SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT of 1934
FOR QUARTER ENDED November 30, 1995 COMMISSION FILE
NUMBER 0-16664
______________________________
GENETIC LABORATORIES WOUND CARE, INC.
State of Incorporation: Minnesota
I.R.S. Employer Identification No: 41-1604048
Executive Offices: 2726 Patton Road, St. Paul, MN 55113
Telephone Number: (612) 633-0805
______________________________
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.
Yes X No_____
______________________________
On November 30, 1995, there were 2,389,100 shares of the
Registrant's $.01 par value common stock outstanding.
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
GENETIC LABORATORIES WOUND CARE, INC.
BALANCE SHEETS
(Unaudited)
ASSETS
November 30, May 31
1995 1995
__________ __________
CURRENT ASSETS
Cash and cash equivalents $437,409 $295,830
Receivables
Trade, less allowance 270,764 277,541
Other 0 10,787
Inventories 445,340 429,105
Prepaid expenses 88,578 29,141
__________ __________
Total current assets 1,242,091 1,042,404
__________ __________
PROPERTY AND EQUIPMENT
Production equipment
and tooling 59,093 59,093
Office equipment 134,412 132,492
__________ __________
193,505 191,585
Less accumulated depreciation
and amortization 167,085 159,990
__________ __________
26,420 31,595
__________ __________
OTHER ASSETS, net 10,043 11,952
__________ __________
$1,278,554 $1,085,951
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $165,808 $132,368
Accrued expenses 45,268 65,804
Income taxes payable 42,246 9,800
__________ __________
Total current liabilities 253,322 207,972
__________ __________
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 23,891 23,261
Additional paid-in capital 641,781 625,186
Retained earnings 359,560 229,532
__________ __________
1,025,232 877,979
__________ __________
$1,278,554 $1,085,951
========== ==========
GENETIC LABORATORIES WOUND CARE, INC.
STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
1995 1994 1995 1994
Net revenues $567,262 $548,772 $1,213,418 $1,106,700
Cost of revenues 234,897 214,247 503,925 421,085
__________ __________ __________ _________
Gross profit 332,365 336,525 709,493 685,615
Operating expenses 330,262 289,083 687,177 569,002
__________ __________ __________ _________
Income from operations 2,103 47,442 22,316 116,613
Other income 3,138 862 169,712 1,721
__________ __________ __________ _________
Income before taxes 5,241 48,304 192,028 118,334
Provision for taxes 1,000 11,500 62,000 34,500
__________ __________ __________ _________
Net income $4,241 $36,804 $130,028 $83,834
============ ========== ========== =========
Per common share data
Net income $.00 $.02 $.05 $.04
===== ====== ======== ======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 2,583,050 2,344,020 2,580,200 2,344,020
========== ========== ========== ==========
GENETIC LABORATORIES WOUND CARE, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
1995 1994 1995 1994
_______ _______ ____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,241 $36,804 $130,028 $83,834
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation and amortization 4,511 5,368 9,004 11,009
Changes in current assets
and liabilities
Receivables 27,945 1,493 17,564 (2,995)
Inventories (100,644) (17,614) (16,235) (70,560)
Prepaid expenses (22,301) (824) (59,437) (17,850)
Accounts payable (5,767) 755 33,440 (17,574)
Accrued expenses (33,606) (14,567) (20,536) (8,636)
Income taxes payable (20,554) (8,500) 32,446 7,500
___________ ________ ________ _______
Net cash provided by (used in)
operating activities (146,175) 2,915 126,274 (15,272)
__________ _______ _______ ________
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(1,920) 0 (1,920) (8,704)
__________ __________ ________ ________
Net cash used in investing activities
(1,920) 0 (1,920) (8,704)
________ _________ _______ ______
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of issuance of
common stock 999 0 17,225 0
__________ _________ _______ _______
Net cash used in
financing activities 999 0 17,225 0
__________ ________ ______ ______
Net increase (decrease) in cash
and cash equivalents (147,096) 2,915 141,579 (23,976)
CASH and CASH EQUIVALENTS
Beginning 584,505 232,280 295,830 259,171
_________ ________ ________ ________
Ending $437,409 $235,195 $437,409 $235,195
=========== ======== ========= ========
GENETIC LABORATORIES WOUND CARE, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. Basis of Presentation
The interim financial statements are unaudited but in the opinion
of management, reflect all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the
Company's financial position as of November 30, 1995, and the
results of its operations and its cash flow for the three months
ended November 30, 1995 and 1994. The results of operations for any
interim period are not necessarily indicative of the results to
be expected for the full year. These statements are condensed and
therefore do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. These financial statements should be read
in conjunction with the financial statements and notes thereto
contained in the Company's Form 10-KSB or Annual Report for the
year ended May 31, 1995.
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net Revenues:
Net revenues were $567,262 for the three months ended November 30,
1995 compared to $548,772 for the three months ended November 30,
1994, an increase of 3.4%. Domestic sales increased 9% comparing
the three months ended November 30, 1995 to the three months ended
November 30, 1994. Suture Strip wound closure strips sales were 68%
of net revenues for the three months ended November 30, 1995, compared
to 66% of net revenues for the three months ended November 30, 1994.
Sales to international customers accounted for 15% of net revenues for
the three months ended November 30, 1995, compared to 14% for the three
months ended November 30, 1994.
Included in net revenues are royalties of $13,069 for the three
months ended November 30, 1994 and there are no royalties for the
three months ended November 30, 1995. Royalty income has ceased.
Cost of Revenues:
Cost of revenues were $234,897, 41.4% of net revenues, for the
three months ended November 30, 1995 compared to $212,247, 38.7% of
net revenue for the three months ended November 30, 1994. The
increase in cost of revenues was primarily the result of
increases in costs of product components.
Operating Expenses:
Operating expenses were $330,262, 58% of net revenues, for the
three months ended November 30, 1995 compared to $289,083, 53% of
net revenues, for the three months ended November 30, 1994.
Approximately $19,000 of the increase was due to planned
increases in product promotional activities.
Other Income:
On June 26, 1995 the Company sold its rights, title and interest
in a royalty agreement with Bio-Vascular, Inc. for $164,213. The
royalty agreement was due to terminate in July 1995. Royalty
revenues of $56,237 and $50,351 were earned under the royalty
agreement for the years ended May 31, 1995 and 1994,
respectively.
Liquidity and Capital Resources:
At November 30, 1995, the Company had working capital of $988,769
and a working capital ratio of 4.9 to 1 compared to working
capital of $834,432 and a working capital ratio of 5.0 to 1 on
May 31, 1995.
The Company has a revolving line of credit with a local bank in
the amount of $75,000. Outstanding balances on the line of credit
at November 30, 1995 and May 31, 1995 were $0.
The Company expects that is will be able to fund its working
capital requirements for the year through internally generated
funds.
Major Supplier:
As reported in the Company's November 30, 1994 10QSB a major
supplier will discontinue production of an essential component
material used in the Company's wound closure strips and fastener
products. The Company immediately began identifying alternatives
for the discontinued component material. The Company has
qualified an alternative component material for its wound closure
strips and fastener products.
Major Customers:
For the three months ended November 30, 1995 two customers accounted
for more than 10% of net revenue. One customer accounted for approximately
16%, and the other customer 12% of net revenues for the three months ended
November 30, 1995. These same customers accounted for 18.5% and 11.4% of
net revenues for the year ended May 31, 1995.
FINANCIAL STATEMENTS
The interim financial statements are unaudited but in the opinion
of the management, reflect all adjustment necessary for a fair
presentation of results for such periods. The results of
operations for any interim period are not necessarily indicative
of results for the full year.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
27 Financial Data Schedule
B) Reports on Form 8-K
None
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.
GENETIC LABORATORIES WOUND CARE, INC.
January 11, 1996
By: /s/ Arthur A. Beisang
_____________________________
Arthur A. Beisang
Chief Executive Officer