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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 April 30, 2001

Commission File Number 0-5622

PUROFLOW INCORPORATED
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)	13-1947195 (IRS Employer identification No.)
16559 Saticoy Street, Van Nuys, California (Address of executive offices)	91406-1739 (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)

			April 30, 2001			January 31, 2001
ASSETS
CURRENT ASSETS
	Cash		$	8,250		$	8,250
	Accounts receivable, net of allowance for doubtful accounts of $25,000 at April 30, 2001 and at January 31, 2001			1,813,719			1,701,442
	Advances to Officers & Employees			2,765			3,125
	Deferred tax benefit			136,528			136,528
	Inventories			1,917,835			2,016,792
	Prepaid expenses and other current assets			94,321			114,068
		TOTAL CURRENT ASSETS		3,973,418			3,980,205
PROPERTY & EQUIPMENT
	Leasehold improvements			62,834			62,834
	Machinery and equipment			3,627,959			3,622,541
	Tooling and dies			390,382			376,307
				4,081,175			4,061,682
	Less accumulated depreciation and amortization			3,419,472			3,366,441
NET PROPERTY AND EQUIPMENT				661,703			695,241
DEFERRED TAXES				590,165			590,165
OTHER ASSETS				342,732			339,762
		TOTAL ASSETS	$	5,568,018		$	5,605,373
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Line of credit		$	540,000		$	544,000
	Notes payable, current			48,000			48,000
	Bank Overdraft			135,890			34,698
	Accounts payable			432,059			506,207
	Accrued expenses			301,099			429,986
		TOTAL CURRENT LIABILITIES		1,457,048			1,562,891
	Long-Term Debt			32,400			44,200
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			433,967			433,967
	Additional paid-in capital			5,141,767			5,141,767
	Accumulated deficit			(1,458,245	)		(1,538,533	)
	Less:
	Notes Receivable from Stockholders			(6,000	)		(6,000	)
	Treasury Stock (48,500 Shares) at Cost			(32,919	)		(32,919	)
		TOTAL STOCKHOLDERS' EQUITY		4,078,570			3,998,282
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,568,018		$	5,605,373

See accompanying notes to the consolidated financial statements.

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PUROFLOW INCORPORATED
Consolidated Statements of Operations
(Unaudited)

		Three Months Ended April 30,
		2001		2000
Net revenue		$	2,202,618	$	1,843,243
Cost of goods sold			1,653,745		1,237,805
	Gross profit		548,873		605,438
Selling, general and administrative expenses			438,214		426,554
	Operating income		110,659		178,884
Interest expense			16,015		13,953
Other income			1,954		—
Goodwill/Non-Compete			13,780		13,116
Income before taxes from continuing operations			82,818		151,815
Provision for income taxes			2,530		2,300
Income from continuing operations		$	80,288	$	149,515
Income from discontinued operations		$	—	$	5,155
Net Income		$	80,288	$	154,670
Net income per common share
	Basic earnings per share	$	0.01		0.02
	Diluted earnings per share	$	0.01		0.02
Weighted average number of shares
	Basic		7,399,091		7,886,396
	Diluted		7,413,939		7,976,735

See accompanying notes to the consolidated financial statements.

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PUROFLOW INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)

				For the three months ended April 30,
				2001			2000
CASH AT BEGINNING OF PERIOD				$	8,250		$	56,829
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income				80,288			154,670
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			53,031			46,690
		Amortization of Goodwill/Non-compete			13,780			13,117
		Provision for losses on accounts receivable			—			(4,191	)
	Changes in operating assets and liabilities:
		Advances to Officers & Employees			360			750
		Accounts receivable			(112,277	)		(190,535	)
		Inventories			98,957			105,554
		Prepaid expenses and other current assets			2,997			(22,416	)
		Accounts payable & accrued expenses			(203,035	)		(125,823	)
			Net cash provided (used) by operating activities		(65,899	)		(22,184	)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of property and equipment				(19,493	)		(36,936	)
			Net cash provided (used) by investing activities		(19,493	)		(36,936	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Bank Overdraft				101,192			—
	Payment of long term debt				(11,800	)		(61,800	)
	Advance payments on credit line				(4,000	)		80,000
			Net cash provided (used) by financing activities		85,392			18,200
NET INCREASE (DECREASE) IN CASH					—			(40,920	)
CASH AT END OF PERIOD				$	8,250		$	15,909

See accompanying notes to the consolidated financial statements.

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PUROFLOW INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Unaudited)

	COMMON STOCK PAR VALUE			ADDITIONAL PAID-IN CAPITAL			ACCUMULATED DEFICIT TOTAL			NOTES RECEIVABLE FROM STOCKHOLDERS AND TREASURY STOCK			TOTAL
Balance at January 31, 2000	$	441,277		$	5,682,729		$	(1,516,407	)	$	(587,191	)	$	4,020,408
Reversal of Notes Receivable on Stock Purchase and retirement of shares	$	(7,310	)	$	(540,962	)				$	548,272		$	—
Net Loss							$	(22,126	)				$	(22,126	)
Balance at January 31, 2001	$	433,967		$	5,141,767		$	(1,538,533	)	$	(38,919	)	$	3,998,282
Net Income							$	80,288					$	80,288
Balance at April 30, 2001	$	433,967		$	5,141,767		$	(1,458,245	)	$	(38,919	)	$	4,078,570

See accompanying notes to the consolidated financial statements.

5

PUROFLOW INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
April 30, 2001, January 31, 2001, and April 30, 2000

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, 2001 (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, 2001.

NOTE 2—INVENTORIES

    Inventories consist of the following:

		April 30, 2001		January 31, 2001
Raw materials and purchased parts		$	1,271,664	$	1,263,199
Work in process			325,368		394,580
Finished goods and assemblies			320,803		359,013
	Totals	$	1,917,835	$	2,016,792

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.

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NOTE 4—NET INCOME PER SHARE

    Reconciliation of basic and diluted earnings per share:

	INCOME		SHARES	PER-SHARE AMOUNT
3 Months Ended April 30, 2001
Basic earnings per share	$	80,288	7,399,091	$	.01
Effect of Dilutive Securities Stock options			14,848
Diluted earnings per share	$	80,288	7,413,939	$	.01
3 Months Ended April 30, 2000
Basic earnings per share	$	154,670	7,886,396	$	.02
Effect of Diluted Securities Stock Options			90,339
Diluted earnings per share	$	154,670	7,976,735	$	.02

    Basic earnings per share are based on the weighted average number of shares outstanding. Diluted earnings per share include the effect of common stock equivalents when dilutive.

NOTE 5—LINE OF CREDIT

    The Company has a $1,000,000 revolving credit line maturing on December 17, 2001. 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 $540,000 as of April 30, 2001.

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.

NOTE 7—DISCONTINUED OPERATIONS

    As of January 31, 2001 the Company elected to shut down its International Division and all operations have been reclassified under loss from discontinued operations in fiscal year 2001 and 2000. The Company has provided a reserve for its estimated loss on the International Division during the phase-out period, which expects will end on or about July 31, 2001. The provision was $211,000 of which $112,000 remains and is included in accrued expenses.

LIQUIDITY AND CAPITAL RESOURCES

    At April 30, 2001 and January 31, 2001, the Company had cash available of $8,250. It had a current ratio of 2.73 to 1 at April 30, 2001, compared to 2.55 to 1 on January 31, 2001. The Company has a $1,000,000 line of credit with $460,000 available at April 30, 2001 to fund operations.

OPERATING ACTIVITIES

    Cash Flow from Operations for the three months ended April 30, 2001 was reduced by $65,899 compared to a decrease of $22,184 for the three months ended April 30, 2000 mainly due to pay down of Accounts Payable and Accrued expenses.

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INVESTING ACTIVITIES

    The Company invested $19,493 in new capital equipment in the current quarter 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 $540,000 is outstanding at April 30, 2000. 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 April 30, 2001 the balance of this note is $80,400.

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 amortized 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.

			3 Months @ April 30, 2001			3 Months @ April 30, 2000
SEGMENT REPORTING
NET SALES
	Filtration		$	2,162,035		$	1,706,551
	Cleaning			40,583			136,691
		Total	$	2,202,618		$	1,843,243
OPERATING INCOME
	Filtration		$	154,252		$	174,129
	Cleaning			(43,593	)		4,755
		Total	$	110,659		$	178,884

RESULTS OF OPERATIONS FOR QUARTER ENDED APRIL 30, 2001

REVENUES

    Sales were $2,202,618 for the three months ended April 30, 2001 compared to $1,843,243 for the same period in 2000. This is a 19.5% increase of $359,375 due primarily to an increased demand for filtration products, partially offset by decreased sales in contract cleaning.

GROSS PROFIT

    Gross profit as a percentage of sales was 24.9% for the current quarter ended April 30, 2001, compared to 32.8% for the same period in 2000. Lower margins within filtration are attributed to product mix and price concessions made to customers to retain market shares.

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    S, G&A expenses were 19.9% for the three months ended April 30, 2001 compared to 23.1% for the same period last year. The reduction is the result of continued cost containment offset by modest increases in rent and general insurance.

OPERATING INCOME

    Operating income for the quarter was $110,659, an operating margin of 5% compared to $178,884, an operating margin of 9.7%.

INTEREST CHARGES

    Interest expenses for the three months ended April 30, 2001 was $16,015 compared to $13,953 for the same period in 2000.

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.

ITEM 5. OTHER INFORMATION

    None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    None.

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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
June 11, 2001	By:	/s/ MICHAEL H. FIGOFF Michael H. Figoff President/Chief Executive Officer

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QuickLinks

FORM 10-QSB
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
PUROFLOW INCORPORATED AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PART II—OTHER INFORMATION
ITEM 1. PENDING LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULT UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURE