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, 1996
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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 000-18448
AMERICAN CONSOLIDATED LABORATORIES, INC.
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(Exact name of registrant as specified in its charter )
FLORIDA 59-2624130
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(State or other jurisdiction of ( I.R.S. Employer
incorporation or organization) Identification No.)
1640 NORTH MARKET DRIVE, RALEIGH, NORTH CAROLINA 27609
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(Address of principal executive offices) (Zip code)
(919) 872-0744
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Registrant's telephone number, including area code
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
The number of shares outstanding of the registrants Common Stock, par value
$0.05 per share, at April 30, 1996 was 4,136,937 shares.
PART I
ITEM 1. FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996
(Unaudited)
(Begins on the following page)
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER
1996 31, 1995
(UNAUDITED)
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CURRENT ASSETS:
Cash and cash equivalents $ 96,405 $ 37,772
Accounts receivable, less allowance
for doubtful accounts of $216,000
($216,000 at december 1995) 826,141 635,032
Inventories, at lower of cost (first in,
first out) or market 1,013,395 1,094,743
Other current assets 27,873 5,181
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Total current assets 1,963,814 1,772,728
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PROPERTY AND EQUIPMENT AT COST:
Land 50,000 50,000
Building and improvements 205,000 205,000
Laboratory equipment 1,122,832 1,114,567
Office Equipment 325,742 320,607
Leasehold improvements 60,150 60,150
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Total property and equipment 1,763,724 1,750,324
Less accumulated depreciation 1,174,799 1,128,838
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Property plant and equipment, net 588,925 621,486
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OTHER ASSETS:
Costs in excess of fair value of assets
acquired 828,453 828,419
Other intangible assets 865,000 865,034
Deferred loan costs 73,781 73,781
Miscellaneous 91,945 91,945
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1,859,179 1,859,179
Less accumulated amortization 476,548 411,835
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Total other assets, net 1,382,631 1,447,344
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TOTAL ASSETS $ 3,935,370 $ 3,841,558
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See notes to consolidated financial statements
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER
1996 31, 1995
(UNAUDITED)
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CURRENT LIABILITIES:
Accounts payable $ 1,696,197 $ 1,796,484
Accrued expenses 278,487 260,097
Notes payable to stockholders 796,107 376,107
Current maturities of long-term debt and
obligation under capital lease 408,754 230,267
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Total current liabilities 3,179,545 2,662,955
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LONG - TERM DEBT: 1,014,341 1,050,639
DEFERRED RENT 57,010 58,238
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.05 par value, 20,000,000
shares authorized; 4,436,927 shares issued
and 4,136,927 and 4,436,927 outstanding, respectively 221,847 221,847
Capital in excess of par 5,887,834 5,887,834
Receivable for shares issued as collateral (225,000) (225,000)
Treasury Stock (150,000) -
Deficit (6,050,207) (5,814,955)
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Total stocholders' equity (315,526) 69,726
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,935,370 $ 3,841,558
================= =================
See notes to consolidated financial statements
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
Three Months Ended March 31, 1996 and 1995
1996 1995
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NET SALES $ 2,026,450 $ 2,188,528
COST OF SALES 1,190,945 1,442,777
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Gross profit 835,505 745,751
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OPERATING COSTS AND EXPENSES:
Selling expenses 297,885 185,454
Marketing expenses 21,630 13,457
Research and development 11,221 15,290
General and administrative expenses 695,135 585,702
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Total operating costs and expenses 1,025,871 799,903
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Operating (loss) income (190,366) (54,152)
OTHER INCOME (EXPENSES):
Interest expense 59,663 35,597
Other income 14,777 15,835
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Loss before income taxes (235,252) (73,914)
INCOME TAXES - -
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NET LOSS $ (235,252) $ (73,914)
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Deficit at beginning of period (5,814,955) (3,720,509)
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Deficit at end of period $ (6,050,207) $ (3,794,423)
================= =================
Net loss per common share - primary ($0.05) ($0.02)
================= =================
Weighted average shares outstanding - primary 4,311,652 4,423,787
================= =================
See notes to consolidated financial statements
AMERICAN CONSOLIDATED LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, 1996 and 1995
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (235,252) $ (73,914)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation 45,961 36,974
Amortization 64,713 52,760
(Increase) in accounts receivable (191,109) (80,195)
Decrease in inventories 81,348 (44,157)
(Increase) in other current assets (22,692) (26,709)
Decrease in other assets - 37,306
Decrease in accounts payable 100,287 49,287
Increase (decrease) in accrued expenses 18,390 (45,553)
Decrease (increase) in deferred rent (1,228) (535)
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Net cash provided (used in) by operating activities (139,582) (94,736)
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Cash flows from investing activities:
Additions to property and equipment (13,400) (79,624)
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Net cash provided by (used in) investing activities (13,400) (79,624)
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Cash flows from financing activities:
Proceeds from stockholder borrowings 420,000 -
Principal payments on long - term debt (193,118) (68,350)
Principal payments under capital leases (15,267) (14,444)
Issuance of common stock - 75,000
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Net cash provided by (used in) financing activities 211,615 (82,794)
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Net increase (decrease) in cash and cash equivalents 58,633 (257,154)
Cash and cash equivalents beginning of period 37,772 320,948
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Cash and cash equivalents end of period $ 96,405 $ 63,794
================= =================
See notes to consolidated financial statements
AMERICAN CONSOLIDATED LABORATORIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of and For Three Months Ended March 31, 1996
1. Significant accounting policies
(a) Basis of presentation and disclosures included
The consolidated balance sheet as March 31, 1996, and the related
consolidated statements of operations and deficit and cash flows for the
three-month periods ended March 31, 1996 and 1995 are unaudited: in the opinion
of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted only of
normal recurring items. Interim results are not necessarily indicative of
results for a full year.
The financial statements and notes are presented as permitted by
Form 10-QSB, and do not contain certain information included in American
Consolidated Laboratories', Inc. (the Company's) annual consolidated financial
statements and notes.
2. Inventories
Inventories consist of the following:
March 31,
1996 December 31,
(Unaudited) 1995
___________ ___________
Raw Materials ................................ $ 157,977 $ 180,913
Work in process .............................. 29,753 29,154
Finished goods ............................... 825,565 884,676
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$ 1,013,395 $ 1,094,743
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3. Earnings per share
The company calculates primary earnings per share including the
dilutive effect of stock options and warrants. Fully diluted earnings per share
is not presented as it is anti- dilutive.
4. Stock options
On February 23, 1996 the Company granted approximately 108,000
nonqualified stock options that have a term of ten years and an exercise price
equal to the market price of its stock on the date of grant. All the options
vested at date of grant. The information necessary to calculate the effect of
the Financial Accounting Standards Board's Statement 123 was unavailable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations - Three Months Ended March 31, 1996 Compared to Three
Months Ended March 31, 1995
Net sales for the three months ended March 31, 1996 totaled $2,026,450, a
decrease of $162,078 or 7% from 1995. This decrease is due to the effects of
poor weather which caused the closing of many customers business during the
month of January, and lower than last year sales in the area of distributed soft
products. The decrease in soft lens sales was due to problems with the Company's
computer system in processing customer orders.
The Company incurred a net loss of $235,252 for the three months ended March
31, 1996 compared to a net loss of $ 73,914 for the three months ended March 31,
1995. The increased loss was due to an increase of $112,431 in selling expenses,
and an increase of $109,430 in general and administrative expenses. The increase
in selling expenses was due to the addition of a national field sales force in
1995. The increase in general and administrative expenses is due to consulting
fees incurred in order to correct the computer system, and increased costs for
management compensation.
Sales of soft contact lenses and lens products totaled $1,247,768 for the
three months ended March 31, 1996 compared to $1,485,369 for the three months
ended March 31, 1995. The decrease is due to the computer problems mentioned
earlier.
Sales of rigid gas permeable ("RGP") contact lenses totaled $778,682 for the
three months ended March 31, 1996 compared to $703,159 for the 1995 period. This
increase is principally due to the acquisition of Philcon Laboratories, Inc. in
May of 1995.
1996 gross profit was $835,505 or 41% of sales, compared to $745,751 or 34%
of sales for 1995. This increase in gross margin is due to the shift in the
sales mix from soft distributed products to manufactured RGP products.
Selling expenses increased $112,431 or 60 % from 1995. This increase is due
to the hiring of a national sales force, and a sales and marketing vice
president during the latter part of 1995. During the first quarter of 1995 the
company did not have this sales department. During the first quarter of 1996 the
sales and marketing vice - president and the sales force were eliminated.
Management intends to pursue the sales and marketing effort through a
telemarketing program.
General and administrative expenses for the three months ended March 31, 1996
totaled $695,135, an increase of $109,433 or 19% over the prior year. This
increase is due to consulting fees incurred in order to remedy the computer
problems, and additional compensation costs to management.
Interest expense for the three months ended March 31, 1996 totaled $59,663
compared to $ 35,597 for the prior year. This increase is due to the increased
borrowings incurred to support the 1995 fourth quarter loss.
Financial Condition
Tullis - Dickerson Capital Focus, L.P. provided cash advances during the
quarter totaling $420,000. The company continues to aggressively negotiate with
various lenders to provide financing to pay off past due vendor balances and
maturing obligations, and put in place a credit facility for working capital and
future acquisition requirements.
Management believes the achievement of new financing and additional acquisitions
will result in increased sales and improved liquidity. However, no assurance can
be given that the financing will be obtained or that additional acquisitions
will be consummated.
The contract with one buying group customer of the Company is scheduled to
expire in June 1996.
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.
American Consolidated Laboratories, Inc.
Date :_______May 16, 1996_______ By : __(Signature of Joseph Arena
appears here)_______
Joseph Arena
Chief Executive Officer