Andrew, here you go.
Sparta Surgical Corp. Announces Results for its Second Quarter And Six Months Period Sparta Surgical Corp. Announces Results for its Second Quarter And Six Months Period October 16, 1996, 4:36 PM EDT
PLEASANTON, Calif., Oct. 16 /PRNewswire/ -- Sparta Surgical Corporation, (Nasdaq: SPSG), today announced unaudited results for its second quarter and six months ended August 31, 1996 ("Six Months Fiscal 1997").
On December 7, 1995, the Company sold its medical product line, which consisted primarily of wound care gauze dressings, to Tecnol Medical Products, Inc. ("Tecnol") (Nasdaq: TCNL), which resulted in the Company's elimination of the medical product line from its business operations approximately three months before the year ended February 29, 1996 ("Fiscal 1996"). Therefore, the results for the two periods are not strictly comparable. Following this disposition of assets, the Company implemented a restructuring plan involving a reduction of personnel, the reorganization of its sales department, and the consolidation of operating facilities. As part of the ongoing restructuring program, Sparta intends to concentrate its efforts on achieving profitability and growth through selective strategic acquisitions.
Net sales for the Six Months Fiscal 1997 were $1,057,631, a decrease of $2,643,312 from net sales of $3,700,943 for the Six Months Fiscal 1996. The net sales decrease during the Six Months Fiscal 1997 as compared to the Six Months Fiscal 1996 is the result of a decrease of $2,221,529 in medical product sales which resulted from the disposition of the Company's medical product line in December 1995, a decrease of $62,763 in surgical product sales from $653,306 to $590,543 and a decrease of $359,020 in electrotherapy product sales from $826,108 to $467,088 primarily attributed to the completion in July 1995 of a one year, non-cancelable $500,000 contract with Henley Healthcare ("Henley") in which the Company provided Henley with its Spectrum Max-SD TENS unit. The Company is currently in negotiations to enter into a new contract with Henley.
Net loss for the Six Months Fiscal 1997 was $1,408,626 or $.35 per share. The loss is primarily due to the decrease in net sales and the corresponding decrease in gross profit coupled with a one time $695,712 settlement expense more fully described below and legal expenses in the approximate amount of $208,000 which were incurred in connection with various litigation proceedings. In addition, the Company increased its sales and marketing expenses in an effort to broaden its customer base and target new independent sales representatives and distributors for each of its product lines.
On August 6, 1996 the Company settled three related civil actions involving disputes between the Company; Thomas F. Reiner, the Company's Chairman, President and Chief Executive Officer; and Gerald S. Kramer, a former officer and Chairman of the Company's Board of Directors which concerned Mr. Kramer's termination as an officer and director, disputes regarding his employment agreement and various monetary obligations between the parties. Under the settlement, the Company paid to Mr. Kramer $262,500 and issued to him a promissory note in the amount of $62,500, payable over five years. In addition, the parties exchanged general releases and forgave all debts to each other which included obligations from Mr. Kramer to the Company in the amount of approximately $371,000. The Company's management believes that it would have ultimately prevailed in the lawsuit, but took the opportunity to settle the litigation before substantial additional legal fees and management time were expended.
Mr. Reiner commented, "We are pleased to resolve the litigation on favorable terms to Sparta. The cash portion of this settlement was, in effect, a buyout of Mr. Kramer's employment contract for approximately one year's compensation under that contract. It also brought an end to the uncertainty of the litigation, which hampered Sparta's previous efforts, in certain instances, to raise financing from various sources of capital."
Statements, either written or oral, which express the Company's expectation for the future with respect to financial performance or operating strategies can be identified as forward-looking statements. These statements are made to provide the public with management's assessment of the Company's business. Caution must be taken to consider these statements in light of a number of factors discussed in the Company's filings with the Securities and Exchange Commission. In the event such factors do not occur as management anticipates, actual results could differ materially from the expectations expressed in any forward-looking statements.
Sparta Surgical Corporation develops, manufactures and markets specialty surgical and non-invasive electrotherapy devices to the healthcare industry worldwide. Sparta's specialty surgical products, include critical care hospital disposables, microsurgical hand-held instruments and facial reconstructive plating systems for use in General, Ophthalmic, Ear, Nose, Throat, Plastic, and Oral Maxillofacial surgical procedures. In addition, Sparta offers a full line of patented and proprietary transcutaneous electrical nerve stimulation devices, supplies and accessories used to relieve chronic and acute pain for use by physicians, physical therapists and their patients.
SPARTA SURGICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Six Months Ended
August 31, August 31,
1996 1995 1996 1995
Net Sales(A) $472,678 $1,931,481 $1,057,631 $3,700,943
Net Income (Loss) (1,135,529) 17,945 (1,408,626) 43,467
Preferred Stock
Dividends (88,951) (31,381) (93,085) (38,345)
Net Income (Loss)
Applicable to Common
Shareholders $(1,224,480) $(13,436) $(1,501,711) $5,122
Weighted Average Number
of Primary Common
Shares Outstanding 4,489,039 3,665,307 4,314,586 3,502,826
Net Income (Loss)
Per Primary
Common Share $(.27) $ -- $ (.35) $ --
(A) Net sales adjusted to reflect the disposition of the medical product line were $708,117 and $1,479,414 for the three and six months ended August 31, 1995, respectively. Therefore, the results of these two periods are not strictly comparable. SOURCE Sparta Surgical Corp.
c PR Newswire. All rights reserved.
Additional sources of information
SEC Filings - From EDGAR Online
Tell Me More - From Infoseek
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