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UNITED STATES
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 March 31, 2005
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 .
As of May 13, 2005 there were 3,978,199 shares of common stock
outstanding, par value $.0001 per share.
1
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets, March 31, 2005
and June 30, 2004 4
Consolidated Statements of Operations, Three Months
Ended March 31, 2005 and March 31, 2004 6
Consolidated Statements of Operations, Nine Months
Ended March 31, 2005 and March 31, 2004 7
Consolidated Statements of Cash Flows, Nine Months
Ended March 31, 2005 and March 31, 2004 8
Selected Notes to Consolidated Financial Statements 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 25
Item 4. Controls and Procedures 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds 26
Item 3. Defaults Upon Senior Securities 27
Item 4. Submissions of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibits 27
Signatures 28
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 and
Principal Financial and Accounting Officer 29
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
President, Chief Executive Officer and Chief Financial Officer 30
2
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
Certain statements contained in this report are forward-looking in nature.
These statements are generally identified by the inclusion of phrases such as
"we expect", "we anticipate", "we believe", "we estimate" and other phrases of
similar meaning. Whether such statements ultimately prove to be accurate
depends upon a variety of factors that may affect our business and operations.
Many of these factors are described in our most recent Annual Report on Form
10-K as filed with Securities and Exchange Commission.
We make available on our internet website free of charge our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to such reports as soon as practicable after we electronically file
such reports with the SEC. Our website address is www.nyermedicalgroup.com.
The information contained in our website is not incorporated by reference in
this Report.
3
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
PART I - Financial Information
Item 1. Financial Statements:
--------------------
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, June 30,
2005 2004
---- ----
(Unaudited)
Current assets:
Cash $ 1,196,709 $ 1,270,082
Accounts receivable, less allowance
for doubtful accounts of $525,000
at March 31, 2005 and $461,000
at June 30, 2004 4,231,535 4,228,977
Inventories 6,082,103 5,674,550
Prepaid expenses and other current
assets 238,090 349,379
Deferred tax asset 15,000 151,000
Assets to be disposed of from
discontinued operations 108,024 160,634
----------- -----------
Total current assets 11,871,461 11,834,622
----------- -----------
Property, plant and equipment, net 1,425,207 1,364,776
----------- -----------
Goodwill 104,463 104,463
Other intangible assets 469,501 549,073
----------- -----------
573,964 653,536
----------- -----------
Total assets $13,870,632 $13,852,934
=========== ===========
See accompanying notes to consolidated financial statements.
4
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, June 30,
2005 2004
---- ----
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 139,128 $ 213,523
Accounts payable 3,826,149 3,819,088
Accrued payroll and related taxes 411,679 424,115
Accrued expenses and other liabilities 179,381 286,214
Income taxes payable 49,521 20,000
Liabilities to be disposed of from
discontinued operations 505,170 555,556
----------- -----------
Total current liabilities 5,111,028 5,318,496
----------- -----------
Long-term debt, net of current
portion 122,366 210,119
----------- -----------
Minority interest 1,534,545 1,432,576
----------- -----------
Shareholders' equity:
Preferred stock 1 1
Common stock 379 379
Additional paid-in capital 17,691,972 17,691,972
Accumulated deficit (10,589,659) (10,800,609)
----------- -----------
Total shareholders'
equity 7,102,693 6,891,743
----------- -----------
Total liabilities and
shareholders' equity $13,870,632 $13,852,934
=========== ===========
See accompanying notes to consolidated financial statements.
5
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the three months ended
March 31, March 31,
2005 2004
---- ----
Net sales $15,114,121 $15,056,569
----------- -----------
Cost and expenses:
Cost of goods sold 11,728,386 11,781,896
Selling and retail 2,438,721 2,424,378
Warehouse and delivery 263,048 279,103
Administrative 587,872 682,402
----------- -----------
15,018,027 15,167,779
Operating income 96,094 (111,210)
Other income (expense):
Interest expense (4,466) (9,121)
Interest income 16,762 9,948
Other 4,451 (8,016)
----------- -----------
Total other income (loss) 16,747 (7,189)
----------- -----------
Income (loss) from continuing
operations before income taxes 112,841 (118,399)
Provision for income taxes (69,000) 62,375
Minority interest, net of
income taxes expense (26,687) (24,373)
----------- -----------
Income (loss) from continuing
operations 17,154 (80,397)
Discontinued operations - (12,343)
----------- -----------
Net income (loss) $ 17,154 $ (92,740)
=========== ===========
Basic income (loss) per share:
Continuing operations $ .01 $ (.02)
Discontinued operations - (.01)
----------- -----------
Basic income (loss) per share $ .01 $ (.03)
=========== ===========
Weighted average common
shares outstanding, basic 3,784,962 3,784,962
=========== ===========
Diluted income (loss) per share:
Continuing operations $ - $ (.02)
Discontinued operations - -
----------- -----------
Diluted income (loss) per share $ - $ (.02)
=========== ===========
Weighted average common
shares outstanding, diluted 4,098,041 3,784,962
=========== ===========
The accompanying notes are an integral part of the consolidated
6 financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the nine months ended
March 31, March 31,
2005 2004
---- ----
Net sales $45,831,635 $46,118,176
----------- -----------
Cost and expenses:
Cost of goods sold 35,623,501 35,996,357
Selling and retail 7,221,667 6,971,593
Warehouse and delivery 756,704 758,816
Administrative 1,689,855 1,902,101
----------- -----------
45,291,727 45,628,867
----------- -----------
Operating income 539,908 489,309
Other income (expense):
Interest expense (16,767) (29,819)
Interest income 39,619 35,340
Other (841) (7,894)
----------- -----------
Total other income (loss) 22,011 (2,373)
----------- -----------
Income from continuing operations
before income taxes 561,919 486,936
Provision for income taxes (249,000) (205,300)
Minority interest, net of
income taxes expense (101,969) (114,712)
----------- -----------
Income from continuing
operations 210,950 166,924
Discontinued operations - (54,496)
----------- -----------
Net income $ 210,950 $ 112,428
=========== ===========
Basic income per share:
Continuing operations $ .06 $ .04
Discontinued operations - (.01)
----------- -----------
Basic income per share $ .06 $ .03
=========== ===========
Weighted average common
shares outstanding, basic 3,784,962 3,784,962
=========== ===========
Diluted income (loss) per share:
Continuing operations $ .05 $ .04
Discontinued operations - (.01)
----------- -----------
Diluted income per share $ .05 $ .03
=========== ===========
Weighted average common
shares outstanding, diluted 3,970,238 4,009,928
=========== ===========
The accompanying notes are an integral part of the consolidated
7 financial statements.
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, (unaudited)
For the nine months ended
March 31, March 31,
2005 2004
---- ----
Cash flows from operating activities:
Net income from continuing operations $ 210,950 $ 112,428
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 329,196 284,558
Amortization 79,572 87,906
Deferred income tax 136,000 96,641
Other assets - 44,858
Minority interest 101,969 114,712
Changes in working capital (381,509) 153,397
------------ ------------
Net cash flows provided by
operating activities from continuing
operations 476,178 894,500
Net cash flows used in discontinued
activities (2,555) (742,303)
------------ ------------
Net cash flows provided by
operating activities 473,623 152,197
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and
equipment, net (384,846) (379,236)
------------ ------------
Net cash flows used in investing
activities (384,846) (379,236)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt 17,075 -
Payments on long-term debt (179,225) (213,850)
------------ ------------
Net cash flows used in financing
activities (162,150) (213,850)
------------ ------------
Net decrease in cash (73,373) (440,889)
Cash at beginning of period 1,270,082 1,391,666
------------ ------------
Cash at end of period $ 1,196,709 $ 950,777
============ ============
The accompanying notes are an integral part of the consolidated
financial statements.
continued
8
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, (unaudited), continued
For the nine months ended
March 31, March 31,
2005 2004
---- ----
Changes in working capital:
Accounts receivable $ (2,558) $ (155,974)
Inventories (407,553) (344,287)
Prepaid expenses and other current
assets 111,289 51,838
Accounts payable 7,061 110,132
Accrued payroll and related taxes (12,436) (97,975)
Accrued expenses and other liabilities (77,312) 589,663
------------ ------------
Net change $ (381,509) $ 153,397
============ ============
Supplemental disclosures of cash flow information:
For the nine months ended
March 31, March 31,
2005 2004
---- ----
Cash paid during the period for:
Interest $ 13,656 $ 28,949
============ ============
Income taxes $ 125,000 $ 105,250
============ ============
9
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
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, 2004.
2. Going Concern and Management's Plans: The Company has guaranteed certain
obligations from its discontinued operations, and the Company had a loss in
its medical and corporate segments in recent years and has a cash flow
deficiency in those segments. The continued existence of the Company and
specifically, the medical and corporate segments, is dependent upon the medical
segment obtaining profitability, up streaming funds from its Pharmacy segment
and/or raising capital. The Company's Pharmacy segment's minority shareholders
have an operating agreement with the Parent which includes cash management.
The Pharmacy segment's minority shareholders have declined to provide the
Parent with sufficient cash to sustain its present operations and fund the
medical segment, if necessary. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
In order to increase working capital in the medical and corporate
segments, a Company subsidiary obtained a $300,000 line of credit in October
2004. The line of credit is collateralized by property owned by the subsidiary
and is guaranteed by the Company. The Company cannot draw on the line
without approval from a committee of the board established for this purpose.
As of the date of this report, the line of credit has not been used.
Management's plan to return to profitability includes: 1) revamping
management at the corporate and medical segments, 2) instituting cost cutting
measures to reduce and control general and administrative costs; and 3)
raising additional capital.
There is no assurance that management's plan will be successful or that
the Company will maintain profitability. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
10
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Recent Accounting Pronouncements:
On December 16, 2004, the FASB issued Statement No. 123R, "Share-Based
Payment" which requires companies to record compensation expense for stock
options issued to employees at an amount determined by the fair value of the
options. SFAS No. 123R is effective for annual periods beginning after
June 15, 2005.
As such, effective with the Company's first fiscal quarter of 2006, SFAS
No. 123R will eliminate the Company's ability to account for stock options
using the method permitted under APB 25 and instead require recognition of
compensation expense should the Company issue stock options to its employees
or non-employee directors. The Company is in the process of evaluating the
impact adoption of SFAS No. 123R will have on the consolidated financial
statements.
4. Other Intangible Assets:
Following is a summary of the Company's amortizable intangible assets
relating to the Pharmacy segment at:
March 31, 2005 Amortization Accumulated
Period (years) Cost Amortization Net
------------- ---- ------------ ---
Prescription lists 15 $ 528,000 $215,132 $312,868
Non-compete agreements 3-5 750,100 593,467 156,633
---------- -------- --------
Totals $1,278,100 $808,599 $469,501
========== ======== ========
June 30, 2004 Amortization Accumulated
Period (years) Cost Amortization Net
------------- ---- ------------ ---
Prescription lists 15 $ 528,000 $189,050 $338,950
Non-compete agreements 3-5 750,100 539,977 210,123
---------- -------- --------
Totals $1,278,100 $729,027 $549,073
========== ======== ========
Amortization expense for the nine months ended March 31, 2005 was $79,572.
Based on the balance of intangible assets at March 31, 2005, the annual
amortization expense for each of the succeeding five years is estimated to be
as follows:
Year Amortization amount
2005 $100,000
2006 83,000
2007 83,000
2008 71,000
2009 35,000
11
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. Discontinued Operations:
The following table shows assets and liabilities of discontinued
operations (fire and police segment) at March 31, 2005:
Accounts receivable $ -
Inventory 37,293
Prepaid expenses and other
current assets 70,731
Property and equipment,
net of accumulated depreciation -
--------
Total assets $108,024
========
Note payable to related party $157,543
Accounts payable 278,021
Accrued expenses and other
liabilities 69,606
--------
Total liabilities $505,170
========
The note payable to related party pertains to the purchase of a
discontinued subsidiary's inventory. There is a continuing dispute with
the note holder as to the amount owed. The above balance is the Company's
estimate which includes unpaid principal and interest at 7% and payments made
on behalf of the note holder. The note holder has demanded payment of
$233,157, plus accrued interest. The Company is attempting to settle this
matter.
6. Options and Warrants:
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 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.
The following table shows stock options grants and cancels:
For the 3 months ended
March 31, 2005 December 31, 2004 September 30, 2004
-------------- ----------------- --------------
Stock option grants: 36,000 16,000 -
Stock option cancels: - (10,000) -
------ ------ -------
36,000 6,000 -
====== ====== =======
For the 3 months ended
March 31, 2004 December 31, 2003 September 30, 2003
-------------- ----------------- ------------------
Stock option grants: 12,000 12,000 -
Stock option cancels: - (55,000) -
------ ------ -------
12,000 (43,000) -
12 ====== ====== =======
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6. Options and Warrants: continued,
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Net income (loss), as reported: $ 17,154 $ (92,740) $ 210,950 $ 112,428
Add: Total stock-based
compensation expense determined
under fair value based method
for all awards, net of taxes (3,025) (8,607) (11,565) (34,921)
--------- --------- --------- ---------
Pro forma net income $ 14,129 $(101,347) $ 199,385 $ 77,507
========= ========= ========= =========
Basic income (loss) per share:
As reported $ .01 $(.03) $ .06 $ .03
===== ===== ===== =====
Pro forma $ - $(.03) $ .05 $ .02
===== ===== ===== =====
Diluted income (loss) per share:
As reported $ - $(.02) $ .05 $ .03
===== ===== ===== =====
Pro forma $ - $(.03) $ .05 $ .02
===== ===== ===== =====
7. Earnings Per Share:
The following data show the amounts used in computing earnings per share
and the weighted average number of share of diluted potential common stock
at March 31:
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Weighted average number of common
shares used in basic EPS 3,784,962 3,784,962 3,784,962 3,784,962
Stock options 313,079 - 185,276 224,966
--------- --------- --------- ---------
Weighted average number of common
shares used in diluted EPS 4,098,041 3,784,962 3,970,238 4,009,928
========= ========= ========= =========
Certain options were not included in the computation of diluted earnings
per share because the exercise prices of these options were greater than the
average market price of the common shares and the options were therefore
anti-dilutive.
13
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
8. Contingencies:
Legal proceedings
The Company and its subsidiaries are subject to various legal proceedings
from time to time as part of their operations. Currently, the Company and
certain subsidiaries have been threatened with legal proceedings. The Company
believes an adverse outcome of any proceedings, individually or in the
aggregate, could have a material effect on the businesses, financial condition
and results of operations. Any potential litigation, regardless of its merits,
could result in costs to the Company and its subsidiaries and divert
management's attention from operations.
9. Subsequent Event:
On April 15, 2005, the Company sold 193,237 shares of common stock at
$2.07 per share for gross proceeds of $400,000. In addition, the Company
granted warrants to purchase 53,320 common shares over a five-year period at
an exercise price of $2.60 per share.
10. Business Segments:
The Company had two business segments for three and nine months ended
March 31, 2005 and 2004: (1) pharmacies and (2) wholesale and retail sales
of surgical, medical equipment and supplies ("medical"). Business segments
are determined by the management approach which analyses segments based
on products or services offered for sale. Corporate assets include assets of
discontinued operations.
Net sales
- ---------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $13,136,360 $13,007,834 $39,428,805 $39,799,733
Medical 1,977,761 2,048,735 6,402,830 6,318,443
----------- ----------- ----------- -----------
$15,114,121 $15,056,569 $45,831,635 $46,118,176
=========== =========== =========== ===========
Operating income (loss)
- ----------------------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 278,401 $ 240,923 $ 941,098 $ 1,060,291
Medical (24,035) (153,525) 13,820 (81,979)
Corporate (158,272) (198,608) (415,010) (489,003)
----------- ----------- ----------- -----------
$ 96,094 $ (111,210) $ 539,908 $ 489,309
=========== =========== =========== ===========
14
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Business Segments: continued,
Depreciation and amortization
- -----------------------------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 116,950 $ 110,330 $ 348,503 $ 311,795
Medical 18,156 19,391 58,822 60,063
Corporate 158 202 1,443 606
----------- ----------- ----------- -----------
$ 135,264 $ 129,923 $ 408,768 $ 372,464
=========== =========== =========== ===========
Interest expense
- ----------------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 2,972 $ 5,591 $ 11,071 $ 20,000
Medical 1,494 3,530 5,696 9,819
----------- ----------- ----------- -----------
$ 4,466 $ 9,121 $ 16,767 $ 29,819
=========== =========== =========== ===========
Interest income
- ---------------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 5,886 $ 6,264 $ 15,615 $ 18,864
Medical 10,876 3,684 24,004 14,731
Corporate - - - 1,745
----------- ----------- ----------- -----------
$ 16,762 $ 9,948 $ 39,619 $ 35,340
=========== =========== =========== ===========
Identifiable assets
- -------------------
March 31, June 30,
2005 2004 2004
---- ---- ----
Pharmacies $11,771,881 $11,342,079 $11,321,180
Medical 1,855,741 2,138,756 1,996,010
Corporate 243,010 669,927 535,744
----------- ----------- -----------
$13,870,632 $14,150,762 $13,852,934
=========== =========== ===========
15
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Business Segments: continued,
Capital expenditures
- --------------------
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 61,198 $ 124,667 $ 369,009 $ 365,568
Medical - 73,102 26,808 102,852
----------- ----------- ----------- -----------
$ 61,198 $ 197,769 $ 395,817 $ 468,420
=========== =========== =========== ===========
16
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 and the nine months ended March 31, 2005 and 2004.
Net sales. Total sales for the three months ended March 31, 2005 increased by
$57,552 to $15,114,121 from $15,056,569 for the three months ended March 31,
2004. Total sales for the nine months ended March 31, 2005 decreased by
$286,541 to $45,831,635 from $46,118,176 for the nine months ended March 31,
2004.
The following table shows sales by business segment for the three months
ended and the nine months ended March 31:
Business segment
- ----------------
Three months ended % increase Nine months ended %increase
March 31, (decrease) March 31, (decrease)
2005 2004 2005 2004
Pharmacies $13,136,360 $13,007,834 1.0 $39,428,805 $39,799,733 (1.0)
Medical 1,977,761 2,048,735 (3.5) 6,402,830 6,318,443 1.0
---------- ----------- ----------- -----------
$15,114,121 $15,056,569 - $45,831,635 $46,118,176 -
=========== =========== =========== ===========
The pharmacies' sales increased $128,526 to $13,136,360 or 1.0% for the
three months ended March 31, 2005 as compared to $13,007,834 for the three
months ended March 31, 2004. The main reason for the increase was the opening
of a new location within a medical center in Waltham, MA in late November of
2004. The impact of a renegotiation of an expired contract with one federally
qualified health center (FQHC), with different terms and conditions, from a
replenishment model to a segregated inventory model also had an impact on
sales. Under the former contract, the pharmacies dispensed prescriptions
from its inventory and recognized as sales the gross value of the prescription
dispensed. Under the latter contract, the pharmacies dispensed prescriptions
from a segregated inventory owned by the FQHC and recognized as revenues the
dispensing fee paid it by the FQHC. The remaining contract for the FQHCs are
still under the replenishment model. The dispensing fees totaled approximately
$169,000 for the three months ended March 31, 2005 as compared to approximately
$70,600. Had the previous replenishment model and corresponding revenue
recognition been employed, additional sales of approximately $677,000 would
have been recognized as opposed to the approximately $169,000 in dispensing
fees at March 31, 2005 as compared to additional sales of approximately
$282,500 would have been recognized as opposed to the approximately $70,600 in
dispensing fees at March 31, 2004. As such, pharmacies sales would have been
approximately $13,800,000, or approximately 3.9% for the three months ended
March 31, 2005 as compared to $13,300,000 for the three months ended March 31,
2004. Management expects prescriptions to increase due to an aging population,
17
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
increased Medicare prescription benefits and additional prescription drugs
coming to market point to increasing the prescription drug market.
The pharmacies' sales decreased $370,928 to $39,428,805 or 1.0% for the
nine months ended March 31, 2005 as compared to $39,799,733 for the nine
months ended March 31, 2004. The main reason for the decrease of sales was
due to a renewal of a contract with different terms and conditions. Had the
previous replenishment model and corresponding revenue recognition been
employed, additional sales of approximately $1,840,000 would have been
recognized as opposed to the approximately $460,400 in dispensing fees at
March 31, 2005 as compared to additional sales of approximately $282,500
would have been recognized as opposed to the approximately $70,600 in
dispensing fees at March 31, 2004. As such, pharmacies sales would have
been approximately $41,300,000, or approximately 3.0% for the nine months
ended March 31, 2005 as compared to $40,100,000 for the nine months ended
March 31, 2004.
Same store sales growth have recently slowed as the total number of
prescriptions dispensed within the United States remained relatively constant
and many Pharmacy Benefit Management Companies (PBM's) increased the percentage
of prescription insurance plans with a required mail-order component.
Management plans to mitigate the effects of mandatory mail-order
components within the prescription insurance plans by continuing to seek out
niches within the market that it is uniquely qualified to service. In late
November of 2004, the pharmacy segment opened a new location within a medical
center in Waltham, MA, which was recently acquired by Boston Children's
Hospital. Management expects that its presence within this unique medical
community will result in added sales volume and incremental profits.
Medical's sales decreased $70,974 for the three months ended March
31, 2005 to $1,977,761 3.5% as compared to $2,048,735 for the three months
ended March 31, 2004, primarily due to a decline in its Maine location from
increased pressure from larger competitors who offer lower prices. Internet
sales increased approximately $34,000.
Medical's sales increased $84,387 for the nine months ended March 31,
2005 to $6,402,830 or 1.3% as compared to $6,318,443 for the nine months ended
March 31, 2004. The increase was due to a combination of increased Internet
sales of approximately $400,000 and a decrease of its non Internet sales of
approximately $315,600. The medical segment's sales decline are due to the
same reasons mentioned above.
Gross profit margins. The overall gross profit margins were 22.4% for the
three months ended March 31, 2005 as compared to 21.7% for the same period in
2004. The overall gross profit margins were 22.3% for the nine months ended
March 31, 2005 as compared to 21.9% for the same period in 2004.
18
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
Gross profit margins: continued,
The following is a table of gross profit margin percentages by business
segment for the three months ended and nine months ended March 31:
Business Segment
Three months ended Nine months ended
March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies 21.2% 20.8% 21.1% 20.5%
Medical 30.1% 27.7% 29.5% 31.2%
The pharmacies' gross profit margins increased .4% to 21.2% for the three
months ended March 31, 2005 as compared to 20.8% for the three months ended
March 31, 2004, due to larger volume discounts from suppliers.
The pharmacies' gross profit margins increased .6% to 21.1% for the nine
months ended March 31, 2005 as compared to 20.5% for the nine months ended
March 31, 2004. The increase can be attributed to larger sales volume
discounts from suppliers.
Medical's gross profit margins increased 2.4% to 30.1% for the three
months ended March 31, 2005 as compared to 27.7% for the same period in 2004.
This increase was the result of increased gross profit margins on Internet
division sales. Medical's distribution division margins declined approximately
1.5%. This segment continues to experience increasing pressure on its gross
profit margins as described in the net sales section above.
Medical's gross profit margins decreased 1.7% to 29.5% for the nine months
ended March 31, 2005 as compared to 31.2% for the same period in 2004.
Medical's distribution division margins declined approximately 1.2% while the
Internet division's gross profit margins increased approximately 4.0%. This
segment continues to experience increasing pressure on its gross profit margins
as described in the net sales section above.
Selling, general and administrative expenses. Consolidated selling, general
and administrative expenses decreased $96,242 or 2.8% for the three months ended
March 31, 2005 to $3,289,641 as compared to $3,385,883 for the three months
ended March 31, 2004. Consolidated selling, general and administrative
expenses increased $35,716 for the nine months ended March 31, 2005 to
$9,668,226 as compared to $9,632,510 for the nine months ended March 31, 2004.
The following table shows the breakdown by business segment for the three
months ended and the nine months ended March 31:
19
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
Selling, general and administrative expenses: continued,
Business segment
Three months ended % increase Nine months ended %increase
March 31, (decrease) March 31, (decrease)
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 2,511,066 $ 2,466,981 1.8 $ 7,379,197 $ 7,092,786 4.0
Medical 620,303 720,294 (13.9) 1,874,019 2,050,721 (8.6)
Corporate 158,272 198,608 (20.3) 415,010 489,003(15.1)
----------- ----------- ----------- ------------
$ 3,289,641 $ 3,385,883 (2.8) $ 9,668,226 $ 9,632,510 -
=========== =========== =========== ===========
The pharmacies' selling, general and administrative expenses increased
$44,085 to $2,511,066 or 1.8% for the three months ended March 31, 2005
as compared to $2,466,981 for the three months ended March 31, 2004. The
increase consisted of labor costs of approximately $131,000, rent of $17,142,
depreciation of $15,000, while advertising decreased approximately $78,000,
miscellaneous repairs and maintenance decreased $17,000, legal expenses
decreased by $22,650 and amortization expense decreased by $8,300.
The pharmacies' selling, general and administrative expenses increased
$286,411 to $7,379,197 or 4.0% for the nine months ended March 31, 2005
as compared to $7,092,786 for the nine months ended March 31, 2004. The
increase consisted of labor costs of approximately $455,500, rent of $71,878,
depreciation of $45,000, while advertising decreased approximately $223,000,
miscellaneous repairs and maintenance decreased $20,800, legal expenses
decreased by $17,600, equipment rental decreased $23,000 and amortization
expense decreased by $8,300.
Medical's selling, general and administrative expenses decreased
$99,991 or 13.9% to $620,303 for the three months ended March 31, 2005 as
compared to $720,294 for the three months ended March 31, 2004. The main
reasons were personnel reductions and sales related expenses of approximately
of $94,000 and a reduction in Internet advertising expense of $24,000. Bad
debt expense increased $25,000.
Medical's selling, general and administrative expenses decreased $176,702
or 8.6% to $1,874,019 for the nine months ended March 31, 2005 as compared
to$2,050,721 for the nine months ended March 31, 2004. The decrease was due to
a combination of the following: a reduction in sales related expenses of
$122,000, Nevada overhead costs of $34,000, personnel costs of $16,000, reduced
bulk inventory overhead $17,000, building maintenance and repair cost of $4,000
and mortgage interest due to pay down $4,000. Bad debt expense increased
approximately $37,000.
20
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
Selling, general and administrative expenses: continued,
Corporate overhead decreased by $40,336 or 20.3% to $158,272 for the
three months ended March 31, 2005 as compared to $198,608 for the three
months ended March 31, 2004. The decrease was due to a combination of
the following: personnel costs of approximately $36,500, public relation fees
and stock related expenses of $20,000, insurance of $4,342. There was an
increase in legal and audit expense of $13,422 and $16,000 for the annual
shareholders meeting.
Corporate overhead decreased by $73,993 or 15.1% to $415,010 for the nine
months ended March 31, 2005 as compared to $489,003 for the nine months ended
March 31, 2004. The decrease was due to a combination of the following
reductions: personnel costs of approximately $67,000, public relation fees
and stock related expenses of approximately $49,500, insurance of $9,860.
Legal and audit fees increased approximately $47,700.
Interest expense. Interest expense decreased by $4,655 or 51.0% to $4,466 for
the three months ended March 31, 2005 as compared to $9,121 for the three
months ended March 31, 2004. Interest expense decreased by $13,052 or 43.8%
to $16,767 for the nine months ended March 31, 2005 as compared to $29,819 for
the nine months ended March 31, 2004.
The following table shows the breakdown of interest expense by business
segment for the three months ended and the nine months ended March 31:
Business segment
Three months ended % increase Nine months ended % increase
March 31, (decrease) March 31, (decrease)
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 2,972 $ 5,591 (46.8) $ 11,071 $ 20,000 (44.6)
Medical 1,494 3,530 (57.7) 5,696 9,819 (42.0)
------- ------- -------- --------
$ 4,466 $ 9,121 (51.0) $ 16,767 $ 29,819 (43.8)
======= ======= ======== ========
The pharmacies' interest expense decreased by $2,619 or 46.8% to $2,972
for the three months ended March 31, 2005 as compared to $5,591 for the three
months ended March 31, 2004 due to debt pay down.
The pharmacies' interest expense decreased by $8,929 or 44.6% to $11,071
for the nine months ended March 31, 2005 as compared to $20,000 for the
nine months ended March 31, 2004 due to debt pay down.
Medical's interest expense decreased by $2,036 or 57.7% to $1,494 for the
three months ended March 31, 2005 as compared to $3,530 for the three months
ended March 31, 2004 due to debt pay down on its building mortgage.
21
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
Selling, general and administrative expenses: continued,
Medical's interest expense decreased by $4,123 or 42.0% to $5,696 for the
nine months ended March 31, 2005 as compared to $9,819 for the nine months
ended March 31, 2004 due to debt pay down on its building mortgage.
Interest income. Interest income increased by $6,814 or 68.5% to $16,762 for
the three months ended March 31, 2005 as compared to $9,948 for the three
months ended March 31, 2004. Interest income increased by $4,279 or 12.1%
to $39,619 for the nine months ended March 31, 2005 as compared to $35,340 for
the nine months ended March 31, 2004.
The pharmacies' interest income decreased by $378 or 6.0% to $5,886 for
the three months ended March 31, 2005 as compared to $6,264 for the three
months ended March 31, 2004, due to lower accounts receivable interest
revenues.
The pharmacies' interest income decreased by $3,249 or 17.2% to $15,615 for
the nine months ended March 31, 2005 as compared to $18,864 for the nine months
ended March 31, 2004, due to lower accounts receivable interest revenues.
Medical's interest income increased by $7,192 or 195.2% to $10,876 for the
three months ended March 31, 2005 as compared to $3,684 for the three months
ended March 31, 2004, due to higher accounts receivable interest revenues.
Medical's interest income increased by $9,273 or 62.9% to $24,004 for the
nine months ended March 31, 2005 as compared to $14,731 for the nine months
ended March 31, 2004, due to increased accounts receivable interest.
Corporate interest income decreased by $1,745 or 100% to $0 for the nine
months ended March 31, 2005 as compared to $1,745 for the nine months ended
March 31, 2004 due to a lower cash balances.
Income tax expense. Income tax expense increased by $131,375 or 210.6% to
$69,000 for the three months ended March 31, 2005 as compared to $(62,375)
for the three months ended March 31, 2004. Income tax expense increased
by $43,700 or 21.3% to $249,000 for the nine months ended March 31,
2005 as compared to $205,300 for the nine months ended March 31, 2004.
22
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Results of Operations: continued,
Income tax expense: continued,
The following table shows the breakdown of income tax expense by business
segment for the three months ended and the nine months ended March 31:
Business segment
Three months ended % increase Nine months ended % increase
March 31, (decrease) March 31, (decrease)
2005 2004 2005 2004
---- ---- ---- ----
Pharmacies $ 101,000 $ 81,870 23.4 $ 340,000 $ 383,000 (11.2)
Medical - (79,900)(100.0) 19,000 (32,700) 158.1
Corporate (32,000) (64,345) (50.3) (110,000) (145,000) 24.1
--------- --------- --------- ---------
$ 69,000 $ (62,375) 210.6 $ 249,000 $ 205,300 21.3
========= ========= ========= =========
Minority interest. Minority interest for the pharmacy segment increased by
$2,314 or 9.5% to $26,687 for the three months ended March 31, 2005 as
compared to $24,373 for the three months ended March 31, 2004.
Minority interest for the pharmacy segment decreased by $12,743 or 11.1%
to $101,969 for the nine months ended March 31, 2005 as compared to $114,712
for the nine months ended March 31, 2004.
Liquidity and Capital Resources
Net cash flows provided by operating activities were $473,623 for the nine
months ended March 31, 2005 as compared to net cash flows provided of $152,197
for the nine months ended March 31, 2004. The primary uses of cash were to
fund operations for the medical and corporate segments and to purchase pharmacy
inventory.
Net cash flows used in investing activities were $384,846 for the nine
months ended March 31, 2005 as compared $379,236 for the nine months ended
March 31, 2004.
Net cash flows used in financing activities were $162,150 for nine months
ended March 31, 2005 as compared to $213,850 for the nine months ended March
31, 2004.
At March 31, 2005, cash on a consolidated basis was $1,196,709 as compared
to $1,270,082 at June 30, 2004. Approximately $46,395 was held by the parent
company and approximately $1,116,922 was held by the pharmacies. Because the
pharmacies are not a wholly-owned subsidiary of the Company and the Company
does not have operating control, it cannot unilaterally cause the pharmacies to
loan funds to the Company should the Company require a loan. Approximately
23
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued,
Liquidity and Capital Resources: continued,
$150,900 is owed to the Company by the pharmacies. The Company has structured
a repayment schedule.
Our primary source of liquidity is cash provided from operations. Our
principal uses of cash are: operations, capital expenditures and repayment of
debt.
In order to increase working capital in the medical and corporate
segments, a Company subsidiary obtained a $300,000 line of credit in October
2004. The line of credit is collateralized by property owned by the subsidiary
and is guaranteed by the Company. The Company cannot draw on the line without
approval from a committee of the board which was established for this purpose.
As of the date of this report, the line of credit has not been used.
Management's plan for continued profitability includes: 1) revamping
management at the corporate and medical segments, 2) instituting cost cutting
measures to reduce and control general and administrative costs; and 3) raising
additional capital. There is no assurance that management's plan will be
successful or that the Company will continue profitability.
At March 31, 2005, accounts receivable was $4,231,535 as compared to
$4,228,977 at June 30, 2004. Accounts receivable increased due to timing of
insurance reimbursements in the pharmacy segment.
At March 31, 2005, debt was $261,494 as compared to $423,642 at June
30, 2004. Debt decreased due to pay downs. The Company purchased a delivery
vehicle in July 2004 for $17,075 to be repaid over a period of 36 months.
Private Placement
On April 15, 2005, we entered into definitive agreements for the private
placement sale of common shares and warrants to two institutional investors
for aggregate initial gross proceeds of $400,000. The placement closed on
April 15, 2005.
Pursuant to the Securities Purchase Agreement, we issued to the investors
193,237 shares of our common stock at a price of $2.07 per share. We also
granted to the investors warrants to purchase 53,320 common shares over a
five-year period at an exercise price of $2.60 per share. We have also agreed
to file a registration statement with the Securities and Exchange Commission
no later than November 15, 2005 (the "Filing Date") to permit resales of the
common stock by the investors, including the common stock issuable upon
exercise of the warrants. We are to use our best efforts to have the
registration statement declared effective within thirty (30) days after the
Filing Date. If the registration is not filed on time or effective within 60
days of the filing, we will pay 1% for the first month and 2% per month
thereafter in penalties until such default is cured. The exercise price of
the warrants are subject to adjustment for standard anti-dilution relating
to stock splits, combinations and the like and for subsequent equity sales
24
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
Liquidity and Capital Resources: continued,
Private Placement: continued,
at a price less than the exercise price of the warrants. Additionally, we have
granted the investors piggy back registration rights on any applicable
registration statement filed.
A complete description of this private placement can be found by reviewing
the report on Form 8-K (including the exhibits thereto) filed by us on April
18, 2005 with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk.
Cash: Cash is in checking accounts.
Investment securities:
Cash as of March 31, 2005 was $1,196,709.
Debt: Company debt is not subject to market risk and fluctuations because all
of the debt has fixed maturity dates and fixed interest rates. The difference
between the Company's carrying amount and fair value of its long-term debt was
immaterial at March 31, 2005.
The Company has no material risk with respect to changes in foreign
currency exchange rates, commodities prices or interest rates. Management
believes that there are no 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 the design and operation 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 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.
25
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
PART II - Other Information
Item 1. Legal Proceedings
We are not a party to any material litigation.
However, as first reported in our report on Form 10-K filed with the
Securities and Exchange Commission on October 18, 2004 and noted in our reports
on Form 10-Q filed with the Securities and Exchange Commission on each of
November 15, 2004 and February 14, 2005, the Company, Eaton, Anton and Conway
have had litigation threatened against them with respect to separate matters
(i.e., the Company: a contract claim; Eaton: primarily statutory claims; Anton
and Conway: contract claims). Such entities have not yet determined the
likelihood of success of these potential litigation matters against the Company
and/or its subsidiaries. With respect to the threatened litigation against
Eaton, the potential dollar amount of damages is not readily determinable. The
Company does not believe that the dollar amount of possible damages with
respect to any one of the litigation matters threatened against the Company,
Anton and Conway would exceed ten percent of the current assets of the Company
and its subsidiaries on a consolidated basis. If any of these threatened
litigation matters were decided in a manner adverse to the Company or its
subsidiaries, the result would likely be materially adverse to the Company and
its subsidiaries. For further information with respect to this paragraph,
please see Note 8 (Contingencies) in the Selected Notes to Consolidated
Financial Statements.
It should be noted that the immediately preceding paragraph describes
litigation which has been threatened but for which no complaint has been
filed against the Company or any of its subsidiaries. It is possible that
no suit will be filed with respect to these matters.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The foregoing equity repurchases by the Company during the fiscal quarter
ended March 31, 2005 have been reflected as follows:
ISSUER PURCHASES OF EQUITY SHARES
(d)Maximum Number
(or) Approximate
c) Total Number of Dollar Value)of
Shares Purchased as Shares that May
Part of Publicly Yet Be Purchased
a)Total Number of (b)Average Price Announced Plans or Under the Plans or
Shares Purchased Paid Per Share Programs Programs
January 1-31 0 $ - 0 148,000
February 1-28 0 $ - 0 148,000
March 1-31 0 $ - 0 148,000
26
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
NYER MEDICAL GROUP, INC. AND SUBSIDIARIES
PART II - Other Information: continued,
On May 12, 2003, the Company announced that the Board of Directors of the
Company had authorized the repurchase of up to 150,000 shares of the Company's
outstanding common stock from time-to-time in open market transactions at
prevailing market prices. There was no expiration date established for this
repurchase plan. As of the date of this report, the plan has not been
terminated.
Item 3. Defaults Upon Senior Securities None
Item 4. Submissions of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on March 30, 2005,
the shareholders of the Company elected Messrs. Mark Dumouchel, Robert Landis,
and Kenneth Nyer as directors of the Company to each serve for a three-year
term until the Company's annual meeting of shareholders for 2007 and until his
successor is duly elected and qualified. The following table shows the results
of the voting:
VOTES FOR VOTES AGAINST ABSTENTIONS WITHHELD
Mark Dumouchel 7,706,248 - - 49,412
Robert Landis 7,743,289 - - 12,371
Kenneth Nyer 7,706,248 - - 49,412
Each of the following persons' terms as directors continued after the meeting:
Donald Lewis, Samuel Nyer, James Schweiger, Gerald Weston and Karen Wright.
Further, at the annual meeting of shareholders, the shareholders ratified
the selection (by the Audit Committee of the board of directors of the Company)
of Sweeney, Gates & Co. as the Company's independent auditors for the fiscal
year ending June 30, 2005, with 7,664,378 votes for ratification, 88,282 votes
against ratification and 3,000 abstentions.
Further, at the annual meeting of shareholders, the shareholders authorized
the transaction of any other lawful business that may properly come before
the Annual Meeting of shareholders.
Item 5. Other Information None
Item 6. Exhibits
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 and 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 President, Chief Executive Officer and
Chief Financial Officer.
27
FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 MARCH 31, 2005
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.
Registrant
Date: May 16, 2005 By: /s/ Karen L. Wright
Karen L. Wright, President,
Principal Executive Officer,
Chief Executive Officer,
Principal Financial and Accounting
Officer and Chief Financial
Officer
28
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, 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: May 16, 2005
/s/ Karen L. Wright
Karen L. Wright
President (Principal Executive Officer)
Vice President - Finance
(Principal Financial and Accounting Officer)
29
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 March 31, 2005, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Karen L. Wright, President, Chief Executive Officer and 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.
Date: May 16, 2005
/s/ Karen L. Wright
Karen L. Wright,
President, Chief Executive Officer
and Chief Financial Officer
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