SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1996
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
Commission File Number: 33-13058-C
SURGIDYNE, INC.
(Name of small business issuer in its charter)
Minnesota
(State or other jurisdiction of incorporation or organization)
58-1486040
(I.R.S. Employer Identification Number)
9909 South Shore Drive
Minneapolis, MN 55441
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (612) 595-0665
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
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
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge. In definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. X
Issuer's revenues for the year ended December 31, 1996 were $634,509.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 12, 1997 was approximately $264,987 (based on a price
of $.05, the bid price of the local over-the-counter market). For purposes
of this calculation, all Directors and Executive Officers of the Registrant have
been deemed affiliates.
7,017,085 shares of Common Stock, no par value, were outstanding at
February 12, 1997
DOCUMENTS INCORPORATED BY REFERENCE
NONE
This Form 10-KSB consists of 26 pages (including exhibits). The index
to exhibits is set forth on page 25.
<PAGE>
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
General
Surgidyne, Inc. (the "Company"), a Minnesota corporation, designs, develops,
manufactures and markets specialty medical and surgical wound drainage products.
The Company was incorporated in Minnesota in March, 1984, and is successor by
merger to a corporation of the same name which was incorporated in Georgia in
September, 1982. The Company's executive offices are located at 9909 South
Shore Drive, Minneapolis, Minnesota 55441 (612-595-0665).
Products
The Company's current product lines are comprised of VariDyne microelectronic
A.C./D.C. battery powered suction systems with disposable drainage/collection
products for postoperative and other suction drainage applications, disposable
SABER and SCEPTRE bulb evacuators for postoperative closed wound suction
drainage along with other related disposable products. The Company also sells
some of its disposable wound drainage components on an original equipment
manufacturer (OEM) basis. Additionally, the Company provides contract
assembly and packaging services for disposable medical and related products.
In 1990, the Company entered into agreements with Baxter Healthcare Corporation
(Baxter) for the development, license, manufacture and sale of an auto-
transfusion system under their Jackson-Pratt (J-P) trademark. The manufacturing
agreement provides for Baxter to pay an agreed upon price for the product. This
agreement expired December 31, 1993 and the Company continued manufacturing
under an order/bid basis. The development and license agreement calls for a 20%
royalty on the net sales by Baxter to their customers of autotransfusion system
products until total royalties paid equal $2,000,000.
In October of 1996, Baxter advised the Company that in conjunction with the
formation and spinoff of the Allegiance Corporation, they were discontinuing the
orthopedic autotransfusion product line licensed from the Company. Total
revenues received from Baxter for purchases of, and royalties on these auto-
transfusion products were $110,000 in 1995 compared to $10,115 in 1996.
In 1995, the Company began development of new medical related products to
broaden it's current product line. In 1996 the Company continued this endeavor
and plans to finalize the process in 1997. During 1997 the Company also plans
to expand OEM and contract manufacturing.
Marketing and Distribution
The Company's basic products are sold through a network of independent dealers,
with thirteen domestic dealers and five international dealers. The Company
sells directly to hospital accounts in the United States in areas without
dealer representation. The Company does not employ an outside sales force and
is largely dependent upon its dealers for sales and service to hospital
accounts.
Internationally, the Company's products are sold through five dealers located in
Canada, Puerto Rico, the United Kingdom, France and Italy.
The Company's business is not seasonal in nature. The Company typically does
not provide extended payment terms to customers and, has had satisfactory
collections of accounts receivable. Sales are usually made on a net 30 day
basis. Sales orders from the exclusive dealer in Italy are done by irrevocable
letter of credit in U.S. dollars or are prepaid by bank wire transfer.
Suppliers
The Company purchases all components for its products from outside suppliers
and has some components manufactured to its specification. The Company is
dependent upon such suppliers for a readily available supply of necessary
components. The Company has single sources of supply for some of its critical
components. Management has determined that developing and maintaining
additional sources for all critical components is not cost effective. The
Company is unaware of any difficulty experienced by its suppliers in obtaining
raw materials for component manufacture. The Company has no written agreements
with its suppliers, other than purchase orders.
Most suppliers sell to the Company on standard credit terms, while some sell on
a collect-on-delivery basis.
Patents and Trademarks
The Company has patents covering its SABER Bulb Evacuator and its 3C System.
There can be no assurance that these patents will be of material benefit to the
Company.
<PAGE>
Major Customers
Net sales to international customers for the years ended December 31, 1996 and
1995 totalled $206,589 and $175,612 respectively, representing approximately
33% and 25% of the Company's sales. Chirmed, S.R.L., located in Sassari, Italy,
accounted for 22% and 18% of total net sales for 1996 and 1995, respectively.
Baxter accounted for 2% and 15% of total net sales in 1996 and 1995,
respectively. The loss or material reduction of business from Italy could
adversely affect future net sales levels.
Competition
The hospital market for disposable suction drainage products is highly price
competitive. One company, Stryker Corporation an orthopedic product company,
markets battery powered suction drainage systems, including both wound and
orthopedic drainage and autotransfusion products. A number of other companies
market disposable wound drainage and orthopedic autotransfusion products
including C.R. Bard, Boehringer Laboratories, Zimmer, Inc., DePuy and Gish Bio-
medical, Inc. The Company's products are designed to provide significant
enhancements to existing products in it's specific market niches.
Research and Development
For the fiscal years ended December 31, 1996 and 1995 the Company incurred
research and development expenditures of $32,182 and $11,070, respectively.
The increase is attributed to the $19,365 write-down of certain tooling that the
Company determined would not be utilized in future product manufacturing. The
adjusted 1996 research and development costs were $12,817. The low level of
research and development expenditures are attributable to the maturing of
marketed products and cash flow constraints. The Company is expected to
increase research and development expenditures in 1997.
Government Regulation
The Company's products are classified as Class I and II medical devices under
the Medical Device Amendment to the Federal Food, Drug and Cosmetic Act (the
"Act"). As such, they are subject to regulation by the United States Food and
Drug Administration (FDA), which has the power to approve medical devices
before sale, remove medical devices from the marketplace if found to be
unsafe or ineffective, and control plant conditions to assure product quality.
No government approval, other than FDA premarket approval, is required for sale
and use of the Company's products in the United States, Puerto Rico and the
United Kingdom. The Company has FDA 510(k) exemption for all marketed
products, including VariDyne Vacuum Controllers and collection systems, SABER
and SCEPTRE Bulb Evacuators. The VariDyne Vacuum Controller Models 140 and 350,
used in conjunction with the CSA approved Model 2007 battery charger, have been
approved by the Canadian Standards Association.
Employees
At December 31, 1996, 6 full-time persons were employed by the Company. None of
the Company's employees are represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are good.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's administrative headquarters, research and development, production
and warehousing operations are located in a single building in Minneapolis,
Minnesota. This facility comprises approximately 7,000 square feet, which the
Company leases for approximately $3,000 per month through July, 1998.
Management considers that this property is sufficient for its present
operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, nor is any of its property subject to, any
material pending legal proceedings, nor any material legal proceedings known to
be contemplated by governmental authorities or others.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of shareholders during the fourth quarter
ended December 31, 1996.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth for the fiscal period indicated, the high and low
bid prices as reported in the local over-the-counter market in Minneapolis,
Minnesota, by Summit Investments Corporation. These quotations reflect inter-
dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Bid Price Range
1996 1995
Fiscal Period High Low High Low
First quarter $.15 $.06 $.25 $.05
Second quarter .16 .06 .15 .05
Third quarter .15 .05 .15 .05
Fourth quarter .19 .03 .16 .06
On February 12, 1997, the bid price for the common shares as reported in the
local over-the-counter market was $.05 and the Company had 421 holders of record
of its common shares. Although the shares are reported in the local over-the-
counter market, there was limited sales activity.
The Company has not paid cash dividends on its common shares and does not plan
to pay cash dividends to its shareholders in the immediate future. On December
1, 1993, the Company's debenture holders elected to convert the face value of
the debentures into 1,600,000 shares of unregistered Series A preferred stock at
$.25 per share. Commencing January 1, 1994, the preferred shareholders are
entitled to a dividend equal to 3% of net sales. The dividend in a given year
is limited to 50% of the Company's net income. Cumulative dividends cannot
exceed $210,000. As of December 31, 1996 cumulative dividends totalled $437.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations - 1996 compared to 1995
Net Sales. Net sales for the year ended December 31, 1996 decreased by $56,962
as compared to the same period in 1995 as a result of decreased sales to Baxter.
Baxter sales decreased from $105,161 in 1995 to $11,670 in 1996. Increased
contract manufacturing sales in 1996 offset a portion of the Baxter decrease.
Gross Profit. Gross profit, expressed as a percentage of sales, decreased from
34% in 1995 to 32% in 1996. This decrease is due to a reduction in Baxter
royalty revenues in 1996.
Operating Expenses. Operating expenses decreased from $223,519 in 1995 to
$215,518 in 1996. This decrease is due primarily to the elimination of certain
salaried positions of $25,655, offset by a $19,365 write off of tooling the
Company determined would not be used in future product manufacturing.
Other Income (Expense). Other income (expense) decreased from a net expense of
$10,007 in 1995 to $7,180 in 1996. This decrease is attributed primarily to
lower interest expense on notes payable due to the reduction of principal
balances from the conversion to common stock.
Results of Operations - 1995 compared to 1994
Net Sales. Net sales for the year ended December 31, 1995 increased by $17,809
as compared to the same period in 1994 primarily as a result of increased sales
to Baxter. Baxter sales increased from $53,893 in 1994 to $105,161 in 1995.
Gross Profit. Gross profit, expressed as a percentage of sales, increased from
24% in 1994 to 34% in 1995. This increase is due primarily to a reduction in
manufacturing overhead expenses.
Operating Expenses. Operating expenses decreased from $326,402 in 1994 to
$223,519 in 1995. This decrease is due primarily to elimination of certain
salaried positions and a reduction in outside services. This downsizing was
dictated by unprofitable operations and cash flow constraints.
Other Income (Expense). Other income (expense) decreased from a net expense of
$14,402 in 1994 to $10,007 in 1995. This decrease is attributed primarily to
lower interest expense on notes payable due to the reduction of principal
balances from the conversion
to common stock subscriptions and cash payments.
Liquidity and Capital Resources
At December 31, 1996 the Company had working capital of $200,715 compared to
working capital of $183,176 at December 31, 1995. In 1996, net cash provided by
operating activities was $1,852 compared to net cash used in operating
activities of $7,777 in 1995. The current year amount resulted from noncash
expenses of $28,814, decreases in accounts receivable of $19,897 and increases
in accounts payable and accrued expenses of $14,089 offset by the net loss of
$18,105 and increases in inventories and prepaid expenses of $42,843. Planned
increases in inventory were a result of the Company's emphasis on reducing
customer backorders. The Company had no capital expenditures in 1996, but
expects increased expenditures in 1997 for the development of tooling for new
products. Net cash provided by financing activities was $21,792 in 1996
compared to $48,393 in 1995, resulting primarily from the proceeds of a private
placement of common stock that was completed in February, 1996.
In 1995, the Company converted an accounts payable balance of $35,546 into a
non-interest bearing unsecured note payable due in one installment on January 1,
1997. The Company did not pay-off the note on January 1, 1997 and as a result,
the note is currently due on demand.
The ability of the Company to continue as a going concern and its short-term
liquidity is dependent upon obtaining additional debt and/or equity financing
to fund future development and operations. The Company has made changes to it's
current product lines and plans to add additional products in order to offer a
more complete and competitive line. In addition, the Company is investigating
several other new products which are at various stages of development. In
February, 1996, the Company completed a private placement equity offering to
raise capital. In total, the Company has raised $118,350 at $.075 per share in
connection with this offering, which has and will provide working capital to
begin development on a new product line for the Company. Additional funding
will be required in 1997 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 1997 depend largely on increased business from
contract manufacturing and increased sales from existing and new products.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SURGIDYNE, INC.
CONTENTS PAGE
INDEPENDENT AUDITOR'S REPORTS ON THE FINANCIAL
STATEMENTS 7
FIANCIAL STATEMENTS
Balance Sheets 8
Statements of operations 10
Statements of stockholders' equity 11
Statements of cash flows 12
Notes to financial statements 13
<PAGE>
SURGIDYNE, INC.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Surgidyne, Inc.
Plymouth, Minnesota
We have audited the accompanying balance sheets of Surgidyne, Inc. as of
December 31, 1996 and 1995, and the related statements of operations, stock-
holders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by man-
agement, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Surgidyne, Inc. as of December
31, 1996 and 1995, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is dependent upon obtaining additional debt or
equity financing to fund future development and operations, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
McGLADREY & PULLEN, LLP
Minneapolis, Minnesota
February 26, 1997
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
December 31, 1996 1995
ASSETS
Current Assets
Cash and cash equivalents $ 66,941 $ 43,297
Accounts receivable, less
allowance for doubtful accounts
of $4,700 in 1996 and $4,000 in
1995 (Note 11) 86,339 106,236
Inventories (Note 3) 198,461 167,655
Prepaid expenses 16,465 4,428
Total current assets 368,206 321,616
Furniture and Equipment, at cost
(Notes 4 and 9) 328,692 360,257
Less accumulated depreciation 306,926 312,244
21,766 48,013
Other Assets
Patents, trademarks, and debt
issuance costs, net of accum-
ulated amortization of $12,312
in 1996 and $9,745 in 1995 9,528 12,095
Deposits 3,529 3,529
13,057 15,624
$ 403,029 $ 385,253
See Notes to Financial Statements.
<PAGE>
December 31, 1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to officers and
directors (Note 5) $ 10,000 $ 19,605
12% demand note payable 11,646 11,646
Current maturities of long-term debt 38,711 6,406
Accounts payable 68,486 62,509
Accrued expenses 38,648 38,274
Total current liabilities 167,491 138,440
Long-Term Debt, less current maturities
(Notes 5 and 9) 3,129 38,641
3,129 38,641
Commitments and Contingencies
(Notes 9 and 10)
Stockholders' Equity (Notes 5, 6 and 7)
Series A Preferred stock, 1,600,000
shares authorized and issued,
$400,000 liquidation preference 400,000 400,000
Common stock, no par value;
authorized 18,400,000 shares;
issued and outstanding 7,017,085
and 4,537,913 shares in 1996 and
1995, respectively 4,472,042 4,286,086
Common stock subscriptions;
1,914,852 shares in 1995 - 143,614
Accumulated deficit (4,639,633) (4,621,528)
Total stockholders' equity 232,409 208,172
$ 403,029 $ 385,253
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
Years Ended December 31, 1996 1995
Net sales (Notes 10 and 11) $ 634,509 $ 691,471
Cost of goods sold 429,916 457,070
Gross profit 204,593 234,401
Operating expenses
Research and development 32,182 11,070
Sales and marketing 29,776 52,496
General and administrative 153,560 159,953
Total operating expenses 215,518 223,519
Operating income (loss) (10,925) 10,882
Other income (expense)
Interest income 1,594 194
Interest expense (Note 5) (8,774) (10,201)
Net income (loss) $ (18,105) $ 875
Net income (loss) per share $ - $ -
Weighted average common
shares outstanding 6,952,350 7,553,867
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1996 and 1995
Common
Preferred Common Stock Stock Accumulated
Stock Shares Amount Subscribed Deficit Total
Balance, December 31, 1994
$400,000 4,453,913 $4,265,086 $ 21,000 $ (4,621,966) $ 64,120
Subscribed shares issued
- 84,000 21,000 (21,000) - -
Shares subscribed in lieu of notes payable and accrued interest to directors
- - - 50,264 - 50,264
Shares subscribed pursuant to private placement (Note 2)
- - - 93,350 - 93,350
Preferred stock dividends (Note 6)
- - - - (437) (437)
Net income
- - - - 875 875
Balance, December 31, 1995
$400,000 4,537,913 $4,286,086 $143,614 $ (4,621,528) $208,172
Subscribed shares issued
- 1,914,852 143,614 (143,614) - -
Shares issued for private placement (Note 2)
- 333,333 25,000 - - 25,000
Shares issued in lieu of note payable and accrued interest to directors
- 230,987 17,342 - - 17,342
Net loss
- - - - (18,105) (18,105)
Balance, December 31, 1996
$400,000 7,017,085 $4,472,042 $ 0 $ (4,639,633) $232,409
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996 1995
Cash Flows from Operating Activities
Net income (loss) $ (18,105) $ 875
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 9,449 13,485
Write-off of tooling 19,365 -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 19,897 (40,371)
Inventories (30,806) 44,395
Prepaid expenses (12,037) (776)
Increase (decrease) in:
Accounts payable and accrued
expenses 14,089 (25,385)
Net cash provided by (used in)
operating activities 1,852 (7,777)
Cash Flows from Investing Activities
Capital expenditures - (9,240)
Net cash used in investing
activities 0 (9,240)
Cash Flows from Financing Activities
Proceeds from issuance of common
stock subscriptions - 93,350
Proceeds from issuance of common
stock 25,000 -
Principal payments on notes payable - (38,452)
Principal payments on capital leases (3,208) (6,505)
Net cash provided by financing
activities 21,792 48,393
Increase in cash and cash equivalents 23,644 31,376
Cash and Cash Equivalents:
Beginning 43,297 11,921
Ending $ 66,941 $ 43,297
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 3,574 $ 8,917
Supplemental Schedule of Noncash Financing Activities
Notes payable and accrued expenses
exchanged for common shares
subscribed/issued $ 17,324 $ 50,264
Notes payable issued in exchange for
accounts payable - 35,645
See Notes to Financial Statements.
<PAGE>
SURGIDYNE,INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
Nature of business: Surgidyne, Inc. (Company) designs, develops, manufactures
and markets specialty medical and surgical wound drainage products. The Company
sells its products primarily on a credit basis throughout the United States and
Europe.
A summary of the Company's significant accounting policies follows:
Revenue recognition: The Company recognizes revenue, including revenue from
contract manufacturing, upon shipment to the customer.
Cash and cash equivalents: For purposes of reporting cash flows, the Company
considers all cash and any Treasury bills, commercial paper and money market
funds with an initial maturity of three months or less to be cash equivalents.
Inventories: Inventories are stated at the lower of cost (first-in, first-out
method) or market.
Net income (loss) per share: Net income (loss) per share is computed by
dividing the net income (loss) by the weighted average number of common shares
outstanding during the period. Common stock equivalents, consisting of options
and warrants are not included in this calculation as their effect would be
antidilutive. In addition, the convertible preferred stock is included in the
calculation in 1995.
Patents and trademarks: Patent and trademark costs have been
capitalized and are being amortized over 17 years using the
straight-line method.
Furniture and equipment: Furniture and equipment is carried at
cost. Depreciation is provided for on the straight-line method
over estimated useful lives of three to five years.
Research and development costs: Expenditures for research and
development activities, whether performed by the Company or
performed by outside parties under contract, are charged to
operations as incurred. During 1996, the Company determined
certain tooling would not be utilized in future product manufac-
turing, and accordingly wrote-off an amount of $19,365 to
research and development.
Income taxes: Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible
temporary differences and operation loss and tax credit carryfor-
wards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differ-
ences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all or the deferred
tax assets will not be realized. Deferred tax assets and
liabilities are adjusted
for the effects of changes in tax laws and rates on the date
of enactment.
Fair value of financial instruments: The fair value of the
notes payable and long-term debt are estimated based on
interest rates for the same or similar debt offered to the
Company having the same or similar remaining maturities and
collateral requirements. The carrying amount of these
obligations approximates fair value.
Management estimates: The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2. Going Concern
The ability of the Company to continue as a going concern and
its short-term liquidity is dependent upon obtaining addition-
al debt and/or equity financing to fund future development and
operations. The Company has made changes to it's current
product lines and plans to add additional products in order to
offer a more complete and competitive line. In addition, the
Company is investigating several other new products which are
at various stages of development. In February, 1996, the
Company completed a private placement equity offering to raise
capital. In total the Company has raised $118,350 at $.075
per share in connection with this offering, which has and will
provide working capital to begin development on a new product
line for the Company. Additional funding will be required in
1997 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 1997 depend largely on increased business from contract
manufacturing and increased sales from existing and new
products.
<PAGE>
Note 3. Inventories
Inventories consisted of the following:
1996 1995
Component parts and
subassemblies $ 100,098 $ 110,229
Work-in-process 23,146 10,489
Finished goods 85,217 56,937
Less obsolescence reserve (10,000) (10,000)
$ 198,461 $ 167,655
Note 4. Furniture and Equipment
Furniture and equipment consisted of the following:
1996 1995
Furniture, fixtures
and equipment $ 230,300 $ 230,300
Tooling and molds 98,392 117,757
Automobiles - 12,200
$ 328,692 $ 360,257
Note 5. Notes Payable
Notes payable to related parties: The Company has short-term
notes payable outstanding with a certain officer and director
which bears interest at 10%. The balance of $10,000 is due in
annual installments limited to 50% of the audited net income each
year until paid in full. Related party interest expense was
approximately $1,099 and $3,000 in 1996 and 1995, respectively.
Long-term debt: In 1995, the Company converted an accounts
payable balance of $35,546 into a non-interest bearing unsecured
note payable due in a single installment on January 1, 1997. The
Company did not pay-off the note on January 1, 1997 and as a
result the note is due on demand.
Note 6. Series A Preferred Stock
On December 1, 1993, certain debenture holders elected to convert
the face value of the debentures into 1,600,000 shares of
unregistered Series A preferred stock at $.25 per share. The
preferred shareholders are entitled to a dividend equal to 3% of
net sales. The dividend in a given year is limited to 50% of the
Company's net income. Cumulative dividends cannot exceed
$210,000. In 1995, the Company accrued $437 for dividends on
net income.
The preferred stock is convertible into common stock on a one
for one basis, subject to certain anti-dilutive adjustments.
The preferred stock is automatically convertible into common
stock upon the occurrence of any of the following:
* The Company's common stock price is traded at a bid price of $.50 or more for
thirty consecutive trading days;
* The preferred shareholders have received the cumulative
dividends specified above.
* Two-thirds of the preferred shareholders elect to convert
their preferred stock.
<PAGE>
Note 7. Stock Options and Warrants
Incentive stock options: The Company maintains a 1986 Incentive
Stock Option Plan. The plan provides for issuance of up to
195,000 shares of common stock to selected management and other
key employees of the Company.
Under the Plan, the exercise price cannot be less than 100% of
the fair market value of the common stock on the date the option
is granted. Options are fully vested upon issuance and are
exercisable over a five year period from date of grant. Informa-
tion with respect to incentive stock option activity is summa-
rized as follows:
Weighted
Average
Exercise
Shares Price
Outstanding at
December 31, 1994 90,000 $0.22
Granted - -
Cancelled - -
Outstanding at
December 31, 1995 90,000 $0.22
Granted - -
Cancelled (70,000) $0.23
Outstanding at
December 31, 1996 20,000 $0.19
Warrants: The Company has granted warrants for the purchase of shares of the
Company's common stock to directors, medical advisors and certain debt and
equity holders. The warrants are fully vested upon issuance and expire in
varying amounts through 2001. Information with respect to warrant activity is
summarized as follows:
Weighted
Average
Exercise
Shares Price
Outstanding at
December 31, 1994 1,330,000 $0.21
Granted - -
Cancelled (160,000) $0.25
Outstanding at
December 31, 1995 1,170,000 $0.21
Granted 30,000 $0.11
Cancelled (310,000) $0.25
Outstanding at
December 31, 1996 890,000 $0.19
Option and warrant grants discussed above are accounted for following APB
Opinion No. 25 and related interpretations. For 1996 and 1995, there was no
compensation expense recorded on the issuance of stock options and warrants as
they were issued at or above quoted market prices. Compensation costs as
determined using the fair value method required by FASB Statement No. 123 did
not vary significantly from the cost under APB Opinion No. 25, and, accordingly,
the pro forma information required by Statement No. 123 has not been presented.
The following table summarizes information about options and warrants
outstanding as of December 31, 1996:
Weighted
Average Weighted
Range of Number Remaining Average
Exercise of Units Contractual Exercise
Price Outstanding Life (Years) Price
$.075 - .11 205,000 2.8 $.09
$.19 - .25 605,000 1.6 $.19
$.38 100,000 2.5 $.38
910,000 2.0 $.19
<PAGE>
Note 8. Income Taxes
Deferred tax assets consisted of the following:
1996 1995
Depreciation $ - $ (2,000)
Allowance for inventory
obsolescence 2,000 1,000
Other 2,000 3,000
Net operating loss
carryforwards 665,000 665,000
Tax credit carryforwards 42,000 42,000
Gross deferred tax assets 711,000 709,000
Less valuation allowance 711,000 709,000
Net deferred tax
assets $ - $ -
During the year ended December 31, 1996 the Company recorded a valuation
allowance of $711,000 on deferred tax assets to reduce the total to an amount
that management believes will ultimately be realized.
The Company's income tax expense differed from the statutory federal rate as
follows:
1996 1995
Statutory rate applied to
income (loss) before tax $ (6,000) $ -
State income tax net of
federal tax benefit - -
Change in valuation allowance 2,000 -
Effect of graduated tax rates 4,000 -
$ - $ -
The Company has tax net operating loss and credit carryforwards at December 31,
1996 which are available to reduce income taxes payable in future years, subject
to potential limitations due to changes in ownership. These carryforwards and
credits will expire as follows:
Operating Tax Credit
Loss Carry- Carry-
Year forwards forwards
1998 $ 12,000 $ 900
1999 324,000 22,600
2000 226,000 13,700
2001 819,000 4,600
2002 1,128,000 -
2003 995,000 -
2004 407,000 -
2005 144,000 -
2006 4,000 -
2007 - -
2008 164,000 -
2009 187,000 -
2010 21,000 -
$4,431,000 $ 41,800
<PAGE>
Note 9. Leases
Operating leases: The Company leases its office and warehouse
facilities under a noncancellable operating lease. The lease re-
quires monthly payments of $3,281 through July, 1998. Rent
expense was approximately $42,000 in 1996 and 1995, respectively.
Capital leases: The Company leases equipment under a capital
lease discounted at a rate of 13.9%, due in monthly installments
of $340 to October, 1998.
Approximate future minimum lease payments under capital leases
and the aggregate present value of the net leases payments are
as follows:
Years Ending:
1997 $ 4,087
1998 3,405
Total minimum payments 7,492
Less amounts representing interest 1,198
6,294
Less current maturities 3,165
$ 3,129
The following is a summary of equipment under capital lease at
December 31, 1996:
1996
Cost $ 21,743
Less accumulated depreciation 15,119
$ 6,624
Note 10. Baxter Contract
In 1990, the Company entered into agreements with Baxter
Healthcare Corporation for the development, license, manufac-
ture and sale of an autotransfusion system. The manufacturing
agreement provided that Baxter pay an agreed upon price for
the product. This agreement expired December 31, 1993 and the
Company ceased manufacturing for Baxter in 1995.
The development and license agreement calls for a 20% royalty
on the net sales by Baxter to their customers of autotra-
nsfusion products until total royalties paid equal $2,000,000.
As of December 31, 1996 cumulative royalties paid amounted to
approximately $170,000.
In October of 1996, Baxter advised the Company that in
conjunction with the formation and spinoff of the Allegiance
Corporation, they were discontinuing the autotransfusion
product line licensed from the Company.
In addition, the Company has committed to pay a portion of the
manufacturing revenues and royalties received to certain
common and preferred shareholders. This commitment ended
effective December 31, 1996 per the shareholder agreements.
A summary of royalty activity under this contract was as
follows (approximate amounts):
1996 1995
Manufacturing revenues and royalty income $ 10,000 $ 110,000
Royalty expense $ 400 $ 4,000
<PAGE>
Note 11. Major Customers and Export Sales
Major customers: Net sales for the year ended December 31, 1996
and 1995 include sales to major customers as follows:
Sales Percentage
Company 1996 1995
A* 22% 18%
B 2% 15%
Year End Receivable Balances
Company 1996 1995
A* $ 3,200 $ 17,652
B - 18,876
* International customer, representing 67% and 70% of export sales in
1996 and 1995, respectively.
Export sales: Net export sales to international customers were
$206,589 and $175,612 in 1996 and 1995, respectively.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The following eight persons serve as directors of the Company:
Name Age Position Director Since Term *
Charles B. McNeil 67 Director, 1982 *
Executive V.P.
and Treasurer
Theodore A. Johnson 56 Chief Executive 1985 *
Officer and
Chairman
David B. Kaysen 47 Director 1988 *
William F. Gearhart 49 Director and 1984 *
Secretary
Arthur W. Schwalm 64 Director 1984 *
Vance D. Fiegel 43 President and 1995 *
Director
David R. Knighton, M.D. 48 Director 1994 *
Daniel M. McWhorter 58 Director 1996 *
* These directors will serve until the next annual meeting of the shareholders.
Charles B. McNeil, founder of the Company, has over 30 years experience in the
health care industry. He has served as Executive Vice President of the Company
for the past six years and served as President of the Company from its
incorporation in 1982 until 1988. He served as Vice President and General
Manager of the Inmed and Bittner Medical and Home Health Division of Inmed Corp-
oration, Norcross, Georgia. Prior to joining Inmed, he was employed for 18
years by Davol, Inc., Providence, Rhode Island, where he directed product
development for seven years. New products he successfully developed at Davol
include numerous disposable surgical devices such as the Reliavac Closed Wound
Suction Device, surgical drains and disposable surgical suction devices.
Theodore A. Johnson, Chairman of the Board and Chief Executive Officer since
January, 1995 is also President, CEO and Director of the Minnesota Cooperation
Office for Small Business and Job Creation, Inc. (MCO), a non-profit corporation
formed in 1979 to foster job creation through assisting the start-up and growth
of innovative, technological ventures in Minnesota. Prior to joining MCO,
Mr. Johnson spent eight years at Control Data Corporation and twelve years
at DATA 100 Corporation in a number of different technical, marketing and
management positions. He currently serves as Chairman of the Board of
International Lottery and Totalizator Systems, Inc., a NASDAQ listed company in
California. In addition, he serves on the boards of directors of three private
companies and two venture capital funds and is also an active investor and
advisor to a number of emerging companies around the United States.
<PAGE>
Vance D. Fiegel, President and Director since January 1995, is also Chief
Operating Officer and the Director of Research at Embro Corporation, a
biomedical research and development company specializing in wound healing
products and vascular devices. At Embro, he directs corporate operations and
new product development. He is a founder of Embro as well as the National
Reparative Medicine Foundation where he serves as Director and Executive Vice
President. Prior to founding Embro, Mr. Fiegel held various positions at the
University of Minnesota, ultimately directing research in the field of wound
healing where he has published over fifty papers in national and international
journals.
David B. Kaysen, Director, is an experienced healthcare executive with over 20
years involvement in medical products sales and marketing. He is currently
President, CEO of Rehabilicare, Inc. From 1991 to 1992 he served as Vice
President of Emeritus Corporation. From 1989 to 1991 he served as Vice
President of Sales and Marketing for HDM Corporation. From 1988 to 1989, he
served as the President and CEO and Director of Surgidyne, Inc. From 1986 to
1988, Mr. Kaysen was Vice President of Marketing for Red Line/XVIIIB Medi Mart,
Minneapolis, Minnesota.
William F. Gearhart, Director and Secretary, is Vice President of Sales and
Marketing for Schneider (USA), Inc. He was previously Director of Marketing for
St. Jude Medical, and Director of Sales and Marketing for the clinical division
of Sandoz Nutrition Corporation. Mr. Gearhart was President and COO of
MedVentures, Inc. from 1987 to 1990, and from 1985 to 1987 was Chairman and
President of Competitive Business Strategies, a developer of strategic planning
software, and Vice President of Alpha Business Group, Inc., a business
consulting service to start-up medical companies.
Arthur W. Schwalm, Director, was founder of Cardiac Pacemakers, Inc. (CPI) in
1972 and served as President and Chief Executive Officer for 10 years. CPI was
sold to Eli Lilly in 1978. Mr. Schwalm served as Chairman of the Board until
1983. Mr. Schwalm also serves on the board of directors of Orthofix. He is an
active investor in a number of new ventures, primarily in the medical device
area.
David R.Knighton, M.D., Director and Chairman of the Company's Medical and
Scientific Advisory Board. He is currently a practicing vascular surgeon in the
Twin Cities, Medical Director of the Institute for Reparative Medicine, and
President and CEO of Embro, Inc. Dr. Knighton founded Curative Technologies,
Inc., an international wound healing company which specializes in formation and
management of Wound Care Centers. In addition to his recognized expertise in
clinical wound care, Dr. Knighton is an experienced basic science researcher in
the field of wound repair and wound healing angiogenesis.
Daniel McWhorter, Director, is Vice President of Research and Development for
LecTec Corporation, a medical products company located in Minnetonka, Minnesota.
Mr. McWhorter has over 25 years of experience in the medical device industry
during which he has been responsible for the development and launch of products
for wound management, anesthesia, urology, I.V. fluid administration and general
surgery. Prior to joining LecTec, he served in a variety of technical and
growth management roles at The Kendall Company and Pharmacia Deltec and in
senior technical roles at Abbott Laboratories and Mentor Corporation.
Mr. McWhorter holds a B.S. degree in Chemistry from MacMurray College and
an MBA from the University of Chicago. He also holds 30 patents.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid or accrued by the
Company for services rendered during the years indicated to its executive
officer serving in the capacity as the CEO.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs (#) Payouts sation
*Charles B. McNeil (Exec. Vice Pres.)
1996 $35,000 $ - $ 4,000 $ - - $ - $ -
1995 35,500 - - - - - -
1994 66,000 - - - - - -
* Vance D. Fiegel is employed by the Company part-time and although Theodore A.
Johnson, who is a non-employee of the Company, has the title of CEO, Charles
B. McNeil has served in that capacity. Mr. Johnson does not receive comp-
ensation from the Company.
The following table provides information with respect to option/SAR grants for
the year ended December 31, 1996:
Number of Secu- % of Total Options/
rities Underly- SAR's Granted to Em- Exercise
ing Options/ ployees in Fiscal or Base Expira-
Name SARs Granted (#) Year Price ($/Sh) tion Date
Charles B. McNeil - - $ - -
The following table provides information with respect to stock option exercises
in fiscal 1996 by the named executive officers and the value of such officers'
unexercised options at December 31, 1996.
Aggregate Option Exercises in Last Fiscal Year and Year-End Option Values
Shares Number of Value of Unexercised
Acquired Unexercised Options In-the-Money Options
on Value at Year-End at Year-End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Charles B. McNeil
- $ - 20,000 - $ - $ -
Compensation of Directors
The Company does not provide cash remuneration to its directors. During 1996,
the Company granted warrants for the purchase of 30,000 shares at $.11 per share
to Dan McWhorter.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information with respect to each share-
holder known by the Company to own beneficially 5% or more of its outstanding
common shares (which includes the assumed conversion of the Series A preferred
stock) and for each Director and Officer as of February 12, 1997. Each share-
holder has sole voting and investment power with respect to the shares shown as
beneficially owned, except as otherwise indicated in a footnote.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Owner Percent of Class
All Directors and Officers
as a group (8 people in group) 2,532,354 1 26.9%
Charity, Inc.
6187 Heather Circle
Fridley, MN 55432 1,126,016 2 12.5%
Theodore A. Johnson 906,875 3 10.3%
Charles B. McNeil 752,839 4 8.6%
9909 South Shore Drive
Minneapolis, MN 55441
Arthur W. Schwalm 455,293 5 4.7%
David R. Knighton, M.D. 156,000 6 1.8%
David B. Kaysen 130,000 7 1.5%
William F. Gearhart 100,000 8 1.2%
Vance D. Fiegel 50,000 9 0.6%
Daniel M. McWhorter 30,000 10 0.4%
******************************
1 Includes 635,000 shares issuable pursuant to options and warrants which are
currently exercisable and 80,000 shares of Series A convertible preferred
stock.
2 Includes 400,000 shares of Series A convertible preferred stock.
3 Includes 120,000 shares issuable pursuant to warrants which are currently
exercisable and 60,000 shares of Series A convertible preferred stock.
Does not include 27,300 shares held by Minnesota Cooperation Office, of which
Mr. Johnson is President.
4 Includes 120,000 shares issuable pursuant to options and warrants which are
currently exercisable.
5 Includes 50,000 shares issuable pursuant to warrants which are currently
exercisable.
6 Includes 135,000 shares issuable pursuant to warrants which are currently
exercisable and 20,000 shares of Series A convertible preferred stock.
7 Represents 130,000 shares issuable pursuant warrants which are currently
exercisable.
8 Represents 100,000 shares issuable pursuant warrants which are currently
exercisable.
9 Represents 50,000 shares issuable pursuant warrants which are currently
exercisable.
10 Represents 30,000 shares issuable pursuant warrants which are currently
exercisable.
<PAGE>
The following table presents certain information with respect to each share-
holder known by the Company to own beneficially 5% or more of its outstanding
Series A Preferred Stock shares and for each Director and Officer as of February
12, 1997. Each shareholder has sole voting and investment power with respect to
the shares shown as beneficially owned, except as otherwise indicated in a
footnote.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Owner Percent of Class
Charity, Inc.
6187 Heather Circle
Fridley, MN 55432 400,000 25.0%
Samuel M. Joy
828 Ridge Place
Mendota Heights, Mn 55118 140,000 8.8%
Dr. Demetre Nicoloff
c/o National City Bank
Account #50-1580-04
75 South Fifth Street
Minneapolis, Mn 55402 120,000 7.5%
Eugene T. and Joan L. Plitt
S76 West 12816 Cambridge Court
Muskego, WI 53150 100,000 6.3%
John M. Metcalfe
6565 Word Parkway
Melbourne Village, FL 32904-3636 80,000 5.0%
Dr. Melvin P. Bubrick
5712 Long Brake Trail
Edina, MN 55345 80,000 1 5.0%
Theodore A. Johnson 60,000 3.8%
David R. Knighton, M.D. 20,000 1.3%
All Directors and Officers as a group 80,000 5.0%
******************************
1 Includes 40,000 shares held in trust in the names of Dr. Bubrick's children.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, Theodore A. Johnson, Arthur W. Schwalm and Charles B. McNeil each
loaned the Company $25,000 in the form of short-term notes payable bearing
interest at 15%. The aggregate balance of these notes as of December 31, 1996
and December 31, 1995 was $10,000 and $19,605 respectively. In 1996 and 1995,
the Company exchanged a portion of the notes payable plus accrued interest
totalling $17,324 and $50,264 respectively, for common stock at $.075 per share.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits required to be filed by Item 601(a) of Regulation S-B are included
as Exhibits to this report as follows:
3.1 Articles of Incorporation of Surgidyne, Inc. (including Articles of
Merger).1
3.2 Bylaws of Surgidyne, Inc.1
4.1 Private Placement Offering Statement of Terms for Convertible
Subordinated Debenture Offering.2
4.2 Form of 12% Convertible Subordinated Debenture for Convertible
Subordinated Debenture Offering.2
4.3 Form of 10% Convertible Subordinated Debenture for Convertible
Subordinated Debenture Offering.2
4.4 Form of Convertible Subordinated Debenture Agreement for Convertible
Subordinated Debenture Offering.2
4.5 Form of Amendment to Convertible Subordinated Debenture Agreement for
Convertible Subordinated Debenture Offering, dated November 28,
1989.3
4.6 Common Stock Purchase Warrant dated December 22, 1988, issued to
Samuel M. Joy for the purchase of 21,600 shares at a price of $0.01
per share.2
4.7 Common Stock Purchase Warrant dated February 28, 1989, issued to
Samuel M. Joy for the purchase of 5,400 shares at a price of $0.01
per share.2
4.8 Form of Amendment to Convertible Subordinated Debenture Agreement for
Convertible Subordinated Debenture Offering, dated June 5, 1990.4
4.9 1990 Private Placement Offering Memorandum.4
10.1 Lease dated August 23, 1985 between Technology Park Associates and
Surgidyne, Inc. for the office and warehouse space located at 9600
West 76th Street, Eden Prairie, Minnesota, as amended.1
10.2 Lease dated January 30, 1989 between Medical Incorporated and
Surgidyne, Inc. for the office and warehouse space located at 9605
West Jefferson Trail, Inver Grove Heights, Minnesota.2
10.3 1984 Stock Option Plan.1
10.4 1986 Stock Option Plan.1
10.5 Selling Agency Agreement dated October 12, 1988 between Surgidyne,
Inc. and Samuel M. Joy.2
10.6 Employment Agreement dated September 11, 1989 between Surgidyne, Inc.
and Thomas J. McEvoy.3
10.7 Lease dated August 1, 1990 between Omnicor, Inc. and Surgidyne, Inc.
for the office and warehouse space located at 9605 West Jefferson
Trail, Inver Grove Heights, Minnesota.4
10.8 Development and license agreement and Manufacturing Agreement dated
October 9, 1990 with Baxter Healthcare Corporation.4
10.9 Lease dated August 1, 1991 between Omnicor, Inc. and Surgidyne, Inc.
for the office and warehouse space located at 9605 West Jefferson
Trail, Inver Grove Heights, Minnesota.5
10.10 Lease dated June 21, 1994 between Medicine Lake Properties of
Plymouth and Surgidyne, Inc. for office and warehouse space located
at 9909 South Shore Drive, Minneapolis, Minnesota.6
10.11 Purchase and sale of Assets and Restated Manufacturing Agreements
dated August 24, 1993 with Baxter Healthcare Corporation.7
10.12 Promissory note dated June 14, 1994 between Robert D. Furst, Jr. and
Surgidyne, Inc.9
1 Incorporated by reference to Exhibits filed with Registrants' 1987
Form 10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
2 Incorporated by reference to Exhibits filed with Registrants' 1988
Form 10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
3 Incorporated by reference to Exhibits filed with Registrants' 1989
Form 10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
4 Incorporated by reference to Exhibits filed with Registrants' 1990
Form 10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
5 Incorporated by reference to Exhibits filed with Registrants' 1991
Form 10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
6 Incorporated by reference to Exhibits file with Registrant's Form
10-QSB for the quarter ended June 25, 1994 under the Securities and
Exchange Act of 1934, file #33-13058-C.
7 Incorporated by reference to Exhibits file with Registrant's Form
10-QSB for the quarter ended September 24, 1994 under the Securities
and Exchange Act of 1934, file #33-13058-C.
8 Incorporated by reference to Exhibits file with Registrant's 1993 Form
10-KSB under the Securities and Exchange Act of 1934, file
#33-13058-C.
9 Incorporated by reference to Exhibits file with Registrant's Form
10-QSB for the quarter ended June 30, 1994 under the Securities and
Exchange Act of 1934, file #33-13058-C.
B. Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the fiscal
year covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SURGIDYNE, INC.
(Registrant)
/s/ Vance D. Fiegel March 27, 1997
By: Vance D. Fiegel
President and Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Charles B. McNeil March 27, 1997
By: Charles B. McNeil
Executive Vice President, Treasurer and Director.
/s/ Theodore A. Johnson March 27, 1997
By: Theodore A. Johnson
Chief Executive Officer and Chairman of the Board of Directors
/s/ David B. Kaysen March 27, 1997
By: David B. Kaysen
Director
/s/ Arthur W. Schwalm March 27, 1997
By: Arthur W. Schwalm
Director
/s/ William F. Gearhart March 27, 1997
By: William F. Gearhart
Secretary and Director
/s/ David R. Knighton March 27, 1997
By: David R. Knighton
Director
/s/ Daniel M. McWhorter March 27, 1997
By: Daniel M. McWhorter
Director
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