UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 33-13058-C
SURGIDYNE, INC.
(Name of small business issuer in its charter)
Minnesota 58-1486040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9909 South Shore Drive, Minneapolis, MN 55441
(Address of principal executive offices)
(612) 595-0665
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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. X YES NO
4,537,913 shares of Common Stock, no par value, outstanding at
August 8, 1995
Transitional Small Business Disclosure Format. YES X NO
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1995 1994
ASSETS
Current Assets
Cash and cash equivalents $ 9,905 $ 11,921
Accounts receivable, less allowance
for doubtful accounts of $4,450 85,156 65,865
Inventories (Note 2) 199,443 212,050
Prepaid expenses 3,652 3,652
Total current assets 298,156 293,488
Furniture and Equipment, at cost (Note 3) 360,257 351,017
Less accumulated depreciation 305,889 301,325
Total furniture and equipment 54,368 49,692
Other Assets
Patents and trademarks, net of accumulated
amortization of $27,800 in 1995 and
$27,159 in 1994 13,378 14,661
Deposits 3,529 3,529
Total other assets 16,907 18,190
Total assets $ 369,431 $ 361,370
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS (Continued)
(Unaudited)
June 30, December 31,
1995 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to officers and directors
(Note 4) $ 19,605 $ 57,616
Notes payable to unrelated parties
(Note 4) 29,721 50,000
Accounts payable 105,294 125,924
Current leases payable 6,406 6,406
Accrued expenses 31,599 47,705
Total current liabilities 192,625 287,651
Long-Term Liabilities
Capital leases payable 6,389 9,599
Total long-term liabilities 6,389 9,599
Stockholders' Equity
Series A Preferred stock, authorized
1,600,000 shares; $400,000 liquidation
preference, 1,600,000 shares issued and
outstanding in 1995 and 1994 400,000 400,000
Common stock, no par value; authorized
18,400,000 shares; issued and
outstanding 4,453,913 in 1995 and
1994 4,286,086 4,265,086
Common stock subscriptions; 1,541,236
shares subscribed in 1995 and 84,000
in 1994 115,014 21,000
Accumulated deficit (4,630,683) (4,621,966)
Total stockholders' equity 170,417 64,120
Total liabilities and stockholders'
equity $ 369,431 $ 361,370
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three and Six Months June 30 June 30 June 30 June 30
Ended 1995 1994 1995 1994
OPERATIONS
Net sales $ 148,734 $ 174,107 $ 351,177$ 363,231
Cost of goods sold 97,238 105,386 209,928 197,610
Gross profit 51,496 68,721 141,249 165,621
Operating expenses
Research and development 433 8,678 10,902 19,025
Sales and marketing 16,211 11,204 35,245 23,196
General and administrative 47,043 62,326 98,954 133,884
Total operating
expenses 63,687 82,208 145,101 176,105
Operating loss (12,191) (13,487) (3,852) (10,484)
Other income (expense)
Interest income 20 110 41 202
Interest expense (2,371) (3,611) (6,031) (6,196)
Other 463 2,520 1,125 6,789
Net income (loss) $ (14,079) $ (14,468) $ (8,717)$ (9,689)
Net income (loss)
per share $ (.00) $ (.00) $ (.00)$ (.00)
Weighted average
common shares
outstanding 6,079,149 4,453,913 5,582,529 4,453,913
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
June 30, June 30,
Six Months Ended 1995 1994
Cash Flows from Operating Activities
Net loss $ (8,717) $ (9,689)
Adjustments to reconcile net income to net
cash provided by (used) in operating
activities:
Depreciation and amortization 5,847 6,297
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (19,291) (40,539)
Inventories 12,607 17,298
Prepaid expenses - 1,887
Decrease in:
Accounts payable and accrued expenses (24,483) (29,040)
Net cash provided by (used) in operating
activities (34,037) (53,786)
Cash Flows used in Investing Activities
Capital expenditures (9,240) (5,411)
Net cash used in investing activities (9,240) (5,411)
Cash Flows from Financing Activities
Payments on capital leases payable (3,210) (3,993)
Proceeds from private placement 64,750 -
Payments on notes payable (20,279) -
Proceeds from issuance of notes payable - 50,000
Net cash provided by (used) in financing
activities 41,261 46,007
Increase in cash and cash equivalents (2,016) (13,190)
Cash and Cash Equivalents:
Beginning 11,921 61,366
Ending $ 9,905 $ 48,176
Supplemental Disclosures of Cash Flow
Information
Cash payments for interest $ 6,249 $ -
Supplemental Schedule of Noncash Financing
Activities
Accrued expenses exchanged for common shares
subscribed $ 12,253 $ 21,000
Equipment on capital lease - 22,788
Notes payable exchanged for common shares
subscribed 38,011 -
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Financial Statements
The Balance Sheet as of June 30, 1995, the Statement of Operations for the
three and six month periods ended June 30, 1995 and June 30, 1994, and the
Statement of Cash Flows for the six month periods ended June 30, 1995 and
June 30, 1994 have been prepared by the Company without audit. In the
opinion of management, all adjustments (consisting solely of normal,
recurring adjustments) necessary to present fairly the financial position
at June 30, 1995; the results of operations for the three and six month
periods ended June 30, 1995 and June 30, 1994, and the statement of cash
flows for the six month periods ended June 30, 1995 and June 30, 1994 have
been made. The Balance Sheet at December 31, 1994 has been taken from the
audited financial statements at that date. Results of operations for the
interim periods are not necessarily indicative of the full fiscal year.
Note 2 Inventories
Inventories consisted of the following:
June 30, December 31,
1995 1994
Component parts and subassemblies $ 125,252 $ 131,800
Work in process 14,095 30,790
Finished goods 90,096 79,460
Less obsolescence reserve (30,000) (30,000)
$ 199,443 $ 212,050
Note 3. Furniture and Equipment
Furniture and equipment consisted of the following:
June 30, December 31,
1995 1994
Furniture, fixtures and equipment $ 230,300 $ 230,300
Tooling and molds 117,757 108,517
Automobiles 12,200 12,200
$ 360,257 $ 351,017
Note 4. Notes Payable
Notes payable to unrelated parties: The Company has a 12% short-term note
payable, secured by a certain customer purchase order. The Company has
paid $20,280 in principal on the note and the balance of $29,720 is due as
the Company receives payment from the customer upon completion of the
purchase order.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - 1995 compared to 1994
Sales. Sales for the six and three month periods ended June 30, 1995 were
$351,177 and $148,734, respectively, or approximately 3% and 15% less than
sales for the same period in fiscal 1994. This decrease is attributed to
an atypical lapse in sales in May of this period. This lapse has not
continued and is not anticipated to be a trend.
Gross Profit. Gross profit expressed as percentage of sales decreased
from approximately 46% for the first six months of fiscal 1994 to
approximately 40% for the same period in fiscal 1995. This decrease was
due primarily to overhead costs being dispersed over lower sales in 1995
and lower margins on certain OEM jobs.
Gross profit expressed as percentage of sales decreased from approximately
39% for the three month period ended June 30, 1994 to approximately 35%
for the same period in fiscal 1995 for the same reason.
Operating Expenses. Operating expenses decreased from $176,105 for the
six month periods ended June 30, 1994 to $145,101 for the same period in
fiscal 1995. This decrease is primarily attributed to a decrease of
approximately $22,000 in outside services.
Operating expenses decreased from $82,208 for the three month periods
ended June 30, 1994 to $63,687 for the same period in fiscal 1995 for the
same reason.
Liquidity and Capital Resources
At June 30, 1995 the Company had working capital of $105,531 compared to
$5,837 at December 31, 1994.
Cash flows used in operating activities for the first six months of fiscal
1995 were $34,037, primarily due to an increase of approximately $19,000
in accounts receivable and an approximately $24,000 decrease in accounts
payable and accrued expenses. The cash flows used in operating
activities, along with capital expenditures and payments on notes payable
and capital leases during the first six months of fiscal 1995 were
financed by $64,750 of proceeds from the Company's private placement.
The Company expects additional capital expenditures of approximately
$15,000 for tooling during the remainder of 1995.
The Company plans to add additional products to its current product line
in order to offer a more complete and competitive line. This will be done
with low investment by modifying existing products and by purchasing some
components on an O.E.M. basis. In addition, the Company is investigating
several other new products which are at various stages of development
which could require additional capital in 1995 for development, the
purchase of tooling and the implementation of marketing efforts. In
January, 1995, the Company commenced a private placement, equity offering
to raise capital. The Company is offering 3,333,333 shares of common
stock at $.075 per share for total proceeds of $250,000. As of August 10,
1995 the Company has raised approximately $84,000 in connection with this
offering.
<PAGE>
Long-term liquidity is dependent upon the attainment of the short-term
factors discussed above and greater sales volumes that generate profitable
operations. Increased sales volumes in 1995 depend largely on increased
business from contract manufacturing, and increased sales from existing
and new products. Contract manufacturing revenues have increased in 1995
and are expected to increase further as the Company begins production on
new Baxter orders and other O.E.M. bids are accepted.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8-K were filled during the six month
period ended June 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SURGIDYNE, INC.
(Registrant)
Date August 8, 1995 /s/ Vance D. Fiegel
Vance D. Fiegel
President and Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June
30, 1995 10-Q of Surgidyne, Inc. and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 9,905
<SECURITIES> 0
<RECEIVABLES> 89,606
<ALLOWANCES> 4,450
<INVENTORY> 199,443
<CURRENT-ASSETS> 298,156
<PP&E> 360,257
<DEPRECIATION> 305,889
<TOTAL-ASSETS> 369,431
<CURRENT-LIABILITIES> 192,625
<BONDS> 6,389
<COMMON> 4,286,086
0
400,000
<OTHER-SE> (4,515,669)
<TOTAL-LIABILITY-AND-EQUITY> 369,431
<SALES> 351,177
<TOTAL-REVENUES> 351,177
<CGS> 209,928
<TOTAL-COSTS> 209,928
<OTHER-EXPENSES> 145,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,031
<INCOME-PRETAX> (8,717)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,717)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,717)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
