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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended: MARCH 31, 2001
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from _____to______
Commission file number: 0-30629
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FIRST AID DIRECT, INC.
(Name of small business issuer in its charter)
FLORIDA 59-1796257
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(State of incorporation) (IRS employer Ident. No.)
10211 N.W. 53rd St., Sunrise, FL 33351
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(Address of principal office) (Zip Code)
Registrant's telephone number: (954) 749-9926
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the 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 [ ]
The number of shares outstanding of each of the issuer's classes of
equity as of March 31, 2001: 3,985,000 shares of Common Stock, $.001 par value.
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FIRST AID DIRECT, INC.
TABLE OF CONTENTS
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2001
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheet (Unaudited) as of March 31, 2001 Page 3
Condensed Statements of Income (Unaudited) for the three
months ended March 31, 2001 and 2000 Page 4
Condensed Statements of Cash Flows (Unaudited) for the
three months ended March 31, 2001 and 2000 Page 5
Notes to Financial Statements Page 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K.
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FIRST AID DIRECT, INC.
CONDENSED BALANCE SHEET
MARCH 31, 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $ 76,038
Accounts receivable, stockholder 72,117
Accounts receivable 305,779
Inventories 428,463
Prepaid expense 81,099
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Total current assets 963,496
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Property and equipment, net 68,846
Intangible asset, net 119,474
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$ 1,151,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 287,116
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Total current liabilities 287,116
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Obligations under line of credit 105,000
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Stockholders' equity:
Common stock 3,985
Additional paid-in capital 1,604,127
Deficit (848,412)
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759,700
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$ 1,151,816
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The accompanying notes are an integral part of these condensed financial
statements.
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FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
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2001 2000
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Net sales $ 852,470 $ 619,662
Cost of sales 603,907 421,480
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Gross margin 248,563 198,182
General and administrative expenses 232,866 158,111
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Income before income taxes 15,697 40,071
Provision for income taxes -- --
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Net income $ 15,697 $ 40,071
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Net income per share information:
Basic:
Net income per share $ .00 $ .01
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Weighted average number of common shares 3,932,556 3,905,000
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Diluted:
Net income per share $ .00 $ .01
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Weighted average number of common shares 3,985,000 3,971,777
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The accompanying notes are an integral part of these condensed financial
statements.
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FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
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2001 2000
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Cash flows from operating activities:
Net income $ 15,697 $ 40,071
Depreciation and amortization 8,455 5,500
Provision for doubtful accounts -- 9,946
Changes in assets and liabilities 77,801 (261,426)
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Net cash provided by (used in) operating activities 101,953 (205,909)
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Cash flows from investing activities:
Purchase of equipment (1,151) (675)
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Net cash used in investing activities (1,151) (675)
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Cash flows from financing activities:
Repayment on line of credit (33,000) --
Proceeds from stockholder loan -- 50,000
Proceeds from exercise of stock options 8,000 --
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Net cash (used in) provided by financing activities (25,000) 50,000
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Net increase (decrease) in cash 75,802 (156,584)
Cash, beginning of period 236 270,839
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Cash, end of period $ 76,038 $ 114,255
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Supplemental Disclosure of Cash Paid:
Interest $ 3,283 $ --
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Non-cash Investing and Financing Activities:
Assets acquired in exchange for debt $ 50,000
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The accompanying notes are an integral part of these condensed financial
statements.
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FIRST AID DIRECT, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of First Aid Direct,
Inc. (the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month period ended March 31, 2001 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001. For further
information, refer to the financial statements and footnotes for the year ended
December 31, 2000 found in the Company's Form 10-KSB.
The fiscal years ended December 31, 2001 and December 31, 2000 are herein
referred to as "fiscal 2001" and "fiscal 2000", respectively.
2. INVENTORIES
Inventories are comprised primarily of first aid products held for sale, and are
stated at the lower of cost or market, determined on the FIFO method.
3. ACQUISITION OF ASSETS
PURCHASE
On March 17, 2000, the Company entered into an asset purchase
agreement to buy certain assets from Van Dyne Crotty, Inc., a
stockholder. The Company purchased accounts receivable, inventory
and customer lists for $200,000, as noted below, to be paid in
cash. The $200,000 represents cost as reflected in the accounting
books and records of the stockholder. As of December 31, 2000, the
full purchase price of $200,000 was paid.
Accounts receivable $ 25,264
Inventories 41,374
Customer listings 133,362
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$200,000
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COMMITMENTS
The Company entered into a non-competition agreement and a
consulting agreement with the original owner of the assets
purchased above. The covenant not to compete is being amortized
over the five-year term of the agreement and provides for $25,000
each year, for a term of three years, to be paid in thirty-six
equal installments totaling $75,000. The consulting agreement is
for a three-year term and provides for thirty-six equal
installments totaling $75,000.
4. SALES TO STOCKHOLDER
During the three months ended March 31, 2001 and 2000, 30% and 20%,
respectively, of revenue was derived from sales to a stockholder.
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CERTAIN STATEMENTS MADE WITHIN THIS REPORT ARE FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FOR THIS
PURPOSE, ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL
FACT SHOULD BE REGARDED AS FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE
BASED ON MANAGEMENTS' BELIEFS AND ASSUMPTIONS AND ON INFORMATION CURRENTLY
AVAILABLE. THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH
FORWARD LOOKING STATEMENTS.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2000.
SALES. Total revenues increased 38% in the first quarter of fiscal 2001 over the
same period in fiscal 2000. Revenue increased $232,808 from $619,662 to $852,470
in the three months ended March 31, 2001 period in the prior fiscal year.
Revenue increased 22% due to the supplier agreement signed with Van Dyne Crotty,
Inc., for the Company to be the primary supplier for its retail first aid
distribution business. An additional revenue increase of 7% was attributable to
the Company acquiring a customer list and other assets from Van Dyne Crotty,
Inc. as disclosed in Note 3 to the financial statements. The remaining 9%
increase in sales resulted primarily from increases in sales to new and existing
distributors.
COSTS AND EXPENSES. The cost of sales for the third quarter increased $182,428
from $421,480 in the first quarter of fiscal 2000 to $603,908 in the first
quarter of fiscal 2001. This resulted in a 25% increase in the gross margin of
$50,381, from $198,182 in the first quarter of fiscal 2000 to $248,563 in the
first quarter of fiscal 2001. As a percentage, the gross margin decreased from
32% in fiscal 2000 to 29% in fiscal 2001, principally as a result of higher
freight costs due to rate increases from freight carriers.
General and administrative expenses increased 47% or $74,755 from $158,111 in
the first quarter of fiscal 2000 to $232,866 in the first quarter of fiscal
2001. Also, general and administrative expenses increased slightly as a percent
of revenue from 26% in 2000 to 27% in 2001. The increase primarily resulted from
costs related to an updated catalog and amortization and consulting costs for
the Roehampton product line, which were not included in the results of the prior
year.
INCOME BEFORE INCOME TAXES. The Company's income before income taxes was
$15,697, which is a decrease of $24,374 compared to $40,071 during the first
quarter of fiscal 2000. The decrease was primarily a result of the higher
freight costs and cost for an updated catalog to increase sales as well as
amortization and consulting costs related to the Roehampton product line in
2000.
OTHER. No income tax expense or benefit is recorded in the three-month periods
ended March 31, 2001 and 2000, as the Company will utilize net operating loss
carryforwards to offset the current tax expense.
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LIQUIDITY AND CAPITAL RESOURCES
The primary sources of the Company's cash are net cash flows from operating
activities, short-term vendor financing and a line of credit obtained from a
bank. The Company established a $250,000 line of credit with a bank that matures
in February 2003 to fund cash requirements as needed. The line requires monthly
interest payments and bears interest at the prime rate of interest (8.0% at
March 31, 2001). As of March 31, 2001, $105,000 was outstanding on the line of
credit. The line is collateralized by the Company's accounts receivable and
inventory.
The Company believes its current available cash position, coupled with its cash
forecast for the year and periods beyond, is sufficient to meet its cash needs
on both a short-term and long-term basis. The balance sheet has a strong working
capital ratio (3.36 to 1) and management is not aware of any known trends or
demands, commitments, events, or uncertainties, as they relate to liquidity
which could negatively affect the Company's ability to operate and grow as
planned.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
On March 17, 2000, the Company entered into an asset purchase agreement to buy
certain assets from a company stockholder (See Note 3 of the financial
statements).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
None
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST AID DIRECT, INC.,
A FLORIDA CORPORATION
Date: May 14, 2001 By /s/ Scott Siegel
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Scott Siegel, President and CEO
(Principal Executive Officer)
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