<PAGE> 1
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 000-23207
NEUTRAL POSTURE ERGONOMICS, INC.
(Exact name of small business issuer as specified in its charter)
TEXAS 74-2563656
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3904 N. TEXAS AVENUE
BRYAN, TEXAS 77803
(Address of principal executive offices) (Zip code)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (409) 778-0502
CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED
BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PAST 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 NO X
STATE THE NUMBERS OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON EQUITY, AS OF THE LAST PRACTICABLE DATE; NOVEMBER 10, 1997.
CLASS SHARES OUTSTANDING AS OF NOVEMBER 10, 1997
- ----------------------------- ------------------------------------------
COMMON STOCK, $0.01 PAR VALUE 3,200,000
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NEUTRAL POSTURE ERGONOMICS, INC.
Quarterly Report on Form 10-QSB
for the Quarter Ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets as of September 30, 1997 and June 30, 1997 . . . . . . . . . . . . . . . . 1
Condensed Statements of Income for the Three Months Ended September 30, 1997 and 1996 . . . . . . . 2
Condensed Statements of Cash Flows for the Three Months Ended September 30, 1997 and 1996 . . . . . 3
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Income . . . . . 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. Changes in Securities and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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NEUTRAL POSTURE ERGONOMICS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, JUNE 30,
1997 1997
------------ -----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents ................................................. $ 177,904 $ 294,014
Accounts receivable - net ................................................. 1,472,929 1,124,227
Inventories ............................................................... 566,723 507,577
Deferred Offering Costs ................................................... 325,369 --
Prepaid expenses and other ................................................ 150,637 156,947
----------- -----------
Total current assets .............................................. 2,693,562 2,082,765
Property and Equipment - Net ................................................... 1,441,057 1,434,939
Notes Receivable - shareholders ................................................ 118,175 118,175
Deposits and Other ............................................................. 81,375 62,162
----------- -----------
Total ............................................................. $ 4,334,169 $ 3,698,041
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt ......................................... $ 26,077 $ 26,077
Accounts payable .......................................................... 638,224 755,264
Accrued liabilities ....................................................... 845,199 563,135
Income taxes payable ...................................................... 61,724 47,706
Distributions payable to shareholders ..................................... -- 100,000
----------- -----------
Total current liabilities ......................................... 1,571,224 1,492,182
Long-Term Debt - Less current portion .......................................... 800,196 606,591
Shareholders' Equity:
Common stock: $.01 par value; 14,000,000 shares authorized; 2,300,000
shares issued and outstanding ......................................... 23,000 23,000
Additional paid-in capital ................................................ 425,345 382,000
Retained earnings ......................................................... 1,681,499 1,373,238
Accounts and notes receivable - shareholders .............................. (95,845) (95,845)
Deferred compensation - stock options granted ............................. (71,250) (83,125)
----------- -----------
Total shareholders' equity ........................................ 1,962,749 1,599,268
----------- -----------
Total ............................................................. $ 4,334,169 $ 3,698,041
=========== ===========
</TABLE>
See notes to condensed financial statements.
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NEUTRAL POSTURE ERGONOMICS, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net Sales .................................................................... $ 2,949,237 $ 2,969,648
Cost of Sales ................................................................ 1,791,611 1,848,978
----------- -----------
Gross Profit ................................................................. 1,157,626 1,120,670
Operating Expenses:
Selling ................................................................... 313,590 277,512
General and administrative ................................................ 505,824 570,913
----------- -----------
Total ................................................................ 819,414 848,425
----------- -----------
Operating Income ............................................................. 338,212 272,245
Other Income (Expense):
Interest expense .......................................................... (16,184) (41,728)
Interest income ........................................................... 252 1,097
Other ..................................................................... -- 4,796
----------- -----------
Total ................................................................ (15,932) (35,835)
----------- -----------
Income Before Income Taxes ................................................... 322,280 236,410
----------- -----------
Pro Forma Income Taxes (Note 3) ............................................ 118,827 87,115
=========== ===========
Pro Forma Net Income ......................................................... $ 203,453 $ 149,295
=========== ===========
Pro Forma Net Income Per Common Share ........................................ $ .08 $ .06
=========== ===========
Weighted Average Common and Common Equivalent Shares Outstanding ........... 2,500,000 2,500,000
=========== ===========
</TABLE>
See notes to condensed financial statements.
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NEUTRAL POSTURE ERGONOMICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
--------------------------
1997 1996
--------- ---------
<S> <C> <C>
Operating Activities:
Pro forma net income .................................................. $ 203,453 $ 149,295
Noncash items in net income:
Depreciation - property and equipment ............................. 44,862 36,340
Amortization of deferred compensation ............................. 11,875 --
Amortization of patent and licensing agreement .................... 6,304 --
Changes in operating working capital:
Accounts receivable ............................................... (348,702) (461,165)
Inventories ....................................................... (59,146) 22,099
Prepaid expenses and other ........................................ 6,310 (6,277)
Accounts payable .................................................. (117,040) 133,299
Accrued liabilities ............................................... 18,506 58,606
Income taxes payable .............................................. 14,018 1,315
Notes receivable - shareholders ................................... (100,000) --
Deposits and other ................................................ (25,517) (18,431)
--------- ---------
Pro forma net cash used for operating activities ............. (345,077) (84,919)
Pro forma income tax expense .......................................... 104,809 90,979
--------- ---------
Historical net cash from (used for) operating activities ..... (240,268) 6,060
--------- ---------
Investing Activities:
Additions to property and equipment ................................... (50,980) (87,053)
Proceeds from sale of property and equipment .......................... -- --
--------- ---------
Net cash used for investing activities ....................... (50,980) (87,053)
--------- ---------
Financing Activities:
Issuance of debt ...................................................... 200,000 259,483
Payments on debt ...................................................... (6,395) (5,158)
Capital contribution by shareholders .................................. 43,345 --
Stock offering costs .................................................. (61,812) --
--------- ---------
Net cash from financing activities ........................... 175,138 254,325
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents ........................... (116,110) 173,332
Cash and Cash Equivalents:
Beginning of period ................................................... 294,014 39,623
--------- ---------
End of period ......................................................... $ 177,904 $ 212,955
========= =========
</TABLE>
See notes to condensed financial statements.
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NEUTRAL POSTURE ERGONOMICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL STATEMENTS
The condensed interim financial statements included herein have
been prepared by Neutral Posture Ergonomics, Inc. ("Neutral Posture" or the
"Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). The financial statements
reflect adjustments of a normal recurring nature which are, in the opinion of
management, necessary to present fairly such information. Although the Company
believes that the disclosures are adequate to make the interim information
presented not misleading, certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. These
interim financial statements should be read in conjunction with the financial
statements and the notes thereto, for the year ended June 30, 1997 included in
the Company's Registration Statement on Form SB-1, as amended. Quarterly
operating results may vary significantly and are not necessarily indicative of
the results for the full year or any future period.
2. INVENTORIES
Inventories consist primarily of raw materials and are stated at
the lower of cost (on the first-in, first-out method) or market.
3. PRO FORMA INCOME TAXES
Effective April 1, 1996, the Company elected taxation status as an
S corporation under the Internal Revenue Code, with profits and losses
reportable by the shareholders on their individual income tax returns. Pro forma
income taxes represent the applicable pro forma adjustments for federal and
state income taxes as if the Company had not been treated as an S Corporation in
the three month periods ended September 30, 1997 and 1996. Upon completion of
the public offering as described in note 4 below, the Company terminated its
status as an S corporation and is subject to such income taxes.
4. SUBSEQUENT EVENTS
On October 9, 1997, the Company declared a cash dividend to its
shareholders of record on that date in the amount of $.0587 per share, for a
total distribution of $135,000, to provide for those shareholders' estimated
federal income tax obligations attributable to the Company's earnings for the
period from July 1, 1997 through the Termination Date. The cash dividend was
paid on October 14, 1997 from earnings of the Company.
On October 21, 1997, the Company completed an initial public
offering of common stock and the private placement of common stock warrants.
Proceeds of the offering, less underwriter's commissions and fees and other
offering expenses were approximately $4.5 million for the 900,000 new common
shares issued by the company. Selling shareholders sold 434,000 common shares
for which the Company received no benefit. The Company intends to use the net
proceeds from the offering (i) to develop, manufacture and market
computERGO(TM), (ii) to seek to obtain ISO 9000 certification, (iii) to enhance
the Company's core products and to develop additional ergonomic products, (iv)
to add engineering and marketing resources, (v) to repay outstanding bank
indebtedness, and (vi) for working capital.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF INCOME
GENERAL. The Company generates revenue through sales of its products to
corporate customers and retailers through independent sales
representatives, who generally are paid a commission for each unit sold.
These independent sales representatives channel sales through dealers
located throughout the United States who acquire the products from the
Company at a discount from suggested retail and then resell the products to
the ultimate customers. These dealers typically provide end-users a range
of "value-added" services that may include installation, delivery, site
planning and warranty repairs.
Because the Company is utilizing what it believes are "value-added"
dealers, the Company has been able to increase sales of higher priced
models. The Company believes that those end-users reached through such
higher quality dealers generally prefer, in addition to the value-added
services of such dealers, its higher-priced models inasmuch as the Company
believes the purchasing decisions of such end-users are not focused solely
on price but also on other factors.
RESULTS OF OPERATIONS. The following table sets forth the percentage
relationship to net sales of certain items in the Company's statements of
income for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 60.7 62.3
--------------- --------------
Gross profit 39.3 37.7
Selling, general and administrative expenses 27.8 28.5
--------------- --------------
Operating income 11.5 9.2
=============== ==============
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
Net Sales. Net sales for the three months ended September 30, 1997
remained flat at approximately $3.0 million as compared to the three months
ended September 30, 1996. The number of units sold decreased approximately
12%, but was offset by an increase in average selling price due to the
Company's strategy of shifting the product mix of sales to higher priced
models sold to or through dealers and a reduction in sales to a large lower
margin customer. The decrease in unit sales is primarily a result of the
transition from selling directly to end-users to selling primarily to or
through dealers.
Gross Profit. Gross profit for the three months ended September 30,
1997 was $1.2 million, or approximately 39.3% of net sales as compared to
$1.1 million, or 37.7% of net sales for the similar three month period in
1996. Although the cost per chair remained relatively flat, these increases
in gross profit were the result of the shift in strategy to sales of higher
priced models as discussed in "Net Sales" above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $819,414 for the three months ended September
30, 1997, decreasing slightly from $848,425 for the three months ended
September 30, 1996. The decrease is primarily attributable to reduction in
legal fees partially offset by increases in advertising costs. As a
percentage of sales, the Company's selling, general and administrative
expenses decreased to 27.8% for the three month period in 1997 as compared
to 28.5% for the similar three month period in 1996.
Operating Income. As a result of the foregoing, operating income for
the three month period ended September 30, 1997 was $338,212, increasing
$65,967, or approximately 24%, from $272,245 for the three months ended
September 30, 1996. As a percentage of sales, operating income increased to
11.5% for the three month period in 1997 from 9.2% from the similar period
in 1996.
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LIQUIDITY AND CAPITAL RESOURCES. In October, 1997, the Company
completed an initial public offering of common stock. Proceeds of the
offering, less underwriter's commissions and fees and other offering
expenses were approximately $4.5 million. The Company intends to use the
net proceeds from the offering (i) to develop, manufacture and market
computERGO(TM), (ii) to seek to obtain ISO 9000 certification, (iii) to
enhance the Company's core products and to develop additional ergonomic
products, (iv) to add engineering and marketing resources, (v) to repay
outstanding bank indebtedness, and (vi) for working capital.
The Company's other sources of capital are net cash provided by
operating activities and availability of funds under the Revolving Credit
Facility discussed below. The Company's primary capital requirements,
excluding items covered above, are to fund component parts inventory,
receivables, research and development activities, and product improvements.
The Company currently maintains a $2.0 million Revolving Credit
Facility. The amount available under the Revolving Credit Facility is
determined based on a percentage of eligible receivables. At September 30,
1997, the amount outstanding under this facility was $200,000. The Company
also maintains a Term Facility in the amount of $500,000 to fund equipment
and mold purchases. No amounts were borrowed under this facility. The
credit facilities contain restrictions and financial covenants relating to
various financial ratios, including net worth and levels of debt compared
to net worth. As of September 30, 1997, the Company was in compliance with
such restrictions and covenants.
Cash used for operating activities totaled $345,077 (before pro forma
income taxes) for the three months ended September 30, 1997, as compared to
cash used for operating activities of $84,919 for the three months ended
September 30, 1996. The increase in the amount of cash used for operating
activities was primarily the result of changes in working capital primarily
related to decreases in accounts payable and increases in receivables,
partially offset by increases in net income.
Cash used in investing activities totaled $50,980 and $87,053 for the
three months ended September 30, 1997 and 1996, respectively, and was
primarily comprised of miscellaneous capital expenditures. During the
remainder of fiscal year 1998, the Company expects to continue to make
capital expenditures in connection with manufacturing equipment, office and
computer equipment and other items as outlined above related to the initial
public offering.
Financing activities provided funds totaling $175,138 and $254,325 for
the three months ended September 30, 1997 and 1996, respectively. The funds
provided for both periods were primarily generated from borrowings under
the credit facilities in place and were used to fund interim working
capital needs and approximately $62,000 of offering cost related to the
initial public offering.
In October 1997, prior to consummation of the initial public offering,
the Company declared and paid a cash dividend totaling $135,000 to its
existing shareholders. This cash dividend is an amount to cover the present
shareholders' estimated federal and state income tax obligations
attributable to the Companys' Subchapter S earnings for the period from
July 1, 1997 through consummation of the initial public offering. The
Company has no intention of declaring or paying any other dividend to its
shareholders after the initial public offering is completed.
The Company entered into an agreement with a third party early in 1997
to design and produce injection molds to be utilized in the production
process for approximately $400,000. The Company had paid approximately
$150,000 through September 30, 1997 and expects to pay the remaining
$250,000 upon completion of these molds in November 1997.
The Company believes that cash flow from operations, together with the
net proceeds from the public offering and its unused capacity under the
Revolving Credit Facility should be sufficient to fund its anticipated
operating needs, and capital expenditures through fiscal year 1998.
However, because the Company's future operating
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results will depend on a number of factors, including the demand for the
Company's products, the level of competition and general economic
conditions and other factors beyond the Company's control, there can be no
assurance that the Company's capital resources will be sufficient to fund
the Company's operations beyond such date.
CAUTIONARY STATEMENT. With the exception of historical information, the
matters discussed under "General" "Results of Operations" and "Liquidity
and Capital Resources" contain forward-looking statements. There are
certain important factors which could cause results to differ materially
from those anticipated by some of the forward-looking statements. Some of
the important factors which could cause actual results to differ materially
from those in the forward-looking statements include, among other things,
changes from anticipated levels of sales, whether due to future national or
regional economic and competitive conditions, changes in relationships with
customers including, but not limited to, the Company's relationship with
its significant customers, customer acceptance of existing and new
products, pricing pressures due to excess capacity, raw material cost
increases, change of tax rates, change of interest rates, declining
conditions in the industry, validity of patents, availability of key
component parts, casualty to or other disruption of the Company's
production facility and equipment, delays and disruptions in the shipment
of the Company's products and raw materials and other factors that
generally affect businesses.
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PART II
ITEM 1. LEGAL PROCEEDINGS
This information has been previously reported on pages 27 and 28 of the
Company's Registration Statement on Form SB-1 (the "Registration
Statement"), File No. 333-33675.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) This information has been previously reported on pages 35
through 37 of the Registration Statement.
(b) Not applicable.
(c) This information has been previously reported on pages 38
and 39 of the Registration Statement.
(d) (1) The Company filed the Registration Statement, which
was declared effective by the Securities and
Exchange Commission on October 16, 1997.
(2) The offering pursuant to the Registration Statement
commenced on October 20, 1997.
(3) (i) The offering has terminated but did not do so
before the sale of all securities registered
pursuant to the Registration Statement.
(ii) The managing underwriter of the offering was
Huberman Financial, Inc.
(iii) Pursuant to the Registration Statement, the Company
registered its Common Stock.
(iv) (1) Pursuant to the Registration Statement, the
Company registered 900,000 shares of Common
Stock, and the selling shareholders registered
434,000 shares of Common Stock.
(2) The aggregate price of the offering amount
registered was $6.00 per share, for a total of
$8,004,000, of which $5,400,000 was allocated
to the Company and $2,604,000 was allocated to
the selling shareholders.
(3) A total of 1,334,000 shares have been sold to
date, of which 900,000 were offered by the
Company and 434,000 were offered by the selling
shareholders.
(4) The aggregate offering price of the amount sold
to date was $6.00 per share, for a total of
$8,004,000, of which $5,400,000 was allocated
to the Company and $2,604,000 was allocated to
the selling shareholders.
(v) On or prior to September 30, 1997, the ending
date of the reporting period, the Company
incurred $ 325,369 of total expenses in
connection with the offering as follows:
(1) $0 in underwriting discounts and commissions;
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(2) $2,942.72 for Securities and Exchange
Commission Registration Fee;
(3) $1,471.10 for NASD filing fee;
(4) $22,000.00 for Nasdaq National Market Listing
Fee (this amount is a reasonable estimate for
the amount of expense incurred);
(5) $15,000 for printing expenses (this amount is a
reasonable estimate for the amount of expense
incurred:
(6) $130,000 for accounting fees and expenses (this
amount is a reasonable estimate for the amount
of expenses incurred);
(7) $140,000 for legal fees and expenses (this
amount is a reasonable estimate for the amount
of expense incurred);
(8) $5,000.00 for fees of transfer agent and
registrar (this amount is a reasonable estimate
for the amount of expense incurred); and
(9) $8,955.18 for miscellaneous expenses (this
amount is a reasonable estimate for the amount
of expense incurred).
None of such payments were direct or indirect
payments to directors, officers, general
partners of the issuer or their associates; to
persons owning 10% or more of any class of
equity securities of the issuer; and to
affiliates of the issuer. All of such expenses
were direct or indirect payments to others.
(vi) The net offering proceeds to the Company after
deducting total expenses in clause (v) above were
approximately $4,568,000. (This amount is a
reasonable estimate of the amount of net offering
proceeds.)
(vii) On or prior to September 30, 1997, the ending date
of the reporting period, the Company did not use
the net offering proceeds because such net offering
proceeds had not been received during such period.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 11, 1997, the shareholders of the Company agreed pursuant to a
unanimous consent to (i) approve and authorize the Amended and Restated 1996
Nonqualified Stock Option Plan and (ii) authorize, approve and adopt the Amended
and Restated Articles of Incorporation. Seven votes were cast in favor of both
of the resolutions, no votes were cast against or withheld, and there were no
abstentions or broker non-votes.
On August 12, 1997, the shareholders of the Company agreed pursuant to a
unanimous consent to elect the following persons as directors of the Company
until his or her successor is elected and qualified: Jerome Congleton, Ronald
Jones, Cynthia Pladziewicz and James Thompson. The term of office of each of the
following directors continued after the meeting: Rebecca Boenigk and David
Campbell. Each of the following received the following votes:
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<PAGE> 12
<TABLE>
<CAPTION>
Person Votes For Votes Against Votes Withheld Abstentions Broker Non-Votes
<S> <C> <C> <C> <C> <C>
Jerome Congleton 7 0 0 0 0
Ronald Jones 7 0 0 0 0
Cynthia Pladziewicz 7 0 0 0 0
James Thompson 7 0 0 0 0
</TABLE>
On September 22, 1997, the shareholders of the Company agreed
pursuant to a unanimous consent to (i) authorize and approve the Neutral Posture
Ergonomics, Inc. 1997 Omnibus Securities Plan and (ii) authorize, adopt and
approve the Amended and Restated Bylaws of the Company. Seven votes were cast in
favor of both of the resolutions, no votes were cast against or withheld, and
there were no abstentions or broker non-votes.
On October 9, 1997, the shareholders of the Company agreed pursuant
to a unanimous consent to authorize and approve the amendment and restatement of
the Neutral Posture Ergonomics, Inc. Amended and Restated 1996 Nonqualified
Stock Option Plan. Seven votes were cast in favor of the resolution, no votes
were cast against or withheld, and there were no abstentions or broker
non-votes.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
<S> <C>
3.1 - Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 2.1 to the
Registration Statement and incorporated by reference herein
3.2 - Amended and Restated Bylaws of the Company, filed as Exhibit 2.2 to the Registration Statement and
incorporated by reference herein
4.1 - Specimen Common Stock Certificate, filed as Exhibit 3.1 to the Registration Statement and
incorporated by reference herein
10.1 - Employment Agreement, dated as of July 1, 1997 between the Company and Rebecca E. Boenigk, filed
as Exhibit 6.1 to the Registration Statement and incorporated by reference herein
10.2 - Employment Agreement, dated as of July 1, 1997, between the Company and David W. Campbell, filed
as Exhibit 6.2 to the Registration Statement and incorporated by reference herein
10.3 - Employment Agreement, dated as of July 1, 1997, between the Company and David W. Ebner, filed as
Exhibit 6.3 to the Registration Statement and incorporated by reference herein
10.4 - Employment Agreement, dated as of July 1, 1997, between the Company and Gregory A. Katt, filed as
Exhibit 6.4 to the Registration Statement and incorporated by reference herein
10.5 - Consulting Agreement, dated as of July 1, 1997, between the Company and Dr. Jerome Congleton,
filed as Exhibit 6.5 to the Registration Statement and incorporated by reference herein
10.6 - Letter Agreement, dated as of December 20, 1996, between the Company and Shepherd Products, Inc.
filed as Exhibit 6.6 to the Registration Statement and incorporated by reference herein
10.7 - Amendment to Letter Agreement, dated as of June 17, 1997 between the Company and Shepherd
Products, Inc., filed as Exhibit 6.7 to the Registration Statement and incorporated by reference
herein
</TABLE>
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<TABLE>
<S> <C>
10.8 - Agreement, dated as of February 21, 1995, between the Company and the General Services
Administration, filed as Exhibit 6.8 to the Registration Statement and incorporated by reference
herein
10.9 - Trademark License, dated as of January 12, 1997, between the Company and Relax the Back
Franchising Company, filed as Exhibit 6.9 to the Registration Statement and incorporated by
reference herein
10.10 - Promissory Note, dated as of April 30, 1997, issued by David W. Campbell in favor of the Company,
filed as Exhibit 6.10 to the Registration Statement and incorporated by reference herein
10.11 - Promissory Note, dated as of June 30, 1996, issued by David W. Campbell in favor of the Company,
filed as Exhibit 6.11 to the Registration Statement and incorporated by reference herein
10.12 - Promissory Note, dated as of June 30, 1996, issued by David W. Ebner in favor of the Company,
filed as Exhibit 6.12 to the Registration Statement and incorporated by reference herein
10.13 - Loan Agreement, dated as of December 30, 1996, between the Company and Comerica Bank-Texas, filed
as Exhibit 6.13 to the Registration Statement and incorporated by reference herein
10.14 - Amendment to Secured Loan Agreement, dated as of August 12, 1997, between the Company and Comerica
Bank-Texas, filed as Exhibit 6.14 to the Registration Statement and incorporated by reference
herein
10.15 - Split Dollar Insurance Agreement, dated as of April 28, 1997, between the Company and Rebecca E.
Boenigk, filed as Exhibit 6.15 to the Registration Statement and incorporated by reference herein
10.16 - Life Insurance Agreement, dated as of February 20, 1997, between the Company and David W.
Campbell, filed as Exhibit 6.16 to the Registration Statement and incorporated by reference herein
10.17 - Split Dollar Insurance Agreement, dated as of June 26, 1995, between the Company and Jaye E.
Congleton, filed as Exhibit 6.17 to the Registration Statement and incorporated by reference herein
10.18 - Split Dollar Insurance Agreement, dated as of January 21, 1997, between the Company and David W.
Ebner, filed as Exhibit 6.18 to the Registration Statement and incorporated by reference herein
10.19 - Key Man Insurance Agreement, dated as of April 28, 1997, between the Company and Rebecca Boenigk,
filed as Exhibit 6.19 to the Registration Statement and incorporated by reference herein
10.20 - Key Man Insurance Agreement, dated as of February 20, 1997, between the Company and David W.
Campbell, filed as Exhibit 6.20 to the Registration Statement and incorporated by reference herein
10.21 - Key Man Insurance Agreement, dated as of March 3, 1997, between the Company and Dr. Jerome J.
Congleton, filed as Exhibit 6.21 to the Registration Statement and incorporated by reference herein
10.22 - Neutral Posture Ergonomics, Inc. Amended and Restated 1996 Nonqualified Stock Option Plan, dated
as of October 9, 1997, filed as Exhibit 6.22 to the Registration Statement and incorporated by
reference herein
10.23 - Neutral Posture Ergonomics, Inc. 1997 Omnibus Securities Plan, dated as of July 1, 1997, filed as
Exhibit 6.23 to the Registration Statement and incorporated by reference here
10.24 - Form of Warrant Agreement, dated as of October , 1997, between the Company and
Underwriter, filed as Exhibit 6.24 to the Registration Statement and incorporated by reference
herein
10.25 - Agreement, dated as of March 5, 1997, between the Company and Jerome J. Congleton, filed as
Exhibit 6.25 to the Registration Statement and incorporated by reference herein
10.26 - Royalty Agreement, dated as of July 1, 1997, between the Company and Jerome J. Congleton, filed as
Exhibit 6.26 to the Registration Statement and incorporated by reference herein
10.27 - Assignment, dated as of August 27, 1997, executed by the Company, filed as Exhibit 6.27 to the
Registration Statement and incorporated by reference herein
10.28 - Assignment, dated as of September 15, 1997, between the Company and Texas A&M University System,
filed as Exhibit 6.28 to the Registration Statement and incorporated by reference herein
10.29 - Assignment, dated as of August 27, 1997, executed by Jerome J. Congleton, filed as Exhibit 6.29 to
the Registration Statement and incorporated by reference herein
</TABLE>
-11-
<PAGE> 14
<TABLE>
<S> <C>
10.30 - Loan Agreement, dated as of April 30,1996, between the Company and Commerce National Bank, filed
as Exhibit 6.30 to the Registration Statement and incorporated by reference herein
10.31 - Loan Agreement, dated as of April 30, 1996, between the Company and Commerce National Bank, filed
as Exhibit 6.31 to the Registration Statement and incorporated by reference herein
10.32 - First Amendment to Loan Agreement, dated as of October 10, 1997, between the Company and Compass
Bank, filed as Exhibit 6.32 to the Registration Statement and incorporated by reference herein
10.33 - Second Amendment to Loan Agreement, dated as of October 14, 1997, between the Company and Comerica
Bank-Texas, filed as Exhibit 6.33 to the Registration Statement and incorporated by reference
herein
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report is filed
-12-
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEUTRAL POSTURE ERGONOMICS, INC.
Date: November 14, 1997 By: /s/REBECCA E BOENIGK
-----------------------------------------
Rebecca E. Boenigk
Chairman of the Board
and Chief Executive Officer
Date: November 14, 1997 By: /s/GREGORY A. KATT
-----------------------------------------
Gregory A. Katt
Vice President and Chief Financial Officer
(Also Principal Accounting Officer)
-13-
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 - Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 2.1 to the
Registration Statement and incorporated by reference herein
3.2 - Amended and Restated Bylaws of the Company, filed as Exhibit 2.2 to the Registration Statement and
incorporated by reference herein
4.1 - Specimen Common Stock Certificate, filed as Exhibit 3.1 to the Registration Statement and
incorporated by reference herein
10.1 - Employment Agreement, dated as of July 1, 1997 between the Company and Rebecca E. Boenigk, filed
as Exhibit 6.1 to the Registration Statement and incorporated by reference herein
10.2 - Employment Agreement, dated as of July 1, 1997, between the Company and David W. Campbell, filed
as Exhibit 6.2 to the Registration Statement and incorporated by reference herein
10.3 - Employment Agreement, dated as of July 1, 1997, between the Company and David W. Ebner, filed as
Exhibit 6.3 to the Registration Statement and incorporated by reference herein
10.4 - Employment Agreement, dated as of July 1, 1997, between the Company and Gregory A. Katt, filed as
Exhibit 6.4 to the Registration Statement and incorporated by reference herein
10.5 - Consulting Agreement, dated as of July 1, 1997, between the Company and Dr. Jerome Congleton,
filed as Exhibit 6.5 to the Registration Statement and incorporated by reference herein
10.6 - Letter Agreement, dated as of December 20, 1996, between the Company and Shepherd Products, Inc.
filed as Exhibit 6.6 to the Registration Statement and incorporated by reference herein
10.7 - Amendment to Letter Agreement, dated as of June 17, 1997 between the Company and Shepherd
Products, Inc., filed as Exhibit 6.7 to the Registration Statement and incorporated by reference
herein
</TABLE>
<PAGE> 17
<TABLE>
<S> <C>
10.8 - Agreement, dated as of February 21, 1995, between the Company and the General Services
Administration, filed as Exhibit 6.8 to the Registration Statement and incorporated by reference
herein
10.9 - Trademark License, dated as of January 12, 1997, between the Company and Relax the Back
Franchising Company, filed as Exhibit 6.9 to the Registration Statement and incorporated by
reference herein
10.10 - Promissory Note, dated as of April 30, 1997, issued by David W. Campbell in favor of the Company,
filed as Exhibit 6.10 to the Registration Statement and incorporated by reference herein
10.11 - Promissory Note, dated as of June 30, 1996, issued by David W. Campbell in favor of the Company,
filed as Exhibit 6.11 to the Registration Statement and incorporated by reference herein
10.12 - Promissory Note, dated as of June 30, 1996, issued by David W. Ebner in favor of the Company,
filed as Exhibit 6.12 to the Registration Statement and incorporated by reference herein
10.13 - Loan Agreement, dated as of December 30, 1996, between the Company and Comerica Bank-Texas, filed
as Exhibit 6.13 to the Registration Statement and incorporated by reference herein
10.14 - Amendment to Secured Loan Agreement, dated as of August 12, 1997, between the Company and Comerica
Bank-Texas, filed as Exhibit 6.14 to the Registration Statement and incorporated by reference
herein
10.15 - Split Dollar Insurance Agreement, dated as of April 28, 1997, between the Company and Rebecca E.
Boenigk, filed as Exhibit 6.15 to the Registration Statement and incorporated by reference herein
10.16 - Life Insurance Agreement, dated as of February 20, 1997, between the Company and David W.
Campbell, filed as Exhibit 6.16 to the Registration Statement and incorporated by reference herein
10.17 - Split Dollar Insurance Agreement, dated as of June 26, 1995, between the Company and Jaye E.
Congleton, filed as Exhibit 6.17 to the Registration Statement and incorporated by reference herein
10.18 - Split Dollar Insurance Agreement, dated as of January 21, 1997, between the Company and David W.
Ebner, filed as Exhibit 6.18 to the Registration Statement and incorporated by reference herein
10.19 - Key Man Insurance Agreement, dated as of April 28, 1997, between the Company and Rebecca Boenigk,
filed as Exhibit 6.19 to the Registration Statement and incorporated by reference herein
10.20 - Key Man Insurance Agreement, dated as of February 20, 1997, between the Company and David W.
Campbell, filed as Exhibit 6.20 to the Registration Statement and incorporated by reference herein
10.21 - Key Man Insurance Agreement, dated as of March 3, 1997, between the Company and Dr. Jerome J.
Congleton, filed as Exhibit 6.21 to the Registration Statement and incorporated by reference herein
10.22 - Neutral Posture Ergonomics, Inc. Amended and Restated 1996 Nonqualified Stock Option Plan, dated
as of October 9, 1997, filed as Exhibit 6.22 to the Registration Statement and incorporated by
reference herein
10.23 - Neutral Posture Ergonomics, Inc. 1997 Omnibus Securities Plan, dated as of July 1, 1997, filed as
Exhibit 6.23 to the Registration Statement and incorporated by reference here
10.24 - Form of Warrant Agreement, dated as of October , 1997, between the Company and Underwriter, filed as
Exhibit 6.24 to the Registration Statement and incorporated by reference herein
10.25 - Agreement, dated as of March 5, 1997, between the Company and Jerome J. Congleton, filed as
Exhibit 6.25 to the Registration Statement and incorporated by reference herein
10.26 - Royalty Agreement, dated as of July 1, 1997, between the Company and Jerome J. Congleton, filed as
Exhibit 6.26 to the Registration Statement and incorporated by reference herein
10.27 - Assignment, dated as of August 27, 1997, executed by the Company, filed as Exhibit 6.27 to the
Registration Statement and incorporated by reference herein
10.28 - Assignment, dated as of September 15, 1997, between the Company and Texas A&M University System,
filed as Exhibit 6.28 to the Registration Statement and incorporated by reference herein
10.29 - Assignment, dated as of August 27, 1997, executed by Jerome J. Congleton, filed as Exhibit 6.29 to
the Registration Statement and incorporated by reference herein
</TABLE>
<PAGE> 18
<TABLE>
<S> <C>
10.30 - Loan Agreement, dated as of April 30,1996, between the Company and Commerce National Bank, filed
as Exhibit 6.30 to the Registration Statement and incorporated by reference herein
10.31 - Loan Agreement, dated as of April 30, 1996, between the Company and Commerce National Bank, filed
as Exhibit 6.31 to the Registration Statement and incorporated by reference herein
10.32 - First Amendment to Loan Agreement, dated as of October 10, 1997, between the Company and Compass
Bank, filed as Exhibit 6.32 to the Registration Statement and incorporated by reference herein
10.33 - Second Amendment to Loan Agreement, dated as of October 14, 1997, between the Company and Comerica
Bank-Texas, filed as Exhibit 6.33 to the Registration Statement and incorporated by reference
herein
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 178
<SECURITIES> 0
<RECEIVABLES> 1,541
<ALLOWANCES> 68
<INVENTORY> 567
<CURRENT-ASSETS> 2,694
<PP&E> 1,852
<DEPRECIATION> 411
<TOTAL-ASSETS> 4,334
<CURRENT-LIABILITIES> 1,571
<BONDS> 800
0
0
<COMMON> 23
<OTHER-SE> 1,940
<TOTAL-LIABILITY-AND-EQUITY> 4,334
<SALES> 2,949
<TOTAL-REVENUES> 2,949
<CGS> 1,792
<TOTAL-COSTS> 1,792
<OTHER-EXPENSES> 819
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<INTEREST-EXPENSE> 16
<INCOME-PRETAX> 322
<INCOME-TAX> 119
<INCOME-CONTINUING> 203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203
<EPS-PRIMARY> $.08
<EPS-DILUTED> $.08
</TABLE>
