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: September 30, 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 No X
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The number of shares outstanding of each of the issuer's classes of equity
as of September 30, 2001: 3,985,000 shares of Common Stock, $.001 par value.
FIRST AID DIRECT, INC.
TABLE OF CONTENTS
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2001
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Balance Sheet (Unaudited) as of September Page 3
30, 2001
Condensed Statements of Income (Unaudited) for the
nine months ended September 30, 2001 and 2000 and the
three months ended September 30, 2001 and 2000 Page 4
Condensed Statements of Cash Flows (Unaudited)for
the nine months ended September 30, 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. Page 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
FIRST AID DIRECT, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
ASSETS
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Current assets:
Cash $ 98,967
Accounts receivable 250,533
Accounts receivable - shareholder 80,031
Inventories 397,174
Prepaid expenses 42,302
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Total current assets 869,007
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Property and equipment, net 59,451
Intangible asset, net 112,808
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$1,041,266
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current Liabilities:
Accounts payable and accrued expenses $ 207,162
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Total current liabilities 207,162
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Obligations under line of credit 60,000
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Shareholders' equity:
Common stock 3,985
Additional paid-in capital 1,604,127
Deficit (834,008)
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774,104
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$1,041,266
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The accompanying notes are an integral part of these condensed financial
statements.
FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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2001 2000 2001 2000
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Net sales $2,428,731 $2,092,582 $ 762,235 $ 763,678
Cost of sales 1,758,362 1,484,923 552,404 546,969
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Gross margin 670,369 607,659 209,831 216,709
General and administrative expenses 640,268 554,083 205,527 231,548
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Income (loss) before income taxes 30,101 53,576 4,304 (14,839)
Provision for income taxes - - - -
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Net income (loss) $ 30,101 $ 53,576 $ 4,304 $ (14,839)
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Net income (loss) per share information:
Basic:
Net income (loss) per share $ .01 $ .01 $ .00 $ .00
========== ========== ========== ===========
Weighted average number of common shares 3,961,264 3,905,000 3,985,000 3,905,000
========== ========== ========== ===========
Diluted:
Net income (loss) per share $ .01 $ .01 $ .00 $ .00
========== ========== ========== ===========
Weighted average number of common shares 3,985,000 3,979,667 3,985,000 3,979,667
========== ========== ========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
FIRST AID DIRECT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
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2001 2000
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Cash flows from operating activities:
Net income $ 30,101 $ 53,576
Depreciation and amortization 25,364 23,728
Changes in assets and liabilities 115,265 (176,228)
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Net cash provided by (used in) operating activities 170,730 (98,924)
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Cash flows from investing activities:
Purchase of equipment (1,999) (3,054)
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Net cash used in investing activities (1,999) (3,054)
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Cash flows from financing activities:
Repayment of shareholder loan - (150,000)
Repayment on line of credit (78,000) -
Proceeds from exercise of stock options 8,000 -
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Net cash provided by financing activities (70,000) (150,000)
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Net increase (decrease) in cash and cash equivalents 98,731 (251,978)
Cash and cash equivalents, beginning of period 236 270,839
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Cash and cash equivalents, end of period $ 98,967 $ 18,861
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Supplemental Disclosure of Cash Paid:
Interest $ 6,104 $ -
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Non-cash Investing and Financing Activities:
Assets acquired in exchange for debt $ - $ 200,000
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The accompanying notes are an integral part of these condensed financial
statements.
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 and
nine month periods ended September 30, 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 a Company shareholder. 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 shareholder. 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 for a five-year term and provides for
$25,000 each year, for a term of three years, to be paid in
thirty-nine equal installments totaling $75,000. The consulting
agreement is for a three-year term and provides for thirty-nine equal
installments totaling $75,000.
4. SALES TO SHAREHOLDER
During the nine months ended September 30, 2001 and 2000, 31% and 22%,
respectively, of revenue was derived from sales to a shareholder.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES OR OTHER FACTORS,
WHICH MAY CAUSE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS TO VARY FROM THOSE PREDICATED OR IMPLIED IN THIS
REPORT. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, WITHOUT LIMITATION,
DECLINE IN DEMAND FOR THE COMPANY'S PRODUCTS OR SERVICES, AND THE EFFECT OF
GENERAL ECONOMIC CONDITIONS AND FACTORS AFFECTING THE WHOLESALE DISTRIBUTION
INDUSTRY. FURTHER INFORMATION ON THE FACTORS AND RISKS THAT COULD AFFECT FIRST
AID DIRECT'S BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS ARE
INCLUDED UNDER THE "RISK FACTORS" SECTIONS OF FIRST AID DIRECT'S PUBLIC FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULT OF OPERATIONS
Three months ended September 30, 2001 compared to the three months ended
September 30, 2000.
Sales Total revenues decreased only $1,443 from $763,678 to $762,235 in the
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three months ended September 30, 2001 over the same period in the prior fiscal
year. Revenues resulting from the supplier agreement signed with Van Dyne
Crotty, Inc., for the Company to be the primary supplier for its retail first
aid distribution business, increased in the quarter, however, a decrease in
sales from new and existing distributors offset the Van Dyne Crotty revenue
increase.
Costs and Expenses The cost of sales for the third quarter increased $5,435
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from $546,969 in the third quarter of fiscal 2000 to $552,404 in the third
quarter of fiscal 2001. The overall result was a $6,878 decrease in the gross
margin, from $216,709 in the third quarter of fiscal 2000 to $209,831 in the
third quarter of fiscal 2001. As a percentage, the gross margin remained
constant at 28% in fiscal 2001.
General and administrative expenses decreased 11% or $26,021 from $231,548 in
the third quarter of fiscal 2000 to $205,527 in the third quarter of fiscal
2001. Also, general and administrative expenses decreased slightly as a percent
of revenue from 30% in 2000 to 27% in 2001. In the third quarter of 2000 the
Company paid severance to the former CEO which accounted for the majority of the
decline in administrative expenses from the fiscal third quarter of 2000 to
2001.
Income before income taxes The Company's income before income taxes increased
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$19,143 during the third quarter of fiscal 2001 to $4,304, from a loss of
$(14,839) during the third quarter of fiscal 2000. The increase resulted from
primarily from the severance paid to the former CEO in the third quarter of
fiscal 2000.
Other. No income tax expense or benefit is recorded in the three-month periods
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ended September 30, 2001 and 2000, as the Company will utilize net operating
loss carryforwards to offset the current tax expense.
Nine months ended September 30, 2001 compared to the nine months ended September
30, 2000.
Sales Total revenues increased 16% through the third quarter of fiscal 2001
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over the same period in fiscal 2000. The revenue increased $336,149 from
$2,092,582 to $2,428,731 in the nine months ended September 30, 2001 over the
same period in the prior fiscal year. Revenues increased as a result of the
supplier agreement signed with Van Dyne Crotty, Inc. for the Company to be the
primary supplier for its retail first aid distribution business, the Company's
acquisition of a customer list and other assets from Van Dyne Crotty, Inc. as
disclosed in Note 3 to the financial statements, and increases in sales to new
and existing distributors.
Costs and Expenses The cost of sales through the third quarter increased
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$273,439 from $1,484,923 for the nine months of fiscal 2000 to $1,7583,362
through the third quarter of fiscal 2001. This resulted in a 10% increase in
the gross margin of $62,710, from $607,659 during the nine months of fiscal 2000
to $670,369 through the third quarter of fiscal 2001. As a percentage, the
gross margin decreased from 29% in fiscal 2000 to 28% in fiscal 2001.
General and administrative expenses increased 16% or $86,185 from $554,083 for
the nine months of fiscal 2000 to $640,268 for the nine months of fiscal 2001.
Also, general and administrative expenses remained constant as a percent of
revenue at 26% in 2001. The actual expense 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 from before income taxes
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decreased $23,475 during the nine months of fiscal 2001 to $30,101, from $53,576
during the nine months 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
added during 2000.
Other. No income tax expense or benefit is recorded in the nine-month periods
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ended September 30, 2001 and 2000, as the Company will utilize net operating
loss carryforwards to offset the current tax expense.
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 (6.0%
at September 30, 2001). As of September 30, 2001, $60,000 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 (4.20 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 6. EXHIBITS:
(a) Exhibits
None
(b) Reports on Form 8-K
None
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: November 5, 2001 By /s/ Scott Seigel
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Scott Seigel, President and CEO
(Principal Executive Officer)