10-Q 1 dectxt.txt NYER'S 10Q 12/31/01 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 December 31, 2001 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 February 13, 2002, there were 3,758,062 shares of common stock outstanding, par value $.0001 per share. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements: Consolidated Balance Sheets, December 31, 2001 and June 30, 2001 3-4 Consolidated Statements of Operations, Three Months Ended December 31, 2001 and December 31, 2000 5 Consolidated Statements of Operations, Six Months Ended December 31, 2001 and December 31, 2000 6 Consolidated Statements of Cash Flows, Six Months Ended December 31, 2001 and December 31, 2000 7-8 Selected Notes to Consolidated Financial Statements 9-10 Item 2. Management's Discussion and Analysis of Second Quarter 2001 Results 11-17 PART II - OTHER INFORMATION Item 3. Other Information 17 Signatures 18 FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31 June 30, 2001 2001 (Unaudited) Current assets: Cash and cash equivalents $ 607,319 $ 374,423 Investment in marketable securities 821,798 821,798 Accounts receivable, less allowance for doubtful accounts of $433,339 at December 2001 and $348,339 at June 30, 2001 4,176,726 4,447,290 Inventories, net 4,775,520 4,720,835 Prepaid expenses 261,564 284,631 Receivables from related parties 14,188 9,798 Total current assets 10,657,115 10,658,775 Property, plant and equipment, at cost: Land 92,800 92,800 Building 641,508 641,508 Leasehold improvements 761,949 743,619 Machinery and equipment 71,189 175,952 Transportation equipment 356,507 335,059 Office furniture, fixtures, and equipment 1,023,335 1,006,113 2,947,288 2,995,051 Less accumulated depreciation and amortization (1,652,180) (1,569,366) 1,295,108 1,425,685 Goodwill and other deferred assets, net of accumulated amortization of $629,271 and $583,723 at December 31, 2001 and June 30, 2001, respectively 396,909 292,457 Advances due from related companies 39,917 38,267 Non-current assets of discontinued operation 134,367 187,893 571,193 518,617 Total assets $12,523,416 $12,603,077 See accompanying notes to consolidated financial statements. FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY December 31, June 30, 2001 2001 (Unaudited) Current liabilities: Current portion of notes payable due related party $ 206,110 $ 206,110 Current portion of long-term debt 123,152 73,656 Accounts payable 3,498,210 4,029,420 Accrued payroll and related taxes 72,992 305,758 Accrued expenses and other liabilities 306,977 202,372 Total current liabilities 4,207,441 4,817,316 Notes payable due related party, net of current portion 181,805 241,805 Long-term debt, net of current portion 286,876 216,749 Minority interest 868,315 765,552 Deferred credit 105,340 154,420 Shareholders' equity: Class A preferred stock, par value $.0001, authorized, issued and outstanding: 2,000 shares 1 1 Class B preferred stock, series 1, par value $.0001, authorized: 2,500,000; issued and outstanding: 1,000 shares at December 31, 2001 and June 30, 2001 Common stock, par value $.0001 authorized: 10,000,000 shares; issued: 3,769,062 at December 31, 2001 and at June 30, 2001 377 377 Additional paid-in capital 17,691,946 17,691,946 Stock sale receivable - (115,500) Treasury stock (11,000 shares at December 31, 2001 and June 30, 2001) (52,249) (52,249) Accumulated deficit (10,766,436) (11,117,340) Total shareholders' equity 6,873,639 6,407,235 Total liabilities and shareholders' equity $12,523,416 $12,603,077 See accompanying notes to consolidated financial statements. FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended December 31, December 31, 2001 2000 Net sales $13,217,216 $11,032,054 Cost and expenses: Cost of goods sold 10,540,564 8,378,433 Selling and retail 1,670,291 1,470,316 Warehouse and delivery 197,035 208,524 Administrative 724,237 1,042,529 Impairment - 42,666 13,132,127 11,142,468 Operating income (loss) 85,089 (110,414) Other income (expense): Interest expense (5,496) (45,946) Interest income 10,202 42,282 Other 130,551 83,646 Total other income 135,257 79,982 Income (loss) before minority interest 220,346 (30,432) Minority interest (49,153) (71,100) Income (loss) from continuing operations before income 171,193 (101,532) taxes Provision for income taxes 13,000 20,000 Income (loss) from continuing operations after income taxes 158,193 (121,532) Discontinued operations: Loss from Nyer Nutritional Systems (10,724) (24,240) Net loss from discontinued operations (10,724) (24,240) Net Income (loss) $ 147,469 $ (145,772) Basic and diluted income (loss) per share: Continuing operations $ .04 $ (.03) Discontinued operations - (.01) Basic and diluted income (loss) per share $ .04 $ (.04) Weighted average common shares outstanding 3,757,103 3,742,189 See accompanying notes to consolidated financial statements. FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Six months ended December 31, December 31, 2001 2000 Net sales $25,797,862 $21,602,080 Cost and expenses: Cost of goods sold 20,460,518 16,900,895 Selling and retail 3,223,277 2,880,479 Warehouse and delivery 395,388 393,442 Administrative 1,384,796 1,682,727 Impairment - 42,666 25,463,979 21,900,209 Operating income (loss) 333,883 (298,129) Other income (expense): Interest expense (16,054) (58,810) Interest income 30,586 73,022 Other 152,650 202,410 Total other income 167,182 216,622 Income (loss) before minority interest 501,065 (81,507) Minority interest (102,763) (85,905) Income (loss) from continuing operations before income 398,302 (167,412) taxes Provision for income taxes 26,000 20,000 Income (loss) from continuing operations after income taxes 372,302 (187,412) Discontinued operations: Loss from Nyer Nutritional Systems (21,398) (142,402) Net loss from discontinued operations (21,398) (142,402) Net Income (loss) $ 350,904 $ (329,814) Basic and diluted income (loss) per share: Continuing operations $ .10 $ (.05) Discontinued operations (.01) (.04) Basic and diluted income (loss) per share $ .09 $ (.09) Weighted average common shares outstanding 3,761,104 3,752,779 See accompanying notes to consolidated financial statements. FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended December 31, December 31, 2001 2000 Cash flows from operating activities: Net income (loss) $ 350,904 $(329,814) Adjustments to reconcile net income (loss) to net cash used in operating activities: Impairment Loss - 42,666 Depreciation 200,319 158,862 Amortization 45,549 43,200 Loss on disposal of property, plant and equipment 6,279 Gain on sale of respiratory Division (77,001) Minority interest 102,763 85,905 Decrease in deferred credit (49,080) (35,501) Changes in certain working capital elements (424,815) 291,231 Net cash flows provided by operating activities 148,639 262,828 Cash flows from investing activities: Purchase of pharmacy assets (150,000) - Purchase of property, plant and equipment (67,319) (112,829) Proceeds from sale of division 150,000 - Proceeds from sale of marketable securities - 463,958 Net change in advances due from related companies (825) (2,269) Increase in other assets, net (22,722) (19,190) Net cash(used in) provided by investing activities (90,866) 329,670 Cash flows from financing activities: Loan repayment from stock sale receivable 115,500 - Proceeds from issuance of long-term debt 181,953 - Payments of long-term debt (62,330) (128,928) Net repayments of notes to related parties (60,000) (44,287) Net cash provided by (used in) financing activities 175,123 (173,215) Net increase in cash and cash equivalents 232,896 419,283 Cash and cash equivalents at beginning of period 374,423 384,554 Cash and cash equivalents at end of period $ 607,319 $ 803,837 See accompanying notes to consolidated financial statements. FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended December 31, December 31, 2001 2000 Changes in certain working capital elements: Accounts receivable, net $ 270,564 $ (286,364) Inventories (54,685) 155,485 Prepaid expenses 23,067 132,698 Receivables from related parties (4,390) (427) Accounts payable (531,210) 65,104 Accrued payroll and related taxes (232,766) 49,554 Accrued expenses and other liabilities 104,605 175,181 Net change $ (424,815) $ 291,231 Supplemental cash flow information: Cash paid during the first six months: Interest $ 11,329 $ 24,710 Income taxes $ 10,912 $ - FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated financial statements included herein have been prepared by the Company, without audit, 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 generally accepted accounting principals 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. Basic net income (loss) per share is computed using the weighted- average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common and dilutive potential common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and excludes dilutive potential common shares outstanding, as their effect is anti-dilutive. Basic and dilutive income per share is the same because all stock options were exercisable above the current market price as of December 31, 2001. 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, 2001. 2. Business Segments: The Company had three active business segments as of December 31, 2001 and 2000. 1) retail pharmacy drug store chain, (2) wholesale and retail sales of surgical and medical equipment and supplies, and (3) wholesale and retail distribution of equipment, supplies, and novelty items to emergency medical service, fire departments, and police departments. 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. Summary data for the six months ended December 31, 2001: Medical and EMT, Fire, Pharmacy Surgical Police Equip Chain Supplies and Supplies Corporate Consolidated Net Sales $18,940,460 $4,638,098 $2,219,304 $ - $25,797,862 Operating income (loss) 411,434 179,459 (88,521) (130,070) 372,302 Total assets 7,059,285 3,037,703 1,172,097 1,254,331 12,523,416 Capital Expenditures 47,512 12,446 6,836 525 67,319 continued FORM 10-Q NYER MEDICAL GROUP, INC 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 2. Business segments: continued, Summary data for the six months ended December 31, 2001: continued, Medical and EMT, Fire, Pharmacy Surgical Police Equip Chain Supplies and Supplies Corporate Consolidated Depreciation and amortization 131,451 82,679 29,701 2,037 245,868 Interest income (6,345) (10,648) - (13,593) (30,586) Interest expense 5,162 10,259 633 - 16,054 Summary data for the six months ended December 31, 2000: Medical and EMT, Fire, Pharmacy Surgical Police Equip Chain Supplies and Supplies Corporate Consolidated Net Sales $15,086,114 $4,166,641 $2,349,325 $ - $21,602,080 Operating income (loss) 277,201 3,234 (186,175) (392,389) (298,129) Total assets 6,054,423 2,921,379 1,681,280 1,977,749 12,634,831 Capital Expenditures 63,434 48,995 400 - 112,829 Depreciation and amortization 81,518 83,031 35,326 2,007 201,882 Interest income (9,877) (9,262) - (53,883) (73,022) Interest expense 8,795 17,256 32,759 - 58,810 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Results of Operations: The Company has changed its fiscal year end from December 31 to June 30, and accordingly, the following discussion provides information with respect to our results of operations, liquidity, and capital resources on a comparative basis for the six months ended December 31, 2001 as compared to the six months ended December 31, 2000 as well as for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. NET SALES. Total sales for the six months ended December 31, 2001 increased by 19.4% from December 31, 2000 to $25,797,862 from $21,602,080 in 2000. The Company had three active business segments for the six months ended December 31, 2001 and December 31, 2000: 1) retail pharmacy drug store chain (2) wholesale and retail sales of medical and surgical equipment and supplies and (3) wholesale and retail distribution of equipment, supplies, and novelty items to emergency medical service, fire departments and police departments. Business segments are determined by the management approach which analyzes results based on products or services offered for sale. The following table shows sales by business segments for the six months ended December 31, 2001 as compared to the same period in 2000: Business Segment 2001 2000 % increase (decrease) Pharmacy chain $18,940,460 $15,086,114 25.5% Medical and surgical supplies 4,638,098 4,166,641 11.3 EMT, fire, police equipment and supplies 2,219,304 2,349,325 (5.5) Total for business segments $25,797,862 $21,602,080 19.4% The pharmacy chain segment's sales increase of $3,854,346 was due to the purchase of an existing pharmacy and a continuing increase in volume on prescription drugs as a result of a continuing marketing campaign focused on assisted-living and home-based sectors, increased advertising and home delivery service. The medical and surgical supplies segment increased $471,457 in 2001, as compared to 2000, mainly due to increased sales at ADCO and Nyer Internet. ADCO has seen an increase in supplies and equipment sales due to a continuing marketing effort. Nyer Internet has increased the number of products available on-line which has aided its increase in sales. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Results of Operations: continued, The EMT, fire, police equipment and supplies segment had a decrease in sales of $130,021 in 2001 as compared to 2000 sales. The main reason for this decrease was due to less than anticipated sales as compared to the same same period last year. Also, Conway had a change in sales management in the last quarter of 2001. A replacement has been hired. We believe that this sales decline is short term. We are still working on increasing our margins to offset this decline in sales. The following table shows sales by business segments for the three months ended December 31, 2001 as compared to the same period in 2000: Three month ended December 31, Business Segment 2001 2000 % increase (decrease) Pharmacy chain $ 9,881,519 $ 7,889,706 25.2% Medical and surgical supplies 2,235,338 2,113,282 5.8 EMT, fire, police equipment and supplies 1,100,359 1,029,066 6.9 Total for business segments $13,217,216 $11,032,054 19.8% The pharmacy chain segment's sales increase and the medical and surgical supplies segment differences are as stated above. ADCO South had a slight decrease in sales due to less than anticipated equipment sales. The EMT, fire, police equipment and supplies segment had an increase of $71,293 for the three months ended in 2001 as compared to 2000 sales due to an increase in Anton's sales. Anton had more equipment sales than they had the previous two quarters. Conway had a slight decrease for the three months ended December 31, 2001 as compared to the same period in 2000. The reasons for the decreases are the same as stated above for the six months ended. GROSS PROFIT MARGINS. Our overall gross margins were 20.7% for the six months ended December 31, 2001 as compared 21.8% for the six months ended December 31, 2000. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Results of Operations: continued, GROSS PROFIT MARGINS: continued, The following is a table of gross margin percentages by business segments for the six months ended December 31, 2001 and 2000 and for the three months ended December 31, 2001 and 2000: Six months ended Three months ended December 31, December 31, Business Segment 2001 2000 2001 2000 Pharmacy chain 18.8% 19.1% 18.4% 20.3% Medical and surgical supplies 28.1 31.2 28.8 35.9 EMT, fire, police equipment and supplies 21.6 21.8 19.6 28.3 Total for business segments 20.7% 21.8% 20.3% 24.1% The pharmacy chain's gross margin decreased .3% for the first six months ended December 31, 2001 to 18.8% as compared 19.1% for the same period of 2000. The main reason for this decrease was due to lower insurance reimbursement on prescription drugs. Their margins also saw a decline for the three months ended December 31, 2001 to 18.4% as compared to 20.3% for the three months ended December 31, 2000. The main reason for this decrease was as stated above, lower insurance reimbursement on prescription drugs. The medical and surgical supplies segment's gross margin decreased from 31.2% for the six months ended 2000 to 28.1% for the six months ended December 31, 2001. This decrease is due to increased sales volume at ADCO Surgical Supply ("ADCO") which saw an increase in their equipment sales which generally have a lower gross profit margin and in December 2000, ADCO reduced its inventory reserve by $50,000. The decrease in margin for the three months ended December 31, 2001 of 3.1% as compared to three months ended December 31, 2000 are as stated above. The EMT, fire, police equipment and supplies segment experienced a slight decrease in its margins from 21.8% for the six months ended December 31, 2000 as compared 21.6% for the six months ended December 31, 2001. They also experienced a decrease in its margins from 28.3% for the three months ended December 31, 2000 as compared 19.6% for the three months ended December 31, 2001. Conway had a change in sales management in the last quarter of 2001. A replacement has been hired. We believe that this margin decline is short term. Anton and Conway are concentrating on increasing its gross profit margin and profits. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Results of Operations: continued, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Consolidated selling, general and administrative expenses were basically unchanged for the six months ended December 31, 2001, $5,003,461 as compared to $4,999,314 for the six months ended December 31, 2000. The following table shows the breakdown by business segments for the six months ended December 31, 2001 and 2000 and for the three months ended December 31, 2001 and 2000: Six months ended Three months ended December 31, December 31, Business Segment 2001 2000 2001 2000 Pharmacy chain $3,044,399 $2,609,858 $1,590,544 $1,366,624 Medical and surgical supplies 1,202,383 1,298,952 600,894 720,041 EMT, fire, police equipment and supplies 545,289 698,115 272,094 403,818 Corporate 211,390 392,389 128,031 273,552 Total for business segments $5,003,461 $4,999,314 $2,591,563 $2,764,035 The Pharmacy chain had an increase in its S,G&A expenses of $434,541. Its increase came mainly from increased labor wages and expenses associated with the increase in sales. The medical and surgical supplies segment's selling, general and administrative (S,G&A) expenses decreased $96,569. Most of this was the increase in accounts receivable reserve of $50,000 in December 2000. Their accounts receivable reserve was increased by $85,000 for the six months ended December 2001 ($75,000 of this expense was included against other income, not included in S,G&A, this expense was offset by the gain of the sale of the respiratory division. Also, respiratory salaries were down due to a therapist leaving to work for another company in anticipation of the sale of this division. The EMT, fire, police equipment and supplies segment experienced a decrease in its S,G&A expenses of approximately $152,826 for the six months ended December 31, 2001 as compared to the same period ended December 31, 2000. This decrease was mainly due to expenses directly related to sales and a write down of goodwill of $42,666 in 2000. Corporate saw a decrease of $180,999 in S,G&A expenses for the six months ended December 31, 2001 as compared to December 31, 2000. The main decrease came from a stock guarantee expense in December 2000 of $100,000 in connection with an anticipated acquisition. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Results of Operations: continued, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: continued, The pharmacy chain segment's sales increase and the medical and surgical supplies segment differences for three months ended December 31, 2001 as compared to December 31, 2000, are stated above. The EMT, fire, police equipment and supplies segment experienced a decrease in its S,G&A expenses of approximately $131,724 for the three months ended December 31, 2001 as compared to the same period ended December 31, 2000. This decrease was mainly due to expenses directly related to sales and a write down of goodwill of $42,666 in 2000. Corporate saw a decrease of $145,521 in S,G&A expenses for the three months ended December 31, 2001 as compared to December 31, 2000. The reasons are the same as stated above. CONTINUING OPERATIONS. We had a profit from continuing operations for the six months ended December 31, 2001 of $372,302 as compared to a loss of $187,412 for the six months ended December 31, 2000. The following table shows the breakdown by business segments for the six months ended December 31, 2001 and 2000 and for the three months ended December 31, 2001 and 2000: Six months ended Three months ended December 31, December 31, Business Segment 2001 2000 2001 2000 Pharmacy chain $ 411,434 $ 336,417 $ 196,277 $ 232,169 Medical and surgical supplies 179,459 1,899 118,016 40,231 EMT, fire, police equipment and supplies (88,521) (259,599) (67,153) (186,462) Corporate (130,070) (266,129) (88,947) (207,470) Total for business segments $ 372,302 $(187,412) $ 158,193 $ 121,532 The Pharmacy chain had an increase in its profits of $75,017 for six months ended December 31, 2001 as compared to the same period in 2000 due to increased sales volume. Their had a decrease in profits for the three months ended December 31, 2001 as compared to December 31, 2000 of $35,892 and this can be attributed to a lower gross profit margin. The medical and surgical supplies segment's showed a profit for the six months ended December 31, 2001 of $179,459 as compared to a $1,899 for the six months ended December 31, 2000. The two FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS CONTINUING OPERATIONS: continued, main reasons for this increase was the sale of their respiratory division and increased sales volume. Their profit increased $77,785 for the three months ended December 31, 2001 as compared to December 31, 2000 mainly due to the sales of their respiratory division. The EMT, fire, police equipment and supplies segment's loss was mainly due to decline in sales and margins. We are marketing new and existing accounts to offset this decline in sales and marketing. DISCONTINUED OPERATIONS. On October 25, 1999, the Board of Directors approved a plan for the disposal of its investment in Nyer Nutritional. Its results have been reported as discontinued operations for all periods presented. Nyer Nutritional incurred $21,398 in net costs for the six months ended December 31, 2001 as compared to $142,402 in net costs for the six months ended December 31, 2000. They incurred $10,724 in net costs for the three months ended December 31, 2001 as compared to $24,240 in net costs for the three months ended December 31, 2000. We have reported the assets to be disposed (primarily patents and fixed assets) as discontinued operations as of December 31, 2001. All equipment is listed for sale on our website. The Company settled litigation regarding the patents. The settlement approximates the net book value of the patents. Liquidity and Capital Resources Net cash provided by operating activities was $148,639 for the six months ended December 31, 2001 as compared to $262,828 for the six months ended December 31, 2000. The primary use of cash from operations was to fund operations for our nutritional, fire, police and rescue equipment and supplies, Internet and corporate operations. The net cash (used in) provided by investing activities was $(90,866) for the six months end December 31, 2001 as compared to cash provided of $329,670 for the six months ended December 31, 2000. The decrease was mainly due to the proceeds of $463,958 received from marketable securities in 2000. Net cash provided by (used in) financing activities was $175,123 for six months ended December 31, 2001 as compared to ($173,215) for the same period in 2000. The decrease is due to the issuance of long-term debt of $181,953 and the repayment of a stock sale receivable of $115,500 for the six months ended December 31, 2001 as compared to $0 for the six months ended December 31, 2000. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SECOND QUARTER RESULTS Liquidity and Capital Resources: continued, In December 2001, the Company's Chief Executive Officer paid $115,500, plus all accrued interest, for a stock sale receivable. This receivable was included in shareholders' equity section of the balance sheet. In December 2001, the Company sold its respiratory division. The Company feels it can offset the loss in sales through increased sales in its medical and surgical segment as well as in its retail pharmacy division. We anticipate our current cash resources to be adequate to fund our current operating needs. PART II Item 3: Other information The Company is still actively seeking to acquire medical related companies. FORM 10-Q NYER MEDICAL GROUP, INC. 000-20175 DECEMBER 31, 2001 NYER MEDICAL GROUP, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NYER MEDICAL GROUP, INC. Date: February 14, 2002 /s/ Karen L. Wright Karen L. Wright, Treasurer (Chief Financial Officer)