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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996 or
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from _____________________ to _______________________
Commission file number 0-19562
BIO-DYNE CORPORATION
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(Exact name of
Registrant as Specified in its Charter)
Georgia 58-1865733
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(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
5400 Bucknell Dr. S.W., Atlanta Georgia 30336
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (404) 346-3100
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, at of the latest practicable date.
Common Stock $ .01 Par Value 10,463,529
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Class September 13, 1996
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BIO-DYNE CORPORATION
FORM 10-QSB
FOR THE QUARTER ENDED June 30, 1996
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets -June 30, 1996
(Unaudited) and March 31, 1996. . . . . . . . . . 3
Consolidated Statements of Operations for the
Three Months Ended June 30,
1996 and 1995 (Unaudited) . . . . . . . . . . . . 5
Condensed Notes to Consolidated
Financial Statements. . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and analysis of
Financial Condition and Results of Operations. . . 7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 9
Exhibit 11.1 Statement Regarding computation of Per Share Earnings . . 11
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BIO-DYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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($000 omitted)
June 30, 1996 March 31, 1996
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(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 167 $ 286
Accounts Receivable 1,088 564
Factored Accounts Receivable 259 239
Inventories 1,445 2,095
Prepaid expenses and other current assets 126 174
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Total current assets 3,085 3,358
PROPERTY, PLANT AND EQUIPMENT, net 460 499
DEPOSITS AND OTHER ASSETS 118 114
GOODWILL, net of accumulated amortization 2,570 2,063
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$6,233 $6,034
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See accompanying notes to consolidated financial statements.
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BIO-DYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
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($000 omitted)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
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(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,751 $ 2,360
Accrued expenses 797 768
Current portion of notes payable and capital lease obligations 216 436
Line of credit 174 157
Customer deposits 1,990 756
Notes Payable to Continental 600
Current portion of reserve for acquisition costs 173 186
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Total current liabilities 5,701 4,663
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS,
net of current portion 224 271
ACCRUED SETTLEMENT - NET OF CURRENT PORTION 450 56
DEFERRED PROFIT - SALE OF BUILDING 95 96
FUTURE BANKRUPTCY SETTLEMENT -- 450
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Total liabilities 6,470 5,536
STOCKHOLDERS' EQUITY:
Common stock 103 103
Additional paid-in capital 9,729 9,729
Accumulated Deficit - Beginning (8,834) (5,983)
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998 3,849
Current Profit/Loss (1,235) (3,351)
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Total stockholders' equity (237) 498
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$ 6,233 $ 6,034
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</TABLE>
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See accompanying notes to consolidated financial statements.
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BIO-DYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
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($000 omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30,
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1996 1995
<S> <C> <C>
Net sales $ 1,661 $ 3,834
Cost of goods sold 1,263 2,872
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Gross margin 398 962
Selling, general and administrative expenses 1,512 1,558
Depreciation and amortization 154 68
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Loss from operations (1,268) (664)
Interest expense 12 30
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Net loss $ (1,280) $ (694)
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Net loss per common share $ (0.13) $ (0.09)
Weighted average shares outstanding 10,163,529 7,719,362
</TABLE>
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See accompanying notes to consolidated financial statements.
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BIO-DYNE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. FINANCIAL STATEMENTS (BASIS OF PRESENTATION)
In the opinion of the Company, the statements for the unaudited interim periods
presented herein include all adjustments (which include only normal recurring
adjustments) necessary to present a fair statement of the results of such
interim periods. The results of operations for the period ended June 30, 1996
are not necessarily indicative of the operating results for the year.
2. INVENTORY
Inventory consisted of the following:
($000 omitted) June 30, 1996 March 31, 1996
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Raw materials $ 272 $ 459
Work in process 29 43
Finished goods 68 169
Retail 1,076 1,424
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$1,445 $2,095
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3. INCOME TAXES
At March 31, 1996, the Company had, for federal income tax purposes, net
operating loss carryforwards of approximately $6,416,812 which if not utilized,
begin to expire in the year 2005.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109) effective April 1,
1993. SFAS 109 requires the recognition of deferred tax liabilities and assets
for the expected future tax consequences of events that have been recognized in
a company's financial statement or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement carrying amounts and tax basis of assets and liabilities
using enacted tax rates in effect in the years in which the differences are
expected to reverse. The Company has not recognized the benefit of any net
operations loss carryforwards as the result of adopting SFAS 109.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's Consolidated Financial Statements and related
condensed notes thereto. The three months ended June 30, 1996 represent
the first quarter of the fiscal year ending March 31, 1997 and will be
compared to the three months ended June 30, 1995.
<TABLE>
<CAPTION>
($000 omitted) Three Months Ended June 30,
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1996 1995
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<S> <C> <C> <C> <C>
Net sales $ 1,661 100.0% $ 3,834 100.0%
Cost of goods sold 1,263 76.0 2,872 74.9
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Gross Profit 398 24.0 962 25.1
Selling, general and
administrative expenses 1,512 91.0 1,558 40.6
Depreciation and
amortization 154 9.3 68 1.8
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(1,268) (76.3) (664) (17.3)
Interest expense, net 12 .7 30 .8
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Net loss ($1,280) (77.0%) ($ 694) (18.1%)
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</TABLE>
The Company's first fiscal quarter ending June 30 is historically the
Company's second weakest quarter in an increasingly more skewed year,
with the second fiscal quarter being the weakest period and the period
November 1 to January 15 being the strongest period in the year.
Net sales decreased approximately $2,173,000, or 57% in the three
months ended June 30, 1996 compared to 1995. The decrease was caused by
continued softness in the Company's manufacturing operation and the
inability to fill retail and commercial orders in the Company's two
subsidiaries, Home Fitness Studios, Inc. (HFS) and Carolina Fitness
Equipment, Inc. (CFE).
The decrease in sales in the Company's manufacturing operations is
caused primarily by one condition. The inability to purchase raw
materials resulted in canceled purchase orders from dealers and
decreased order flow from HFS and CFE. The decrease in sales in the
Company's retail and commercial sales operations is caused primarily by
one condition. The inability to purchase inventory due to frozen credit
lines with most of HFS and CFE trade creditors.
Gross profit decreased approximately $564,000, or 59%, in the first
quarter of 1996 compared to 1995, and to 24% as a percentage of sales
from 26% in 1995. These decreases are due to less efficient
manufacturing operations in 1996 because of the significantly smaller
throughput in the factory caused by the lower sales.
Selling, general and administrative expenses (SG&A) were down
approximately $46,000, or 3% in the quarter ending June 30, 1996
compared to the quarter ending June 30, 1995 due primarily to the
reduction in sales experienced in the quarter. However, the Company's
SG&A as a percent of sales in the quarter increased to 91% in 1996
compared to 40.6% in 1995, primarily due to the relatively fixed nature
of these expenses and the lower sales volume in 1996.
Loss from operations and net loss increased approximately $604,000 and
$586,000, respectively, in the first quarter of fiscal 1996 compared to
1995. These increased losses are directly attributable to the reduced
volume in 1996 without a corresponding reduction in SG&A.
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Liquidity and Capital Resources
The Company had a line of credit with a bank, collateralized by the
manufacturing accounts receivable, inventory and machinery and
equipment, to provide loans up to an aggregate amount of $300,000,
however, this line was closed due to the deteriorating financial
position of the Company. Management aggressively pursued and negotiated
with several sources to finance or factor its manufacturing receivables
with lines of credit similar or higher than the line it had. However,
due to the importance of financing its manufacturing purchases to meet
its Christmas season need, management elected to secure a line of
credit with Continental American Transportation, Inc. (Continental) for
$1,000,000. On May 31, 1996, Chip Beam and Harvey Miller resigned as
Officers and Directors and appointed Timothy Holstein, Brian Henninger
and Erik Bailey to similar positions. As a condition of the line of
credit, three members of the seven member board resigned leaving Board
Control to the Continental group.
During the quarter ended June 30, 1996, the Company experienced a net
decrease in cash of approximately $119,000, ending with a balance of
approximately $167,000 at June 30, 1996. During the quarter ended June
30, 1996, the Company received a revolving line of credit from
Continental for $1,000,000, of which the Company borrowed $600,000 at
June 30, 1996. The decrease in cash, increased customer deposits, and
the proceeds from the line were used to reduce long-term liabilities
and fund the Company's operating losses.
The Company can not meet short and long term capital needs through cash
generated from operations and no assurances can be given that outside
financing is available, or if available, can be obtained on terms
suitable to the Company.
Inflation
Inflation has not had a significant impact on the Company's results of
operations to date.
Subsequent Events
On August 23, 1996, the Company closed all of its seventeen retail
store locations due to narrowing profit margins, decreased sales, and
frozen credit lines with most of its trade creditors. The Company plans
on liquidating the assets of CFE and HFS in an orderly manner. While
sales will substantially decrease, the Company anticipates tremendous
savings in SG&A expenses and hopes to settle with many of its creditors
so that a substantial equity gain is realized. The Company will focus
on developing its manufacturing division on a full-time basis. While
this division has been historically unprofitable and there can be no
assurances that it will ever be profitable, the Company will
concentrate on developing this operation as well as commercial sales
due to the relatively low fixed cost for these types of operations.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
Subsequent to June 30, 1996, the Company has been
notified by several of its landlords at various
retail locations regarding pending litigation
against the Company's two subsidiaries, Home Fitness
Studios, Inc. and Carolina Fitness Equipment, Inc.
The pending litigation is a result of the retail
store closings. The Company is confident that these
matters will not affect the existing operations of
Bio-Dyne Corporation.
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibit - 11.1 - Statement Regarding Computation of
Per Share Earnings.
(b) During the three months ended June 30 1996, one
report on Form 8-K was filed for May 31, 1996
reporting that the Company established a line of
credit with Continental American Transportation,
Inc. and that there was a change of control with
respect to the Company's Officers and Directors.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
BIO-DYNE CORPORATION
(Registrant)
Date: September 18, 1996 /s/ Timothy Holstein
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Timothy Holstein
President and Chief Executive Officer
Date: September 18, 1996 /s/ Erik Bailey
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Erik Bailey
Vice President and Chief Financial Officer
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EXHIBIT 11.1
Statement Regarding Computation of Per Share Earnings
Income per share calculation:
($000 omitted, except per share data)
Three Months Ended
June 30, June 30,
1996 1995
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Net (loss) $ (1,280) $ (694)
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Weighted average number of
common shares and common
share equivalents are as follows:
Weighted average common
shares outstanding. . . . . . . . . . . 10,313,529 7,719,362
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Shares held in escrow. . . . . . . . . . . ( 150,000) ( 150,000)
Weighted average number of
shares outstanding as adjusted. . . . 10,163,529 7,569,362
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Net (loss) per common and
common equivalent share. . . . . . . $(0.13) $(0.09)
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Note: Shares issued from assumed exercise of options and warrants include the
number of incremental shares which result from applying the "treasury stock
method" for options and warrants, APB 15, paragraph 38.
