UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(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, 1996
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 33-13058-C
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SURGIDYNE, INC.
(Name of small business issuer in its charter)
Minnesota 58-1486040
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
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 6, 1996
Transitional Small Business Disclosure Format. YES X NO
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SURGIDYNE, INC.
CONTENTS PAGE
FINANCIAL STATEMENTS
Balance sheets 3
Statements of operations 5
Statements of cash flows 6
Notes to financial statements 7
SURGIDYNE, INC.
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1996 1995
ASSETS
Current Assets
Cash and cash equivalents $54,178 $43,297
Accounts receivable, less allowance for
doubtful accounts of $4,450 96,039 106,236
Inventories (Note 2) 157,706 167,655
Prepaid expenses 5,239 4,428
Total current assets 313,162 321,616
Furniture and Equipment, at cost (Note 3) 348,057 360,257
Less accumulated depreciation 303,485 312,244
Total furniture and equipment 44,572 48,013
Other Assets
Patents and trademarks, net of accumulated amortization
of $31,009 in 1996 and $29,725 in 1995 10,311 12,095
Deposits 3,529 3,529
Total other assets 13,840 15,624
Total assets $371,574 $385,253
See Notes to Financial Statements.
SURGIDYNE, INC.
BALANCE SHEETS (Continued)
(Unaudited)
June 30, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to officers and directors (Note 4)$10,000 $19,605
Notes payable to unrelated parties (Note 4) 11,646 11,646
Accounts payable 55,328 62,509
Current maturities on long-term debt 41,835 6,406
Accrued expenses 30,365 38,274
Total current liabilities 149,174 138,440
Long-Term Liabilities
Long-term debt 0 38,641
Stockholders' Equity
Series A Preferred stock, authorized 1,600,000 shares;
$400,000 liquidation preference, 1,600,000 shares
issued and outstanding in 1996 and 1995 400,000 400,000
Common stock, no par value; authorized 18,400,000 shares;
issued and outstanding 4,537,913 in 1996 and 19954,286,0864,286,086
Common stock subscriptions; 2,479,413 shares subscribed in 1996
and 1,914,853 in 1995 185,956 143,614
Accumulated deficit (4,649,642) (4,621,528)
Total stockholders' equity 222,400 208,172
Total liabilities and stockholders' equity$371,574 $385,253
See Notes to Financial Statements.
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
June 30 June 30 June 30 June 30
Three and Six Months Ended 1996 1995 1996 1995
OPERATIONS
Net sales $154,089$148,734 $284,178$351,177
Cost of goods sold 118,416 97,238 211,967 209,928
Gross profit 35,673 51,496 72,211 141,249
Operating expenses
Research and development 3,268 433 4,574 10,902
Sales and marketing 8,662 16,211 15,059 35,245
General and administrative 38,659 47,043 78,022 98,954
Total operating expenses 50,589 63,687 97,655 145,101
Operating loss (14,916)(12,191) (25,444) (3,852)
Other income (expense)
Interest income 414 20 639 41
Interest expense (1,658) (2,371) (4,959) (6,031)
Other 270 463 1,650 1,125
Net income (loss) $(15,890)$(14,079) $(28,114) (8,717)
Net income (loss) per share$ (.00) $ (.00) $ (.00) $ (.00)
Weighted average common
shares outstanding 7,017,3266,079,149 6,886,7025,582,529
See Notes to Financial Statements.
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
June 30, June 30,
Six Months Ended 1996 1995
Cash Flows from Operating Activities
Net loss $(28,114) $ (8,717)
Adjustments to reconcile net income to net
cash provided by (used) in operating activities:
Depreciation and amortization 5,225 5,847
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 10,197 (19,291)
Inventories 9,949 12,607
Prepaid expenses (811) -
Decrease in:
Accounts payable and accrued expenses (7,353) (24,483)
Net cash provided by (used) in operating activities(10,907)(34,037)
Cash Flows used in Investing Activities
Capital expenditures - (9,240)
Net cash used in investing activities 0 (9,240)
Cash Flows from Financing Activities
Payments on capital leases payable (3,212) (3,210)
Proceeds from private placement 25,000 64,570
Payments on notes payable - (20,279)
Net cash provided by (used) in financing activities21,78841,261
Increase (decrease) in cash and cash equivalents10,881(2,016)
Cash and Cash Equivalents:
Beginning 43,297 11,921
Ending $ 54,178 $ 9,905
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 1,344 $ 6,249
Supplemental Schedule of Noncash Financing Activities
Accrued expenses exchanged for common shares subscribed$7,737$12,253
Notes payable exchanged for common shares subscribed9,605 38,011
See Notes to Financial Statements.
SURGIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Financial Statements
The Balance Sheet as of June 30, 1996, the
Statement of Operations for the three and six
month periods ended June 30, 1996 and June 30,
1995, and the Statement of Cash Flows for the six
month periods ended June 30, 1996 and June 30,
1995 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, 1996;
the results of operations for the three and six
month periods ended June 30, 1996 and June 30,
1995, and the statement of cash flows for the six
month periods ended June 30, 1996 and June 30,
1995 have been made. The Balance Sheet at
December 31, 1995 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,
1996 1995
Component parts and
subassemblies $128,958 $110,229
Work in process 4,733 10,489
Finished goods 34,015 56,937
Less obsolescence reserve(10,000)(10,000)
$157,706 $167,655
Note 3. Furniture and Equipment
Furniture and equipment consisted of the following:
June 30,December 31,
1996 1995
Furniture, fixtures and
equipment $230,300 $230,300
Tooling and molds117,757117,757
Automobiles - 12,200
$348,057 $360,257
Note 4. Notes Payable
Notes payable to related parties: The Company
converted $9,605 of a short-term note outstanding
with a related party to common stock and has
reissued the remaining $10,000 at an interest
rate of prime plus two percent. The interest
rate will be adjusted every six months on June 30
and Deccember 31. As of June 30, 1996 no
adjustment was required to the interest rate and
the interest rate continues to be 10.25%
annually.
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.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - 1996 compared to 1995
Sales. Sales revenues for the six and three month periods ended
June 30, 1996 were $284,178 and $154,089, respectively, or approximately 19%
less than sales for the same six month period in 1995 and 4% more than
sales for the same three month period in fiscal 1995.
The six month decrease is attributed primarily to reduced revenues from
Baxter. Baxter accounted for approximately $8,000 of revenues during the
first six months of 1996 compared to over $65,000 in the first
six months of 1995. Baxter has discontinued sales of the Company's product
and future revenues from Baxter are not anticipated. The three month
increase is attributed to increases in all of the Company's other
product line revenues, more than offsetting the three month period decrease
in Baxter revenues.
Gross profit. Gross profit expressed as percentage of sales decreased from
approximately 40% for the first six months of fiscal 1995 to approximately
25% for the same period in fiscal 1996. This reduction was primarily due to
the decrease in revenues from Baxter. The Baxter revenues had a
significantly higher gross profit than other revenues, as sales were
comprised of both royalty and manufacturing revenues.
Gross profit expressed as percentage of sales decreased from approximately
35% for the three month period ended June 30, 1995 to approximately 23% for
the same period in fiscal 1996 primarily for the same reason.
Operating Expenses. Operating expenses decreased from $145,101 for the six
month periods ended June 30, 1995 to $97,655 for the same period in fiscal
1996. This decrease is primarily attributed to a decrease of approximately
$40,000 in salaries and wages, employee benefits and payroll taxes.
Operating expenses decreased from $63,687 for the three month periods ended
June 30, 1995 to $50,589 for the same period in fiscal 1996 for the same reason.
Liquidity and Capital Resources
At June 30, 1996 the Company had working capital of $163,988 compared to
$183,176 at December 31, 1995.
Cash flows used in operating activities for the first six months of fiscal
1996 were $10,907, primarily due to the net loss of $28,114 partially offset
by combined decreases in accounts receivable and inventories of approximately
$20,000. The cash flows used in operating activities, along with payments
on notes payable and capital leases during the first six months of fiscal
1996 were financed by existing cash balances and $25,000 of proceeds from the
Company's private placement.
The Company has adequate short-term liquidity to manufacture and sell its
existing product line for the next twelve months. The Company is analyzing
opportunities in product extensions to its lines of closed wound suction
drainage products. The Company hopes to complete its analysis and prepare a
product development plan for inclusion in its business plan by the 4th
quarter of 1996. The Company's strategy is to identify the best
opportunities for development of related products requiring modest capital
requirements and providing optimal return on the Company's investment.
Further funding may be required for the development, production, and
marketing of any identified product opportunities.
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, 1996.
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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 20, 1996 /s/ Vance D. Fiegel
Vance D. Fiegel
President and Principal Accounting
Officer
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