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 March 31, 1996
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
May 10, 1996
Transitional Small Business Disclosure
Format. YES X NO
<PAGE>
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
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
(Unaudited)
March 31, December 31,
1996 1995
ASSETS
Current Assets
Cash and cash equivalents $ 79,824 $ 43,297
Accounts receivable, less allowance for
doubtful accounts of $4,450 61,854 106,236
Inventories (Note 2) 171,480 167,655
Prepaid expenses 4,834 4,428
Total current assets 317,992 321,616
Furniture and Equipment, at cost (Note 3)348,057
360,257
Less accumulated depreciation 301,765
312,244
Total furniture and equipment 46,292 48,013
Other Assets
Patents and trademarks, net of accumulated amortization
of $30,367 in 1996 and $29,725 in 1995 11,453 12,095
Deposits 3,529 3,529
Total other assets 14,982 15,624
Total assets $ 379,266 $ 385,253
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS (Continued)
(Unaudited)
March 31, 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 45,105 62,509
Current maturities on long-term debt41,952 6,406
Accrued expenses 30,784 38,274
Total current liabilities139,487 138,440
Long-Term Liabilities
Long-term debt 1,489 38,641
Total long-term liabilities 1,489 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 1995
4,286,086 4,286,086
Common stock subscriptions; 2,479,413 shares subscribed in 1996
and 1,914,853 in 1995 185,956 143,614
Accumulated deficit (4,633,752) (4,621,528)
Total stockholders' equity 238,290 208,172
Total liabilities and
stockholders' equity $ 379,266 $ 385,253
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
March 31, March 31,
Three Months Ended 1996 1995
OPERATIONS
Net sales $ 130,089 $ 200,449
Cost of goods sold 93,551 110,696
Gross profit 36,538 89,753
Operating expenses
Research and development 1,306 10,489
Sales and marketing 6,397 19,033
General and administrative 39,363 52,391
Total operating expenses 47,066 81,913
Operating income (loss) (10,528) 7,840
Other income (expense)
Interest income 225 21
Interest expense (3,301) (3,660)
Other 1,380 662
Net income (loss) $ (12,224) $ 4,863
Net income (loss)
per share $ .00 $ .00
Weighted average common
shares outstanding 6,754,630 5,074,748
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
March 31, March 31,
Three Months Ended 1996 1995
Cash Flows from Operating Activities
Net income (loss) $ (12,224) $ 4,863
Adjustments to reconcile net income (loss) to net
cash provided by (used) in operating activities:
Depreciation and amortization 2,363 2,452
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 44,382 (21,491)
Inventories (3,825) (9,928)
Prepaid expenses (406) -
Decrease in:
Accounts payable and
accrued expenses (17,157) (17,320)
Net cash provided by (used) in
operating activities 13,133 (41,424)
Cash Flows used in Investing Activities
Capital expenditures - (2,300)
Net cash used in
investing activities 0 (2,300)
Cash Flows from Financing Activities
Payments on capital leases payable (1,606) (1,604)
Proceeds from private placement 25,000 64,750
Payments on notes payable - (3,742)
Net cash provided by in
financing activities 23,394 59,404
Increase in cash and
cash equivalents 36,527 15,680
Cash and Cash Equivalents:
Beginning 43,297 11,921
Ending $ 79,824 $ 27,601
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 672 $ 4,816
Supplemental Schedule of Noncash Financing Activities
Accrued expenses exchanged for common
shares subscribed $ 7,737 $ 12,253
Notes payable exchanged for common
shares subscribed 9,605 38,011
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Financial Statements
The Balance Sheet as of March 31, 1996, the Statement of Operations
for the three month periods ended March 31, 1996 and March 31,
1995, and the Statement of Cash Flows for the three month periods
ended March 31, 1996 and March 31, 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
March 31, 1996; the results of operations for the three
month periods ended March 31, 1996 and March 31, 1995,and the
statement of cash flows for the three month periods ended March 31,
1996 and March 31, 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:
March 31, December 31,
1996 1995
Component parts and
subassemblies $118,634 $ 110,229
Work in process 7,716 10,489
Finished goods 55,130 56,937
Less obsolescence reserve (10,000) (10,000)
$ 171,480 $ 167,655
Note 3. Furniture and Equipment
Furniture and equipment consisted of the following:
March 31, December 31,
1996 1995
Furniture, fixtures and
equipment $ 230,300 $ 230,300
Tooling and molds 117,757 117,757
Automobiles - 12,200
$ 348,057 $ 360,257
<PAGE>
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 December 31. Initially the interest rate
will be set at 10.25% annually.
Notes payable to unrelated parties: The Company
has a 12% short-term note payable, secured by a
certain customer receivable. 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 on the receivable.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations - 1996 compared to 1995
Sales. Sales for the first three months of fiscal 1996 were
$130,089, or approximately 35% less than sales for the same period
in fiscal 1995. This decrease is attributed primarily to decreases
in sales to Baxter and in VariDyne pumps. These decreases are
expected to be reversed as the Company begins production on in
house orders expected to be delivered in the second and third
quarters.
Gross Profit. Gross profit expressed as percentage of sales
decreased from approximately 45% for the first three months of
fiscal 1995 to approximately 28% for the same period in fiscal
1996. This decrease was due primarily to idle capacity in
manufacturing due to a low volume of production, which results in
the allocation of overhead expenses over a smaller number of
manufactured products.
Operating Expenses. Operating expenses decreased from $81,913 for
the three month periods ended March 31, 1995 to $47,066 for the
same period in fiscal 1996. This decrease is primarily attributed
to reductions in salaries and wages, due to the elimination of
certain positions, and reductions in other operating expenses.
Liquidity and Capital Resources
At March 31, 1996 the Company had working capital of $178,505
compared to $183,176 at December 31, 1995.
Cash flows provided by operating activities for the first three
months of fiscal 1996 were $13,133, primarily due to a decrease of
approximately $44,000 in accounts receivable. The cash flows
provided by operating activities, along with cash provided by
financing activities were used to decrease current liabilities and
are being conserved for product development activities.
The Company is investigating several new products which are at
various stages of development which will require capital in 1996
for further research and development activities. In February,
1996, the Company completed a private placement, equity offering to
raise capital. In total, the Company has raised approximately
$120,000 in connection with this offering. Additional funding may
be required in 1996 for further development, the purchase of
tooling and the implementation of marketing efforts.
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 1996
depend largely on increased business from contract manufacturing,
and increased sales from existing and new products. Contract
manufacturing revenues are expected to increase slightly in 1996 as
existing customers increase sales volumes. Baxter revenues are
expected to increase in the second quarter as the Company begins
production on new orders.
<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 three month period
ended March 31,
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 May 10, 1996
/s/ Vance D. Fiegel
Vance D. Fiegel
President and Principal
Accounting
Officer
<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] MAR-31-1996
[CASH] 79824
[SECURITIES] 0
[RECEIVABLES] 61854
[ALLOWANCES] 0
[INVENTORY] 171480
[CURRENT-ASSETS] 317992
[PP&E] 348057
[DEPRECIATION] 301765
[TOTAL-ASSETS] 379266
[CURRENT-LIABILITIES] 139487
[BONDS] 1489
[COMMON] 4286086
[PREFERRED-MANDATORY] 0
[PREFERRED] 400000
[OTHER-SE] 185956
[TOTAL-LIABILITY-AND-EQUITY] 379266
[SALES] 130089
[TOTAL-REVENUES] 130089
[CGS] 93551
[TOTAL-COSTS] 93551
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 3301
[INCOME-PRETAX] (12224)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (12224)
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
