11
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
--------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 0-12991
-------
LANGER, INC.
------------
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2239561
- ---------------------------- ----------------------
(State or other jurisdiction (I.R.S. employer iden-
of incorporation or tification number)
organization)
450 COMMACK ROAD, DEER PARK, NEW YORK 11729-4510
-------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (631) 667-1200
--------------
* * * * * * * * * * *
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 [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, Par Value $.02 - 4,444,355 shares as of August 11, 2003.
1
INDEX
LANGER, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets 3
Unaudited Consolidated Statements of Operations 4
Unaudited Consolidated Statement of Stockholders' Equity 5
Unaudited Consolidated Statements of Cash Flows 6
Notes to Unaudited Consolidated Financial Statements 7-16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 17-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 DECEMBER 31, 2002
------------- -----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 5,657,191 $ 9,411,710
Accounts receivable, net of allowance for doubtful
accounts of $153,717 and $124,935, respectively 3,524,689 2,937,340
Inventories, net 2,447,532 2,353,153
Prepaid expenses and other 739,634 627,154
------------ ------------
Total current assets 12,369,046 15,329,357
Property and equipment, net 2,051,900 943,893
Identifiable intangible assets, net 4,086,759 3,313,413
Goodwill 4,029,740 3,186,386
Other assets 943,817 1,037,105
------------ ------------
Total assets $ 23,481,262 $ 23,810,154
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 800,000 $ 1,000,000
Accounts payable 1,246,647 1,235,598
Other current liabilities 1,917,339 1,864,344
Unearned revenue 658,375 660,866
------------ ------------
Total current liabilities 4,622,361 4,760,808
Long-term debt 14,589,000 15,389,000
Unearned revenue 160,341 162,455
Accrued pension expense 209,539 209,539
Other 512,957 176,138
------------ ------------
Total liabilities 20,094,198 20,697,940
------------ ------------
Stockholders' Equity
Preferred stock, no par value; authorized 250,000 shares;
no shares issued -- --
Common stock, $.02 par value; authorized
50,000,000 and 10,000,000 shares;
issued 4,444,355 and 4,336,744 shares, respectively 88,887 86,735
Additional paid-in capital 13,192,191 12,825,237
Accumulated deficit (9,385,449) (9,153,669)
Accumulated other comprehensive loss (393,108) (530,632)
------------ ------------
3,502,521 3,227,671
Treasury stock at cost, 67,100 shares (115,457) (115,457)
------------ ------------
Total stockholders' equity 3,387,064 3,112,214
------------ ------------
Total liabilities and stockholders' equity $ 23,481,262 $ 23,810,154
============ ============
See accompanying notes to unaudited consolidated financial statements.
3
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net sales $ 6,364,744 $ 4,692,309 $ 11,949,922 $ 7,830,928
Cost of sales 4,073,233 2,983,204 7,867,660 5,006,466
------------ ------------ ------------ ------------
Gross profit 2,291,511 1,709,105 4,082,262 2,824,462
Selling expenses 798,096 797,743 1,550,427 1,319,640
General and administrative expenses 1,270,411 1,084,989 2,358,187 1,855,384
------------ ------------ ------------ ------------
Operating income (loss) 223,004 (173,627) 173,648 (350,562)
Other income (expense):
Interest income 31,829 65,813 77,773 144,423
Interest expense (160,296) (159,126) (325,993) (305,634)
Other (24,286) (49,469) (68,658) (97,204)
------------ ------------ ------------ ------------
Other income (expense), net (152,753) (142,782) (316,878) (258,415)
------------ ------------ ------------ ------------
Income (loss) before income taxes 70,251 (316,409) (143,230) (608,977)
Provision for income taxes 43,950 9,500 88,550 13,500
------------ ------------ ------------ ------------
Net income (loss) $ 26,301 $ (325,909) $ (231,780) $ (622,477)
============ ============ ============ ============
Weighted average number of common shares used in
computation of net income (loss) per share:
Basic 4,377,255 4,241,576 4,370,121 4,221,381
============ ============ ============ ============
Diluted 4,612,806 4,241,576 4,370,121 4,221,381
============ ============ ============ ============
Net income (loss) per common share:
Basic $ .01 $ (.08) $ (.05) $ (.15)
============ ============ ============ ============
Diluted $ .01 $ (.08) $ (.05) $ (.15)
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements.
4
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(UNAUDITED)
Accumulated Other
Comprehensive Loss
Common Stock ------------------
------------ Additional Foreign Minimum Total
Treasury Paid-in Accumulated Currency Pension Stockholders'
Shares Amount Stock Capital Deficit Translation Liability Equity
-------------------------------------------------------------------------------------------------------
Balance at January 1, 2003 4,336,744 $86,735 $(115,457) $12,825,237 $(9,153,669) $(26,217) $(504,415) $3,112,214
Net loss for six months
ended June 30, 2003 (231,780) (231,780)
Foreign currency adjustment 137,524 137,524
Issuance of stock to
purchase business 107,611 2,152 366,954 369,106
-------------------------------------------------------------------------------------------------------
Balance at June 30, 2003 4,444,355 $88,887 $(115,457) $13,192,191 $(9,385,449) $111,307 $(504,415) $3,387,064
=======================================================================================================
See accompanying notes to unaudited consolidated financial statements.
5
LANGER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Cash Flows From Operating Activities:
Net income (loss) $ 26,301 $ (325,909) $ (231,780) $ (622,477)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 188,357 189,710 375,610 327,510
Compensation expense for options acceleration -- -- -- 20,057
Provision for doubtful accounts receivable 23,941 8,915 42,455 19,080
Deferred income taxes 32,750 (183) 64,750 (74)
Issuance of common stock and options for consulting
services -- 5,242 -- 5,242
Changes in operating assets and liabilities:
Accounts receivable (359,259) (91,377) (254,420) (138,083)
Inventories 198,105 9,543 81,009 (135,903)
Prepaid expenses and other assets 44,035 101,871 111,538 (184,858)
Accounts payable and other current liabilities (218,707) 397,497 (373,052) 303,812
Unearned revenue and other liabilities (17,246) (8,205) (211,336) 7,848
------------ ------------ ------------ ------------
Net cash (used in) provided by operating activities (81,723) 287,104 (395,226) (397,846)
------------ ------------ ------------ ------------
Cash Flows From Investing Activities:
Purchase of business, net of cash acquired (327,530) (4,490,846) (1,629,193) (4,490,846)
Purchase of fixed assets (632,531) (160,204) (730,100) (205,174)
------------ ------------ ------------ ------------
Net cash used in investing activities (960,061) (4,651,050) (2,359,293) (4,696,020)
------------ ------------ ------------ ------------
Cash Flows From Financing Activities:
Payment of promissory notes (1,000,000) -- (1,000,000) --
Proceeds from the exercise of stock options -- 6,563 -- 6,563
------------ ------------ ------------ ------------
Net cash (used in) provided by financing activities (1,000,000) 6,563 (1,000,000) 6,563
------------ ------------ ------------ ------------
Net decrease in cash and cash equivalents (2,041,784) (4,357,383) (3,754,519) (5,087,303)
Cash and cash equivalents at beginning of period 7,698,975 15,067,002 9,411,710 15,796,922
------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 5,657,191 $ 10,709,619 $ 5,657,191 $ 10,709,619
============ ============ ============ ============
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest expense $ 303,712 $ 159,126 $ 321,712 $ 305,634
============ ============ ============ ============
Income taxes $ -- $ -- $ -- $ --
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements.
6
LANGER, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
(A) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. These unaudited consolidated financial statements should be
read in conjunction with the financial statements and footnotes
included in the Company's annual report on Form 10-K for the fiscal
year ended December 31, 2002.
Operating results for the three and six months ended June 30, 2003 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2003.
(B) CHANGE IN STATE OF INCORPORATION
At the Company's June 27, 2002 annual meeting, the stockholders
approved the changing of the State of Incorporation of the Company from
New York to Delaware. The new Certificate of Incorporation authorizes
the issuance of 50,000,000 shares of common stock, par value $.02 per
share, and the issuance of 250,000 shares of blank check preferred
stock. No shares of preferred stock are issued or outstanding.
(C) INCOME (LOSS) PER SHARE
Basic income (loss) per share is based on the weighted average number
of shares of common stock outstanding during the period. Diluted income
(loss) per share is based on the weighted average number of shares of
common stock and common stock equivalents (options, warrants and
convertible subordinated notes) outstanding during the period, except
where the effect would be antidilutive, computed in accordance with the
treasury stock method.
(D) PROVISION FOR INCOME TAXES
For the three and six months ended June 30, 2003, there was no current
provision for income taxes on domestic operations. The provision for
income taxes on foreign operations was estimated at $11,200 and
$23,800, respectively, for the three and six months ended June 30,
2003. The provision for income taxes on foreign operations for the
three and six months ended June 30, 2002 was estimated at $9,500 and
$13,500 respectively.
Prior to the adoption of SFAS No. 142, the Company would not have
needed a valuation allowance for the portion of the net operating
losses equal to the amount of tax-deductible goodwill and trade names
amortization expected to occur during the carryforward period of the
net operating losses based on the timing of the reversal of these
taxable temporary differences. As a result of the adoption of SFAS 142,
the reversal will not occur during the carryforward period of the net
operating losses. Therefore, the Company recorded a deferred income tax
expense of approximately $32,750 and $ 64,750 respectively, during the
three and six months ended June 30, 2003 which would not have been
required prior to the adoption of SFAS 142.
7
(E) RECLASSIFICATIONS
Certain amounts have been reclassified in the prior period consolidated
financial statements to present them on a basis consistent with the
current year.
(F) SEASONALITY
A substantial portion of the Company's revenue is derived from the sale
of custom orthotics. North American custom orthotic revenue has
historically been significantly higher in the warmer months of the
year, while custom orthotic revenue of the Company's United Kingdom
subsidiary has historically not evidenced any seasonality.
(G) STOCK OPTIONS
At June 30, 2003, the Company has two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related Interpretations. No stock-based
employee compensation cost is reflected in net income (loss), as all
options granted under those plans had an exercise price equal to market
value of the underlying common stock on the date of grant. The
following table illustrates the effect on net income (loss) and
earnings (loss) per share if the company had applied the fair value
recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.
Three months ended Six months ended
June 30, June 30,
----------------------- -------------------------
2003 2002 2003 2002
--------- ---------- ---------- -----------
Net income (loss) - as reported $ 26,301 $ (325,909) $ (231,780) $ (622,477)
Deduct: Total stock-based employee
compensation expense determined
under fair value basis method for
all rewards, net of tax (49,627) (15,739) (81,360) (15,739)
--------- ---------- ---------- -----------
Pro forma net income (loss) $ (23,326) $ (341,648) $ (313,140) $ (638,216)
========= ========== ========== ===========
Earnings (loss) per share:
Basic- as reported $ .01 $ (.08) $ (.05) $ (.15)
========= ========== ========== ===========
Basic- pro forma $ (.01) $ (.08) $ (.07) $ (.15)
========= ========== ========== ===========
Diluted- as reported $ .01 $ (.08) $ (.05) $ (.15)
========= ========== ========== ===========
Diluted- pro forma $ (.01) $ (.08) $ (.07) $ (.15)
========= ========== ========== ===========
8
(H) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities" ("FIN 46"), which requires variable interest entities
(commonly referred to as SPEs) to be consolidated by the primary
beneficiary of the entity if certain criteria are met. FIN 46 applies
immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains
an interest after that date. The Interpretation applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. The Company does not have any
variable interest entities. Therefore, the adoption of FIN 46 did not
have a material effect on the Company's consolidated financial
statements.
In April 2003, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities." SFAS No. 149 amends and clarifies
accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 149 is generally effective for derivative
instruments, including derivative instruments embedded in certain
contracts, entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The adoption of SFAS No.
149 is not expected to have a material effect on the Company's
consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 establishes standards for how to classify and
measure certain financial instruments with characteristics of both
liabilities and equity. The statement is effective for financial
instruments entered into or modified after May 31, 2003. The adoption of
SFAS No. 145 did not have a material impact on the Company's
consolidated financial statements.
In 2002, the Company adopted the provision of Emerging Issues Task Force
("ETIF") Consensus No. 00-10 "Accounting for Shipping and Handling Fees
and Costs," which addresses the income statement classification for
shipping and handling fees. In accordance with EITF 00-10, net sales and
cost of sales have been increased by $212,152 and $357,323 for the three
and six months ended June 30, 2002, respectively. Net sales and cost of
sales have been restated from previously issued reports. The change in
classification had no impact on the Company's consolidated results of
operations, cash flows or financial position.
NOTE 2 - ACQUISITIONS
A) BI-OP, INC.
Effective January 1, 2003, the Company, through a wholly-owned subsidiary,
acquired all of the issued and outstanding stock of Bi-Op Laboratories, Inc.
("Bi-Op") pursuant to the terms of a Stock Purchase Agreement dated as of
January 13, 2003 (the "Stock Purchase Agreement").
In connection with the acquisition, the Company paid consideration in
Canadian dollars, determined through arms-length negotiation of the parties.
When converted to U.S. dollars the total purchase price approximated $1.6
million of which $1.2 million was paid in cash and $.4 million was paid by
issuing 107,611 shares of the Company's common stock. $250,000 CDN of the
cash portion of the consideration was deposited in escrow until final
determination of the closing date balance sheet of Bi-Op as set forth in the
Stock Purchase Agreement. The purchase price will be reduced dollar for
dollar to the extent that the net assets of Bi-Op as of December 31, 2002
were less than $1,000,000 CDN. Conversely, the purchase price will be
increased dollar for dollar to the extent that the net assets of Bi-Op as of
the closing date exceeded $1,000,000 CDN. We funded the entire cash portion
of the purchase price through working capital.
In connection with the Stock Purchase Agreement, the Company entered into an
employment agreement with Raynald Henry, Bi-Op's principal owner, having a
term of three years and providing for an annual base salary of $75,000 CDN
and benefits, including certain severance payments.
9
The following table sets forth the components of the estimated purchase
price:
Cash consideration $1,201,574
Common stock issued 369,106
Transaction costs 497,021
----------
Total purchase price $2,067,701
==========
The following table provides the preliminary allocation of the estimated
purchase price:
Assets: Cash and cash equivalents $ 194,531
Accounts receivables 292,372
Inventories 111,153
Prepaid expenses and other 143,919
Property and equipment 437,478
Goodwill 718,226
Identified intangible assets 900,000
Other assets 41,803
-----------
2,839,482
-----------
Liabilities:
Accounts payable 196,323
Accrued liabilities 118,633
Deferred Income Tax 270,000
Long term debt and other liabilities 186,825
-----------
771,781
-----------
Total purchase price $ 2,067,701
===========
B) BENEFOOT, INC. AND BENEFOOT PROFESSIONAL PRODUCTS, INC.
On May 6, 2002 the Company, through a wholly-owned subsidiary, acquired
substantially all of the assets and liabilities of each of Benefoot, Inc.
and Benefoot Professional Products, Inc. (jointly, "Benefoot"), pursuant to
the terms of an asset purchase agreement (the "Asset Purchase Agreement").
The assets acquired include machinery and equipment, other fixed assets,
inventory, receivables, contract rights, and intangible assets.
In connection with the acquisition, the Company paid consideration of $6.1
million, of which $3.8 million was paid in cash, $1.8 million was paid
through the issuance of promissory notes (the "Promissory Notes") and
$500,000 was paid by issuing 61,805 shares of common stock (the "Shares"),
together with certain registration rights. $1,000,000 of the Promissory
Notes were paid on May 6, 2003 and the balance are due on May 6, 2004. The
Promissory Notes bear interest at 4%. The Company also assumed certain
liabilities of Benefoot, including approximately $300,000 of long-term
indebtedness. The Company also agreed to pay Benefoot up to an additional
$1,000,000 upon satisfaction of certain performance targets on or prior to
May 6, 2004. As of June 30, 2003 the Company has paid $200,125 based upon
the satisfaction of performance targets for 2002. The Company funded the
entire cash portion of the purchase price through working capital generated
principally through the prior sale of the Company's 4% convertible
subordinated notes due August 31, 2006.
In connection with the Asset Purchase Agreement, the Company entered into an
employment agreement with each of two former shareholders of Benefoot, each
having a term of two years and providing for an annual base salary of
$150,000 and benefits, including certain severance arrangements. One of
these shareholders subsequently terminated his employment agreement with the
Company. As a result, the Company accrued $94,000 for termination costs. The
Company also entered into an agreement with Sheldon Langer as a medical
consultant providing for an annual fee of $45,000 and a one-time grant of
3,090 shares of common stock, together with certain registration rights. The
allocation of the purchase price among the assets acquired and liabilities
assumed is based on the Company's valuation of the fair value of the assets
and liabilities of Benefoot.
10
The following table sets forth the components of the estimated purchase
price:
Cash consideration $3,800,351
Benefoot long term debt paid at closing 307,211
----------
Total cash paid at closing $4,107,562
Promissory note issued 1,800,000
Common stock issued 529,512
Transaction costs 747,000
Contingent consideration 200,125
----------
Total purchase price $7,384,199
==========
The following table provides the allocation of the purchase price:
Assets: Cash and cash equivalents $ 225,953
Accounts receivables 806,370
Inventories 660,559
Prepaid expenses and other 76,973
Property and equipment 223,398
Goodwill 3,311,514
Identified intangible assets 3,430,000
Other assets 6,162
----------
8,740,929
----------
Liabilities:
Accounts payable 647,873
Accrued liabilities 389,400
Unearned revenue 210,355
Long term debt & other liabilities 109,102
----------
1,356,730
----------
Total purchase price $7,384,199
==========
In accordance with the provisions of SFAS No. 142, the Company will not
amortize goodwill and intangible assets with indefinite lives (trade names
with an estimated fair value of $1,600,000). The Company did not recognize
any impairment losses on goodwill during the three and six months ended June
30, 2003 and 2002.
Identifiable intangible assets at June 30, 2003 consist of:
Amortization Gross Carrying Accumulated Net Carrying
Assets Period Value Amortization Value
--------------------------- ------------ --------------- ------------- ------------
Trade names indefinite $1,600,000 $ -- $1,600,000
Non-competition agreements 7-8 years 630,000 62,911 567,089
License agreements and 11 years 1,600,000 167,830 1,432,170
related technology
Repeat customer base 20 years 500,000 12,500 487,500
---------- ---------- ----------
$4,330,000 $ 243,241 $4,086,759
========== ========== ==========
11
Aggregate amortization expense for the three and six months ended June 30,
2003 was $63,327 and $126,654, respectively and was $23,976 for both the
three and six months ended June 30, 2002.
Unaudited pro forma results of operations for the three and six months ended
June 30, 2002, as if the Company acquired Bi-Op and Benefoot at the
beginning of that year, include estimates and assumptions which management
believes are reasonable. However, pro forma results do not include the
realization of cost savings from operating efficiencies, synergies or other
effects resulting from the acquisition, and are not necessarily indicative
of the actual consolidated results of operations had the acquisition
occurred on the date assumed, nor are they necessarily indicative of future
consolidated results of operations.
Unaudited pro forma results were:
Three months ended Six months ended
June 30, 2002 June 30, 2002
------------------ ----------------
Net sales $5,897,834 $11,220,283
Net loss $ (205,838) $ (505,014)
Diluted loss per share $ (.05) $ (.11)
NOTE 3 - INVENTORIES, NET
Inventories consist of:
June 30, 2003 December 31, 2002
------------- -----------------
(Unaudited)
Raw materials $1,546,189 $1,224,136
Work-in-process 171,218 180,135
Finished goods 1,015,286 1,169,287
---------- ----------
2,732,693 2,573,558
Less: allowance for excess and obsolescence 285,161 220,405
---------- ----------
$2,447,532 $2,353,153
========== ==========
NOTE 4- LONG TERM DEBT
On October 31, 2001, the Company completed the sale of $14,589,000 principal
amount of its 4% convertible subordinated notes due August 31, 2006 (the
"Notes"), in a private placement. The Notes are convertible into shares of
the Company's common stock at a conversion price of $6.00 per share (equal
to the market value of the Company's stock on October 31, 2001), subject to
anti-dilution protections, and are subordinated to existing or future senior
indebtedness of the Company. Among other provisions, the Company may, at its
option, call, prepay, redeem, repurchase, convert or otherwise acquire
(collectively, "Call") the Notes, in whole or in part, (1) after August 31,
2003 or (2) at any time if the closing price of the Company's common stock
equals or exceeds $9.00 per share for at least ten consecutive trading days.
If the Company elects to Call any of the Notes, the holders of the Notes may
elect to convert the Notes for the Company's common stock. Interest is
payable semi-
12
annually on the last day of June and December. Interest expense on these
Notes for both the six and three month periods ended June 30, 2003 and 2002
was $291,780 and $145,890, respectively.
The Company received net proceeds of $13,668,067 from the offering of the
Notes. The cost of raising these proceeds was $920,933, which is being
amortized over the life of the Notes. The amortization of these costs for
the six and three months ended June 30, 2003 was $96,886 and $48,443,
respectively and for the comparable period in 2002 was $96,219 and $48,176,
respectively.
The Company issued $1,800,000 in Promissory Notes in connection with the
acquisition of Benefoot. $1,000,000 of the notes were paid on May 6, 2003
and the balance are due on May 6, 2004. Interest expense for the six and
three months ended June 30, 2003 was $29,932 and $11,932, respectively and
for the comparable period from the date of acquisition was $11,200.
NOTE 5 - SEGMENT INFORMATION
In the quarter ended June 30, 2003, the Company operated in two segments
(custom orthotics and distributed products) principally in the design,
development, manufacture and sale of foot and gait-related products.
Intersegment net sales are recorded at cost. Segment information for the
three and six months ended June 30, 2003 is summarized as follows:
THREE MONTHS ENDED JUNE 30, 2003 CUSTOM ORTHOTICS DISTRIBUTED PRODUCTS TOTAL
-------------------------------- ---------------- -------------------- -----
Net sales $4,949,164 $1,415,580 $6,364,744
Gross profit 1,924,538 366,973 2,291,511
Operating profit 29,264 193,740 223,004
Depreciation and amortization 184,267 4,090 188,357
Capital expenditures 631,413 1,118 632,531
SIX MONTHS ENDED JUNE 30, 2003 CUSTOM ORTHOTICS DISTRIBUTED PRODUCTS TOTAL
------------------------------ ---------------- -------------------- -----
Net sales $9,150,585 $2,799,337 $11,949,922
Gross profit 3,357,024 725,238 4,082,262
Operating profit (loss) (202,821) 376,469 173,648
Depreciation and amortization 367,430 8,180 375,610
Total assets 22,215,982 1,265,280 23,481,262
Capital expenditures 714,526 15,574 730,100
The Company operated in one segment (custom orthotics) in the three and six
months ended June 30, 2002 since the distributed products segment
established in the year ended December 31, 2002 had not been considered
significant. Net sales for custom orthotics were $3,787,209 and $6,472,226,
respectively and net sales for distributed products were $905,100 and
$1,358,702, respectively, for the three and six months ended June 30, 2002.
Information regarding gross profit, operating profit (loss), depreciation
and amortization and total assets and capital expenditures for the three and
six months ended June 30, 2002 is not available.
13
Geographical segment information is summarized as follows:
NORTH UNITED CONSOLIDATED
AMERICA KINGDOM TOTAL
THREE MONTHS ENDED JUNE 30, 2003
- -----------------------------------------------------------------------------------------
Net sales from external customers $ 5,723,187 $ 641,557 $ 6,364,744
Intersegment net sales 88,051 -- 88,051
Gross profit 2,030,692 260,819 2,291,511
Operating profit 89,453 133,551 223,004
Depreciation and amortization 174,695 13,662 188,357
Capital expenditures 621,979 10,552 632,531
THREE MONTHS ENDED JUNE 30, 2002
- -----------------------------------------------------------------------------------------
Net sales from external customers $ 4,136,801 $ 555,508 $ 4,692,309
Intersegment net sales 62,489 -- 62,489
Gross profit 1,461,542 247,563 1,709,105
Operating (loss) profit (294,868) 121,241 (173,627)
Depreciation and amortization 177,476 12,234 189,710
Capital expenditures 154,404 5,800 160,204
SIX MONTHS ENDED JUNE 30, 2003
- -----------------------------------------------------------------------------------------
Net sales from external customers $ 10,642,455 $ 1,307,467 $ 11,949,922
Intersegment net sales 157,052 -- 157,052
Gross profit 3,559,228 523,034 4,082,262
Operating (loss) profit (74,827) 248,475 173,648
Depreciation and amortization 348,248 27,362 375,610
Total assets 22,422,107 1,059,155 23,481,262
Capital expenditures 718,265 11,835 730,100
SIX MONTHS ENDED JUNE 30, 2002
- -----------------------------------------------------------------------------------------
Net sales from external customers $ 6,744,908 $ 1,086,020 $ 7,830,928
Intersegment net sales 165,401 -- 165,401
Gross profit 2,364,691 459,771 2,824,462
Operating (loss) profit (566,218) 215,656 (350,562)
Depreciation and amortization 303,104 24,406 327,510
Total assets 23,236,216 902,461 24,138,677
Capital expenditures 195,988 9,186 205,174
14
NOTE 6 - COMPREHENSIVE INCOME (LOSS)
The Company's comprehensive income (loss) were as follows:
Three months ended June 30, Six months ended June 30,
--------------------------- --------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income (loss) $ 26,301 $(325,909) $(231,780) $(622,477)
Other comprehensive income (loss) net of tax:
Change in equity resulting from
translation of financial statements
into U.S. dollars 85,752 14,880 137,524 12,092
--------- --------- --------- ---------
Comprehensive income (loss) $ 112,053 $(311,029) $ (94,256) $(610,385)
========= ========= ========= =========
NOTE 7 - INCOME (LOSS) PER SHARE
The following table provides a reconciliation between basic and diluted
earnings per share:
Three months ended June 30,
-----------------------------------------------------------------------------------------
2003 2002
------------------------------------------- ------------------------------------------
Per Per
Basic EPS Income(loss) Shares Share Income(loss) Shares Share
- ----------------------------- ------------- ----------- ---------- ------------ ---------- -----------
Income (loss) available to
common stockholders $ 26,301 4,377,255 $ .01 $ (325,909) 4,241,576 $ (.08)
Effect of Dilutive Securities
- -----------------------------
Stock options -- 235,551 -- -- -- --
---------- ---------- ------- ---------- ---------- -------
Diluted EPS
- -----------------------------
Income (loss) available to
common stockholders plus
assumed exercise of stock
options $ 26,301 4,612,806 $ .01 $ (325,909) 4,241,576 $ (.08)
========== ========== ======= ========== ========== =======
Six months ended June 30,
-----------------------------------------------------------------------------------------
2003 2002
------------------------------------------- ------------------------------------------
Per Per
Basic EPS Income(loss) Shares Share Income(loss) Shares Share
- ----------------------------- ------------- ----------- ---------- ------------ ---------- -----------
Loss available to common
stockholders $ (231,780) 4,370,121 $ (.05) $ (622,477) 4,221,381 $ (.15)
Effect of Dilutive Securities
- -----------------------------
Stock options -- -- -- -- -- --
---------- ---------- ------- ---------- ---------- -------
Diluted EPS
- -----------------------------
Loss available to common
stockholders plus assumed
exercise of stock options $ (231,780) 4,370,121 $ (.05) $ (622,477) 4,221,381 $ (.15)
========== ========== ======= ========== ========== =======
15
The diluted income (loss) per share computations for the six months ended
June 30, 2003 and for the three and six months ended June 30, 2002 exclude
incremental shares of approximately 253,399 and 429,257 and 500,550
respectively, related to employee stock options. These shares are excluded
due to their antidilutive effect as a result of the Company's loss during
the period. In addition, the Company's Debentures were not included in the
computation of diluted income (loss) per share for the six and three months
ended months ended June 30, 2003 and 2002 because the effect of including
them would be antidilutive.
NOTE 8 - RELATED PARTY TRANSACTIONS
Langer has engaged a company which is owned by the brother-in-law of a
senior executive of Langer, to provide certain technology related products
and services. Costs incurred for products and services provided by this
company were approximately $46,000 and $83,000, during the three and six
months ended June 30, 2003, and approximately $11,000 and $31,000 during the
three and six months ended June 30, 2002.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company disclosed its critical accounting policies and estimates in the
December 31, 2002 Form 10-K. There have been no changes to those critical
accounting policies and estimates during the six months ended June 30, 2003.
RESULTS OF OPERATIONS
Net sales for the six months ended June 30, 2003 were $11,949,922 or 53%
above net sales of $7,830,928 for the six months ended June 30, 2002. Net
sales for the three months ended June 30, 2003 were $6,364,744 or 36% above
net sales of $4,692,309 for the three months ended June 30, 2002. Net sales
of custom orthotics were $9,150,585 and $4,949,164 while net sales of
distributed products were $2,799,337 and $1,415,580 for the six and three
months ended June 30, 2003, respectively. Net sales for the three and six
months ended June 30, 2003 attributable to acquisitions were $1,026,912 and
$2,928,854, respectively.
Net sales of custom orthotics for the six months ended June 30, 2003 were
$9,150,585 as compared to $6,472,226 for the six months ended June 30, 2002,
an increase of $2,678,359. Net sales of custom orthotics for the three
months ended June 30, 2003 were $4,949,164 as compared to $3,787,209 for the
three months ended June 30, 2002. Net sales of custom orthotics related to
acquisitions were $746,705 and $1,771,276 for the three and six months ended
June 30, 2003. Net sales of custom orthotics, exclusive of net sales related
to acquisitions, increased $415,250 or approximately 11% and $907,083 or
approximately 14% for the three and six months ended June 30, 2003
respectively, as a result of increases in the Company's Canadian and United
Kingdom business and increases in the Company's Langer Ankle Stabilizing
Technology (LAST) business.
Net sales of distributed products for the six months ended June 30, 2003
were $2,799,337 as compared to $1,358,702 for the six months ended June 30,
2002, an increase of $1,440,635. Net sales of distributed products for the
three months ended June 30, 2003 were $1,415,580 as compared to $905,100 for
the three months ended June 30, 2002. Net sales of distributed products
attributable to acquisitions were $280,207 and $1,157,578 for the three and
six months ended June 30, 2003. Net sales of distributed products exclusive
of net sales related to acquisitions increased $230,273 or approximately 25%
and $283,057 or approximately 21% for the three and six months ended June
30, 2003 respectively, as a result of increases in unit sales of most of the
distributed product line.
Gross profit as a percentage of net sales for the six months ended June 30,
2003 was 34.2%, as compared to 36.1% for the six months ended June 30, 2002.
Gross profit as a percentage of net sales for the three months ended June
30, 2003 was 36.0% as compared to 36.4% for the three months ended June 30,
2002. Gross profit as a percentage of net sales declined as a result of
higher material costs, offset in part as a percentage of sales by lower
labor costs and lower manufacturing overhead.
Selling expenses for the six months ended June 30, 2003, were $1,550,427 or
13.0% of net sales as compared to $1,319,640 or 16.9% of net sales for the
six months ended June 30, 2002. Selling expenses for the three months ended
June 30 2003 were $798,096 or 12.5% of net sales as compared to $797,743 or
17.0% of net sales for the six months ended June 30, 2002. Selling expenses
as a percentage of sales for the quarter improved primarily as a
17
result of the increased revenues from acquisitions which spread the fixed
selling costs incurred over a larger sales base.
General and administrative expenses for the six months ended June 30, 2003
were $2,358,187 or 19.7% of net sales for the six months ended June 30, 2003
as compared to $1,855,384 or 23.7% of net sales for the six months ended
June 30, 2002. General and administrative expenses for the three months
ended June 30, 2003 were $1,270,411 or 20.0% as compared to $1,084,989 or
23.1% of net sales for the three months ended June 30, 2002. General and
administrative expense as a percentage of net sales improved primarily as a
result of the increased revenues from acquisitions, which spread the fixed
costs over a larger sales base. General and administrative costs increased
in dollars as a result of increased costs incurred as we continue to
strengthen our infrastructure.
Other income (expense), net, was $(316,878) for the six months ended June
30, 2003, as compared to $(258,415) for the six months ended June 30, 2002.
The increase in other income (expense) is attributable to interest on the
notes issued in connection with the Benefoot acquisition as well as reduced
interest income as cash on hand was expended to complete the acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2003 was $7,746,685, as compared to
$10,568,549 as of December 31, 2002. Cash balances at June 30, 2003 were
$5,657,191, a decrease of $3,754,519 from the $9,411,710 at December 31,
2002. The reduction in cash is attributable to the cash used to complete the
acquisition of Bi-Op, the repayment of $1,000,000 of notes payable in
connection with the Benefoot acquisition, the payment of contingent
consideration in connection with the Benefoot acquisition as well as cash
used to pay year end bonuses, annual insurance premiums and the purchase of
a computer software system.
In connection with the acquisition of Benefoot, the Company issued
$1,800,000 of 4% Promissory notes. $1,000,000 of the Promissory notes were
paid on May 6, 2003 and the balance are due on May 6, 2004. Interest expense
on these notes for the three and six months ended June 30, 2003 was $29,932
and $11,932, respectively.
The Company's United Kingdom subsidiary maintains a line of credit with a
local bank in the amount of 50,000 British pounds, which is guaranteed by
the Company pursuant to a standby Letter of Credit. If this credit facility,
which has been renewed through February 2004, would not be available, the
Company believes it can readily find a suitable replacement, or the Company
could supply the necessary capital.
Repurchases of the Company's common stock may be made from time to time in
the open market at prevailing prices or in privately negotiated
transactions, subject to available resources. The Company may also finance
acquisitions of other companies or product lines in the future from existing
cash balances, from borrowings from institutional lenders, and/or the public
or private offerings of debt or equity securities. Management believes that
its existing cash balances will be adequate to meet the Company's cash needs
for the next twelve months.
18
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standard Board ("FASB") issued
FASB Interpretation No. 46, "Consolidation of Variable Interest Entities"
("FIN 46"), which requires variable interest entities (commonly referred to
as SPEs) to be consolidated by the primary beneficiary of the entity if
certain criteria are met. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities
in which an enterprise obtains an interest after that date. The
Interpretation applies in the first fiscal year or interim period beginning
after June 15, 2003, to variable interest entities in which an enterprise
holds a variable interest that it acquired before February 1, 2003. The
Company does not have any variable interest entities. Therefore, the
adoption of FIN 46 did not have a material effect on the Company's
consolidated financial statements.
In April 2003, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS No. 149 amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS No. 149 is
generally effective for derivative instruments, including derivative
instruments embedded in certain contracts, entered into or modified after
June 30, 2003 and for hedging relationships designated after June 30, 2003.
The adoption of SFAS No. 149 is not expected to have a material effect on
the Company's consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No.
150 establishes standards for how to classify and measure certain financial
instruments with characteristics of both liabilities and equity. The
statement is effective for financial instruments entered into or modified
after May 31, 2003. The adoption of SFAS No. 145 did not have a material
impact on the Company's consolidated financial statements.
In 2002, the Company adopted the provision of Emerging Issues Task Force
("ETIF") Consensus No. 00-10 "Accounting for Shipping and Handling Fees and
Costs," which addresses the income statement classification for shipping and
handling fees. In accordance with EITF 00-10, net sales and cost of sales
have been increased by $212,152 and $357,323 for the three and six months
ended June 30, 2002, respectively. Net sales and cost of sales have been
restated from previously issued reports. The change in classification had no
impact on the Company's consolidated results of operations, cash flows or
financial position.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Information contained or incorporated by reference in the quarterly report
on Form 10-Q, in other SEC filings by the Company, in press releases, and in
presentations by the Company or its management, contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 which can be identified by the use of forward-looking
terminology such as "believes," "expects," "plans," "intends," "estimates,"
"projects," "could," "may," "will," "should," or "anticipates" or the
negative thereof, other variations thereon or comparable terminology, or by
discussions of strategy. No assurance can be given that future results
covered by the forward-looking statements will be achieved. Such
forward-looking statements include, but are not limited to, those relating
to the Company's financial and operating prospects, future opportunities,
the Company's acquisition strategy and ability to integrate acquired
companies and assets, outlook of customers, and reception of new products,
technologies, and pricing. In addition, such forward looking statements
involve known and unknown risks, uncertainties, and other factors including
those described from time to time in the Company's Registration Statement on
Form S-3, most recent Form 10-K and 10-Q's and other Company filings with
the Securities and Exchange Commission which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results expressed or implied by such forward-looking statements.
Also, the Company's business could be materially adversely affected and the
trading price of the Company's common stock could decline if any such risks
and uncertainties develop into actual events. The Company undertakes no
obligation to publicly update or revise forward-looking statements to
reflect events or circumstances after the date of this Form 10-Q or to
reflect the occurrence of unanticipated events.
19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In general, business enterprises can be exposed to market risks, including
fluctuation in commodity and raw materials prices, foreign currency exchange
rates, and interest rates that can adversely affect the cost and results of
operating, investing, and financing. In seeking to minimize the risks and/or
costs associated with such activities, the Company manages exposure to
changes in commodities and raw material prices, interest rates and foreign
currency exchange rates through its regular operating and financing
activities. The Company does not utilize financial instruments for trading
or other speculative purposes, nor does the Company utilize leveraged
financial instruments or other derivatives. The following discussion about
our market rate risk involves forward-looking statements. Actual results
could differ materially from those projected in the forward-looking
statements.
The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's short-term monetary investments. There is
a market rate risk for changes in interest rates earned on short-term money
market instruments. There is inherent rollover risk in the short-term money
market instruments as they mature and are renewed at current market rates.
The extent of this risk is not quantifiable or predictable because of the
variability of future interest rates and business financing requirements.
However, there is no risk of loss of principal in the short-term money
market instruments, only a risk related to a potential reduction in future
interest income. Derivative instruments are not presently used to adjust the
Company's interest rate risk profile.
The majority of the Company's business is denominated in United States
dollars. There are costs associated with the Company's operations in foreign
countries, primarily the United Kingdom and Canada, that require payments in
the local currency and payments received from customers for goods sold in
these countries are typically in the local currency. The Company partially
manages its foreign currency risk related to those payments by maintaining
operating accounts in these foreign countries and by having customers pay
the Company in those same currencies.
20
ITEM 4. CONTROLS AND PROCEDURES
(a) Based on their evaluation of the Company's disclosure controls and
procedures as of a date within 90 days of the filing of this report, the
Company's principal executive officer and chief financial officer have
concluded that such controls and procedures are effective.
(b) There were no significant changes in the Company's internal controls or
in other factors that could significantly affect such controls subsequent to
the date of their evaluation.
21
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on June
25, 2003. Of the 4,377,255 shares of the Company's common
stock entitled to vote at the meeting, 3,924,234 shares of
common stock were present in person or by proxy and entitled
to vote. Such number of shares represented approximately 90%
of the Company's outstanding shares of common stock.
At the meeting, the Company's stockholders approved the
election of Burtt R. Ehrlich, Andrew H. Meyers, Jonathan R.
Foster, Arthur Goldstein, Greg Nelson, and Thomas W. Strauss
to the Company's board of directors. The Company's
stockholders voted as follows in connection with such
election:
For: Withheld:
---- ---------
Burtt R. Ehrlich 3,923,868 366
Andrew H. Meyers 3,923,868 366
Jonathan R. Foster 3,924,168 66
Arthur Goldstein 3,924,168 66
Greg Nelson 3,924,168 66
Thomas W. Strauss 3,924,168 66
At the meeting, the Company's stockholders approved the
appointment of Deloitte & Touche LLP as the Company's
independent auditor for the Company's fiscal year ending
December 31, 2003. There were 3,923,868 votes in favor, 41
votes against and 325 abstentions in connection with such
proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 - Certification pursuant to 18 U.S.C. 1350.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on May 13,
2003, to report information under Item 9, Regulation FD
Disclosure, regarding the announcement of the Company's
results for the quarter ended March 31, 2003.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LANGER, INC.
Date: August 12, 2003 By: /s/ Andrew H. Meyers
------------------------------
Andrew H. Meyers
President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Anthony J. Puglisi
------------------------------
Anthony J. Puglisi
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
23
CERTIFICATIONS
I, Andrew H. Meyers, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Langer, Inc.,
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Langer, Inc. as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's quarter ended June 30, 2003 that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 12, 2003
/s/ Andrew H. Meyers
- -----------------------
Andrew H. Meyers
President and
Chief Executive Officer
24
CERTIFICATIONS
I, Anthony J. Puglisi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Langer, Inc.,
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Langer, Inc. as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
c. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report
based on such evaluation; and
d. Disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's quarter ended June 30, 2003 that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
d. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information;
and
e. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 12, 2003
/s/ Anthony J. Puglisi
- -----------------------
Anthony J. Puglisi
Vice President and
Chief Financial Officer
25