<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
May 31, 1995 0-8350
- - --------------------------------- ----------------------------
(For Quarter Ended) (Commission File Number)
STAODYN, INC.
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware 84-0684224
- - ---------------------------- -------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1225 Florida Ave., Longmont, CO 80501
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 772-3631
----------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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
----------- -----------
6,294,067
- - -------------------------------------------------------------------------------
(Number of shares of common stock outstanding as of July 5, 1995)
<PAGE>
PART I. FINANCIAL INFORMATION
STAODYN, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
May 31
1995
------------
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,734,084
Accounts receivable, net 4,541,898
Inventories 4,171,002
Prepaid expenses and other assets 188,988
-----------
Total current assets 10,635,972
Property, Plant and Equipment, Net 2,611,633
Other Assets
Patents and intangibles, net 803,375
Product supply agreement, net 675,000
Other 30,746
-----------
Total Assets $14,756,726
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 306,515
Accounts payable 466,493
Accrued expenses and other liabilities 792,407
-----------
Total current liabilities 1,565,415
Long-Term Debt 1,565,343
Commitments and Contingencies
Stockholders' Equity
Preferred stock - $0.01 par value; 1,000,000
shares authorized; none issued -
Common stock - $0.01 par value; 10,000,000
shares authorized; 6,289,067 shares issued 62,891
Additional paid-in capital 15,062,431
Retained earnings (deficit) (3,499,354)
-----------
11,625,968
Total Liabilities and Stockholders' Equity $14,756,726
===========
</TABLE>
See accompanying notes.
2
<PAGE>
STAODYN, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ------------------------
May 31 May 31 May 31 May 31
1995 1994 1995 1994
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $4,728,879 $3,999,596 $9,286,384 $ 7,275,882
Cost of Sales 1,559,194 1,433,570 3,107,883 2,629,620
---------- ---------- ---------- -----------
Gross Profit 3,169,685 2,566,026 6,178,501 4,646,262
---------- ---------- ---------- -----------
Operating Expenses
Selling, general and
administrative 2,943,970 2,816,898 5,734,222 5,622,570
Research and development 109,410 91,630 212,409 203,281
---------- ---------- ---------- -----------
3,053,380 2,908,528 5,946,631 5,825,851
---------- ---------- ---------- -----------
Income (Loss) from Operations 116,305 (342,502) 231,870 (1,179,589)
Other Income (Expense), Net 5,603 (41,322) (29,618) (26,841)
---------- ---------- ---------- -----------
Income (Loss) Before Income
Taxes 121,908 (383,824) 202,252 (1,206,430)
Income Tax Expense (Benefit) - - - -
---------- ---------- ---------- -----------
Net Income (Loss) $ 121,908 $ (383,824) $ 202,252 $(1,206,430)
========== ========== ========== ===========
Income (Loss) per Common Share $ .02 $ (.07) $ .03 $ (.22)
========== ========== ========== ==========
Weighted Average Number of
Common Shares Outstanding 6,269,232 5,417,728 6,254,421 5,409,945
========== ========== ========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
STAODYN, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
------------------------
May 31 May 31
1995 1994
----------- -----------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 421,964 $(2,093,091)
---------- -----------
INVESTING ACTIVITIES
Payments for purchases of property, plant
and equipment (119,543) (124,207)
Payment for other assets (28,413) (1,401)
---------- -----------
Net cash used in investing
activities (147,956) (125,608)
---------- -----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 46,369 81,926
Payments of offering costs - (20,024)
Principal payments under capital lease
obligations and long-term debt (132,467) (173,148)
Payment for purchase of treasury stock - (54,342)
---------- -----------
Net cash provided by financing
activities (86,098) (165,588)
---------- -----------
Net increase (decrease) in cash and cash
equivalents 187,910 (2,384,287)
Cash and cash equivalents at beginning of period 1,546,174 4,384,266
---------- -----------
Cash and cash equivalents at end of period $1,734,084 $ 1,999,979
========== ===========
Supplemental information:
Interest paid $ 109,862 $ 117,245
========== ===========
</TABLE>
See accompanying notes.
4
<PAGE>
STAODYN, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles 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.
Operating results for the six month period ended May 31, 1995 are not
necessarily indicative of the results that may be expected for the year ended
November 30, 1995. For further information, refer to the financial statements
and footnotes thereto included in the Registrant Company's annual report on Form
10-KSB for the year ended November 30, 1994.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INCOME TAXES
Income taxes are provided for the difference between the book and tax basis of
assets and liabilities.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per common share is based on the weighted average number of
common shares. Options and warrants outstanding during the periods ended
May 31, 1994 are not included in the computation of weighted average shares
outstanding as their inclusion would be antidilutive due to the Company's
losses. Options and warrants outstanding during the periods ended May 31, 1995
are not included, as dilutive effect is below three percent. The Company has
never declared or paid dividend to its shareholders.
CONCENTRATION OF CREDIT RISK
The Company's accounts receivable are due from approximately 400 active dealers
and distributors primarily located in the United States and Canada, and from a
larger number of individuals and insurance carriers throughout the United
States. At May 31, 1995, no single customer accounted for more than 5% of total
accounts receivable.
3. INVENTORIES
Inventories include the following components:
<TABLE>
<CAPTION>
May 31
1995
----------
<S> <C>
Raw Materials $ 630,933
Work in process 129,947
Finished goods 3,410,122
----------
$4,171,002
==========
</TABLE>
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -SIX MONTHS ENDED MAY 31, 1995
RESULTS OF OPERATIONS
Net sales for the second quarter were $4,728,879, an increase of $729,283 or 19%
over the comparable quarter of the prior year. For the six month period, sales
increased over the comparable period of 1994 by $2,010,502 or 28% to $9,286,384.
The first quarter sales in 1994 were unusually depressed. The increase in sales
is primarily the result of a larger sales force and improved operating
efficiencies in the retail division.
Gross profit was $3,169,685 or 67% of sales for the quarter, as compared to
$2,566,026 or 64% for the three months ended May 31, 1994. For the six month
period, the gross profit of $6,178,501 or 67% compares to $4,646,262 or 64%.
The improvement in gross profit is primarily a result of higher manufacturing
volume.
Total operating expenses were $3,053,380 for the current quarter, as compared to
$2,908,528 for the comparable quarter of the prior year (an increase of 5%).
For the six month period, operating expenses were $5,946,631, an increase of
$120,780 or 2% over the prior year amount of $5,825,851. The increase in
operating expenses in both periods presented is related primarily to increased
sales expenses, primarily commissions and headcount in the retail division.
These increases were offset by reduced commissions paid in the wholesale
division, as relationships with a number of wholesale sales representatives were
terminated in the first quarter of the year.
Other income (expense) was $5,603 for the second quarter of 1995, as compared to
$(41,322) for the second quarter of 1994. For the six month period, other
income (expense) was $(29,618) in 1995 and $(26,841) in 1994. Other income
(expense) consists primarily of interest expense and interest income earned on
excess cash.
Net income for the second quarter ended May 31, 1995 was $121,908 or $.02 per
share, as compared to $(383,824) or $(.07) per share for the comparable period
in 1994. For the six month period, net income was $202,252 or $.03 per share in
1995, compared to $(1,206,430) or $(.22) per share in 1994. The increase in the
weighted average number of shares is due primarily to approximately 750,000
shares issued in November 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company provided $421,964 of cash from operations in the six months ended
May 31, 1995. Working capital at May 31, 1995 was $9,070,557 or 6.8:1, as
compared to $8,546,364 or 5.7:1 at November 30, 1994. The Company anticipates
that current liquidity will be sufficient to fund its cash requirements. Should
additional cash be required, management believes that funds would be available
from the collateralization of accounts receivable and inventory for a credit
facility.
INFLATION AND CHANGING PRICES
Inflation has a negligible effect on the Company's operations. Governmental and
other efforts to reduce healthcare spending have and may continue to affect the
Company's revenues. Management anticipates continued price sensitivity in the
medical marketplace.
6
<PAGE>
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of Staodyn, Inc. was held on May 25, 1995.
At this meeting, Dr. Alan C. Stormo was elected as a director. Other directors
continuing in office are W. Bayne Gibson, Frederick H. Ayers, Margaret S.
Hansson and Gerald D. Van Eeckhout.
Matters voted on at the meeting and the voting tabulations are as follows:
<TABLE>
<CAPTION>
VOTING TABULATIONS
Description of Matter For Against Withheld Abstained
- - --------------------- --- ------- -------- ---------
<S> <C> <C> <C> <C>
Election of Dr. Alan C. Stormo
for Director 5,454,483 - 71,367 -
Approval of Amendment to Increase
Shares Available for Purchase
Under the 1992 Stock Option Plan
from 204,000 to 400,000 5,205,933 205,339 - 49,848
Approval of Price Waterhouse LLP
as Independent Auditors for the
Year Ending November 30, 1995 5,247,109 250,613 - 28,398
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports
The Company filed a Form 8-K on April 13, 1995 covering the resignation of
James A. Brooks, Vice President - Sales and Marketing.
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.
STAODYN, INC.
(REGISTRANT)
Date: July 13, 1995 /s/ Michael J. Newman
---------------------- --------------------------------------------
Vice President - Finance and Administration
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-QSB FOR THE PERIOD ENDED MAY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 1734084
<SECURITIES> 0
<RECEIVABLES> 4541898
<ALLOWANCES> 0
<INVENTORY> 4171002
<CURRENT-ASSETS> 10635972
<PP&E> 2611633
<DEPRECIATION> 0
<TOTAL-ASSETS> 14756726
<CURRENT-LIABILITIES> 1565415
<BONDS> 0
<COMMON> 62891
0
0
<OTHER-SE> 11563077
<TOTAL-LIABILITY-AND-EQUITY> 14756726
<SALES> 9286384
<TOTAL-REVENUES> 9286384
<CGS> 3107883
<TOTAL-COSTS> 5946631
<OTHER-EXPENSES> 29618
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 202252
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 202252
<EPS-PRIMARY> .03
<EPS-DILUTED> .0
</TABLE>
