Delaware
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06-1123096
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(State
or other jurisdiction of
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(I.R.S.
employer
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incorporation
or organization)
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identification
no.)
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PART I
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Financial Information
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Page No.
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Item
1
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Financial
Statements (Unaudited)
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||
Condensed
Consolidated Balance Sheets as of March 31, 2009 and December 31,
2008
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3
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Condensed
Consolidated Statements of Operations for the Three Months Ended March 31,
2009 and 2008
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5
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Condensed
Consolidated Statements of Cash Flow for the Three Months Ended March 31,
2009 and 2008
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6
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Notes
to Condensed Consolidated Financial Statements
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7
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Item
2
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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10
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|||
Item
3
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Quantitative
and Qualitative Disclosures about Market Risk
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14
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|||
Item
4
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Controls
and Procedures
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14
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PART II
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Other Information
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Item
1
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Legal
Proceedings
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15
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Item
6
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Exhibits
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15
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Signatures
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16
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Assets
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March
31,
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December
31,
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||||||
2009
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2008
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|||||||
Current
Assets:
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||||||||
Cash
and cash equivalents
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$ | 1,089,482 | $ | 1,082,619 | ||||
Accounts
receivable, net of allowance
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4,301,584 | 3,681,355 | ||||||
Recoverable
income taxes
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110,647 | 101,185 | ||||||
Other
receivables
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418,926 | 715,769 | ||||||
Inventories
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9,796,048 | 9,786,538 | ||||||
Deferred
income taxes
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1,021,901 | 791,493 | ||||||
Other
current assets
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319,735 | 411,938 | ||||||
Total
current assets
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17,058,323 | 16,570,897 | ||||||
Property
and equipment:
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||||||||
Property
and equipment
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5,674,861 | 5,608,347 | ||||||
Equipment
at customers
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1,171,217 | 1,132,422 | ||||||
6,846,078 | 6,740,769 | |||||||
Accumulated
depreciation and amortization
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(4,287,793 | ) | (4,013,900 | ) | ||||
2,558,285 | 2,726,869 | |||||||
Intangible
and other assets, net
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740,601 | 757,378 | ||||||
Goodwill
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3,379,021 | 3,379,021 | ||||||
Deferred
income taxes
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527,487 | 250,370 | ||||||
Total
assets
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$ | 24,263,717 | $ | 23,684,535 |
Liabilities and Stockholders’ Equity |
March
31,
2009
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December
31,
2008
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||||||
Current
Liabilities:
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||||||||
Current
portion of long-term debt
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$ | 623,325 | $ | 614,067 | ||||
Line-of-credit
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3,135,339 | 1,994,008 | ||||||
Accounts
payable
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2,503,721 | 2,307,675 | ||||||
Accrued
expenses
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1,049,779 | 835,868 | ||||||
Total
current liabilities
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7,312,164 | 5,751,618 | ||||||
Long-term
debt, less current portion
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1,548,756 | 1,708,493 | ||||||
Deferred
gain on sale and leaseback of property
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1,135,041 | 1,168,701 | ||||||
Income
taxes payable
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155,875 | 155,875 | ||||||
Stockholders'
Equity:
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||||||||
Series
A cumulative convertible preferred stock, $.001 par
value per share, 1,000,000 shares authorized, no shares
issued or outstanding
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— | — | ||||||
Common
stock, $.004 par value per share, 40,000,000 shares
authorized, 11,442,662 and 11,419,535 shares issued
at March 31, 2009 and December 31, 2008, respectively,
including shares held in treasury
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45,767 | 45,675 | ||||||
Common
stock held in treasury, at cost - 86,000 shares
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(101,480 | ) | (101,480 | ) | ||||
Additional
paid-in capital
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7,538,148 | 7,423,340 | ||||||
Retained
earnings
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6,629,446 | 7,532,313 | ||||||
Total
stockholders' equity
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14,111,881 | 14,899,848 | ||||||
Total
liabilities and stockholders' equity
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$ | 24,263,717 | $ | 23,684,535 |
Three
Months Ended
March
31,
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||||||||
2009
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2008
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|||||||
Net
sales
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$ | 8,405,824 | $ | 8,961,551 | ||||
Cost
of sales
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5,940,695 | 6,281,396 | ||||||
Gross
profit
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2,465,129 | 2,680,155 | ||||||
Operating
expenses:
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||||||||
Research
and development
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626,195 | 511,326 | ||||||
Selling,
general and administrative
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3,211,128 | 3,020,873 | ||||||
3,837,323 | 3,532,199 | |||||||
Operating
loss
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(1,372,194 | ) | (852,044 | ) | ||||
Interest
expense, net
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49,644 | 72,097 | ||||||
Loss
before income taxes
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(1,421,838 | ) | (924,141 | ) | ||||
Income
tax benefit
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(518,970 | ) | (394,250 | ) | ||||
Net
loss
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$ | (902,868 | ) | $ | (529,891 | ) | ||
Loss
per common share:
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||||||||
Basic
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$ | ( 0.08 | ) | $ | ( 0.05 | ) | ||
Diluted
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$ | ( 0.08 | ) | $ | ( 0.05 | ) | ||
Weighted
average number of
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||||||||
common
shares outstanding:
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||||||||
Basic
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11,212,010 | 10,781,292 | ||||||
Diluted
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11,212,010 | 10,781,292 | ||||||
Three
Months Ended
March
31,
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||||||||
2009
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2008
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|||||||
OPERATING
ACTIVITIES:
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Net
loss
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$ | (902,868 | ) | $ | (529,891 | ) | ||
Adjustments
to reconcile net loss to net cash (used) provided by operating
activities:
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||||||||
Depreciation
and amortization
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316,021 | 269,828 | ||||||
Deferred
income taxes
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(507,525 | ) | (294,556 | ) | ||||
Non-cash
stock compensation
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77,668 | 140,493 | ||||||
Amortization
of deferred gain on sale and leaseback of property
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(33,660 | ) | (33,659 | ) | ||||
Changes
in operating assets and liabilities:
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||||||||
Accounts
receivable
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(620,229 | ) | 545,661 | |||||
Other
receivables
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296,843 | — | ||||||
Inventories
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(9,510 | ) | (468,083 | ) | ||||
Other
current assets
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92,203 | 30,030 | ||||||
Recoverable
income taxes, net
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(9,462 | ) | (97,908 | ) | ||||
Income
taxes
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— | 2,750 | ||||||
Accounts
payable and accrued expense
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409,957 | 1,056,283 | ||||||
Net
cash (used) provided by operating activities
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(890,562 | ) | 620,948 | |||||
INVESTING
ACTIVITIES:
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Purchase
of property and equipment
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(105,309 | ) | (414,792 | ) | ||||
Purchase
of intangible assets
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(25,351 | ) | (137,284 | ) | ||||
Net
cash used by investing activities
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(130,660 | ) | (552,076 | ) | ||||
FINANCING
ACTIVITIES:
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||||||||
Repayments
of long-term debt
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(150,479 | ) | (141,308 | ) | ||||
Repayments
of notes payable
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— | (53,960 | ) | |||||
Borrowings
from line-of-credit, net
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1,141,331 | 106,403 | ||||||
Tax
effect from vesting of restricted stock
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— | (7,347 | ) | |||||
Proceeds
from issuance of common stock
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37,233 | 74,308 | ||||||
Net
cash provided (used) by financing activities
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1,028,085 | (21,904 | ) | |||||
Change
in cash and cash equivalents
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6,863 | 46,968 | ||||||
Cash
and cash equivalents, beginning of period
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1,082,619 | 666,722 | ||||||
Cash
and cash equivalents, end of period
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$ | 1,089,482 | $ | 713,690 | ||||
Supplemental
Disclosures of Cash Flow Information:
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||||||||
Cash
paid during the period for interest
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$ | 48,739 | $ | 68,432 | ||||
Cash
(collected) paid during the period for income taxes, net
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$ | (1,982 | ) | $ | 2,812 |
March
31,
2009
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December
31,
2008
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|||||||
Raw
materials
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$ | 7,724,322 | $ | 7,560,332 | ||||
Work-in-process
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31,499 | 24,560 | ||||||
Finished
goods
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2,040,227 | 2,201,646 | ||||||
$ | 9,796,048 | $ | 9,786,538 |
·
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Critical
care monitoring products – includes sales of the FORE-SIGHT® cerebral
monitor and accessories.
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·
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Bedside
monitoring products – includes sales of cardio-respiratory monitors and
accessories used to monitor apnea in home-based and hospital settings; the
Company’s dual platform of vital signs monitors and accessories
incorporating various combinations of measurement parameters for both
human and veterinary use including pulse oximetry, electro-cardiography,
temperature, non-invasive blood pressure, and capnography; co-branded
products developed and manufactured by Analogic Corporation including
vital signs monitors utilizing parameters as described above and
additionally monitors which measure non-invasive cardiac output and
hemodynamic status, and fetalgard
monitors.
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·
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Blood
pressure measurement technology – includes sales to Original Equipment
Manufacturers (“OEM”) of the Company’s proprietary non-invasive blood
pressure modules (MAXNIBP®), blood pressure cuffs and accessories for the
OEM market and related license
fees.
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·
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Supplies
and service – includes sales of blood pressure cuffs and rapid infusor
cuffs, neonatal intensive care supplies including electrodes and skin
temperature probes, and service repair
revenues.
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Aggregate
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Weighted-Average
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|||
Option
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Weighted-Average
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Intrinsic
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Contractual
Life
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Shares
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Exercise
Price
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Value
(1)
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Remaining
in Years
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Outstanding
at December 31, 2008
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590,125
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$ 2.43
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$
219,264
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Granted
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—
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|||
Cancelled
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(1,000)
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1.50
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Exercised
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—
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Outstanding
at March 31, 2009
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589,125
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2.43
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$
84,404
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5.85
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Exercisable
at March 31, 2009
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469,124
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$ 2.06
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$
84,404
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4.96
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($000’s)
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Three
Months Ended
March
31, 2009
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Three
Months Ended
March
31, 2008
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Increase/
(Decrease)
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|||||||||
Bedside
Monitoring Products
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$ | 2,576 | $ | 3,508 | $ | (932 | ) | |||||
Critical
Care Monitoring Products
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885 | 274 | 611 | |||||||||
Blood
Pressure Measurement Technology
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1,483 | 1,360 | 123 | |||||||||
Supplies
and Service
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3,462 | 3,820 | (358 | ) | ||||||||
$ | 8,406 | $ | 8,962 | $ | (556 | ) | ||||||
Domestic
Sales
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6,370 | 6,333 | 37 | |||||||||
International
Sales
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2,036 | 2,629 | (593 | ) | ||||||||
$ | 8,406 | $ | 8,962 | $ | (556 | ) |
31.1
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Certification
pursuant to Rule 13a-14(a) of Andrew E. Kersey, President and Chief
Executive Officer
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31.2
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Certification
pursuant to Rule 13a-14(a) of Jeffery A. Baird, Chief Financial
Officer
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32.1
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Certification
pursuant to 18 U.S.C. 1350 of Periodic Financial Report of Andrew E.
Kersey, President and Chief Executive Officer and Jeffery A. Baird, Chief
Financial Officer
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/s/ Andrew E. Kersey | Date: May 6, 2009 |
By: Andrew
E. Kersey
President and Chief Executive Officer
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/s/ Jeffery A. Baird | Date: May 6, 2009 |
By: Jeffery
A. Baird
Chief Financial Officer
|
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