LANGER INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

o 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 of incorporation or organization)		(I.R.S. employer identification number)

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 ý NO o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)

YES o NO ý

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 – 4,397,933 shares as of May 10, 2005.

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANGER, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	March 31, 2005			December 31, 2004
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	4,846,633		$	3,909,849
Accounts receivable, net of allowances for doubtful accounts and returns and allowances aggregating $489,579 and $447,657, respectively	6,278,443			7,055,505
Inventories, net	4,706,838			4,846,083
Prepaid expenses and other	1,827,234			1,387,800
Total current assets	17,659,148			17,199,237
Property and equipment, net	7,154,413			7,181,277
Identifiable intangible assets, net	9,183,681			9,342,898
Goodwill	13,089,151			13,321,151
Other assets	723,522			762,013
Total assets	$	47,809,915		$	47,806,576
Liabilities and Stockholders’ Equity
Current liabilities:
Secured promissory note payable	$	7,795,372		$	7,986,000
Promissory note payable	3,000,000			—
Obligation under Put Option	—			1,750,000
Accounts payable	1,269,110			1,139,953
Unearned revenue	627,783			670,513
Other current liabilities	4,331,352			4,265,345
Total current liabilities	17,023,617			15,811,811
Non current liabilities:
Long-term debt:
Convertible notes	14,589,000			14,589,000
Promissory note payable	—			2,737,000
Senior subordinated notes payable	4,879,588			4,821,498
Obligation under capital lease, excluding current installments	2,700,000			2,700,000
Unearned revenue	104,814			116,000
Accrued pension expense	94,445			94,445
Deferred income taxes payable	1,676,610			1,639,610
Other liabilities	86,794			82,519
Total liabilities	41,154,868			42,591,883
Commitments and contingencies (Notes 2 and 10)
Stockholders’ equity:
Preferred stock, $1.00 par value; authorized 250,000 shares; no shares issued	—			—
Common stock, $.02 par value; authorized 50,000,000 shares; issued 4,505,033 at each balance sheet date	90,101			90,101
Additional paid-in capital	14,441,541			14,441,541
Unearned stock compensation	(231,250		)	(277,083		)
Accumulated deficit	(7,374,060		)	(8,784,352		)
Accumulated other comprehensive loss	(155,828		)	(140,057		)
	6,770,504			5,330,150
Treasury stock at cost, 67,100 shares	(115,457		)	(115,457		)
Total stockholders’ equity	6,655,047			5,214,693
Total liabilities and stockholders’ equity	$	47,809,915		$	47,806,576

See accompanying notes to unaudited consolidated financial statements.

LANGER, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

	Three months ended March 31,
	2005		2004

Net sales	$	10,397,193	$	5,763,936
Cost of sales	5,502,060		3,790,586
Gross profit	4,895,133		1,973,350

General and administrative expenses	2,300,098		1,174,134
Selling expenses	1,938,543		807,689
Research and development expenses	130,303		—
Operating income (loss)	526,189		(8,473		)

LANGER, INC. AND SUBSIDIARIES
		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets As of March 31, 2005 (Unaudited) and December 31, 2004	3

	Unaudited Consolidated Statements of Operations Three month periods ended March 31, 2005 and 2004	4

	Unaudited Consolidated Statements of Stockholders’ Equity Three month period ended March 31, 2005	5

	Unaudited Consolidated Statements of Cash Flows Three month periods ended March 31, 2005 and 2004	6

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 6.	Exhibits	35

Signatures		36