SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2003
Commission File Number 000-20175
NYER MEDICAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 01-0469607
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1292 Hammond Street, Bangor, Maine 04401
(Address of principal executive offices) (Zip Code)
(207) 942-5273
(Registrant's telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act:
Name of Exchange
Title of Each Class on which registered
None None
Check whether the registrant has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve months (or for
such shorter periods 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.
As of November 19, 2003, there were 3,783,862 shares of common stock
outstanding, par value $.0001 per share.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
INDEX
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, September 30, 2003
and June 30, 2003 3-4
Consolidated Statements of Operations, Three Months
Ended September 30, 2003 and September 30, 2002 5
Consolidated Statements of Operations, Three Months
Ended September 30, 2003 and September 30, 2002 5
Consolidated Statements of Cash Flows, Three Months
Ended September 30, 2003 and September 30, 2002 6-7
Selected Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-16
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 16
Item 4. Controls and Procedures 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submissions of Matters to Vote of Security Holders 17
Item 5. Other information 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Exhibit 31.1 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of
2002 by Principal Executive Officer
Exhibit 31.2 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of
2002 by Principal Financial and Accounting Officer
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive
Officer
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial
Officer
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
Item 1. Financial Statements:
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
2003 2003
Current assets:
Cash and cash equivalents $ 1,148,836 $ 1,417,744
Accounts receivable, less
allowance for doubtful
accounts of $394,562
and $368,352, respectively 4,520,777 4,438,842
Inventories, net 5,966,157 5,878,997
Deferred tax asset 185,000 185,000
Prepaid expenses and other
current assets 316,594 256,472
Total current assets 12,137,364 12,177,055
Property, plant and equipment,
net of accumulated depreciation 1,261,309 1,307,788
Goodwill, net 104,463 104,463
Other intangible assets, net 636,979 666,281
Advances due from related
companies 44,858 44,858
786,300 815,602
Total assets $14,184,973 $14,300,445
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, June 30,
2003 2003
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 282,470 $ 291,485
Accounts payable 3,935,815 4,005,879
Accrued payroll and related taxes 312,663 449,434
Accrued expenses and other
liabilities 173,217 276,711
Income taxes payable 166,000 101,753
Current portion of payable due
related party 172,263 196,263
Total current liabilities 5,042,428 5,321,525
Long-term debt, net of current
portion 356,735 418,425
Minority interest 1,286,387 1,243,533
Shareholders' equity:
Class A preferred stock, par value
$.0001, authorized, issued and
outstanding: 2,000 shares 1 1
Class B preferred stock, series 1,
par value $.0001, authorized:
2,500,000; issued and outstanding:
1,000 shares at September 30, 2003
and June 30, 2003
Common stock, par value $.0001
authorized: 10,000,000 shares; issued:
3,797,962 at September 30, 2003
and at June 30, 2003 380 380
Additional paid-in capital 17,746,543 17,746,543
Treasury stock (14,100 shares at
September 30, 2003 and
June 30, 2003) (54,573) (54,573)
Accumulated deficit (10,192,928) (10,375,389)
Total shareholders' equity 7,499,423 7,316,962
Total liabilities and
shareholders' equity $14,184,973 $14,300,445
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
September 30, September 30,
2003 2002
Net sales $15,798,040 $14,512,850
Cost and expenses:
Cost of goods sold 12,255,850 11,433,665
Selling and retail 2,072,666 1,827,373
Warehouse and delivery 246,702 254,680
Administrative 842,287 725,415
15,417,505 14,241,133
Operating income 380,535 271,717
Other (expense) income:
Interest expense (18,024) (7,811)
Interest income 12,443 11,233
Other (3,639) 580
Total other (expense)
income (9,220) 4,002
Income before
minority interest 371,315 275,719
Minority interest (42,854) (70,051)
Income before income taxes 328,461 205,668
Provision for income taxes 146,000 40,000
Income after income 182,461 165,668
Net income $ 182,461 $ 165,668
Basic and diluted income
per share: $ .05 $ .04
Weighted average common shares
outstanding, basic: 3,783,862 3,769,062
Weighted average common shares
outstanding, diluted: 3,792,674 3,769,062
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
September 30, September 30,
2003 2002
Cash flows from operating activities:
Net income $ 182,461 $ 165,668
Adjustments to reconcile net
income to net cash
used in operating activities:
Depreciation 93,822 86,728
Amortization 29,302 14,696
Gain on sale of property, plant
and equipment 3,639 (300)
Minority interest 42,854 70,051
Decrease in deferred credit - -
Changes in certain working capital
elements (475,299) (167,920)
Net cash flows provided by (used
in) operating activities (123,221) 168,923
Cash flows from investing activities:
Purchase of property, plant and
equipment (62,295) (38,499)
Proceeds from sale of property, plant
and equipment - 2,800
Net change in advances due from
related companies 11,313 -
Increase in other assets, net - -
Net cash provided by (used in)
investing activities (50,982) (35,699)
Cash flows from financing activities:
Proceeds from issuance of
long-term debt - -
Payments of long-term debt (70,705) (48,601)
Net repayments of notes to
related parties (24,000) (30,000)
Net cash provided by (used in)
financing activities (94,705) (78,601)
Net (decrease) increase in cash
and cash equivalents (268,908) 54,623
Cash and cash equivalents,
beginning of period 1,417,744 1,550,374
Cash and cash equivalents,
end of period $1,148,836 $1,604,997
See accompanying notes to consolidated financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
September 30, September 30,
2003 2002
Changes in certain working capital elements:
Accounts receivable, net $ (81,935) $ 472,951
Inventories (87,160) 153,411
Prepaid expenses (60,122) 15,843
Accounts payable (70,064) (500,760)
Accrued payroll and related
taxes (136,771) (152,790)
Accrued expenses and other (103,494) (156,575)
liabilities
Income taxes payable 64,247 -
Net change $ (475,299) $ (167,920)
Supplemental cash flow information:
Cash paid during the first three months:
Interest $ 8,152 $ 5,853
Income taxes $ 105,250 $ 110,000
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Basis of Presentation: The consolidated financial statements included herein
have been prepared by the Company, without audit, in accordance with
accounting principals generally accepted in the United States of America and
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principals
generally accepted in the United States of America have been condensed or
omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information presented
not to be misleading. In the opinion of management, the amounts shown
reflect all adjustments necessary to present fairly the financial position
and results of operations for the periods presented. All such adjustments
are of a normal recurring nature.
It is suggested that the financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's Form
10-K for the year ended June 30, 2003.
2. Goodwill and Other Intangible Assets:
Following is a summary of the Company's amortizable intangible assets
relating to the Pharmacy segment at:
September 30, 2003 Amortization Accumulated
Period (years) Cost Amortization Net
--- -------- -------- --------
Prescription lists 15 $ 528,000 $162,968 $365,032
Non-compete agreements 3-5 750,100 478,153 271,947
---------- -------- --------
Totals $1,278,100 $641,121 $636,979
========== ======== ========
June 30, 2003 Amortization Accumulated
Period (years) Cost Amortization Net
--- -------- -------- --------
Prescription lists 15 $ 528,000 $ 154,274 $373,726
Non-compete agreements 3-5 750,100 457,545 292,555
-------- ---------- --------
Totals $1,278,100 $ 611,819 $666,281
========== ========== ========
Aggregate Amortization Expense:
For the three months ended September 30, 2003 $ 29,302
Estimated Amortization:
For the fiscal year 2004 $ 126,511
For the fiscal year 2005 100,116
For the fiscal year 2006 83,449
For the fiscal year 2007 83,449
For the fiscal year 2008 71,449
3. Earnings per share:
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share considers the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
3. Earnings per share: continued,
The following data show the amounts used in computing earnings per share
and the weighted average number of shares of diluted potential common stock:
9-30-03 9-30-02
Weighted average number of
common shares used in
basic EPS 3,783,862 3,769,062
Stock options 8,812 -
Weighted average number of
common shares used in
diluted EPS 3,792,674 3,769,062
4. Options and Warrants:
The Company has two stock option plans under which employees, consultants
and directors have been granted options to purchase shares of the Company's
common stock. The 1993 Stock Option Plan was amended in fiscal 2003 to, among
other things, (a) cease grants under such plan upon the effectiveness of the
2002 Stock Option Plan of the Company and (b) increase the maximum aggregate
number of shares available for award under such plan to 1,000,000. The maximum
aggregate number of shares of common stock available for award under the 2002
plan is 3,000,000, and is subject to adjustment as set forth therein. Under the
2002 plan, automatic options vest semi-annually to all directors and certain
officers and expire in ten years from the date of grant. Except with respect to
certain incentive stock options ("ISOs"), options under the 1993 plan expire 10
years from the date of grant. Under the 1993 plan, except for ISOs, the exercise
price for options is the fair market value of the common stock of the Company at
the date of grant, as such fair market value is determined under the 1993 plan.
Under the 2002 plan, except for certain ISOs, the exercise price is not to be
less than the Market Price (as defined in the 2002 plan) of the common stock of
the Company on the date of the grant.
The Company complies with SFAS No. 123, "Accounting For Stock-Based
Compensation." This statement defines a fair value based method whereby
compensation cost is measured at the grant date based on the fair value of the
award. Under SFAS No. 123, companies are encouraged, but are not required, to
adopt the fair value method of accounting for employee stock-based
transactions. The Company accounts for such transactions under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
but discloses pro forma net income (loss) as if the Company had applied the
SFAS No. 123 method of accounting. Accordingly, no compensation cost has been
recognized for options granted under the Plan.
In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". This statement provides
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based compensation. In addition, this statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures about the method of accounting for stock-based compensation and the
effect of the method used on reported interim and annual results. The Company
has elected to continue accounting for stock-based compensation in accordance
with APB Opinion No. 25. The adoption of SFAS No. 148 had no impact on the
consolidated results of operations or financial position. The Company has
adopted the disclosure requirements of SFAS No. 148. Pro forma information,
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
4. Options and Warrants: continued,
assuming the Company had accounted for its employee and director stock options
granted under the fair value method is presented below. The fair value method
for recognizing employee stock-based compensation cost ratably over the vesting
period. The fair value of each option grant is estimated on the date of each
grant using the Black-Scholes option-pricing model.
Pro forma information, assuming the Company had accounted for its employee and
director stock options granted under the fair value method prescribed by SFAS
No. 123, as amended by Financial Accounting Standards Statement No. 148,
"Accounting for Stock Based Compensation - Transition and Disclosure, an
Amendment of FASB Statement No. 123", is presented below. The fair value of each
option grant is estimated on the date of each grant using the Black-Scholes
option-pricing model and amortized ratably over the option's vesting periods.
There were no stock options granted in the first quarter of fiscal 2004 or for
the first quarter of fiscal 2003.
Three months ended
September 30,
2003 2002
---- ----
Net income, as reported: $ 182,461 $165,668
Add: Total stock-based employee
and director compensation
expense determined under fair
value based method for all
awards, net of taxes (11,415) 120,351
--------- --------
Pro forma net income $ 171,046 $ 45,317
========= =========
Basic and diluted earnings per share:
Per reported .05 .04
Pro forma .05 .01
5. Business Segments: The Company had three business segments for the three
months ended September 30, 2003 and 2002: (1) pharmacy chain
(2) wholesale and retail sales of surgical, medical equipment and supplies, (3)
wholesale and retail distribution of equipment, supplies, and novelty items
to emergency medical service, fire and police depart- ments. Business
segments are determined by the management approach which analyses segments
based on products or services offered for sale.
Summary data for the three months ended September 30, 2003:
Medical and EMT, Fire,
Pharmacy Surgical Police Equip.
Chain Supplies and Supplies Corporate Consolidated
Net Sales $13,089,377 $ 2,152,546 $ 556,117 $ - $15,798,040
Operating
income (loss) 388,307 147,873 (43,360) (112,285) 380,535
Total assets 10,590,447 2,530,451 387,506 676,569 14,184,973
Capital
FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Business segments, continued
Expenditures 29,106 3,285 - - 32,391
Depreciation
and
amortization 96,384 20,829 5,709 202 123,124
Interest income (6,838) (4,710) - (895) (12,443)
Interest expense $ 7,693 $ 3,361 $ 6,970 $ - $ 18,024
Summary data for the three months ended September 30, 2002:
Medical and EMT, Fire,
Pharmacy Surgical and Police Equip.
Chain Supplies and Supplies Corporate Consolidated
Net Sales $11,386,603 $ 2,236,371 $ 889,876 $ - $14,512,850
Operating
income (loss) 421,833 19,124 (54,922) (114,318) 271,717
Total assets 8,199,203 2,868,982 927,599 915,712 12,911,496
Capital
Expenditures 36,601 - - 1,898 38,499
Depreciation and
amortization 69,217 23,358 7,685 1,164 101,424
Interest income (4,018) (4,540) - (2,675) (11,233)
Interest expense $ 3,778 $ 3,901 $ 132 $ - $ 7,811
Results of Operations:
The following discussion provides information with respect to our results
of operations, liquidity, and capital resources on a comparative basis for the
three months ended September 30, 2003 as compared to the three months ended
September 30, 2002.
NET SALES. Total sales for the three months ended September 30, 2003 increased
by 8.9% to $15,798,040 for the three months ended September 30, 2003 as compared
to $14,512,850 for the three months ended September 30, 2002.
The Company had three active business segments for the three months ended
September 30, 2003 and 2002: (1) retail pharmacy drug store chain ("pharmacy
chain"), (2) wholesale and retail sales of surgical, medical equipment and
supplies ("medical"), and (3) wholesale and retail distribution of equipment,
supplies, and novelty items to emergency medical service, fire departments, and
police departments, ("EMT, fire, police equipment and supplies"). Business
segments are determined by the management approach which analyzes results based
on products or services offered for sale.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations: continued,
NET SALES, continued,
The following table shows sales by business segments for the three months
ended September 30, 2003 and 2002:
Business Segment 2003 2002 % increase
(decrease)
Pharmacy chain $13,089,377 $11,386,603 15.0
Medical and surgical
equipment and supplies 2,152,546 2,236,371 (3.7)
EMT, fire, police
equipment and supplies 556,117 889,876 (37.5)
Total for business segments $15,798,040 $14,512,850 8.9
The pharmacies segment's sales increased $1,702,744 to $13,089,377 or 15.0%
for the three months ended September 30, 2003 as compared to $11,386,603 for the
three months ended September 30, 2002. The increase was due to: increased sales
to non-profit organizations of $350,550; the acquisition of two pharmacies in
March 2003 and June 2003 which resulted in an increase of approximately
$829,410. The remainder was due to continued increases in volume on prescription
drugs sales.
The medical segment's sales decreased $83,825 to $2,152,546 or 3.7% for the
three months ended September 30, 2003 as compared to $2,236,371 for the three
months ended September 30, 2002, mainly due to the discontinuing of unprofitable
items and increased competition from cut rate competitors.
The fire and police segment's sales decreased by $333,759 to $556,117 or
37.5% for the three months ended September 30, 2003 as compared to $889,876 for
the three months ended September 30, 2002. Because of declining sales and
unprofitable operations, this segment closed one location and incorporated its
inventory and personnel into another location. Sales were impacted by increased
competition.
GROSS PROFIT MARGINS. Our overall gross margins were 22.4% for the three months
ended September 30, 2003 as compared to 21.2% for the three months ended
September 30, 2002.
The following is a table of gross margin percentages by business segments for
the three months ended September 30, 2003 and 2002:
Business Segment 2003 2002
Pharmacy chain 20.0 19.9
Medical and surgical
equipment and supplies 36.1 27.6
EMT, fire, police
equipment and supplies 27.3 21.1
Total for business segments 22.4 21.2
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations: continued,
GROSS PROFIT MARGINS, continued
The pharmacy segment's gross profit margins remained approximately the same
for the three months ended September 30, 2003 and 2002. Eaton expects sales
growth to continue to be strong in its core business, but expects pressures on
margins to further intensify. Budgetary deficits in Massachusetts have resulted
in the Executive Office of Human Services Division of Health Care Finance and
Policy reducing the reimbursement paid to pharmacies for dispensing Medicaid
prescriptions by approximately 4%. Eaton expects other third party payors to
follow. We believe the increased sales volume and a decrease in costs from the
company's major supplier will help offset lower insurance reimbursements.
The medical segment's gross profit margins increased 8.5% to 36.1% for the
three months ended September 30, 2003, from 27.6% for the three months ended
September 30, 2002. This was due to a one time sale of merchandise acquired in a
discounted bulk purchase which is at no cost. The cost of the merchandise was
allocated to inventory which was previously sold. The impact on its gross profit
margins was approximately 5%. The medical segment also continues to eliminate
the sales of unprofitable items.
The fire and police segment's gross profit margins increased 6.2% to 27.3%
for the three months ended September 30, 2003, from 21.1% for the three months
ended September 30 in 2002. This increase can be attributed to an inventory
adjustment.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general and
administrative expenses increased $354,187 to $3,161,655 or 12.6% for the three
months ended September 30, 2003 as compared to $2,807,468 for the three months
ended September 30, 2002.
The following table shows the breakdown by business segments for the three
months ended September 30, 2003 and 2002:
Business Segment 2003 2002 % increase
(decrease)
Pharmacy chain $ 2,225,324 $ 1,847,426 20.5
Medical and surgical
equipment and supplies 628,992 599,389 4.9
EMT, fire, police
equipment and supplies 195,056 246,335 (20.8)
Corporate 112,283 114,318 (1.8)
Total for business segments $ 3,161,655 $ 2,807,468 12.6
The pharmacies segment's S,G&A expenses increased $377,898 to $2,225,324 or
20.5% for the three months ended September 30, 2003 as compared to $1,847,426
for the three months ended September 30, 2002. The increase came from the
additional overhead costs associated with the acquisition and operation of two
additional pharmacies of $112,610, increased labor costs of approximately
$102,000 due to a shortage of available pharmacists and increased advertising
expense of $105,287.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations: continued,
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES, continued
The medical segment's S,G&A expenses increased $29,603 to $628,992 or 4.9%
for the three months ended September 30, 2003 as compared to $599,389 for the
three months ended September 30, 2002. The main reasons for the increases are an
additional $20,000 in the accounts receivable reserve and increased advertising
expense of approximately $12,000.
The fire and police segment's S,G&A expenses decreased by $51,279 to
$195,056 or 20.8% for the three months ended September 30, 2003 as compared to
$246,335 for the three months ended September 30, 2002. This decrease was due to
lower expenses directly related to decreased sales and related overhead.
The Corporate segment's overhead remained approximately the same.
Other expense and income expense:
The following table shows the breakdown of interest expense by business
segment for the three months ended September 30, 2003 and 2002:
Three months ended
September 30,
Business Segment 2003 2002
- ---------------- ---- ----
Pharmacy segment $ 7,693 $ 3,778
Medical and
surgical equipment
and supplies 3,361 3,901
EMT, fire and
police segment 6,970 132
Corporate - -
------- -------
Total for business
segments $18,024 $ 7,811
======= =======
Our interest expense increased due to new debt for the purchase of pharmacies,
interest expense on note due to related party.
The following table shows the breakdown of interest income by business
segment for the three months ended September 30, 2003 and 2002:
Three months ended
September 30,
Business Segment 2003 2002
- ---------------- ---- ----
Pharmacy segment $ 6,838 $ 4,018
Medical and
surgical equipment
and supplies 4,710 4,540
EMT, fire and
police segment - -
Corporate 895 2,675
-------- --------
Total for business
segments $ 12,443 $ 11,233
======== ========
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Results of Operations: continued,
Other expense and income expense, continued
Interest income was derived from accounts receivable, a note related to the sale
of the respiratory division and money market account in 2001.
The following table shows the breakdown of other (loss) income by business
segment for the three months ended September 30, 2003 and 2002:
Three months ended
September 30,
Business Segment 2003 2002
- ---------------- ---- ----
Pharmacy segment $(3,369) $ 280
Medical and
surgical equipment
and supplies - -
EMT, fire and
police segment - 300
Corporate - -
Total for business ------- ---------
segments $(3,369) $ 580
======= =========
Other (loss) income was from the sale of fixed assets.
The following table shows the breakdown of minority interest which predominately
represents the 20% minority interest in the pharmacy chain segment for the three
months ended September 30, 2003 and 2002:
Three months ended
September 30,
Business Segment 2003 2002
- ---------------- ---- ----
Pharmacy segment $ 42,973 $ 70,106
Medical and
surgical equipment
and supplies - -
EMT, fire and
police segment (119) (55)
Corporate - -
-------- --------
Total for business
segments $ 42,854 $ 70,051
======== ========
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FIRST QUARTER RESULTS
Liquidity and Capital Resources
Net cash used in operating activities was $123,221 for the three months
ended September 30, 2003 as compared to net cash provided by operating
activities of $168,923 for the three months ended September 30, 2002.
The net cash used in investing activities was $50,982 and $35,699, for the
three months ended September 30, 2003 and 2002, respectively.
Net cash used in financing activities was $94,705 for the three months
ended September 30, 2003 as compared to $78,601 for the same period in 2002.
We anticipate our current cash resources to be adequate to fund our current
operating needs.
Our primary source of liquidity is cash provided from operations. Our
principal uses of cash are: cash used for by operations and cash used for
pharmacy retail acquisitions, capital expenditures and repayment debt.
During the three months ended September 30, 2003, we had a decrease in cash
due the funding the losses of our fire and police segment.
Cash - At September 30, 2003, we had approximately $1.1 million in cash. We
invest available cash in money markets.
Accounts receivable - At September 30, 2003, we had accounts receivable of
approximately $4.5 million. Although our sales have increased, our accounts
receivables have remained relatively the same.
Debt - We had $811,468 of debt as of September 30, 2003. Our debt has decreased
due to pay down of the debt with no additional borrowing for the quarter.
Because of our cash balances, we have not needed to borrow to fund operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We do not have any material risk with respect to changes in foreign
currency exchange rates, commodities prices or interest rates. We do not believe
that we have any other relevant market risk with respect to the categories
intended to be discussed in this item of this report.
Item 4. Controls and Procedures.
The Company's management evaluated, with the participation of its principal
executive officer and principal financial officer, the effectiveness of its
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) as of the end of the period covered
by this report. Based on such evaluation, the principal executive officer and
the principal financial officer of the Company concluded that its disclosure
controls and procedures are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and regulations of the Securities
and Exchange Commission and are operating in an effective manner.
No change in the Company's internal control over financial reporting (as
defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of
1934) occurred during the most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, its internal control
over financial reporting.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
PART II
Item 1. Legal Proceedings None
Item 2. Changes in Securities and Use of Proceeds None
Item 3. Defaults upon Senior Securities None
Item 4. Submissions of Matters to Vote of
Security Holders None
Item 5. Other information
The Company is still actively seeking to acquire medical related companies.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 31.1 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of
2002 by Principal Executive Officer
Exhibit 31.2 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of
2002 by Principal Financial and Accounting Officer
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive
Officer
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial
Officer
(b) Reports on Form 8-K None
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 SEPTEMBER 30, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
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.
NYER MEDICAL GROUP, INC.
Date: November 19, 2003 /s/ Samuel Nyer
Samuel Nyer,
Chief Executive Officer
and Principal Executive
Officer
Date: November 19, 2003 /s/ Karen L. Wright
Karen L. Wright,
Chief Financial Officer,
Chief Accounting Officer,
and Principal Financial
Officer
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002
I, Samuel Nyer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nyer Medical
Group, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) 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 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 report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) 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(s) 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: November 19, 2003
/s/ Samuel Nyer
Samuel Nyer
President
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002
I, Karen L. Wright, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nyer Medical
Group, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) 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 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 report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) 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(s) 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: November 19, 2003
/s/ Karen L. Wright
Karen L. Wright
Vice President - Finance
(Principal Financial and Accounting Officer)
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
2003 Quarterly Report on Form 10-Q
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarterly Report of Nyer Medical Group, Inc. (the
"Company") on Form 10-Q for the Quarter ended September 30, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),
I, Samuel Nyer, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Samuel Nyer
Samuel Nyer
Chief Executive Officer
November 19, 2003
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
2003 Quarterly Report on Form 10-Q
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002
In connection with the Quarterly Report of Nyer Medical Group, Inc. (the
"Company") on Form 10-Q for the quarter ended September 30, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Karen L. Wright, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Karen L. Wright
Karen L. Wright
Chief Financial Officer
November 19, 2003