<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
February 29, 1996 0-8350
------------------------------ ----------------------------
(For Quarter Ended) (Commission File Number)
STAODYN, INC.
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(Exact name of registrant as specified in its Charter)
Delaware 84-0684224
---------------------------- --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1225 Ken Pratt Boulevard, Longmont, CO 80501
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(Address of principal executive offices) (Zip Code)
(303) 772-3631
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(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
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6,344,326
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(Number of shares of common stock outstanding as of April 9, 1996)
<PAGE>
PART I. FINANCIAL INFORMATION
STAODYN, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
February 29
1996
------------
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 2,233,257
Short-term investments 494,447
Accounts receivable, net 4,415,472
Inventories 3,758,967
Prepaid expenses and deposits 219,492
-----------
Total current assets 11,121,635
Property, Plant, and Equipment, Net 2,135,374
Other Assets
Patents and intangibles, net 714,287
Product supply agreement, net 607,500
Other 49,972
-----------
Total Assets $14,628,768
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 212,165
Accounts payable 560,203
Accrued expenses and other liabilities 712,742
-----------
Total current liabilities 1,485,110
Long-Term Debt 1,408,853
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; 6,344,326 shares issued 63,443
Additional paid-in capital 15,130,022
Retained earnings (deficit) (3,458,660)
-----------
11,734,805
-----------
Total Liabilities and Stockholders' Equity $14,628,768
===========
</TABLE>
See accompanying notes.
2
<PAGE>
STAODYN, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
February 29 February 28
1996 1995
------------ ----------
<S> <C> <C>
Net Sales $4,150,298 $4,557,505
Cost of Sales 1,417,646 1,548,689
---------- ----------
Gross Profit 2,732,652 3,008,816
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Operating Expenses
Selling, general and administrative 2,551,153 2,790,252
Research and development 125,171 102,999
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2,676,324 2,893,251
---------- ----------
Income from Operations 56,328 115,565
Other Income (Expense), Net (17,038) (35,221)
---------- ----------
Loss Before Income Taxes 39,290 80,344
Income Tax Expense (Benefit) - -
---------- ----------
Net Income $ 39,290 $ 80,344
========== ==========
Income per Common Share $ .01 $ .01
========== =========
Weighted Average Number of Common
Shares Outstanding 6,335,865 6,238,999
========== =========
</TABLE>
See accompanying notes.
3
<PAGE>
STAODYN, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
------------------------
February 29 February 28
1996 1995
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<TABLE>
<CAPTION>
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $234,897 $230,414
----------- ----------
INVESTING ACTIVITIES
Payments for purchases of property, plant
and equipment (18,911) (84,836)
Payment for other assets (23,562) (25,989)
Maturities of short-term investments 500,000 -
----------- ----------
Net cash provided by (used in)
investing activities 457,527 (110,825)
----------- ----------
</TABLE>
<TABLE>
<CAPTION>
FINANCING ACTIVITIES
<S> <C> <C>
Proceeds from issuance of common stock 16,895 46,369
Principal payments under capital lease
obligations and long-term debt (86,702) (55,054)
----------- ----------
Net cash used in financing
activities (69,807) (8,685)
----------- ----------
Net increase in cash and cash equivalents 622,617 110,904
Cash and cash equivalents at beginning of
period 1,610,640 1,546,174
----------- ----------
Cash and cash equivalents at end of period $2,233,257 $1,657,078
=========== ==========
Supplemental information:
Interest paid $ 50,582 $ 55,541
</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 three month period ended February 29, 1996 are not
necessarily indicative of the results that may be expected for the year ended
November 30, 1996. 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, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INCOME TAXES
Deferred 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 and common equivalent shares, including dilutive common stock options and
warrants, outstanding during the period. Options and warrants outstanding
during the fiscal quarter ended February 29, 1996 are not included in the
computation of weighted shares outstanding as their inclusion results in a
dilution of less than three percent. The Company has never declared or paid a
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
large number of individuals and insurance carriers throughout the United States.
At February 29, 1996, no single customer accounted for more than 5% of total
accounts receivable.
5
<PAGE>
STAODYN, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(Continued)
3. INVENTORIES
Inventories include the following components:
<TABLE>
<CAPTION>
February 29
1996
-----------
<S> <C>
Raw Materials $ 702,671
Work in process 98,896
Finished goods $2,957,400
----------
$3,758,967
==========
</TABLE>
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - THREE MONTHS ENDED FEBRUARY 29, 1996
RESULTS OF OPERATIONS
Net sales for the first quarter of 1996 were $4,150,298, a decrease of $407,207
or 9% from the comparable quarter of 1995. The decrease was incurred in both the
retail and wholesale divisions. Wholesale sales declined approximately $200,000
from the comparable prior period due to reduced sales representation and the
continued shrinking of the wholesale market. Retail sales also declined
approximately $200,000 due to lower new patient referrals in the fourth quarter
of 1995 and the first quarter of 1996.
Gross profit was $2,732,652 or 65.8%, as compared to $3,008,816 or 66.0% in the
comparable quarter of the prior year.
Total operating expenses were $2,676,324, a decrease of $216,927 or 7.5% over
the first quarter of 1995. The decrease was due primarily to reduced sales and
marketing headcount in the wholesale division, as well as to lower sales support
expenses in the retail division.
Other income (expense) for the period was $(17,038), compared to $(35,221) in
the first quarter of the prior year. Net expense consists primarily of interest
income and expense; the decrease of $18,183 is attributable to interest income
earned on higher levels of cash investments.
The Company generated net income of $39,290 or $.01 per share for the quarter,
as compared to $80,344 or $.01 per share for the comparable quarter of the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
Company operations provided cash of $234,897 in the quarter ended February 29,
1996. Working capital at February 29, 1996 was $9,636,525, with a current ratio
of 7.5:1. This compares favorably to $9,432,636 or 6.8:1 at November 30, 1995.
The Company believes that funds on hand are sufficient to support its existing
and planned operations for at least the next twelve months.
INFLATION AND CHANGING PRICES
Inflation has had 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.
7
<PAGE>
Part II Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 10-K
(a) Exhibits
None
(b) Reports
None
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: April 12, 1995 /s/Michael J. Newman
-------------- -------------------------------------------
Vice President - Finance and Administration
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 2,233,257
<SECURITIES> 494,447
<RECEIVABLES> 4,415,472
<ALLOWANCES> 0
<INVENTORY> 3,758,967
<CURRENT-ASSETS> 11,121,635
<PP&E> 2,135,374
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,628,768
<CURRENT-LIABILITIES> 1,485,110
<BONDS> 0
0
0
<COMMON> 63,443
<OTHER-SE> 11,671,362
<TOTAL-LIABILITY-AND-EQUITY> 14,628,768
<SALES> 4,150,298
<TOTAL-REVENUES> 4,150,298
<CGS> 1,417,646
<TOTAL-COSTS> 2,676,324
<OTHER-EXPENSES> 17,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 39,290
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,290
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
