<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-24362
NUMED SURGICAL, INC.
(Exact name of small business issuer in its charter)
STATE OF NEVADA 34-1755390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6505 ROCKSIDE ROAD SUITE 425, INDEPENDENCE, OH 44131
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (216) 573-6522
Indicate by check mark whether the issuer (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.
Yes X No
----- -----
The number of shares outstanding of the Issuer's common stock at $.001 par
value as of August 12, 1996, was 8,775,685.
Form 10-QSB
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NUMED SURGICAL, INC.
BALANCE SHEETS
ASSETS (UNAUDITED)
------ JUNE 30 MARCH 31
CURRENT ASSETS 1996 1996
-------------- ----------- ---------
<S> <C> <C>
Cash and Cash Equivalents $6,376 $7,229
Accounts Receivable - Trade 63,071 43,687
Prepaid Expenses 5,753 300
Inventories 60,225 77,221
----------- ---------
TOTAL CURRENT ASSETS 135,425 128,437
PROPERTY AND EQUIPMENT, NET 980 1,842
OTHER ASSETS
------------
Intangible Assets, net of accumulated amortization of
$114,371 and $122,093 respectively 57,352 65,074
Prototype Equipment, Net 1,433 1,689
----------- ---------
TOTAL OTHER ASSETS 58,785 66,763
----------- ---------
TOTAL ASSETS $195,190 $197,042
----------- ---------
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
-------------------
Accounts Payables $43,325 $39,095
Accrued Expenses 11,020 27,344
Short Term Borrowings 64,544 41,544
----------- ---------
TOTAL CURRENT LIABILITIES 118,889 107,983
----------- ---------
STOCKHOLDERS' EQUITY
--------------------
Preferred Stock, Authorized 2,000,000, None Issued 0 0
Common Stock, $.001 Par Value, Authorized 48,000,000
Shares, 8,775,685 Issued and Outstanding 8,776 8,776
Paid in Capital 473,222 473,222
Accumulated Deficit (405,697) (392,939)
----------- ---------
TOTAL STOCKHOLDERS' EQUITY 76,301 89,059
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $195,190 $197,042
----------- ---------
----------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Form 10-QSB
2
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NUMED SURGICAL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED JUNE 30
1996 1995
--------- ---------
<S> <C> <C>
Sales $124,991 $108,345
Cost of Sales 73,772 45,236
--------- ---------
GROSS PROFIT 51,219 63,109
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Salary and Benefits 32,035 44,702
Professional Fees 5,302 14,007
Travel and Entertainment 1,872 1,791
Occupancy 2,353 2,448
Advertising and Marketing 5,420 2,671
Shareholder Relations 858 775
Director's Fees 0 2,500
Office Expense 5,937 4,129
Amortization and Depreciation 8,785 9,080
--------- ---------
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 62,562 82,103
--------- ---------
OPERATING LOSS (11,343) (18,994)
OTHER INCOME (EXPENSES)
- -----------------------
Interest Income 2 471
Interest Expense (1,417) (275)
--------- ---------
TOTAL OTHER INCOME (EXPENSES) (1,415) 196
--------- ---------
NET LOSS ($12,758) ($18,798)
--------- ---------
--------- ---------
PER SHARE:
Net Loss ($0.00) ($0.00)
--------- ---------
--------- ---------
Shares Used in Computing Per Share Information 8,775,685 8,775,685
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Form 10-QSB
3
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NUMED SURGICAL, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED
SHARES DOLLARS CAPITAL DEFICIT TOTAL
--------- ------- -------- ----------- -------
<S> <C> <C> <C> <C> <C>
BALANCE AT APRIL 1, 1994 5,175,685 5,176 183,674 (72,895) 115,955
Private Placement of Common Stock,
Net of Commissions and Fees 3,600,000 3,600 288,048 291,648
Net Loss (124,781) (124,781)
--------- ------- -------- ----------- -------
BALANCE AT MARCH 31, 1995 8,775,685 8,776 471,722 (197,676) 282,822
--------- ------- -------- ----------- -------
Write-off of Agent Fees 1,500 1,500
Net Loss (195,263) (195,263)
--------- ------- -------- ----------- -------
BALANCE AT MARCH 31, 1996 8,775,685 8,776 473,222 (392,939) 89,059
--------- ------- -------- ----------- -------
--------- ------- -------- ----------- -------
Net Loss (12,758) (12,758)
--------- ------- -------- ----------- -------
BALANCE AT JUNE 30, 1996 8,775,685 $8,776 $473,222 ($405,697) $76,301
--------- ------- -------- ----------- -------
--------- ------- -------- ----------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Form 10-QSB
4
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NUMED SURGICAL, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED JUNE 30
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($12,760) ($18,798)
Adjustments to Reconcile Net Loss to Net Cash
Used in Operating Activies:
Depreciation and Amortization 8,785 9,080
(Decrease) Increase in Cash Due to Net Changes in
Operating Assets and Liabilities:
Accounts Receivable (19,384) (10,479)
Inventories 16,996 (6,228)
Prepaid Expenses and Other Assets (5,453) (11,296)
Accounts Payable 4,230 10,727
Accrued Expenses (16,324) (2,271)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES (23,910) (29,265)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment 56 (1,209)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 56 (1,209)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Short-Term Borrowings 23,000 0
Payments on Short-Term Borrowings 0 (6,023)
--------- ---------
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 23,000 (6,023)
--------- ---------
Decrease in Cash and Cash Equivalents (854) (36,497)
Cash and Cash Equivalents at Beginning of Period 7,229 123,289
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $6,375 $86,792
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Form 10-QSB
5
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NUMED SURGICAL, INC.
NOTES TO FINANCIAL STATEMENTS - (UNAUDITED)
JUNE 30, 1996
NOTE A- BASIS OF PREPARATION
GENERAL
The accompanying interim financial statements are unaudited, but reflect all
adjustments which are, in the opinion of the Company's management necessary
to present fairly the financial position as of June 30, 1996, and the results
of operations and cash flows for the three months ended June 30, 1995 and
1996. The results for the three months ended June 30, 1996, are not
necessarily indicative of results to be expected for the full year.
References should be made to the Company's Form 10-KSB for the year ended
March 31, 1996, for additional disclosures.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
INTRODUCTION
The following is an analysis of the operations of NuMED Surgical for the
three months ended June 30, 1996 and 1995 and should be read in conjunction
with the Company's financial statements that appear elsewhere in this report.
RESULTS OF OPERATIONS:
Net revenues from patient positioning products for the three months ended
June 30, 1996 were $124,991 as compared to $108,345 for the same period one
year ago. This represents a increase of $16,646 or 13% over the same period
one year ago. This increase was due mainly to the introduction of two new
products; Liftmate and Infinity Stirrups. The Company expects this growth to
continue despite the fact that pressure remains on controling hospital and
healthcare budgets.
The gross profit for the three months ended June 30, 1996, was $51,219 or 41%
of revenues as compared to $63,109 or 58% the same period one year ago. The
decreases for the three month period in gross profit as a percentage of
revenues was due to a shift in product mix, penetration pricing strategy on
the Infinity Stirrup, additional discounting to obtain sales, and a price
increase from a major supplier. The price increase scheduled for first
quarter 1997 was delayed due to market conditions. The price increase will
be effective in September.
Total general and administrative expenses as a percentage of revenues for the
three months ended June 30, 1996 decreased to 43% as compared to 67% for the
same period one year ago. This is a decrease of $19,244 or 14% for the same
period one year ago. Expenditures for salaries and benefits for the three
months ended June 30, 1996 were $32,035 as compared to $44,702 for the same
period one year ago. This represents a decrease of $12,667 or 15% as
compared to the same period one year ago. This decrease was primarily due to
the change in the Company's corporate management structure. Professional
fees for the three months ended June 30, 1996 were $5,303 as compared to
$14,007 for the same period one year ago. This decrease is due to the
cancellation of the management services
Form 10-QSB
6
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contract for management, corporate funding, finance, accounting services and
marketing.
The operating loss decreased approximately 40% or $7,651 from ($18,994) to
($11,343). This decrease was primarily due to the change in the Company's
corporate management structure and the cancelation of the management services
contract. As a result of the foregoing, the Company had a net loss of
$12,758 for the three months ended June 30, 1996, as compared to a net loss
of $18,798 for the three months ended June 30, 1995.
The Company is working on its plan to increase sales on its two newly
introduced products by developing strategic alliances with key players in the
market. The Company will continue to develop plans to distribute the
products through direct sales, through original equipment manufacturers,
through dealers and catalog sales. Major manufacturer representative
organizations have been contracted for national distribution coverage. A
major amount of resources will be devoted to these products due to the
immediate potential.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES:
The Company's cash and cash equivalents decreased to $6,376 at June 30, 1996
from $7,229 at March 31, 1996, which is a net decrease of $853 resulting
mostly from operating losses. The Company financed operations using net
proceeds raised in a private offering of common stock in mid 1994 and the
line of credit. At June 30, 1996, the Company had $64,544 outstanding on its
line of credit. The Company continues to experience negative cash flow from
operating losses and the relatively long collection cycle for its
receivables, resulting from sales subject to customer evaluation and
acceptance. It is anticipated that the Company will begin to experience
postive cash flows.
If the Company is unable to fund its new product line, it may have to sell or
lease certain tangible and intangible assets. Additionally, NuMED Surgical
will have to cease product development and acquisition programs and devote
funding to current operations until cash reserves are sufficient to continue
product development and acquisition programs.
If NuMED Surgical is not able to introduce the newly acquired products as
planned or delays occur in production, it may be necessary to obtain
additional bank financing, seek a joint venture, and/or issue additional
stock in order to finance the commercialization of the two product lines.
Over the long term it is anticipated that NuMED Surgical will fund operations
through profits, if any, derived from acquired businesses, sales of
internally developed products and sales from currently distributed products.
There can be no assurance that the Company will achieve profitability, and
additional funding through the sale of debt or equity securities may be
necessary. While the Company believes that a ready market exists for its
products, there are other companies that sell similar products, some of which
are more adequately funded.
PART II: OTHER INFORMATION
ITEM 1-5. NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Form 10-QSB
7
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a. Exhibits: None.
b. Reports on Form 8-K: None.
Form 10-QSB
8
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DATE: AUGUST 12, 1996 /s/ Michael J. Diroff
---------------------------------------
Michael J. Diroff
President, Chief Accounting Officer
and Director
Form 10-QSB
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DATE: AUGUST 12, 1996
---------------------------------------
Michael J. Diroff
President, Chief Accounting Officer
and Director
Form 10-QSB
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,376
<SECURITIES> 0
<RECEIVABLES> 63,071
<ALLOWANCES> 0
<INVENTORY> 60,225
<CURRENT-ASSETS> 135,425
<PP&E> 980
<DEPRECIATION> 0
<TOTAL-ASSETS> 195,190
<CURRENT-LIABILITIES> 118,889
<BONDS> 0
0
0
<COMMON> 8,776
<OTHER-SE> 67,525
<TOTAL-LIABILITY-AND-EQUITY> 195,190
<SALES> 124,991
<TOTAL-REVENUES> 124,991
<CGS> 73,772
<TOTAL-COSTS> 73,772
<OTHER-EXPENSES> 62,562
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,417
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,758)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,758)
<EPS-PRIMARY> 0.001
<EPS-DILUTED> 0.001
</TABLE>
