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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
--------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 0-12991
-------
LANGER, INC.
------------
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2239561
------------------------------ ---------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or identification number)
organization)
450 COMMACK ROAD, DEER PARK, NEW YORK 11729-4510
-------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (631) 667-1200
--------------
* * * * * * * * * * *
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----------- -----------
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
YES NO X
----------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, Par Value $.02 - 4,380,851 shares as of May 10, 2004.
1
INDEX
LANGER, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets 3
Unaudited Consolidated Statements of Operations 4
Unaudited Consolidated Statements of Stockholders' Equity 5
Unaudited Consolidated Statement of Cash Flows 6
Notes to Unaudited Consolidated Financial Statements 7-16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 17-21
Item 3. Quantitative and Qualitative Disclosures about Market Risk 22
Item 4. Controls and Procedures 23
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 24
2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 DECEMBER 31, 2003
--------------------- -----------------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 4,901,029 $ 5,533,946
Accounts receivable, net of allowances for doubtful
accounts and returns and allowances aggregating $313,104
and $292,725, respectively 3,588,421 3,628,052
Inventories, net 2,867,912 2,496,583
Prepaid expenses and other 725,475 495,386
--------------------- -----------------------
Total current assets 12,082,837 12,153,967
Property and equipment, net 2,743,680 2,496,071
Identifiable intangible assets, net 3,896,778 3,960,105
Goodwill 4,656,341 4,536,198
Other assets 813,679 876,856
--------------------- -----------------------
Total assets $ 24,193,315 $ 24,023,197
===================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 800,000 $ 800,000
Accounts payable 1,269,271 1,133,149
Other current liabilities 2,294,270 2,114,270
Unearned revenue 639,896 672,597
--------------------- -----------------------
Total current liabilities 5,003,437 4,720,016
Long-term debt 14,589,000 14,589,000
Unearned revenue 190,778 166,757
Accrued pension expense 171,893 171,893
Other liabilities 642,101 600,338
--------------------- -----------------------
Total liabilities 20,597,209 20,248,004
--------------------- -----------------------
Stockholders' equity
Preferred stock, no par value; authorized 250,000 shares;
no shares issued - -
Common stock, $.02 par value; authorized 50,000,000
shares; issued 4,447,951 and 4,447,451, respectively 88,959 88,949
Additional paid-in capital 13,203,719 13,202,129
Accumulated deficit (9,378,232) (9,159,140)
Accumulated other comprehensive loss (202,883) (241,288)
--------------------- -----------------------
3,711,563 3,890,650
Treasury stock at cost, 67,100 shares (115,457) (115,457)
--------------------- -----------------------
Total stockholders' equity 3,596,106 3,775,193
--------------------- -----------------------
Total liabilities and stockholders' equity $ 24,193,315 $ 24,023,197
===================== =======================
See accompanying notes to consolidated financial statements.
3
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2004 2003
------------------ -------------------
Net sales $ 5,763,936 $ 5,585,178
Cost of sales 3,790,586 3,789,821
------------------ -------------------
Gross profit 1,973,350 1,795,357
Selling expenses 807,689 712,133
General and administrative expenses 1,174,134 1,069,253
------------------ -------------------
Operating (loss) income (8,473) 13,971
------------------ -------------------
Other income (expense):
Interest income 44,347 46,295
Interest expense (204,966) (214,489)
Other - (59,258)
------------------ -------------------
Other expense, net (160,619) (227,452)
------------------ -------------------
Loss before income taxes (169,092) (213,481)
Provision for income taxes 50,000 44,600
------------------ -------------------
Net loss $ (219,092) $ (258,081)
================== ===================
Weighted average number of common shares used
in computation of net income loss per share:
Basic 4,380,422 4,362,907
================== ===================
Diluted 4,380,422 4,362,907
================== ===================
Net loss per common share:
Basic $ (.05) $ (.06)
================== ===================
Diluted $ (.05) $ (.06)
================== ===================
See accompanying notes to unaudited consolidated financial statements.
4
LANGER, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(UNAUDITED)
Accumulated Other
Comprehensive Loss
------------------
Common Stock Additional Foreign Minimum Total
------------ Treasury Paid-in Accumulated Currency Pension Stockholders'
Shares Amount Stock Capital Deficit Translation Liability Equity
--------------------------------------------------------------------------------------------------------
Balance at January 1, 2004 4,447,451 $ 88,949 $ (115,457) $ 13,202,129 $ (9,159,140) $ 211,821 $ (453,109) $ 3,775,193
Net loss for three months
ended March 31, 2004 (219,092) (219,092)
Foreign currency adjustment 38,405 38,405
Exercise of stock options 500 10 1,590 1,600
--------------------------------------------------------------------------------------------------------
Balance at March 31, 2004 4,447,951 $ 88,959 $ (115,457) $ 13,203,719 $ (9,378,232) $ 250,226 $ (453,109) $ 3,596,106
========================================================================================================
See accompanying notes to unaudited consolidated financial statements.
5
LANGER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2004 2003
----------------- ------------------
Cash Flows From Operating Activities:
Net loss $ (219,092) $ (258,081)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 229,835 187,253
Provision for doubtful accounts receivable 24,000 18,514
Deferred income taxes 37,000 31,086
Changes in operating assets and liabilities:
Accounts receivable 29,339 104,839
Inventories (360,563) (117,096)
Prepaid expenses and other assets (209,273) 62,621
Accounts payable and other current liabilities 131,791 (154,345)
Unearned revenue and other liabilities 17,268 (194,090)
----------------- -----------------
Net cash used in operating activities (319,695) (319,299)
----------------- -----------------
Cash Flows From Investing Activities:
Purchase of business, net of cash acquired - (1,301,663)
Purchase of property and equipment (321,362) (97,569)
----------------- -----------------
Net cash used in investing activities (321,362) (1,399,232)
----------------- -----------------
Cash Flows From Financing Activities - exercise of stock options 1,600 -
----------------- -----------------
Effect of exchange rate changes in cash 6,540 5,796
----------------- -----------------
Net decrease in cash and cash equivalents (632,917) (1,712,735)
Cash and cash equivalents at beginning of period 5,533,946 9,411,710
----------------- -----------------
Cash and cash equivalents at end of period $ 4,901,029 $ 7,698,975
================= =================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest $ 2,828 $ 19,544
================= =================
See accompanying notes to unaudited consolidated financial statements.
6
LANGER, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
------------------------------------------------------------
(a) BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. These unaudited consolidated financial statements should be read
in conjunction with the financial statements and footnotes included in the
Company's annual report on Form 10-K for the fiscal year ended December 31,
2003.
Operating results for the three months ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2004.
(b) PROVISION FOR INCOME TAXES
--------------------------
For the three months ended March 31, 2004, there was no provision for income
taxes on domestic operations. The provision for income taxes on foreign
operations was estimated at $13,000. The provision for income taxes on
foreign operations for the three months ended March 31, 2003 was estimated
at $12,600.
Prior to the adoption of SFAS No. 142, the Company would not have needed a
valuation allowance for the portion of the net operating losses equal to the
amount of tax-deductible goodwill and trade names amortization expected to
occur during the carryforward period of the net operating losses based on
the timing of the reversal of these taxable temporary differences. As a
result of the adoption of SFAS 142, the reversal will not occur during the
carryforward period of the net operating losses. Therefore, the Company
recorded a deferred income tax expense of approximately $37,000 and $32,000
during the three months ended March 31, 2004 and 2003, respectively, which
would not have been required prior to the adoption of SFAS 142.
(c) RECLASSIFICATIONS
-----------------
Certain amounts have been reclassified in the prior period consolidated
financial statements to present them on a basis consistent with the current
year.
(d) SEASONALITY
-----------
A substantial portion of the Company's revenue is derived from the sale of
custom orthotics. North American custom orthotic revenue has historically
been significantly higher in the warmer months of the year, while custom
orthotic revenue of the Company's United Kingdom subsidiary has historically
not evidenced any seasonality.
7
(e) STOCK OPTIONS
-------------
At March 31, 2004, the Company has two stock-based employee compensation
plans. The Company accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. No stock-based employee compensation
cost is reflected in net (loss), as all options granted under those plans
had an exercise price equal to market value of the underlying common stock
on the date of grant. The following table illustrates the effect on net
income (loss) and earnings (loss) per share if the company had applied the
fair value recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.
Three months ended March 31,
------------------ -----------------
2004 2003
------------------ -----------------
Net loss - as reported $ (219,092) $ (258,081)
Deduct: Total stock-based employee compensation expense
determined under fair value basis method for all
awards, net of tax (66,953) (31,733)
------------------ -----------------
Pro forma net loss $ (286,045) $ (289,814)
================== =================
Earnings (loss) per share:
Basic - as reported $ (.05) $ (.06)
================== =================
Basic - pro forma $ (.07) $ (.07)
================== =================
Diluted - as reported $ (.05) $ (.06)
================== =================
Diluted - pro forma $ (.07) $ (.07)
================== =================
(f) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations." SFAS No. 141 applies prospectively to all
business combinations initiated after June 30, 2001, and all business
combinations accounted using the purchase method for which the date of
acquisition is July 1, 2001, or later. This statement requires all business
combinations to be accounted for using one method, the purchase method.
Under previously existed accounting rules, business combinations were
accounted for using one of two methods, pooling-of-interests method or the
purchase method. As of January 1, 2002 the Company adopted the provisions of
SFAS No. 141. Accordingly, the Company accounted for it's acquisitions of
Benefoot and Bi-Op (see Note 2) under the purchase method of accounting.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets. Under SFAS No. 142, goodwill
and some intangible assets will no longer be amortized, but rather reviewed
for impairment on a periodic basis. As of January 1, 2002 the Company
adopted the provisions of SFAS No. 142. Therefore, goodwill and certain
identifiable intangible assets with indefinite lives have not been amortized
and is being reviewed for impairment on an annual basis.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This standard requires entities to record the fair
value of a liability for an asset retirement obligation in the period in
which it is incurred. When the liability is initially recorded, the entity
capitalizes a cost by increasing the carrying amount of the related
long-lived asset. Over time the liability is accreted to its present value
each period and the capitalized cost is depreciated over the useful life of
the related asset.
8
Upon settlement of the liability, an entity either settles the obligation
for its recorded amount or incurs a gain or loss upon settlement. The
standard is effective for fiscal years beginning after June 15, 2002. The
adoption of SFAS No. 143 as of January 1, 2003 did not have a material
impact on the Company's consolidated financial statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145, among other things, rescinds SFAS No. 4, which
required all gains and losses from the extinguishment of debt to be
classified as an extraordinary item and amends SFAS No. 13 to require that
certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. The rescission of SFAS No. 4 is effective for
fiscal years beginning after May 15, 2002. The remainder of the statement is
generally effective for transactions occurring after May 15, 2002 with
earlier application encouraged. The adoption of SFAS No. 145 as of January
1, 2003 did not have a material impact on the Company's consolidated
financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal
Activities." This statement addresses the recognition, measurement and
reporting of costs that are associated with exit and disposal activities.
This statement includes the restructuring activities that are currently
accounted for pursuant to the guidance set forth in EITF 94-3, "Liability
Recognition for Certain Employee Termination Benefits and other Costs to
exit an Activity (including Certain Costs Incurred in a Restructuring),"
costs related to terminating a contract that is not a capital lease and
one-time benefit arrangements received by employees who are involuntarily
terminated- nullifying the guidance under EITF 94-3. Under SFAS No. 146 the
cost associated with an exit or disposal activity is recognized in the
periods in which it is incurred rather than at the date the company
committed to the exit plan. This statement is effective for exit or disposal
activities initiated after December 31, 2002 with earlier application
encouraged. The adoption of SFAS No. 146 as of January 1, 2003 did not have
a material effect on the Company's consolidated financial statements.
In November 2002, the FASB issued Financial Interpretation ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
that the guarantor recognize, at the inception of certain guarantees, a
liability for the fair value of the obligation undertaken in issuing such
guarantee. FIN 45 also requires additional disclosure requirements about the
guarantor's obligations under certain guarantees that it has issued. The
initial recognition and measurement provisions of this interpretation are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of this interpretation are
effective for financial statement periods ending after December 15, 2002.
The adoption of FIN 45 did not have a material effect on the Company's
consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation-Transitions and Disclosure- an amendment of FASB Statements No.
123." This amendment provides alternative methods of transition for
voluntary change to the fair value based method of accounting for
stock-based employee compensation. Additionally, prominent disclosures in
both annual and interim financial statements are required for the method of
accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company will continue to account for
it's stock based awards using the intrinsic value method and has disclosed
the required information under SFAS No. 148 in the notes to the consolidated
financial statements.
In December 2003, the FASB issued SFAS No. 132, as revised, Employers'
Disclosures about Pensions and Other Postretirement Benefits, ("Revised SFAS
132"), which requires additional disclosures about assets, obligation, cash
flows, and net periodic benefit cost of defined benefit pension plans and
other defined benefit postretirement plans. The Company adopted the required
revised disclosure provisions of Revised SFAS 132 as of December 31, 2003,
except for the disclosure of estimated future benefit payments, which the
Company is required to and will disclose as of December 31, 2004. The
adoption of SFAS No. 132 did not have a material impact on the Company's
financial statements.
9
NOTE 2 - ACQUISITIONS
------------
(a) BI-OP LABORATORIES, INC.
------------------------
Effective January 1, 2003, the Company, through a wholly-owned subsidiary,
acquired all of the issued and outstanding stock of Bi-Op Laboratories, Inc.
("Bi-Op") pursuant to the terms of a Stock Purchase Agreement dated as of
January 13, 2003 (the "Stock Purchase Agreement").
In connection with the acquisition, the Company paid consideration in
Canadian dollars, determined through arms-length negotiation of the parties.
When converted to U.S. dollars the total purchase price approximated $2.2
million of which $1.8 million (including $0.5 million for transaction costs)
was paid in cash and $0.4 million was paid by issuing 107,611 shares of the
Company's common stock (the "Shares"). The purchase price was funded by
using a portion of the proceeds remaining from the sale of the Company's 4%
convertible subordinated notes due August 31, 2006. The shares were valued
based upon the market price of the Company's common stock two days before,
two days after and the date the acquisition was announced.
In connection with the Stock Purchase Agreement, the Company entered into an
employment agreement with Raynald Henry, a former principal owner, having a
term of three years and providing for an annual base salary of $75,000 CDN
and benefits, including certain severance payments. The allocation of the
purchase price among the assets and liabilities is based upon the Company's
valuation of the fair value of assets and liabilities of Bi-Op.
The following table sets forth the components of the purchase price:
Cash consideration $ 1,368,756
Common stock issued 369,106
Transaction costs 495,383
----------------------
Total purchase price $ 2,233,245
======================
The following table provides the allocation of the purchase price:
Assets: Cash and cash equivalents $ 194,531
Accounts receivables 212,593
Inventories 109,572
Prepaid expenses and other 232,394
Property and equipment 437,148
Goodwill 820,056
Identified intangible assets (non-competition agreement of
$400,000 and repeat customer base of $500,000) 900,000
Other assets 41,802
----------------
2,948,096
----------------
Liabilities: Accounts payable 117,809
Accrued liabilities 140,217
Deferred income tax 270,000
Long term debt and other liabilities 186,825
----------------
714,851
----------------
Total purchase price $ 2,233,245
================
10
The goodwill created by the purchase of Bi-Op is not deductible for tax
purposes.
(b) BENEFOOT, INC. AND BENEFOOT PROFESSIONAL PRODUCTS, INC.
-------------------------------------------------------
On May 6, 2002 the Company, through a wholly-owned subsidiary, acquired
substantially all of the assets and liabilities of each of Benefoot,
Inc. and Benefoot Professional Products, Inc. (jointly, "Benefoot"),
pursuant to the terms of an asset purchase agreement (the "Asset
Purchase Agreement"). The assets acquired include machinery and
equipment, other fixed assets, inventory, receivables, contract rights,
and intangible assets.
In connection with the acquisition, the Company paid consideration of $6.1
million, of which $3.8 million was paid in cash, $1.8 million was paid
through the issuance of 4% promissory notes (the "Promissory Notes") and
$0.5 million was paid by issuing 61,805 shares of common stock (the
"Shares"), together with certain registration rights. The Shares were valued
based upon the market price of the Company's common stock two days before,
two days after and on the day the acquisition was announced. $1.0 million of
the Promissory Notes was paid on May 6, 2003 and the balance of $0.8
million, plus interest was paid on May 6, 2004. The Company also assumed
certain liabilities of Benefoot, including approximately $0.3 million of
long-term indebtedness. The Company also agreed to pay Benefoot up to an
additional $1 million upon achievement of certain performance targets on or
prior to May 6, 2004 measured at various intervals. During the three months
ended March 31, 2004, the Company recorded $120,143 of additional goodwill
upon the achievement of certain performance targets. As of March 31, 2004
the Company had paid or accrued a total of $723,381 based upon the
satisfaction of performance targets. The Company funded the entire cash
portion of the purchase price with proceeds from the prior sale of the
Company's 4% convertible subordinated notes due August 31, 2006.
In connection with the Asset Purchase Agreement, the Company entered
into an employment agreement with each of two shareholders of Benefoot,
each having a term of two years and providing for an annual base salary
of $150,000 and benefits, including certain severance arrangements. One
of these shareholders subsequently terminated his employment agreement
with the Company and the second contract expires in the second quarter
of 2004. The Company also entered into an agreement (which was amended
in 2003 and 2004), with Sheldon Langer as a medical consultant. The
allocation of the purchase price among the assets acquired and
liabilities assumed is based on the Company's valuation of the fair
value of the assets and liabilities of Benefoot.
The following table sets forth the components of the purchase price:
Cash consideration $ 3,800,351
Benefoot long-term debt paid at closing 307,211
----------------------
Total cash paid at closing $ 4,107,562
Promissory note issued 1,800,000
Common stock issued 529,512
Transaction costs 680,228
Contingency consideration paid or accrued 723,381
-----------------
Total purchase price $ 7,840,683
=================
The goodwill created by the purchase of Benefoot is deductible for tax
purposes.
11
The following table provides the allocation of the purchase price:
Assets: Cash and cash equivalents $ 225,953
Accounts receivables 806,370
Inventories 660,559
Prepaid expenses and other 76,973
Property and equipment 155,110
Goodwill 3,836,285
Identified intangible assets (trade names of $1,600,000,
non-competition agreements of $230,000, and license agreements
and related technology of $1,600,000) 3,430,000
Other assets 6,163
------------------
9,197,413
------------------
Liabilities: Accounts payable 647,873
Accrued liabilities 389,400
Unearned revenue 210,355
Long term debt & other liabilities 109,102
------------------
1,356,730
------------------
Total purchase price $ 7,840,683
==================
In accordance with the provisions of SFAS No. 142, the Company will not
amortize goodwill and intangible assets with indefinite lives (trade names
with an estimated fair value of $1,600,000).
Identifiable intangible assets at December 31, 2003 consisted of:
Amortization Original Accumulated Net Carrying
Assets Period Cost Amortization Value
---------------------------------- ---------------- ------------- ---------------- -----------------
Trade Names indefinite $ 1,600,000 - $ 1,600,000
Non-competition agreements 7/8 years 630,000 104,339 525,661
License agreements and
related technology 11 Years 1,600,000 240,556 1,359,444
Repeat customer base 20 Years 500,000 25,000 475,000
------------- ---------------- -----------------
$ 4,330,000 $ 369,895 $ 3,960,105
============= ================ =================
Identifiable intangible assets at March 31, 2004 consisted of:
Amortization Accumulated Net
Assets Period Original Cost Amortization Carrying Value
---------------------------------- ---------------- ------------- ---------------- -----------------
Trade Names indefinite $1,600,000 - $ 1,600,000
Non-competition agreements 7/8 years 630,000 125,052 504,948
License agreements and
related technology 11 Years 1,600,000 276,920 1,323,080
Repeat customer base 20 Years 500,000 31,250 468,750
------------- ---------------- -----------------
$ 4,330,000 $ 433,222 $ 3,896,778
============= ================ =================
Aggregate amortization expense relating to the above identifiable intangible
assets for each of the quarters ended March 31, 2004 and 2003 was $63,327.
12
At December 31, 2003, estimated future amortization expense is approximately
$253,000 per annum for 2004 to 2008.
Changes in goodwill for the quarter ended March 31, 2004 and for the year
ended December 31 2003, are as follows:
CUSTOM DISTRIBUTED
ORTHOTICS PRODUCTS TOTAL
-------------------- ------------------ ------------------
Balance December 31, 2002 $ 1,191,986 $ 1,994,400 $ 3,186,386
Purchase price adjustments
related to achievement of
milestones and acquisition
costs 198,175 331,581 529,756
Acquisition - Bi-Op 820,056 - 820,056
-------------------- ------------------ ------------------
Balance December 31, 2003 2,210,217 2,325,981 4,536,198
Purchase price adjustments related to
achievement of milestones and
acquisition costs 44,944 75,199 120,143
-------------------- ------------------ ------------------
Balance March 31, 2004 $ 2,255,161 $ 2,401,180 $ 4,656,341
==================== ================== ==================
NOTE 3 - INVENTORIES, NET
----------------
Inventories consist of:
March 31, 2004 December 31, 2003
--------------------- -------------------------
(Unaudited)
Raw materials $ 1,562,972 $ 1,087,916
Work-in-process 175,076 174,164
Finished goods 1,129,864 1,234,503
---------------------- -------------------------
$ 2,867,912 $ 2,496,583
====================== =========================
NOTE 4 - LONG TERM DEBT
--------------
On October 31, 2001, the Company completed the sale of $14,589,000 principal
amount of its 4% convertible subordinated notes due August 31, 2006 (the
"Notes"), in a private placement. The Notes are convertible into shares of
the Company's common stock at a conversion price of $6.00 per share, (equal
to the market value of the Company's stock on October 31, 2001), subject to
anti-dilution protections and are subordinated to existing or future senior
indebtedness of the Company. Among other provisions, the Company may, at its
option, call, prepay, redeem, repurchase, convert or otherwise acquire
(collectively, "Call") the Notes, in whole or in part, (1) after August 31,
2003 or (2) at any time if the closing price of the Company's common stock
equals or exceeds $9.00 per share for at least ten consecutive trading days.
If the Company elects to Call any of the Notes, the holders of the Notes may
elect to convert the Notes for the Company's common stock. Interest is
payable semi-annually on the last day of June and December. Interest expense
on these Notes was $145,890 for each of the three month periods ended March
31, 2004 and 2003.
The Company received net proceeds of $13,668,067 from the offering of the
Notes. The cost of raising these proceeds was $920,933, which is being
amortized over the life of the Notes. The amortization of these costs for
each of the three months ended March 31, 2004 and 2003 was $48,443.
13
The Company issued $1,800,000 in Promissory Notes in connection with the
acquisition of Benefoot. $1,000,000 of the notes were paid on May 6, 2003
and the balance was paid on May 6, 2004. Interest expense for the three
months ended March 31, 2004 and 2003 was $8,000 and $18,000, respectively.
NOTE 5 - SEGMENT INFORMATION
-------------------
The Company operated in two segments (custom orthotics and distributed
products) principally in the design, development, manufacture and sale of
foot and gait-related products. Intersegment net sales are recorded at cost.
Segment information for the quarters ended March 31, 2004 and 2003 is
summarized as follows:
THREE MONTHS ENDED MARCH 31, 2004 CUSTOM ORTHOTICS DISTRIBUTED PRODUCTS TOTAL
------------------------------------------ ------------------------ ----------------------- -------------
Net Sales $ 4,635,023 $ 1,128,913 $5,763,936
Gross Margins 1,554,660 418,690 1,973,350
Operating profit (loss) (50,492) 42,019 (8,473)
THREE MONTHS ENDED MARCH 31, 2003 CUSTOM ORTHOTICS DISTRIBUTED PRODUCTS TOTAL
------------------------------------------ ------------------------ ----------------------- ----------------
Net Sales $ 4,201,421 $ 1,383,757 $5,585,178
Gross Margins 1,437,092 358,265 1,795,357
Operating profit (loss) (168,758) 182,729 13,971
Geographical segment information is summarized as follows:
THREE MONTHS ENDED MARCH 31, 2004 NORTH AMERICA UNITED KINGDOM TOTAL
-------------------------------------------- ---------------------------- --------------------- -----------------
Net sales to external customers $ 5,078,571 $ 685,365 $ 5,763,936
Intersegment net sales $ 70,952 $ - $ 70,952
Gross margins $ 1,741,890 $ 231,460 $ 1,973,350
Operating (loss) profit $ (100,960) $ 92,487 $ (8,473)
THREE MONTHS ENDED MARCH 31, 2003 NORTH AMERICA UNITED KINGDOM TOTAL
-------------------------------------------- ---------------------------- --------------------- -----------------
Net sales from external customers $ 4,919,268 $ 665,910 $ 5,585,178
Intersegment net sales $ 69,001 $ - $ 69,001
Gross margins $ 1,533,142 $ 262,215 $ 1,795,357
Operating (loss) profit $ (100,953) $ 114,924 $ 13,971
14
NOTE 6 - COMPREHENSIVE INCOME (LOSS)
---------------------------
The Company's comprehensive income (loss) were as follows:
Three months ended March 31,
-----------------------------------------
2004 2003
-------------------- -----------------
Net loss $ (219,092) $ (258,081)
Other comprehensive income (loss) net of tax:
Change in equity resulting from translation of
financial statements into U.S. dollars 38,405 51,772
-------------------- -----------------
Comprehensive loss $ (180,687) $ (206,309)
==================== =================
NOTE 7 - INCOME (LOSS) PER SHARE
-----------------------
The following table provides a reconciliation between basic and diluted
earnings per share:
Three months ended March 31,
2004 2003
------------------------------------------- ---------------------------------------
Per Per
Basic loss per common share Income(loss) Shares Share Income(loss) Shares Share
----------------------------- ------------- ----------- ---------- ------------ ---------- --------
Loss available to common $ (219,092) 4,380,422 $ (.05) $ (258,081) 4,362,907 $ (.06)
Stockholders
Stock options - - - - - -
------------- ----------- ---------- ------------ ---------- --------
Diluted loss per common
share
-----------------------------
Loss available to common
stockholders plus assumed
exercise of stock options $ (219,092) 4,380,422 $ (.05) $ (258,081) 4,362,907 $ (.06)
============= =========== ========== ============ ========== ========
Basic earnings per common share ("EPS") are computed based on the weighted
average number of common shares outstanding during each period. Diluted
earnings per common share are computed based on the weighted average number
of common shares, after giving effect to dilutive common stock equivalents
outstanding during each period. The diluted income (loss) per share
computations for the quarters ended March 31, 2004 and 2003 exclude stock
options totaling approximately 649,000 and 621,000, respectively. These
shares are excluded due to their anti-dilutive effect as a result of the
Company's loss during each of the periods. The impact of the convertible
notes on the calculation of the fully-diluted earnings per share was
anti-dilutive and is therefore not included in the computation for the
quarters ended March 31, 2004 and 2003. Had the impact of the convertible
notes been included in the calculation of diluted earnings per share, net
loss would have decreased by approximately $194,000 in each of the quarters
ended March 31, 2004 and 2003. Additionally, the diluted weighted average
shares would have increased by 2,431,500 for each of the quarters ended
March 31, 2004 and 2003, to reflect the conversion of the convertible notes.
15
NOTE 8 - RELATED PARTY TRANSACTIONS
--------------------------
Langer has engaged a company which is owned by the brother-in-law of a
senior executive of Langer, to provide certain technology related products
and services. Cost incurred for products and services provided by this
company were approximately $12,000, and $7,200 in the quarters ended March
31, 2004 and 2003, respectively. Langer also engaged a company owned by the
father-in-law of a senior executive of Langer to provide certain promotional
and marketing goods and services. Costs incurred with respect to such goods
and services for the quarters ended March 31, 2004 and 2003 were $14,735,
and $20,309, respectively. In April 2002, a senior executive of the Company
borrowed $21,000 from the Company ("Executive Note"). The Executive Note
earns interest at a rate of 4% per annum and was repaid in April 2004.
NOTE 9 - PENSION
-------
PENSION BENEFITS
------------------------------------------
THREE MONTHS ENDED MARCH 31: 2004 2003
---------------------------------------------------------- -------------------- ------------------
Service cost $ - $
Interest cost 8,550 9,106
Expected return on plan assets (9,603) (8,671)
Amortization of transition (assets) or obligations 1,948 1,948
Recognized actuarial (gain) loss 4,808 5,782
-------------------- ------------------
Net periodic benefit cost $ 5,703 $ 8,165
==================== ==================
EMPLOYER CONTRIBUTIONS
The Company previously disclosed in its financial statements for the year
ended December 31, 2003, that it expected to contribute $72,000 to its
pension plan in 2004. As of March 31, 2004 no contributions have been made.
The Company presently anticipates contributing $72,000 to fund its pension
plan in 2004.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
------------------------------------------
The Company disclosed its critical accounting policies and estimates on the
December 31, 2003 Form 10-K. There have been no changes to those critical
accounting policies and estimates during the three months ended March 31,
2004.
RESULTS OF OPERATIONS
---------------------
Net sales for the three months ended March 31, 2004 were $5,763,936 or
approximately 3% above net sales of $5,585,178 for the three months ended
March 31, 2003. Net sales of custom orthotics were $4,635,023 and $4,201,421
while net sales of distributed products were $1,128,913 and $1,383,757 for
the three months ended March 31, 2004 and 2003, respectively.
Net sales for custom orthotics for the three months ended March 31, 2004
were $4,635,023 as compared to $4,201,421 for the three months ended March
31, 2003, an increase of $433,602, or approximately 10%. The primary reason
for the increase in revenue during the 2004 quarter was a price increase put
into effect during the first quarter for orthotic products as well as the
strong performance by the Bi-Op Laboratories clinic as compared to the prior
year.
Net sales of distributed products for the three months ended March 31, 2004
were $1,128,913 as compared to $1,383,757 for the three months ended March
31, 2003, a decrease of $254,844 or approximately 18%. The primary reasons
for the decrease in sales revenue were a 10% price reduction within the
therapeutic shoe program that was put into effect to become more competitive
in the marketplace, and the elimination of a direct-to-consumer product
line.
Gross profit as a percentage of net sales for the three months ended March
31, 2004 was 34.2%, as compared to 32.1% for the three months ended March
31, 2003. Gross profit as a percentage of net sales increased due primarily
to the price increase in orthotic products partially offset by a 10% price
reduction within the therapeutic shoe program.
Selling expenses for the three months ended March 31, 2004, were $807,689 or
14% of net sales as compared to $712,133 or 12.8% of net sales for the three
months ended March 31, 2003. Selling expenses as a percentage of sales
increased primarily as a result of marketing initiatives in the first
quarter of the 2004 year. The Company introduced its new scanner technology
at several industry shows during the March 2004 quarter.
General and administrative expenses for the three months ended March 31,
2004 were $1,174,134 or 20% of net sales for the three months ended March
31, 2004 as compared to $1,069,253 or 19.1% of net sales for the three
months ended March 31, 2003. General and administrative expenses increased
primarily as a result of costs associated with the continued strengthening
of the Company's infrastructure and increases in professional fees and
insurance costs.
Other income (expense), net, was $(160,619) for the three months ended March
31, 2004, as compared to $(227,452) for the three months ended March 31,
2003. The decrease in expense is attributable to the
17
reduction in interest expense as the result of reduction in the amount of
indebtedness outstanding in this 2004 quarter as compared to the 2003
quarter. Additionally, the Company incurred other expenses totaling $59,258
in the 2003 quarter, no such amount was incurred in the 2004 quarter.
For the three months ended March 31, 2004, there was no provision for income
taxes on domestic operations. The provision for income taxes on foreign
operations was estimated at $13,000. The provision for income taxes on
foreign operations for the three months ended March 31, 2003 was estimated
at $12,600.
Prior to the adoption of SFAS No. 142, the Company would not have needed a
valuation allowance for the portion of the net operating losses equal to the
amount of tax-deductible goodwill and trade names amortization expected to
occur during the carryforward period of the net operating losses based on
the timing of the reversal of these taxable temporary differences. As a
result of the adoption of SFAS 142, the reversal will not occur during the
carryforward period of the net operating losses. Therefore, the Company
recorded a deferred income tax expense of approximately $37,000 and $32,000
during the three months ended March 31, 2004 and 2003, respectively, which
would not have been required prior to the adoption of SFAS 142.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Working capital as of March 31, 2004 was $7,079,400, as compared to
$7,433,951 as of December 31, 2003. Cash balances at March 31, 2004 were
$4,901,029, a decrease of $632,917 from the $5,533,946 at December 31, 2003.
The reduction in cash is attributable to the cash utilized for the
implementation of the new information technology system, the payment of
annual bonuses and the funding of annual insurance premiums.
The Company issued $1,800,000 in 4% promissory notes ("Benefoot Notes") in
connection with the acquisition of Benefoot. $1,000,000 of the Benefoot
Notes were paid on May 6, 2003 and the balance of $800,000 was paid on May
6, 2004. Interest expense with respect to the Benefoot Notes for the three
months ended March 31, 2004 and 2003 was $8,000 and $18,000, respectively.
In 2003 the Company's United Kingdom subsidiary ("UK Subsidiary") maintained
a line of credit with a local bank in the amount of 50,000 British pounds,
which was guaranteed by the Company pursuant to a standby Letter of Credit.
The Letter of Credit expired in February 2004 and the Company has thereafter
provided sufficient funds to the UK Subsidiary to meet its working capital
requirements.
The Company may finance acquisitions of other companies or product lines in
the future from existing cash balances, from borrowings from institutional
lenders, and/or public or private offerings of debt or equity securities.
As described above, the Company made the final payment under the Benefoot
Notes totaling $800,000 plus interest in May 2004. Additionally, the Company
is obligated to make certain contingent price payments based upon certain
defined net sales through May 6, 2004. As of March 31, 2004 the Company had
accrued $422,179 ($302,036 of which was accrued at December 31, 2003).
Additionally, the Company has paid or expects to pay approximately $500,000
in 2004 to complete its information technology system conversion.
In 2003, the Company did not have earnings after taxes and it did not have
earnings after taxes for the quarter ended March 31, 2004. To the extent
that the Company is unable to increase its profitability in the next two
years it will not have sufficient funds to repay its obligation under the
convertible notes which mature in 2006. The Company would have to refinance
or restructure such convertible notes at that time.
18
Repurchases of the Company's common stock may be made from time to time in
the open market at prevailing prices or in privately negotiated
transactions, subject to available resources. The Company may also finance
acquisitions of other companies or product lines in the future from existing
cash balances, from borrowings from institutional lenders, and/or the public
or private offerings of debt or equity securities. Management believes that
its existing cash balances will be adequate to meet the Company's cash needs
for the next 12 months.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
-----------------------------------------
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations." SFAS No. 141 applies prospectively to all
business combinations initiated after June 30, 2001, and all business
combinations accounted using the purchase method for which the date of
acquisition is July 1, 2001, or later. This statement requires all business
combinations to be accounted for using one method, the purchase method.
Under previously existed accounting rules, business combinations were
accounted for using one of two methods, pooling-of-interests method or the
purchase method. As of January 1, 2002 the Company adopted the provisions of
SFAS No. 141. Accordingly, the Company accounted for it's acquisitions of
Benefoot and Bi-Op (see Note 2) under the purchase method of accounting.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets. Under SFAS No. 142, goodwill
and some intangible assets will no longer be amortized, but rather reviewed
for impairment on a periodic basis. As of January 1, 2002 the Company
adopted the provisions of SFAS No. 142. Therefore, goodwill and certain
identifiable intangible assets with indefinite lives have not been amortized
and is being reviewed for impairment on an annual basis.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This standard requires entities to record the fair
value of a liability for an asset retirement obligation in the period in
which it is incurred. When the liability is initially recorded, the entity
capitalizes a cost by increasing the carrying amount of the related
long-lived asset. Over time the liability is accreted to its present value
each period and the capitalized cost is depreciated over the useful life of
the related asset. Upon settlement of the liability, an entity either
settles the obligation for its recorded amount or incurs a gain or loss upon
settlement. The standard is effective for fiscal years beginning after June
15, 2002. The adoption of SFAS No. 143 as of January 1, 2003 did not have a
material impact on the Company's consolidated financial statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145, among other things, rescinds SFAS No. 4, which
required all gains and losses from the extinguishment of debt to be
classified as an extraordinary item and amends SFAS No. 13 to require that
certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. The rescission of SFAS No. 4 is effective for
fiscal years beginning after May 15, 2002. The remainder of the statement is
generally effective for transactions occurring after May 15, 2002 with
earlier application encouraged. The adoption of SFAS No. 145 as of January
1, 2003 did not have a material impact on the Company's consolidated
financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or Disposal
Activities." This statement addresses the recognition, measurement and
reporting of costs that are associated with exit and disposal activities.
This statement includes the restructuring activities that are currently
accounted for pursuant to the guidance set forth in EITF 94-3, "Liability
Recognition for Certain Employee Termination Benefits and other Costs to
exit an Activity (including Certain Costs Incurred in a Restructuring),"
costs related to terminating a contract that is not a capital lease and
one-time benefit arrangements received by employees who are involuntarily
terminated- nullifying the guidance under EITF 94-3. Under SFAS No. 146 the
cost associated with an exit or disposal activity is recognized in the
periods in which it is incurred rather than at the date the company
committed to the exit plan. This statement is effective for exit or disposal
activities initiated after December 31, 2002 with earlier application
encouraged. The adoption of SFAS No. 146 as of January 1, 2003 did not have
a material effect on the Company's consolidated financial statements.
19
In November 2002, the FASB issued Financial Interpretation ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
that the guarantor recognize, at the inception of certain guarantees, a
liability for the fair value of the obligation undertaken in issuing such
guarantee. FIN 45 also requires additional disclosure requirements about the
guarantor's obligations under certain guarantees that it has issued. The
initial recognition and measurement provisions of this interpretation are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of this interpretation are
effective for financial statement periods ending after December 15, 2002.
The adoption of FIN 45 did not have a material effect on the Company's
consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation-Transitions and Disclosure- an amendment of FASB Statements No.
123." This amendment provides alternative methods of transition for
voluntary change to the fair value based method of accounting for
stock-based employee compensation. Additionally, prominent disclosures in
both annual and interim financial statements are required for the method of
accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company will continue to account for
it's stock based awards using the intrinsic value method and has disclosed
the required information under SFAS No. 148 in the notes to the consolidated
financial statements.
In December 2003, the FASB issued SFAS No. 132, as revised, Employers'
Disclosures about Pensions and Other Postretirement Benefits, ("Revised SFAS
132"), which requires additional disclosures about assets, obligation, cash
flows, and net periodic benefit cost of defined benefit pension plans and
other defined benefit postretirement plans. The Company adopted the required
revised disclosure provisions of Revised SFAS 132 as of December 31, 2003,
except for the disclosure of estimated future benefit payments, which the
Company is required to and will disclose as of December 31, 2004. The
adoption of SFAS No. 132 did not have a material impact on the Company's
financial statements.
20
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
----------------------------------------------
Information contained or incorporated by reference in the quarterly report
on Form 10-Q, in other SEC filings by the Company, in press releases, and in
presentations by the Company or its management, contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995 which can be identified by the use of forward-looking
terminology such as "believes," "expects," "plans," "intends," "estimates,"
"projects," "could," "may," "will," "should," or "anticipates" or the
negative thereof, other variations thereon or comparable terminology, or by
discussions of strategy. No assurance can be given that future results
covered by the forward-looking statements will be achieved. Such
forward-looking statements include, but are not limited to, those relating
to the Company's financial and operating prospects, future opportunities,
the Company's acquisition strategy and ability to integrate acquired
companies and assets, outlook of customers, and reception of new products,
technologies, and pricing. In addition, such forward looking statements
involve known and unknown risks, uncertainties, and other factors including
those described from time to time in the Company's Registration Statement on
Form S-3, most recent Form 10-K and 10-Q's and other Company filings with
the Securities and Exchange Commission which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results expressed or implied by such forward-looking statements.
Also, the Company's business could be materially adversely affected and the
trading price of the Company's common stock could decline if any such risks
and uncertainties develop into actual events. The Company undertakes no
obligation to publicly update or revise forward-looking statements to
reflect events or circumstances after the date of this Form 10-Q or to
reflect the occurrence of unanticipated events.
21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
In general, business enterprises can be exposed to market risks, including
fluctuation in commodity and raw materials prices, foreign currency exchange
rates, and interest rates that can adversely affect the cost and results of
operating, investing, and financing. In seeking to minimize the risks and/or
costs associated with such activities, the Company manages exposure to
changes in commodities and raw material prices, interest rates and foreign
currency exchange rates through its regular operating and financing
activities. The Company does not utilize financial instruments for trading
or other speculative purposes, nor does the Company utilize leveraged
financial instruments or other derivatives. The following discussion about
our market rate risk involves forward-looking statements. Actual results
could differ materially from those projected in the forward-looking
statements.
The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's short-term monetary investments. There is
a market rate risk for changes in interest rates earned on short-term money
market instruments. There is inherent rollover risk in the short-term money
market instruments as they mature and are renewed at current market rates.
The extent of this risk is not quantifiable or predictable because of the
variability of future interest rates and business financing requirements.
However, there is no risk of loss of principal in the short-term money
market instruments, only a risk related to a potential reduction in future
interest income. Derivative instruments are not presently used to adjust the
Company's interest rate risk profile.
The majority of the Company's business is denominated in United States
dollars. There are costs associated with the Company's operations in foreign
countries, primarily the United Kingdom and Canada, that require payments in
the local currency and payments received from customers for goods sold in
these countries are typically in the local currency. The Company partially
manages its foreign currency risk related to those payments by maintaining
operating accounts in these foreign countries and by having customers pay
the Company in those same currencies.
22
ITEM 4. CONTROLS AND PROCEDURES
-----------------------
As of the end of the period covered by this report, the
Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures. The Company's disclosure controls and
procedures are designed to provide reasonable assurance that the information
that the Company must disclose in reports filed under the Securities Exchange
Act of 1934, as amended, is communicated and processed in a timely manner.
Andrew H. Meyers, President and Chief Executive Officer, and Joseph P.
Ciavarella, Vice President and Chief Financial Officer, participated in this
evaluation.
Based on such evaluation, Messrs. Meyers and Ciavarella
concluded that, as of the date of such evaluation, the Company's disclosure
controls and procedures were effective. During the most recent fiscal quarter,
there have not been any significant changes in the Company's internal controls
over financial reporting or in other factors that could significantly affect
those controls.
23
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
31.1 Certification of Principal Executive Officer Pursuant to
Rule 13a-14(a) (17 CFR 240.13a-14(a)).
31.2 Certification of Principal Financial Officer Pursuant to
Rule 13a-14(a) (17 CFR 240.13a-14(a)).
32.1 Certification of Principal Executive Officer Pursuant to
Rule 13a-14(b) (17 CFR 240.13a-14(b)) and Section 1350
of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).
32.2 Certification of Principal Financial Officer Pursuant to
Rule 13a-14(b) (17 CFR 240.13a-14(b)) and Section 1350 of
Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350).
(b) In the quarter ended March 31, 2004, the Company filed
one Current Report on Form 8-K dated March 30, 2004,
Items 9 and 12.
24
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.
LANGER, INC.
Date: May 17, 2004 By: /s/ Andrew H. Meyers
-----------------------------
Andrew H. Meyers
President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Joseph P. Ciavarella
-----------------------------
Joseph P. Ciavarella
Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
25