
AMTFTM product and other related products to market. Eaton incurred new
overhead costs associated with its two new two pharmacies acquired in the
second and third quarter of 1997 and first quarter of 1998. ADCO's loss of
$19,003 for the second quarter of 1998 as compared to a loss of $217 can be
attributed to lower than expected government and equipment sales and lower
margins. Conway had income of $51,169 for the second quarter of 1998 as
compared to income of $19,215 for the same comparable period in 1997.
This is attributed to more of an emphasis on raising their gross margins.
The Company recognized a loss from Vectors of $195,679 for the second
quarter of 1998 as compared to a loss of $34,600 in 1997. This loss was
offset by a gain of $146,862 on the sale of 22,000 shares of Vectors.
FORM 10-QSB NYER MEDICAL GROUP, INC. 000-20175 JUNE 30, 1998
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:
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 purchased an aggregate of 11,000 shares
of common stock for a total cost to the Company of $52,248 which is recorded
as treasury stock on the balance sheet.
In May 1998, the Company sold 22,000 shares of its Vectors stock
resulting in an aggregate net proceeds to the Company of $198,342.
In August 1998, the Company intends to sell 23,000 shares of its Vectors
stock.
The Company anticipates its current cash levels are 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 JUNE 30, 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: August 19, 1998 /s/ Samuel Nyer
Samuel Nyer,
President
Date: August 19, 1998 /s/ Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Financial Officer)
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 4,081,588
<SECURITIES> 0
<RECEIVABLES> 3,287,837
<ALLOWANCES> (162,964)
<INVENTORY> 4,240,932
<CURRENT-ASSETS> 11,593,260
<PP&E> 2,025,593
<DEPRECIATION> (747,976)
<TOTAL-ASSETS> 15,587,213
<CURRENT-LIABILITIES> 3,514,630
<BONDS> 788,050
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<COMMON> 340
<OTHER-SE> 10,583,309
<TOTAL-LIABILITY-AND-EQUITY> 15,587,213
<SALES> 17,590,468
<TOTAL-REVENUES> 17,590,468
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