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 September 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
November 13, 1995
Transitional Small Business Disclosure Format. YES X
NO
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
(Unaudited)
September 30,
December 31,
1995
1994
ASSETS
Current Assets
Cash and cash equivalents $ 52,951 $
11,921
Accounts receivable, less allowance
for doubtful accounts of $4,450 87,179
65,865
Inventories (Note 2) 184,818
212,050
Prepaid expenses 3,652
3,652
Total current assets 328,600
293,488
Furniture and Equipment, at cost (Note 3) 360,257
351,017
Less accumulated depreciation 309,067
301,325
Total furniture and equipment 51,190
49,692
Other Assets
Patents and trademarks, net of accumulated
amortization of $29,084 in 1995 and
$27,159 in 1994 12,736
14,661
Deposits 3,529
3,529
Total other assets 16,265
18,190
Total assets $ 396,055 $
361,370
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS (Continued)
(Unaudited)
September 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) 11,646
50,000
Accounts payable 90,470
125,924
Current leases payable 6,406
6,406
Accrued expenses 32,396
47,705
Total current liabilities 160,523
287,651
Long-Term Liabilities
Capital leases payable 4,783
9,599
Total long-term liabilities 4,783
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 4,537,913 in 1995 and
4,453,913 in 1994 4,286,086
4,265,086
Common stock subscriptions; 1,867,570
shares subscribed in 1995 and 84,000
in 1994 139,489
21,000
Accumulated deficit (4,594,826)
(4,621,966)
Total stockholders' equity 230,749
64,120
Total liabilities and stockholders'
equity $ 396,055 $
361,370
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three and Nine Months Sept 30 Sept 30 Sept 30 Sept
30
Ended 1995 1994 1995
1994
OPERATIONS
Net sales $ 179,459 $ 166,704 $ 530,636 $
529,935
Cost of goods sold 105,639 121,754 315,567
319,365
Gross profit 73,820 44,950 215,069
210,570
Operating expenses
Research and development - 11,757 10,902
19,712
Sales and marketing 5,321 14,806 40,566
38,379
General and administrative 31,017 57,521 129,972
203,991
Total operating
expenses 36,338 84,084 181,440
262,082
Operating income (loss) 37,482 (39,134) 33,629
(54,419)
Other income (expense)
Interest income 61 164 102
366
Interest expense (2,048) (2,811) (8,079)
(9,008)
Other 363 (1,054) 1,488
5,735
Net income (loss) $ 35,858 $ (42,835) $ 27,140 $
(54,419)
Net income (loss)
per share $ .01 $ (.01) $ .00 $
(.01)
Weighted average
common shares
outstanding 6,182,015 4,453,913 5,785,296
4,453,913
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
Sept 30,
Sept 30,
Nine Months Ended 1995
1994
Cash Flows from Operating Activities
Net income (loss) $ 27,141 $
(54,419)
Adjustments to reconcile net income to net
cash provided by (used) in operating
activities:
Depreciation and amortization 9,604
9,604
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (22,529)
(21,314)
Inventories 27,232
(3,173)
Prepaid expenses -
5,659
Decrease in:
Accounts payable and accrued expenses (38,511)
(2,201)
Net cash provided by (used) in operating
activities 4,215
(67,059)
Cash Flows used in Investing Activities
Capital expenditures (9,240)
(7,944)
Net cash used in investing activities (9,240)
(7,944)
Cash Flows from Financing Activities
Payments on capital leases payable (4,816)
(5,338)
Proceeds from private placement 89,225
1,182
Payments on notes payable (38,354)
-
Proceeds from issuance of notes payable -
50,000
Net cash provided by in financing
activities 46,055
45,844
Increase (decrease) in cash
and cash equivalents 41,030
(29,159)
Cash and Cash Equivalents:
Beginning 11,921
61,366
Ending $ 52,951 $
32,207
Supplemental Disclosures of Cash Flow
Information
Cash payments for interest $ 8,260 $
-
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 September 30, 1995, the Statement of
Operations
for the three and nine month periods ended September 30, 1995 and
September 30, 1994, and the Statement of Cash Flows for the nine
month
periods ended September 30, 1995 and September 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 September 30, 1995; the
results of operations for the three and nine month periods ended
September
30, 1995 and September 30, 1994, and the statement of cash flows
for the
nine month periods ended September 30, 1995 and September 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:
Sept 30,
December 31,
1995
1994
Component parts and subassemblies $ 124,603 $
131,800
Work in process 16,891
30,790
Finished goods 73,324
79,460
Less obsolescence reserve (30,000)
(30,000)
$ 184,818 $
212,050
Note 3. Furniture and Equipment
Furniture and equipment consisted of the following:
Sept 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 $38,354 in principal on the note and the balance of $11,646 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 nine and three month periods ended September
30,
1995 were $530,636 and $179,459, respectively, or approximately 0%
and 8%
greater than sales for the same period in fiscal 1994. Sales are
expected
to remain at these levels, with modest increases due sales to
Baxter
Gross Profit. Gross profit expressed as percentage of sales
increased
from approximately 40% for the first nine months of fiscal 1994 to
approximately 41% for the same period in fiscal 1995.
Gross profit expressed as percentage of sales increased from
approximately
27% for the three month period ended September 30, 1994 to
approximately
41% for the same period in fiscal 1995. This increase is primarily
attributed to an increase in productivity spreading overhead costs
over
greater products.
Operating Expenses. Operating expenses decreased from $262,082 for
the
nine month periods ended September 30, 1994 to $181,439 for the
same
period in fiscal 1995. This decrease is primarily attributed to a
decrease of approximately $43,000 and $35,000 in salaries and
outside
services, respectively.
Operating expenses decreased from $84,084 for the three month
period ended
September 30, 1994 to $36,338 for the same period in fiscal 1995
due to
the salary reductions previously mentioned.
Liquidity and Capital Resources
At September 30, 1995 the Company had working capital of $168,078
compared
to $5,837 at December 31, 1994.
Cash flows provided by operating activities for the first nine
months of
fiscal 1995 were $4,215, primarily due to net profits and a
decrease in
inventories offset by an increase in accounts receivable and a
decrease in
accrued expenses. The cash flows provided by operating activities,
along
with proceeds from the Company's private placement have been used
to pay
down notes payable, capital expenditures and to stabilize cash
flow.
The Company expects additional capital expenditures of
approximately
$5,000 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 and 1996 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
November
13, 1995 the Company has raised approximately $93,350 in connection
with
this offering.
<PAGE>
Continued 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 and 1996
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 September 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 November 11, 1995 /s/ Vance D. Fiegel
Vance D. Fiegel
President and Principal
Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 52,951
<SECURITIES> 0
<RECEIVABLES> 87,179
<ALLOWANCES> 0
<INVENTORY> 184,818
<CURRENT-ASSETS> 328,600
<PP&E> 360,257
<DEPRECIATION> 309,067
<TOTAL-ASSETS> 396,055
<CURRENT-LIABILITIES> 160,252
<BONDS> 9,599
<COMMON> 4,286,086
0
400,000
<OTHER-SE> 139,489
<TOTAL-LIABILITY-AND-EQUITY> 396,055
<SALES> 530,636
<TOTAL-REVENUES> 530,636
<CGS> 315,657
<TOTAL-COSTS> 315,657
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,079
<INCOME-PRETAX> 27,141
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,141
<EPS-PRIMARY> .01
<EPS-DILUTED> .00
</TABLE>
