UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
----------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ___________________________
Commission File Number: 0-21214
ORTHOLOGIC CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 86-0585310
- ----------------------------------------------------------------------------------------------------
<S> <C>
(State of other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
2850 S. 36th Street, #16, Phoenix, Arizona 85034
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(602) 437-5520
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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 12 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.
[x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
25,022,346 shares of common stock outstanding as of October 31, 1996
Page 1 of 13
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ORTHOLOGIC CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 16,382,542 $ 8,830,514
Short-term investments 37,070,149 9,149,360
Accounts receivable, net 24,989,396 6,488,203
Inventories, net 5,597,530 1,829,865
Prepaids and other current assets 1,186,914 273,237
Deferred income taxes 2,401,000 --
------------- -------------
Total current assets 87,627,531 26,571,179
FURNITURE, RENTAL FLEET AND EQUIPMENT:
Furniture, rental fleet and equipment 10,803,730 1,891,987
Less accumulated depreciation and amortization (1,687,403) (1,196,055)
------------- -------------
Furniture, rental fleet and equipment - net 9,116,327 695,932
INTANGIBLES, net 16,403,115 --
DEPOSITS AND OTHER ASSETS 93,113 97,748
NOTE RECEIVABLE - Officer -- 125,000
------------- -------------
$ 113,240,086 $ 27,489,859
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,125,755 $ 1,053,323
Accrued expenses 7,557,555 1,999,924
------------- -------------
Total current liabilities 10,683,310 3,053,247
DEFFERRED RENT AND CAPITAL LEASE OBLIGATION 296,823 --
STOCKHOLDERS' EQUITY:
Common stock, $.0005 par value - authorized, 40,000,000 shares;
25,022,346 and 19,251,728 shares issued 12,509 9,626
Additional paid-in capital 118,832,041 43,882,991
Retained deficit (16,584,597) (19,456,005)
------------- -------------
Total stockholders' equity 102,259,953 24,436,612
------------- -------------
$ 113,240,086 $ 27,489,859
============= =============
</TABLE>
See notes to consolidated financial statements.
Page 2 of 13
<PAGE>
ORTHOLOGIC CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET REVENUES $ 10,407,527 $ 4,049,603 $ 25,079,188 $ 9,640,189
COST OF REVENUES 1,990,951 800,914 4,365,325 2,003,308
------------ ------------ ------------ ------------
GROSS PROFIT 8,416,576 3,248,689 20,713,863 7,636,881
OPERATING EXPENSES:
Selling, general and administrative 8,506,765 2,995,926 18,487,545 7,936,509
Research and development 529,784 456,647 1,627,404 1,612,878
------------ ------------ ------------ ------------
Total operating expenses 9,036,549 3,452,573 20,114,949 9,549,387
------------ ------------ ------------ ------------
Operating income (loss) (619,973) (203,884) 598,914 (1,912,506)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Grant revenue 37,103 85,494 131,250 158,871
Interest income 1,039,345 27,285 2,141,244 127,892
Interest expense -- (8,750) -- (42,188)
------------ ------------ ------------ ------------
Total other income 1,076,448 104,029 2,272,494 244,575
------------ ------------ ------------ ------------
Net income (loss) $ 456,475 $ (99,855) $ 2,871,408 $ (1,667,931)
============ ============ ============ ============
NET INCOME (LOSS) PER WEIGHTED
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING $ 0.02 $ (0.01) $ 0.12 $ (0.11)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 25,800,962 15,038,402 23,759,306 14,772,294
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
Page 3 of 13
<PAGE>
ORTHOLOGIC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 2,871,408 $ (1,667,931)
Adjustment to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 824,735 226,469
Change in operating assets and liabilities net of effects from
purchase of Sutter Corporation:
Accounts receivable (6,718,447) (2,719,237)
Inventories (2,217,596) (680,628)
Prepaids and other current assets (811,858) (136,866)
Deposits and other assets 4,635 (1,866)
Accounts payable 375,676 259,867
Accrued expenses 1,082,429 638,215
------------ ------------
Net cash used in operating activities (4,589,018) (4,081,977)
INVESTING ACTIVITIES:
Intangibles from dealer transactions (9,278,912) --
Expenditures for furniture and equipment, net (828,744) (93,653)
Purchase of short-term investments, net (27,920,789) --
Repayment of note receivable 125,000 --
Payment for purchase of Sutter Corporation, net of cash acquired (24,907,442) --
------------ ------------
Net cash used in investing activities (62,810,887) (93,653)
FINANCING ACTIVITIES:
Payments under long term debt -- (19,706)
Proceeds from issuance of common stock 74,951,933 2,057,714
------------ ------------
Net cash provided by financing activities 74,951,933 2,038,008
------------ ------------
NET INCREASE (DECREASE) IN CASH AND 7,552,028 (2,137,622)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 8,830,514 3,265,350
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,382,542 $ 1,127,728
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during the period for interest -- $ 42,188
============ ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
The Company purchased all of the capital stock of Sutter Corporation and
incurred certain costs related to this acquisition for a total purchase price of
$25,047,000. In connection with this acquisition, liabilities were assumed as
follows:
Fair value of assets acquired $ 31,516,000
Cash paid and costs related to the acquisition of
capital stock (25,047,000)
------------
Liabilities assumed $ 6,469,000
============
See notes to consolidated financial statements.
Page 4 of 13
<PAGE>
ORTHOLOGIC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statement Presentation
--------------------------------
The consolidated financial statements include the accounts of OrthoLogic
Corp. ("OrthoLogic") since its inception in July 1987 and its wholly-owned
subsidiary Sutter Corporation (collectively the "Company") since its
acquisition on August 30, 1996. All material intercompany accounts and
transactions have been eliminated.
The consolidated balance sheet as of September 30, 1996, and the
consolidated statements of operations for the three and nine months ended
September 30, 1996 and 1995 and the statements of cash flows for the nine
months ended September 30, 1996 and 1995 are unaudited however, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of financial
position, results of operations and cash flows. The results of operations
for the interim periods are not necessarily indicative of the results to
be expected for the complete fiscal year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's 1995 Annual Report
and Form 10-K.
2. Net Income (Loss) per Common Share
----------------------------------
Net income (loss) per common share is computed on the weighted average
number of common and common equivalent shares outstanding during each
period after giving effect to a 2 for 1 stock split in the form of a 100
percent common share dividend which was paid on June 25, 1996, to
stockholders of record as of June 4, 1996. The accompanying financial
statements have been restated to give effect to the split. Common
equivalent shares represent the dilutive effect of the assumed exercise of
outstanding stock options.
3. Acquisition of Sutter Corporation
---------------------------------
On August 30, 1996, OrthoLogic acquired all of the outstanding capital
stock of Sutter Corporation ("Sutter") for $24,500,000 in cash. The
acquisition was accounted for as a purchase and, accordingly the net
assets and results of operations of Sutter have been included in these
consolidated financial statements commencing August 30, 1996. The purchase
resulted in goodwill of $7.4 million which is being amortized over 15
years. The following unaudited pro-forma summary combines the consolidated
results of operations of OrthoLogic and Sutter as if the acquisition had
occurred on January 1 of that period after giving effect to certain
adjustments including amortization of the purchase price in excess of net
assets acquired, interest income, and income taxes. This pro-forma summary
is not necessarily indicative of the results of operations that would have
occurred if OrthoLogic and Sutter had been combined during such periods.
Moreover, the pro-forma summary is not intended to be indicative of the
results of operations to be attained in the future.
Page 5 of 13
<PAGE>
ORTHOLOGIC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Acquisition of Sutter Corporation (continued)
---------------------------------
Nine Months Ended
September 30,
------------------------------------
(in thousands, except per share data)
1996 1995
---- ----
Net revenues $ 48,818 $ 34,745
========= ========
Net income (loss) $ 1,752 $ (2,513)
========= ========
Net income (loss) per common share $ .07 $ (.17)
========= ========
4. Inventories
-----------
Inventories are stated at the lower of cost (FIFO method) or market and
consisted of the following:
September 30, 1996
--------------------------
Raw materials $3,743,040
Work-in process 292,100
Finished goods 1,922,256
----------
5,957,396
Less reserve for obsolescence (359,866)
----------
$5,597,530
==========
5. Intangibles
-----------
The Company is in the process of converting from a dealer network to a
network of direct salespeople. In connection with this conversion the
Company had paid $9.3 million as of September 30, 1996, to certain former
independent dealers for the return of territory rights,
covenants-not-to-compete with varying terms and the right to hire former
independent dealer sales representatives as Company employees. This amount
is being amortized over seven years. Intangibles also include
approximately $7.4 million of goodwill discussed in Note 3.
6. Income Taxes
------------
The Company has recorded a deferred tax asset of $9.9 million relating
primarily to NOL carry forwards and allowances for doubtful accounts and
inventory obsolescence. This amount is offset by a $7.5 million valuation
allowance.
7. Litigation
----------
During 1996 certain lawsuits were filed in the United States District
Court for the District of Arizona against the Company and certain officers
and directors alleging violations of Section 10(b) of the Securities
Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder.
Page 6 of 13
<PAGE>
ORTHOLOGIC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
7. Litigation (continued)
----------
Plaintiffs in these actions allege that correspondence received by the
Company from the Food and Drug Administration (the "FDA") regarding the
promotion and custom configurations of the Company's OrthoLogic 1000 Bone
Growth Stimulator was material and undisclosed, leading to an artificially
inflated stock price. Plaintiffs further allege that the Company's
non-disclosure of the FDA correspondence and of the alleged practices
referenced in that correspondence operated as a fraud against plaintiffs.
Plaintiffs further allege that once the FDA letter became known, a
material decline in the stock price of the Company occurred, causing
damage to the plaintiffs.
All plaintiffs seek class action status, unspecified compensatory damages,
fees and costs. Plaintiffs also seek extraordinary, equitable and/or
injunctive relief as permitted by law. Management believes that the
allegations are without merit and will vigorously defend them. The costs
associated with defending these allegations and the potential outcome
cannot be determined at this time and accordingly, no estimate for such
costs have been included in these financial statements.
Page 7 of 13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
Since receiving approval of its PMA (pre-market approval
application) from the Food and Drug Administration ("FDA") in
March 1994 of its OrthoLogic 1000 Bone Growth Stimulator, the
Company has marketed its products primarily through a network of
independent orthopaedic specialty dealers and a small number of
direct sales representatives. During the second quarter of 1996,
the Company initiated a plan to convert the primary marketing
channel from an independent dealer network to a direct sales
force. As of September 30, 1996, the Company paid approximately
$9.3 million to certain former independent dealers for the return
of territory rights, covenants-not-to-compete with varying terms
and the right to hire former independent dealer sales
representatives as Company employees. The Company expects to
continue negotiating additional similar transactions with
remaining independent dealers.
On August 30, 1996 the Company acquired all of the outstanding
capital stock of Sutter Corporation, for $24,500,000 in cash.
Accordingly, the net assets and results of operations of Sutter
have been included in these financial statements commencing
August 30, 1996.
Results of Operations
Net Revenues. Total net revenues during the three and nine months
ended September 30, 1996, were $10.4 million and $25.1 million,
respectively, compared to $4.0 million and $9.6 million during the
comparable periods in 1995, respectively, reflecting an increase
of 157% and 160%, respectively. The increase in the net revenues
was primarily attributable to higher sales levels of the
OrthoLogic 1000 and Sutter revenues..
Gross Profit. The increased revenue levels generated gross profit
of $8.4 million and $20.7 million for the three and nine months
ended September 30, 1996, which was an increase of 159% and 171%
over the comparable periods in 1995, respectively. Gross profit as
a percentage of net revenues remained flat for the three months
ended September 30, 1996 versus the same period in 1995. Gross
profit as a percentage of net revenues increased from 79.2% to
82.6% for the nine months ended September 30, 1995 and 1996,
respectively. The gross profit percentage improved as a result of
the fixed manufacturing costs being absorbed over a higher volume
of manufactured product and from a change in product revenue mix
to a higher gross profit product in 1996 compared to 1995.
Page 8 of 13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Selling, General and Administrative. Total selling, general, and
administrative expenses ("SG&A") increased 184% and 133% for the
three and nine months ended September 30, 1996 versus the same
periods during 1995, respectively. As a percentage of revenues,
SG&A went from 74.0% to 81.7% for the three months ended September
30, 1995 versus 1996, respectively, and from 82.3% to 73.7% for
the nine months ended September 30, 1995 versus 1996,
respectively. The increased SG&A dollars are due in part to the
variable component of SG&A (commissions, bad debts, royalties)
associated with the increased revenues. The fixed component of
SG&A has also increased due to the additional personnel and other
infrastructure required to support the growing revenue volume,
salespeople added as a result of the transition to a direct sales
force and expenses of Sutter. As a result SG&A is expected to be
higher throughout 1996 compared to 1995.
Research and Development. Research and development expenses during
the three months ended September 30, 1996 increased approximately
16% compared to the same period during 1995. The increase is due
primarily to the timing of various clinical trials. Expenditures
for the nine months ended September 30, 1996 are relatively flat
compared to the same period in 1995.
Other Income. Other income increased during 1996 due primarily to
interest income which was $1.0 million and $2.1 million for the
three and nine months ended September 30, 1996, respectively,
versus $27,000 and $128,000 in the comparable periods during 1995,
respectively. This increase is due primarily to an increased level
of cash and short-term investments resulting from the sale of
common stock.
Liquidity and Capital Resources
On April 30, 1996 the Company issued 2,530,000 shares of common
stock upon the closing of a public offering of its common stock.
Net proceeds to the Company were approximately $73.5 million.
At September 30, 1996, the Company had cash, cash equivalents and
short-term investments of $53.5 million. Working capital increased
over 227% from $23.5 million at December 31, 1995 to $76.9 million
at September 30, 1996, primarily due to proceeds from the stock
offering.
The Company is in the process of converting from a dealer network
to a network of direct salespeople. In connection with this
conversion, the Company had paid approximately $9.3 million as of
September 30, 1996, to certain former independent dealers for the
return of territory rights, covenants-not-to-compete with varying
terms and the right to hire former independent dealer sales
representatives as Company employees. It is anticipated that
approximately $1 million will be paid for similar transactions
during the remainder of 1996.
As noted above, OrthoLogic acquired Sutter Corporation on August
30, 1996 and accounted for the transaction using the purchase
method. The Company paid $25,047,000 and assumed liabilities
totaling $6,469,000 for assets with a fair value of $31,516,000.
Page 9 of 13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources (continued)
The Company anticipates that the cash generated from the proceeds
of the stock offering, product revenues and current cash balances
will be sufficient to meet the Company's capital requirements for
the foreseeable future. There can be no assurance however, that
the Company will not require additional financing in the future,
or that such sources of capital will be available on terms
favorable to the Company, if at all.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this document that are not
historical facts, including, without limitation, statements of
future expectations, projections of results of operations and
financial condition, statements of future economic performance and
other forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, are subject to known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to
differ materially from those contemplated in such forward-looking
statements. In addition to the specific matters referred to
herein, important factors which may cause actual results to differ
from those contemplated in such forward-looking statements
include: (i) the results of the Company's efforts to implement its
business strategy; (ii) actions of the Company's competitors and
the Company's ability to respond to such actions; (iii) changes in
governmental regulation, tax rates and similar matters; (iv) other
risks detailed in the Company's other filings with the Commission;
and (v) the costs and results of pending litigation.
Page 10 of 13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the disclosure under the Caption "Part II
- Item 1. Legal Proceedings" of the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996.
Commencing on June 24, 1996, certain lawsuits were filed in
the United States District Court for the District Court of Arizona against
the Company and certain officers and directors alleging violations of
Sections 10 (b) of the Securities Exchange Act of 1934 ("Exchange Act")
and SEC Rule 10b-5 promulgated thereunder, and, as to other defendants,
Sections 20 (a) of the Exchange Act. In addition to the lawsuits referred
to above, the following were filed:
Scott Longacre, Rickie Trainor, W. Preston Battle, III, Taylor
D. Shepherd, Dianna Lynn Shepherd, Gordon H. Hogan, Trustee, and Dallas
Warehouse Corp., Inc., on behalf of themselves and all others similarly
situated v. Allan M. Weinstein, Allen R. Dunaway, David E. Derminio, Frank
P. Magee, and OrthoLogic Corp., Cause No. CIV 96-1891 PHX PGR, filed in
the United States District Court for the District of Arizona (Phoenix
Division) on August 16, 1996.
Jeffrey D. Bailey, Milton Berg, Bryan Boatwright, Charles R.
Campbell, Mark and Cathy Daniel, Tom Drotar, Rudy Gonnella, David Gross,
Janet Gustafson, Willa P. Koretz, Dr. Richard Lewis, John Maynard,
Margaret Milosh, Michelle Milosh, Theresa L. Onn, Ward B. Perry, William
Schillings, Darwin and Merle Sen, Nestor Serrano and Larry E. and Gloria
M. Swanson v. Allan M. Weinstein, Allen R. Dunaway, David E. Derminio and
OrthoLogic Corporation, Cause No. CIV 96-1910 PHX PGR, filed in the United
States District Court for the District of Arizona (Phoenix Division) on
August 19, 1996.
Nancy Z. Kyser and Mark L. Nichols, on behalf of themselves
and all others similarly situated v. OrthoLogic Corporation, Allan M.
Weinstein, Frank P. Magee and David E. Derminio, Cause No. CIV 96-1937 PHX
ROS, filed in the United States District Court for the District of Arizona
(Phoenix Division) on August 22, 1996.
Plaintiffs in these actions allege the correspondence received
by the Company from the FDA regarding the promotion and custom
configuration of the Company's OrthoLogic 1000 Bone Growth Stimulator was
material and undisclosed, leading to an artificially inflated stock price.
Plaintiffs further allege that the Company's non-disclosure of the FDA
correspondence and of the alleged practices referenced in that
correspondence operated as a fraud against plaintiffs. Plaintiffs further
allege that once the FDA letter became known, a material decline in the
stock price of the Company occurred, causing damage to plaintiffs.
All plaintiffs seek class action status, unspecified
compensatory damages, fees and costs. Plaintiffs also seek extraordinary,
equitable and/or injunctive relief as permitted by law.
Additionally, on or about July 16, 1996, Jacob B. Rapoport
filed a Shareholder Derivative Complaint for Breach of Fiduciary Duty and
Misappropriation of Confidential Corporate Information (based on similar
factual issues underlying the above lawsuits) in the Superior Court of the
State of
Page 11 of 13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings (continued)
Arizona, Maricopa County, No. CV96-12406 against Allan M. Weinstein, John
M. Holliman, Augustus A. White, Frederic J. Feldman, Elwood D. Howse,
George A. Oram, Frank P. Magee and David E. Derminio, Defendants and
OrthoLogic Corp., Nominal Defendant. On October 29, 1996 the defendants
removed the case to the United States District Court for the District of
Arizona (Phoenix Division) No. CIV 2451 PHX RCB pursuant to 28 U.S.C. ss.
1332 on the grounds of diversity. Defendants have also filed a motion to
dismiss the complaint.
The Court ordered the July 10, 1996 complaint filed by Randall
Hutchens in the California Superior Court, Small Claims Division (No.
SSB1415) against Allan M. Weinstein, dismissed without prejudice on August
27, 1996.
On June 24, 1996, the Company received notice that the
National Association of Securities Dealers, Inc., ("NASD") is conducting a
routine review of the trading activity in the Company's stock. The Company
responded to this inquiry in July 1996 and to a follow up inquiry in
September 1996.
On August 7, 1996, the Company received a subpoena from the
Arizona Corporation Commission Securities Division for the production of
records regarding the above lawsuits and the NASD review. The Company has
responded to the subpoena.
Item 6. Exhibits and Reports on Form 8-K
A. See Exhibit Index following the Signatures page which is
incorporated herein by reference.
B. Reports on Form 8-K.
On September 13, 1996, the Company filed a current report on
Form 8-K dated August 30, 1996, to report in Item 2 the
consummation of its acquisition of the capital stock of Sutter
Corporation. The Form 8-K was amended on November 14, 1996 to
include the following financial statements:
- Unaudited Pro-Forma Balance Sheet as of June 30,
1996.
- Unaudited Pro-Forma Statement of Income for the
six month period ended June 30, 1996.
- Unaudited Pro-Forma Statement of Operations for
the year ended December 31, 1995.
- Audited financial statements of Sutter Corporation
for the years ended December 31, 1995, 1994 and
1993 and independent auditors report.
- Unaudited balance sheet of Sutter Corporation as
of June 30, 1996.
- Unaudited statements of income for the six month
periods ended June 30, 1996 and 1995.
Page 12 of 13
<PAGE>
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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Allan M. Weinstein Chairman of the Board of Directors and November 14, 1996
- ----------------------
Allan M. Weinstein Chief Executive Officer
(Principal Executive Officer)
/s/ Allen R. Dunaway Vice-President and Chief Financial Officer November 14, 1996
- --------------------
Allen R. Dunaway (Principal Financial and Accounting Officer)
</TABLE>
Page 13 of 13
<PAGE>
ORTHOLOGIC CORP.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Exhibit Incorporated by Filed
No. Description Reference to: Herewith
--- ----------- ------------- --------
<S> <C> <C> <C>
3.1 Amended and Compiled Certificate of Exhibit 3.1 to the Company's Quarterly
Incorporation of the Company Report on Form
10-Q for the period ended March 31, 1996
3.2 Bylaws of the Company Exhibit 3.4 to the Company's Amendment
No. 2 to Registration Statement on Form
S-1 (No. 33-47569) filed with the SEC
on January 25, 1993
10.1 Stock purchase agreement dated August Exhibit 2.1 to the Company's Form 8-K
30, 1996 by and among OrthoLogic Corp., filed on September 13, 1996
Sutter Corporation and Smith
Laboratories, Inc.
11.1 Statement of Computation of Net Income X
(Loss) per Weighted Average Number of
Common Shares Outstanding
27 Financial Data Schedule X
</TABLE>
Exhibit 11.1
ORTHOLOGIC CORP.
STATEMENT OF COMPUTATION OF NET INCOME (LOSS) PER WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income (Loss) $ 456 $ (100) $ 2,871 $ (1,668)
======== ======== ======== ========
Common shares outstanding at end of period 25,022 15,088 25,022 15,088
Adjustment to reflect weighted average for
shares issued during the period (3) (50) (2,335) (316)
Assuming conversion of stock options and warrants
782 -- 1,072 --
-------- -------- -------- --------
Weighted average number of common shares
outstanding 25,801 15,038 23,759 14,772
======== ======== ======== ========
Net income (loss) per weighted average number of
common shares outstanding $ 0.02 $ (0.01) $ 0.12 $ (0.11)
======== ======== ======== ========
</TABLE>
(1) The common shares outstanding have been adjusted for a 2-for-1 stock
split in the form of a 100 percent common share dividend for all
periods presented.
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 16,382,542
<SECURITIES> 37,070,149
<RECEIVABLES> 21,202,113
<ALLOWANCES> 3,787,283
<INVENTORY> 5,597,530
<CURRENT-ASSETS> 87,627,531
<PP&E> 10,803,730
<DEPRECIATION> 1,687,403
<TOTAL-ASSETS> 113,240,086
<CURRENT-LIABILITIES> 10,683,310
<BONDS> 0
0
0
<COMMON> 12,509
<OTHER-SE> 102,247,444
<TOTAL-LIABILITY-AND-EQUITY> 113,240,086
<SALES> 10,407,527
<TOTAL-REVENUES> 10,407,527
<CGS> 1,990,951
<TOTAL-COSTS> 1,990,951
<OTHER-EXPENSES> 7,784,316
<LOSS-PROVISION> 1,252,233
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 456,475
<INCOME-TAX> 0
<INCOME-CONTINUING> 456,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 456,475
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
