FORM 10-Q
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, 2000
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 19, 2000, there were outstanding, 3,742,189 shares of common
stock,par value $.0001 per share.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, March 31, 2000
and December 31, 1999 3-4
Consolidated Statements of Operations, Three Months
Ended March 31, 2000 and March 31, 1999 5
Consolidated Statements of Cash Flows, Three Months
Ended March 31, 2000 and March 31, 1999 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
First Quarter 2000 Results 9-12
PART II - OTHER INFORMATION
Item 3. Other Information 13
Signatures 14
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, December 31,
2000 1999
Current assets:
Cash and cash equivalents $ 816,417 $ 1,066,562
Investment in marketable securities 1,417,185 1,492,185
Accounts receivable, less
allowance for doubtful accounts
of $177,920 at March 31, 2000
and $177,739 at December 31, 1999 3,656,461 3,704,025
Inventories, net 4,327,194 4,289,055
Prepaid expenses 121,439 104,923
Receivables from related parties 2,029 3,877
Investment in discontinued operation 463,384 472,855
Total current assets 10,804,109 11,133,482
Property, plant and equipment, at
cost:
Land 92,800 92,800
Building 641,508 641,508
Leasehold improvements 543,807 543,807
Machinery and equipment 125,263 125,263
Transportation equipment 360,959 338,971
Office furniture, fixtures,
and equipment 872,023 865,310
2,636,360 2,607,659
Less accumulated depreciation
and amortization (1,154,924) (1,073,393)
1,481,436 1,534,266
Goodwill and other deferred assets,
net of accumulated amortization of
$440,694 and $412,687 at March 31,
2000 and December 31, 1999,
respectively 444,288 472,295
Advances due from related companies 34,346 33,592
478,634 505,887
Total assets $12,764,179 $13,173,635
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
2000 1999
Current liabilities:
Current portion of notes payable
due related party $ 161,508 $ 161,508
Current portion of long-term debt 187,613 222,879
Accounts payable 3,484,576 3,458,835
Accrued payroll and related taxes 196,673 235,046
Accrued expenses and other
liabilities 127,421 224,117
Total current liabilities 4,157,791 4,302,385
Notes payable due related party,
net of current portion 412,820 442,820
Long-term debt, net of current
portion 538,663 555,808
Minority interest 571,523 580,312
Deferred credits 50,800 63,339
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, 2000 and
December 31, 1999
Common stock, par value $.0001
Authorized: 10,000,000 shares;
issued: 3,753,189 at March 31, 2000
and 3,748,789 at December 31, 1999 375 375
Additional paid-in capital 17,679,268 17,657,268
Stock sale receivable (115,500) (115,500)
Treasury stock (11,000 shares at
March 31, 2000 and
December 31, 1999) (52,249) (52,249)
Accumulated deficit (10,479,313) (10,260,924)
Total shareholders' equity 7,032,582 7,228,971
Total liabilities and
shareholders' equity $12,764,179 $13,173,635
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
March 31, March 31,
2000 1999
Net sales $9,760,241 $9,454,434
Cost and expenses:
Cost of goods sold 7,769,498 7,628,171
Selling and retail 1,365,613 1,248,127
Warehouse and delivery 190,786 156,645
Administrative 630,706 688,931
9,956,603 9,721,874
Operating loss (196,362) (267,440)
Other income (expense):
Interest expense (20,970) (24,075)
Interest income 45,416 74,700
Other 23,213 46,700
Total other income 47,659 97,325
Loss before
minority interest (148,703) (170,115)
Minority interest 8,789 28,327
Loss from continuing
operations (139,914) (141,788)
Discontinued operations
Loss from Nyer
Nutritional Systems (78,475) (84,588)
Net loss from discontinued
operations (78,475) (84,588)
Net Loss $ (218,389) $ (226,376)
Basic and diluted loss per share:
Continuing operations $ (.04) $ (.04)
Discontinued operations (.02) (.02)
Basic and diluted loss per share $ (.06) $ (.06)
Weighted average common shares
outstanding 3,749,476 3,744,797
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
2000 1999
Cash flows from operating
activities:
Net loss $(218,389) $(226,376)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation 90,296 52,263
Amortization 28,007 33,762
Gain on sale of pharmacy (25,000)
Minority interest (8,789) (28,327)
Decrease in deferred credit (12,539) (10,500)
Changes in certain working capital
elements (114,571) (174,043)
Net cash flows used in
operating activities (235,985) (378,221)
Cash flows from investing activities:
Purchase of property, plant and
equipment (10,701) (82,962)
Proceeds from sale of pharmacy 50,800
Proceeds from marketable securities 75,000
Net change in advances due from
related companies (754) (765)
Decrease in other assets, net 706 895
Net cash provided by (used in)
investing activities 64,251 (32,032)
Cash flows from financing activities:
Proceeds from issuance of
long-term debt 200,000
Payments of long-term debt (70,411) (46,338)
Net repayments of notes to
related parties (30,000) (20,000)
Proceeds from exercise of stock
options 22,000
Net cash (used in) provided
by financing activities (78,411) 133,662
Net decrease in cash
and cash equivalents (250,145) (276,591)
Cash and cash equivalents at
beginning of period 1,066,562 4,136,988
Cash and cash equivalents at
end of period $ 816,417 $3,860,397
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
2000 1999
Changes in certain working capital
elements:
Accounts receivable, net $ 47,564 $ 678,323
Inventories (38,139) (222,465)
Prepaid expenses (16,516) (4,929)
Receivables from related parties 1,848 1,936
Accounts payable 25,741 (328,298)
Accrued payroll and related
taxes (38,373) (88,111)
Accrued expenses and other
liabilities (96,696) (210,499)
Net change $ (114,571) $ (174,043)
Three Months Ended
March 31, March 31,
2000 1999
Cash paid during the first
three months:
Interest $ 21,757 $ 19,144
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
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-K for the year ended December 31, 1999.
Certain amounts in 1999 have been reclassified to conform to the 2000
presentation.
2. Business Segments:
The Company had three active business segments in 2000, and 1999:
(1)wholesale and retail sale of surgical, diabetic, medical equipment and
supplies, (2) wholesale and retail distribution of equipment, supplies, and
novelty items to emergency medical service, fire departments, and police
departments, and (3) retail pharmacy drug store chain. Business segments are
determined based on products or services offered for sale.
Summary data for the quarter ended March 31, 2000 is as follows:
Diabetic,
Medical, and EMT, Fire, Police Pharmacy
Surgical Supplies Equip and Supplies Chain Corporate Consolidated
Net Sales $1,934,309 $1,066,496 $ 6,759,436 $ 9,760,241
Operating
loss (66,441) (70,106) 33,442 $ (93,257) (196,362)
Total assets 2,882,098 1,859,971 5,422,344 2,136,382 12,300,795
Capital
Expenditures 25,439 3,262 28,701
Depreciation
and
amortization 45,251 13,937 58,101 1,014 118,303
Interest income (2,623) (3,013) (39,780) (45,416)
Interest
expense 6,198 361 14,411 20,970
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. Business Segments, continued
Summary data for the quarter ended March 31, 1999 is as follows:
Diabetic,
Medical, and EMT, Fire, Police Pharmacy
Surgical Supplies Equip and Supplies Chain Corporate Consolidated
Net Sales $1,660,241 $2,096,329 $5,697,864 $ 9,454,434
Operating
loss (19,759) (69,701) (82,974) $ (95,006) (267,440)
Total assets 2,720,612 2,000,177 5,001,220 2,978,771 12,700,780
Capital
Expenditures 31,788 17,669 33,505 82,962
Depreciation
and
amortization 24,179 18,987 41 605 1,254 86,025
Interest income (4,655) (11,713) (58,332) (74,700)
Interest
expense 8,652 398 15,025 24,075
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations
Quarter Ended March 31, 2000 as compared to Quarter Ended March 31, 1999.
NET SALES. Total sales for the first quarter of 2000 increased 3% over the
first quarter of 1999 to $9,760,241, representing an increase of $305,807.
The following table shows sales by subsidiary for first quarter of 2000 and
1999:
March 31, March 31,
Subsidiary 2000 1999 % increase (decrease)
Eaton $6,759,436 $5,697,864 18.6%
Anton 551,893 709,421 (22.2)
ADCO 1,559,517 1,379,808 13.0
SCBA 3,192 4,296 (25.6)
ADCO South 333,114 280,433 18.8
Conway 511,411 1,382,612 (63.0)
Nyer Internet 41,678 -
$9,760,241 $9,454,434
The major reason for the increase in revenues was due to the
Company's pharmacy chain, Eaton. Eaton sales increased due to their
increased volume on prescription drugs as a result of continued
marketing campaign which is focused on assisted-living and home-based
sectors. ADCO's sales increased $179,709 in 2000, as compared to the
first quarter of 1999 due mainly to continued growth of its Nevada division,
its respiratory division, and a continued focus and effort on marketing
to the nursing home and physician markets. The major reason for the
decrease in Conway's sales was the sale of three fire trucks in
the first quarter of 1999 as compared to no fire truck sales in
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Results of Operations: continued,
the first quarter of 2000. The Company intends to focus more on fire
equipment and supplies and less on fire truck sales due to lower margins
realized on the sale of fire trucks. As a result, the Company expects
Conway's sales to decline in the short term with expected increases
in gross margin.
GROSS PROFIT MARGIN. The Company's overall gross margins were approximately
20.4% in 2000 as compared 19.3% for the first quarter of 1999.
The following is a table of gross margins by subsidiary for the first
quarter of 2000 and 1999:
March 31, March 31,
Subsidiary 2000 1999
Eaton 18.9% 20.2%
Anton 16.1 19.6
ADCO 26.8 24.2
SCBA 23.5 41.2
ADCO South 22.5 29.1
Conway 22.3 8.1
Nyer Internet 13.5 -
Eaton's gross margin declined due to continued lower reimbursements from
insurance companies, medicare and medicaid. They believe they can off set
this decline by increased sales volume. ADCO South's decline was due to
increased equipment sales which generally result in lower gross profit
margins than supplies sales. Conway's increase in margin was the result of
three fire truck deliveries in the first quarter of 1999 as compared to no
fire truck deliveries in the first quarter of 2000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general,
and administrative expenses increased approximately 4.5% in 2000 to
$2,187,105 from $2,093,703 in the first quarter of 1999. The following table
shows the breakdown by subsidiary (and corporate expenses) as follows:
March 31, March 31,
Subsidiary 2000 1999
Eaton $ 1,241,972 $ 1,234,575
Anton 151,989 178,629
ADCO 465,898 377,072
SCBA 308 2,324
ADCO South 70,782 64,441
Corporate 93,257 95,005
Conway 133,905 141,340
Nyle Home Health - 317
Nyer Internet 28,994 -
$ 2,187,105 $ 2,093,703
Anton's decrease in selling, general, and administrative expenses
were due to less personnel and costs associated with lower sales.
ADCO's selling, general, and administrative expenses increased due
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
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,
to additional salesmen in its Nevada and New England divisions, increased
expenses in its respiratory division (started in February 1999) and increased
marketing costs. Nyer Internet incurred selling, general, and administrative
expenses of 28,994 due to web site development costs which had lower than
expected sales to offset the overhead.
CONTINUING OPERATIONS. In total, the Company experienced a net loss of
$139,914 in 2000 as compared to a net loss of $141,788 in the first quarter
of 1999.
The following table summarizes the loss from continuing operations by
subsidiary:
March 31, March 31,
Subsidiary 2000 1999
Eaton $ 16,637 $ (47,028)
Anton (50,348) (35,580)
ADCO (40,229) (36,294)
SCBA (1,446) (2,244)
ADCO South (424) 12,856
Corporate (16,268) (4,726)
Conway (18,474) (28,455)
Nyle Home Health (317)
Nyer Internet (29,362) -
$ (139,914) $ (141,788)
Eaton's income for the first quarter of 2000 as compared to a
loss for the same period in 1999 is mainly due to increased sales of
$1,061,572, an increase of 18.6%, while selling, general, and
administrative expenses increased only $7,397. Eaton's gross margin
declined by 1.3%. The increased volume coupled with only a slight
increase in selling, general, and administrative expenses off-set the
decline in margin. ADCO's increased loss is due to two additional
salesmen, increased expenses in its respiratory division (started in
February 1999) and increased marketing costs.
DISCONTINUED OPERATIONS
In October 1999, the Board of Directors approved a plan for the disposal
of its investment in Nyer Nutritional Systems, Inc. The results of NNS have
been reported as a discontinued operation for all periods presented.
The Company has signed a letter of intent with National
Distribution and Contracting Inc. (NDC) to purchase the assets of
NNS, subject to the successful completion of a clinical trial and
execution of a patent license assignment by the 20% owner of Nyer
Nutritional, who owns the patents. The Company expects to complete
the transaction no later than July 15, 2000.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
DISCONTINUED OPERATIONS, continued
The Company incurred approximately $78,475 of expenses related to
the NNS business for the first quarter of 2000 and $84,588 for the
same period in 1999.
The Company has reported the assets to be disposed, primarily
inventory and patents, on the balance sheet as an investment in
discontinued operation. Revenues for NNS were $0 for the quarters ended
March 31, 2000 and 1999, respectively.
Net interest expense as a percentage of sales was less than 1% in the
first three months of 2000 and 1999, respectively.
Liquidity and Capital Resources
Net cash used in operating activities was $235,985 for the quarter ended
March 31, 2000 and $378,221 for the quarter ended March 31, 1999. The
primary use of cash from operations in 2000 was to fund operations for the
Company's Nutritional and medical supply businesses. The Company partially
offset its net loss by increases in accounts payable.
Net cash provided by (used in) investing activities was $64,251 for the
quarter ended March 31, 2000 as compared to $(32,032) for the same period of
1999.
Net cash (used in) provided by in financing activities was $(78,411)
for the first quarter of 2000 as compared to $133,662 for the same period in
1999.
The Company anticipates its current cash resources are adequate to fund
its current operating needs. Additionally, the Company anticipates receiving
cash from the disposal of Nyer Nutritional in 2000. The Company has retained
a financial advisor to raise capital necessary to expand its business. There
can be no assurance that this capital can be raised or that the Nyer
Nutritional sale will occur.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
PART II
Item 3: Other information
The Company is still actively seeking to acquire medical related
companies.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2000
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 19, 2000 /s/ Samuel Nyer
Samuel Nyer,
President
Date: May 19, 2000 /s/ Karen L. Wright
Karen L. Wright,
Treasurer
(Chief Financial Officer)
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 816,417
<SECURITIES> 1,417,185
<RECEIVABLES> 3,834,381
<ALLOWANCES> (177,920)
<INVENTORY> 4,327,194
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<PP&E> 2,636,360
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<BONDS> 1,002,283
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<COMMON> 375
<OTHER-SE> 7,032,206
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<TOTAL-REVENUES> 9,760,241
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