FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES ACT OF
1934
For the quarterly period ended August 31, 2000
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Commission File Number 0-12305
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REPRO-MED SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-3044880
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24 CARPENTER ROAD, CHESTER, NY 10918
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (845) 469-2042
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 during the
past 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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at Aug. 31, 2000
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Common stock, $.01 par value 23,504,000 shares
REPRO-MED SYSTEMS, INC.
TABLE OF CONTENTS
PART I PAGE
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ITEM 1.
Financial Statements
Balance Sheets - August 31, 2000 and 3
August 31, 2000
Statements of Income - for the three-months and
six months ending August 31, 2000 and August 31, 1999 4
Statements of Cash Flow -
August 31, 2000 and 1999 5
Notes to Financial Statements 6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations. 6
PART II
ITEM 1.
Legal Proceedings 9
ITEM 2.
Changes in Securities 9
ITEM 3.
Defaults Upon Senior Securities 9
ITEM 4.
Submission of Matters to a Vote of Security Holders 9
ITEM 5.
Other Information 9
ITEM 6.
Exhibits and Reports on Form 8-K 9
2
REPRO-MED SYSTEMS, INC
BALANCE SHEETS
ASSETS 8-31-00 2-29-00
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CURRENT ASSETS
Cash & Cash Equivalents $117,668 $167,085
Accounts Receivable, net 168,912 227,871
Inventory 646,306 555,882
Prepaid Expenses & Other Receivables 47,374 45,517
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TOTAL CURRENT ASSETS 1,020,260 1,036,355
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EQUIPMENT & OTHER ASSETS
Total Equipment 1,048,051 1,033,718
Less - Accumulated Depreciation (589,862) (549,912)
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Net Book Value of Equipment 458,189 483,806
Deposits 40,000 40,000
Other Assets 52,799 54,412
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TOTAL EQUIPMENT & OTHER ASSETS 510,988 538,218
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TOTAL ASSETS $1,531,248 $1,574,573
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $98,631 $59,363
Accrued Expenses 175,162 184,936
Current Portion Capital Gain 22,481 22,481
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Total Current Liabilities 296,274 266,780
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OTHER LIABILITIES
Customer Deposits 124,905 245,230
Deferred Capital Gain Income 393,415 404,655
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TOTAL LIABILITIES 814,594 916,665
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STOCKHOLDERS' EQUITY
Preferred Stock, 8% Cumulative $.01
Par Value Authorized 2,000,000 Issued &
Outstanding 10,000 Shares 100 100
Common Stock, $.01 Par Value,
Authorized 50,000,000 Shares, Issued &
Outstanding 23,504,000 & 22,904,000
Respectively 235,040 229,040
Additional Paid-in Capital 2,052,631 2,031,631
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Accumulated Deficit (1,429,117) (1,460,863)
Treasury Stock at Cost (142,000) (142,000)
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TOTAL STOCKHOLDERS' EQUITY 716,654 657,908
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,531,248 $1,574,573
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3
REPRO-MED SYSTEMS, INC
STATEMENTS OF INCOME
FOR THE 3 MONTHS ENDED FOR THE 6 MONTHS ENDED
Aug 31, 2000 Aug 31, 1999 Aug 31,2000 Aug 31, 1999
------------ ------------ ----------- ------------
SALES
Net Sales of Products $536,744 $397,663 $1,093,358 $924,939
COST AND EXPENSES
Cost of Goods Sold 302,435 292,765 594,889 596,212
Selling, General & Administrative Expenses 173,694 244,969 393,491 541,310
Research and Development 14,022 24,872 26,968 58,684
Depreciation and Amortization 21,415 30,627 42,830 53,603
------ ------ ------ ------
TOTAL COST AND EXPENSES 511,566 593,233 1,058,178 1,249,809
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INCOME (LOSS) FROM OPERATIONS 25,178 (195,570) 35,180 (324,870)
Non-Operating Income (Expense)
Interest (Expense) (51) (11,009) (51) (21,225)
Interest & Other Income 418 1,826 618 4,995
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367 (9,183) 567 (16,230)
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INCOME (LOSS) BEFORE MINORITY
INTEREST SHARE OF OPERATIONS 25,545 (204,753) 35,747 (341,100)
Minority Interest In Loss of Subsidiary 0 61,155 0 54,542
Income (Loss) Before Income Taxes 25,545 (143,598) 35,747 (286,558)
Provision for Income Taxes 0 760 0 1,520
NET INCOME (LOSS) AFTER TAXES 25,545 (144,358) 35,747 (288,078)
====== ========= ====== =========
EARNINGS (LOSS) PER COMMON SHARE
Primary $0.00 ($0.01) $0.00 ($0.01)
Fully Diluted $0.00 ($0.01) $0.00 ($0.01)
4
REPRO-MED SYSTEMS, INC
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
AUGUST 31, 2000 AUGUST 31, 1999
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OPERATING ACTIVITIES $35,747 ($288,078)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Depreciation and Amortization 42,830 53,603
Income (Loss) of Minority Interests 0 (54,542)
Deferred Gross Profit - Building Lease (11,240) 0
Changes In Assets and Liabilities
Accounts Receivable 58,959 (28,783)
Inventory (90,424) (76,074)
Prepaid Expenses and Other Receivables (1,858) 10,743
Accounts Payable 39,268 48,970
Short Term Investments 0 (168,532)
Other Liabilities (130,099) 179,801
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NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (56,817) (322,892)
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INVESTING ACTIVITIES
Purchase of Property and Equipment (17,213) (29,845)
Other Assets 1,613 0
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(15,600) (29,845)
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Issuance of Common Stock 27,000 0
Repayment of Term Loan 0 (108,398)
Preferred Stock Dividend (4,000) (4,000)
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 23,000 (112,398)
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NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (49,417) (465,135)
Cash and Cash equivalents, beginning of period 167,085 683,321
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Cash and Cash Equivalents, end of period $117,668 $218,186
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SUPPLEMENTAL DISCLOSURES
CASH PAYMENTS FOR
Interest 51 21,225
Income Taxes 801 0
5
REPRO-MED SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The 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 the financial statements prepared in accordance with generally
accepted accounting principles 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 misleading. It is suggested that
these financial statements be read in conjunction with the financial statements
and the notes thereto included in the Company's latest annual report on Form
10-KSB dated February 29, 2000.
PART I ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Quarterly Report on Form 10-QSB contains certain "forward-looking"
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995) and information relating to Repro-Med Systems, Inc. that are based
on the beliefs of the management of Repro-Med Systems, Inc. as well as
assumptions made by and information currently available to the management of
Repro-Med Systems, Inc. The Company's actual results may vary materially from
the forward-looking statements made in this report due to important factors such
as: recent operating losses, uncertainties associated with future operating
results; unpredictability related to Food and Drug Administration regulations,
introduction of competitive products, limited liquidity; reimbursement related
risks; government regulation of the home health care industry; success of the
research and development effort, market acceptance of FREEDOM60, availability of
sufficient capital to continue operations and dependence on key personnel. When
used in this report, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions are intended to identify
forward-looking statements. Such statements reflect the current views of
Repro-Med Systems, Inc. with respect to future events based on currently
available information and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof.
Repro-Med does not undertake any obligation to release publicly any revision to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
6
THREE MONTHS ENDED AUGUST 31, 2000 VS. 1999
Sales increased 35% from $397,633 (1999) to $536,744 (2000) for the
quarter ended August 31. Sales continued to improve for the Res-Q-Vac while
sales of the IV decreased slightly quarter over quarter due to a one-time sale
of product to a distributor in 1999 which did not repeat this year. The OEM
sales improved in this quarter over last year while the Plus resuscitator
decreased due to a tender order which did not re-occur this year.
Cost of goods decreased 17.2% as a % of sales due to improved
efficiencies in production and purchasing. The product margin continued to
improve this quarter with an increase from 26% in 1999 to 44% in 2000.
Selling, general and administrative expense decreased 29% for the three
months period versus 1999. Management initiated expense and payroll reductions
in September 1999 that continue to produce savings compared to prior periods.
Research and development expenses decreased 44% period to period
reflecting payroll reductions made in the second quarter of fiscal 2000 and the
reduction in the development of our new products.
There was no material change in depreciation and amortization expense
during this period.
Interest expense was reduced to 0% as the result of a full payoff of
all bank indebtedness in October 1999.
On August 3, 2000 we signed a national distribution agreement with
Medical Specialties, a large national distributor for the Freedom60 Syringe
Infusion System. The agreement calls for certain minimum requirements to
maintain the agreement and allows Repro-Med to continue its relation with
certain customers and distributors. The distributor has 25 salesmen on the road
to call on new accounts within the continental United States.
On New York August 28, 2000 we were notified of an Indefinite Delivery,
Indefinite Quantity (IDIQ) Contract #RFP-797-FDF3-00-0089 awarded on August 25,
2000 by the AFMLO/VA Services Division. This material contract covers three of
the Company's patented products, Res-Q-Vac Manual Suction System, Freedom60
Syringe Infusion System and Masterson Endometrial Biopsy System which are now
available to all government agencies. This contract is the first step in the
process of introducing our medical devices to all federal government agencies.
The Company has begun to contact government departments who would most benefit
from these life saving devices.
7
On September 29, 2000, we were notified that the U. S. Defense Logistics
Information Service in Battle Creek, MI had assigned National Stock Numbers to
our Freedom60 and Res-Q-Vac products and accessories. This now facilitates
orders from any U. S. military agency to be able to acquire our products from a
national military catalog listing.
SIX MONTHS ENDED AUGUST 31, 2000 VS. 1999
Sales increase $168,419 (18%) primarily because of improvements in sales of
Res-Q-Vac and sales booked against customer deposits.
Cost of goods sold were 54% for the first six months of 2000 versus 59% for the
comparable period in 1999. The higher margins reflect the improved efficiencies
in production and purchasing.
Selling, General and Administrative expenses were 27% lower for the comparable
period as a result of management's continued emphasis on expense and payroll
reductions which began in the third quarter of 1999. Research and Development
expenses were 54% lower for the same reasons as well as a deferral of certain
research and development projects due to cash restraints.
Income before taxes increased from a loss of $286,558 in 1999 to a profit of
$35,747 in 2000, as a resulting of both higher sales and profit margins, and
lower expenses.
LIQUIDITY AND CAPITAL RESOURCES
Our working capital increased form $524,345 as of February 29, 2000 to
$683,986 as of August 31, 2000.
During June 2000 we negotiated a $200,000 line of credit with Premier Bank that
is guaranteed by the President and one of the directors. The line of credit is
intended for material purchases for new orders. As of August 31, 2000, $0 has
been advanced on the line of credit.
We are currently operating at a neutral cash flow and have sufficient capital
for our ongoing needs, based on the anticipated continued sales growth and
maintaining careful control of expenses. We have demonstrated our ability to
control costs and believe we would be able to offset any unanticipated decreases
in revenues with additional reductions in overhead, materials, and labor. The
funds available on August 31, 2000 are expected to meet cash requirements as
planned under current operating conditions at least for the next 12 months.
8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is neither a party to any material litigation, nor to the
knowledge of the officers and directors of the Company, is there any material
litigation threatened against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the quarter ended August 31, 2000.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
REPRO-MED SYSTEMS, INC.
/
/s/ Andrew I. Sealfon October 13, 2000
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Andrew I. Sealfon, President, Treasurer,
Chairman of the Board, Director, and
Chief Executive Officer
10