-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ss7HWppkKaWwyVCfRs2q7uCmpMsN4NWfnZqXS4usysaduQMqtxDeYY/Xbw4AppkL 3cyr7R0+q8yi42xSF5rBUA== 0000912057-00-053028.txt : 20001213 0000912057-00-053028.hdr.sgml : 20001213 ACCESSION NUMBER: 0000912057-00-053028 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUROFLOW INC CENTRAL INDEX KEY: 0000100591 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 131947195 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-05622 FILM NUMBER: 787264 BUSINESS ADDRESS: STREET 1: 16559 SATICOY STREET CITY: VAN NUYS STATE: CA ZIP: 91406 BUSINESS PHONE: 8187561388 MAIL ADDRESS: STREET 1: 16559 SATICOY STREET STREET 2: 1631 TENTH ST CITY: VAN NUYS STATE: CA ZIP: 91406 FORMER COMPANY: FORMER CONFORMED NAME: ULTRA DYNAMICS CORP DATE OF NAME CHANGE: 19830522 10QSB 1 a2032950z10qsb.txt FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED OCTOBER 31, 2000 COMMISSION FILE NUMBER 0-5622 - -------------------------------------------------------------------------------- PUROFLOW INCORPORATED - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-1947195 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (IRS Employer identification No.) or organization) 16559 SATICOY STREET, VAN NUYS, CALIFORNIA 91406-1739 - -------------------------------------------------------------------------------- (Address of executive offices) (ZIP Code) Registrant's telephone number, including area code: (818) 756-1388 Securities registered pursuant to Section 12(g) of the Act: Common Stock Shares outstanding COMMON STOCK, $.01 PAR VALUE 7,399,091 - -------------------------------------------------------------------------------- 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] PUROFLOW INCORPORATED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
OCTOBER 31, JANUARY 31, 2000 2000 ----------- ----------- ASSETS CURRENT ASSETS Cash $ 5,088 $ 56,829 Accounts receivable, net of allowance for doubtful accounts of $15,000 at October 31, 2000 and $25,000 at January 31, 2000 1,750,062 1,589,322 Advances to Officers & Employees 3,200 4,100 Inventories 2,105,338 1,741,088 Deferred tax benefit 41,547 45,347 Prepaid expenses and other current assets 91,762 107,464 ----------- ----------- TOTAL CURRENT ASSETS $ 3,996,997 $ 3,544,150 ----------- ----------- PROPERTY & EQUIPMENT Leasehold improvements 62,834 59,229 Machinery and equipment 3,616,636 3,583,124 Tooling and dies 376,307 350,932 ----------- ----------- 4,055,777 3,993,285 Less accumulated depreciation and amortization 3,300,206 3,145,251 ----------- ----------- NET PROPERTY AND EQUIPMENT $ 755,571 $ 848,034 ----------- ----------- DEFERRED TAXES 678,980 678,980 OTHER ASSETS 369,628 392,227 ----------- ----------- TOTAL ASSETS $ 5,801,176 $ 5,463,391 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Line of credit $ 544,000 $ 500,000 Notes payable, current 60,000 97,200 Accounts payable 748,163 428,554 Accrued expenses 179,288 325,029 ----------- ----------- TOTAL CURRENT LIABILITIES 1,531,451 1,350,783 ----------- ----------- Long-Term Debt 44,000 92,200 ----------- ----------- TOTAL LIABILITIES $ 1,575,451 $ 1,442,983 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock, par value $.10 per share authorized - 500,000 shares - issued none Common stock, par value $.01 per share authorized - 12,000,000 shares issued and outstanding - 7,399,091 shares at October 31, 2000 and 8,130,121 at January 31, 2000 433,967 441,277 Additional paid-in capital 5,141,767 5,682,729 Accumulated deficit (1,311,090) (1,516,407) Less: Notes Receivable from Stockholders (6,000) (554,272) Treasury Stock (48,500 Shares) at Cost (32,919) (32,919) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 4,225,725 4,020,408 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,801,176 $ 5,463,391 =========== ===========
See accompanying notes to the Consolidated Financial Statements. 1 PUROFLOW INCORPORATED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED OCTOBER 31, OCTOBER 31, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net revenue $ 1,961,697 $ 1,768,123 $ 6,081,810 $ 5,567,679 Cost of goods sold 1,355,308 1,298,603 4,224,759 4,139,885 ----------- ----------- ----------- ----------- Gross profit 606,389 469,520 1,857,051 1,427,794 Selling, general and administrative expense 519,800 541,304 1,551,917 1,632,026 ----------- ----------- ----------- ----------- Operating income 86,589 (71,784) 305,134 (204,232) Interest expense (16,487) (5,635) (47,234) (13,854) Other income 36 8,811 665 27,134 Goodwill/Non-Compete (13,116) (14,513) (39,348) (36,539) Non-Recurring Legal Expenses (223,880) (356,314) Gain/(Loss) from Sale of P & E (106,067) -------------------------------------------------------- Income from continuing operations before taxes 57,022 (307,001) 219,217 (689,872) Provision for income taxes 10,600 13,900 1,896 -------------------------------------------------------- NET INCOME $ 46,422 $ (307,001) $ 205,317 $ (691,768) =========== =========== =========== =========== Net income (loss) per common share Basic earnings per share $ 0.01 (0.04) 0.03 (0.09) =========== =========== =========== =========== Diluted earnings per share $ 0.01 (0.04) 0.03 (0.09) =========== =========== =========== =========== Weighted average number of shares Basic 7,399,091 8,123,721 7,561,526 8,113,322 =========== =========== =========== =========== Diluted 7,483,757 8,123,721 7,646,789 8,113,322 =========== =========== =========== ===========
See accompanying notes to the Consolidated Statements. 2 PUROFLOW INCORPORATED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED OCTOBER 31, 2000 1999 --------- --------- CASH AT BEGINNING OF PERIOD $ 56,829 $ 828,809 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) 205,317 (691,768) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 154,955 181,901 Amortization of Goodwill/Non-compete 39,348 6,539 Provision for losses on accounts receivable 22,617 3,000 Write-off of obsolete equipment -0- 106,067 Changes in operating assets and liabilities: Advances to Officers & Employees 900 2,907 Accounts receivable (183,357) 220,915 Other receivables -0- 375,763 Inventories (364,249) (364,131) Prepaid expenses and other current assets (1,048) 63,104 Deferred tax benefit 3,800 (3,600) Other payable (445,650) Accounts payable & accrued expenses 173,868 (421,933) --------- --------- Net cash provided (used) by operating activities 52,151 (966,886) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (62,492) (110,990) --------- --------- Net cash provided (used) by investing activities (62,492) (110,990) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of options 14,100 Payment of long term debt (85,400) (36,223) Advance on credit line 44,000 280,000 --------- --------- Net cash provided (used) by financing activities (41,400) 257,877 --------- --------- NET INCREASE (DECREASE) IN CASH (51,741) (819,999) --------- --------- CASH AT END OF PERIOD $ 5,088 $ 8,810 ========= ========= SUPPLEMENTARY DISCLOSURE OF CASH PAID DURING THE PERIOD FOR: Interest $ 47,234 $ 13,854 ========= ========= Income Taxes $ 4,800 $ 1,200 ========= =========
See accompanying notes to the Consolidated Financial Statements. 3 PUROFLOW INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
NOTES RECEIVABLE FROM COMMON ADDITIONAL ACCUMULATED STOCKHOLDERS STOCK PAID-IN DEFICIT AND TREASURY PAR VALUE CAPITAL TOTAL STOCK TOTAL ----------- ----------- ----------- ----------- ----------- Balance at January 31, 1999 $ 440,979 $ 5,667,327 $ (668,030) $ (587,819) $ 4,852,457 Payment of note receivable $ 628 $ 628 Exercise of stock options for 9,000 shares at $.50 per share $ 90 $ 4,410 $ 4,500 Exercise of stock options for 12,000 shares at $.75 per share $ 120 $ 8,880 $ 9,000 Exercise of sock options for 8,800 shares at $.25 per share $ 88 $ 2,112 $ 2,200 Net Loss $ (848,377) $ (848,377) ----------- ----------- ----------- ----------- ----------- Balance at January 31, 2000 $ 441,277 $ 5,682,729 $(1,516,407) $ (587,191) $ 4,020,408 Adjustment to notes receivable $ (7,310) $ (540,962) $ 548,272 Net Income $ 154,670 $ 154,670 ----------- ----------- ----------- ----------- ----------- Balance at April 30, 2000 $ 433,967 $ 5,141,767 $(1,361,737) $ (38,919) $ 4,175,078 Net Income $ 4,225 $ 4,225 ----------- ----------- ----------- ----------- ----------- Balance at July 31, 2000 $ 433,967 $ 5,141,767 $(1,357,512) $ (38,919) $ 4,179,303 Net Income $ 46,422 $ 46,422 ----------- ----------- ----------- ----------- ----------- Balance at October 31, 2000 $ 433,967 $ 5,141,767 $(1,311,090) $ (38,919) $ 4,225,725 =========== =========== =========== =========== ===========
See accompanying notes to the Consolidated Financial Statements. 4 PUROFLOW INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OCTOBER 31, 2000, JANUARY 31, 2000, AND OCTOBER 31, 1999 NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION The consolidated balance sheet at the end of the preceding fiscal year has been derived from the audited consolidated balance sheet contained in the Company's annual report on Form 10-K for the fiscal year ended January 31, 2000 (The "Form 10-KSB") and is presented for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments that include only normal recurring adjustments necessary to present fairly the financial position, results of operations and changes in financial positions for all periods presented have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year. Footnote disclosures normally included in financial statements prepared in accordance with the generally accepted accounting principles have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission. The consolidated financials statements and notes thereto should be read in conjunction with management's discussion and analysis of financial condition and results of operations, contained in the Company's annual report on Form 10-KSB for the year ended January 31, 2000. NOTE 2 - INVENTORIES Inventories consist of the following:
OCTOBER 31, JANUARY 31, 2000 2000 ----------- ----------- Raw materials and purchased parts $ 1,359,846 $ 1,038,359 Work in process 346,511 267,968 Finished goods and assemblies 398,981 434,761 ----------- ----------- Totals $ 2,105,338 $ 1,741,088 =========== ===========
NOTE 3 - STOCKHOLDERS' EQUITY On February 17, 2000 the Board entered into a plan to retire 920,000 shares of its common stock, from shares issued August 24, 1998 in return for cancellation of notes received by the company from employees and board members. The company received and retired 731,030 shares of common stock. 5 NOTE 4 - NET INCOME PER SHARE Reconciliation of basic and diluted earnings per share:
PER-SHARE INCOME SHARES AMOUNT ========= ========= ====== 9 MONTHS ENDED OCTOBER 31, 2000 Basic earnings per share $ 205,317 7,561,526 $ .03 ====== EFFECT OF DILUTIVE SECURITIES Stock options 85,263 --------- Diluted earnings per share $ 205,317 7,646,789 $ .03 ========= ========= ====== 9 MONTHS ENDED OCTOBER 31, 1999 Basic earnings per share $(691,768) 8,113,322 $ (.09) ====== EFFECT OF DILUTED SECURITIES Stock Options -0- --------- --------- Diluted earnings per share $(691,768) 8,113,322 $ (.09) ========= ========= ======
Basic earnings per share is based on the weighted average number of shares outstanding. Diluted earnings per share include the effect of common stock equivalents when dilutive. EARNINGS PER SHARE In the first quarter of the year ended January 31, 1999, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" (FAS 128), which supersedes Accounting Principles Board Opinion No. 15. Under FAS 128, earnings, per common share, is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock. Prior period amounts have been restated, where appropriate to conform to the requirements of FAS 128. NOTE 5 - LINE OF CREDIT The Company has a $1,000,000 revolving credit line maturing on December 15, 2000. This credit line bears interest at the rate of prime plus 0.25% per annum, and is secured primarily by the Company's accounts receivable and inventories. The terms of this loan agreement contains certain restrictive covenants, including maintenance of minimum working capital, net worth, and ratios of current liabilities and debt to net worth. There is an open balance of $544,000 as of October 31, 2000. 6 NOTE 6 - INCOME TAXES The company complies with Financial Accounting Standards No. 109, Accounting for Income Taxes. The company will use loss carryforwards to offset future income tax liability. LIQUIDITY AND CAPITAL RESOURCES At October 31, 2000, the Company had cash available of $5,088, compared to $56,829 on January 31, 2000. It had a current ratio of 2.61 to 1 at October 31, 2000, compared to 2.62 to 1 on January 31, 2000. The company has a $1,000,000 line of credit, with $456,000 available financing at October 31, to fund operations. OPERATING ACTIVITIES Cash Flow from Operations for the nine months ended October 31, 2000 increased by $52,151 compared to a decrease of ($966,886) for the nine months ended October 31, 1999. INVESTING ACTIVITIES The Company invested $62,492 in new capital equipment in the first three quarters predominantly for tooling and machinery in support of new PMA products. FINANCING ACTIVITIES The Company has a revolving credit line of $1,000,000, which bears interest at the rate of prime plus 0.25% per annum, secured by the Company's accounts receivable and inventory of which $544,000 is outstanding at October 31, 2000. The Company is in compliance with all covenants under its loan agreement with the Bank. The Company obtained a loan of $236,000 to pay non-recurring judgment against it as well as purchase a necessary Blue print copier. At October 31, 2000 the balance of this note is $104,000. BUSINESS ACQUISITION On January 31, 1999 the company acquired Quality Controlled Cleaning Corporation ("QCCC") for $550,630 including all costs of the acquisition. QCCC is a precision cleaning and repair company located in Commerce, California. The Company's acquisition resulted in goodwill of approximately $274,000 and a non-compete agreement of $50,000. The goodwill is being amortize over 10 years and the non-compete over its term of 3 years. In addition to the purchase price, the agreement included a contingent payment of 50% of net sales in the year ending January 31, 2000, in excess of $500,000 up to a maximum of $800,000. The liability totaled $125,609 and was recorded as additional goodwill.
SEGMENT REPORTING 9 MONTHS @ 9 MONTHS @ NET SALES OCTOBER 31, 2000 OCTOBER 31, 1999 ---------------------------------------------- Filtration $5,311,451 $4,763,107 International 449,998 264,164 Testing & Repairs 320,361 540,408 ---------- ---------- Total $6,081,810 $5,567,679 ========== ==========
7
OPERATING INCOME 9 MONTHS END 9 MONTHS END OCTOBER 31, 2000 OCTOBER 31, 1999 ---------------------------------------------- Filtration $ 507,575 $ (339,568) International (146,798) (16,085) Testing & Repairs (55,643) 151,421 ---------- ---------- Total $ 305,134 $ (204,232) ========== ==========
RESULTS OF OPERATIONS FOR QUARTER ENDED OCTOBER 31, 2000 REVENUES Sales were $1,961,697 for the three months ended October 31, 2000 compared to $1,768,123 for the same period in 1999. a 10.9% increase of $193,574 due primarily to an increased sales of aerospace products and international sales with an offset by a decrease in airbag sales and QCCC. GROSS PROFIT Gross profit as a percentage of sales was 30.9% for the three months ended October 31, 2000, compared to 26.5% for the same period in 1999 representing higher margins of precision filters for the PMA program and increased manufacturing efficiencies. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES S,G & A expenses were 26.5% for the three months ended October 31, 2000 compared to 30.6% for the same period last year. The reduction S,G & A expenses was due to reduced legal and outside services incurred as a result of a proxy contest and reduction in administrative expenses. OPERATING INCOME Operating income for the three months ended October 31, 2000 was $86,589, an operating margin of 4.4% compared to a loss of $71,784, an operating margin of negative 4.1%. See the explanation under S,G & A and Gross Profit above. INTEREST CHARGES Interest expenses for the three months ended October 31, 2000 was $16,487 compared to $5,635 for the same period in 1999. 8 RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDING OCTOBER 31, 2000 REVENUE Sales were $6,081,810 for the nine months ended October 31, 2000 compared to $5,567,679 in 1999, a 9.2% increase of $514,131. GROSS PROFIT Gross profit as a percentage of sales was 30.5% in October 2000, compared to 25.6% in October 1999, an increase of 4.9% representing higher margins on precision filters on the PMA Program as well as manufacturing efficiencies. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES S,G & A expenses were 25.5% for the nine months ended October 31, 2000 compared to 29.3% for the same period last year. OPERATING INCOME Operating Income for the nine months ended October 31, 2000 was $305,134, an operating margin of 5% compared to a loss of $204,232, an operating margin of negative 3.7%. INTEREST CHARGES Interest expense for the nine months ended October 31, 2000 was $47,234 compared to $13,854 for the same period last year. PART II - OTHER INFORMATION ITEM 1. PENDING LEGAL PROCEEDINGS The Company is not party, nor are its properties subject to, any material pending proceedings other than ordinary routine litigation incident to the Company's business and the matters described above. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULT UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 9 ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None. SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed and on its behalf by the undersigned thereto, duly authorized. PUROFLOW INCORPORATED December 11, 2000 By: /s/ Michael H. Figoff ----------------------------------------- Michael H. Figoff President/Chief Executive Officer 10 EX-27 2 a2032950zex-27.txt EXHIBIT 27
5 9-MOS JAN-31-2001 AUG-1-2000 OCT-31-2000 5,088 0 1,765,062 15,000 2,105,338 3,996,997 4,055,777 3,300,206 5,801,176 1,531,451 0 0 0 5,536,815 (1,311,090) 5,801,176 6,081,810 6,081,810 4,224,759 5,776,676 (39,348) 5,000 (47,234) 219,217 13,900 205,317 0 0 0 205,317 .03 .03
-----END PRIVACY-ENHANCED MESSAGE-----