ARGAN INC — Interim / Quarterly Report 2002

Sep 13, 2002

10QSB 1 a2089336z10qsb.htm 10QSB QuickLinks -- Click here to rapidly navigate through this document TOC_END

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

User-specified TAGGED TABLE

For the quarter ended July 31, 2002 Commission File Number 0-5622

end of user-specified TAGGED TABLE User-specified TAGGED TABLE

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

end of user-specified TAGGED TABLE User-specified TAGGED TABLE

DELAWARE	13-1947195
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer identification No.)
10616 Lanark Street, Sun Valley, California	91352
(Address of executive offices)	(ZIP Code)

end of user-specified TAGGED TABLE

Registrant's telephone number, including area code: (818) 504-4000

Securities registered pursuant to Section 12(g) of the Act:

User-specified TAGGED TABLE

Common Stock	Shares Outstanding
Common Stock, $.15 Par Value	494,306

end of user-specified TAGGED TABLE

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 ý No o

ZEQ.=1,SEQ=1,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=1036266,FOLIO='blank',FILE='DISK006:[02WLA6.02WLA1636]BA1636A.;7',USER='CTAFT',CD='13-SEP-2002;13:41' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

PUROFLOW INCORPORATED Consolidated Balance Sheets (Unaudited)

User-specified TAGGED TABLE

	July 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$ 238,408	$	123,330
Accounts receivable net of allowance for doubtful accounts of $48,000 at July 31, 2002 and $48,000 at January 31, 2002	1,064,823		1,088,187
Inventories	2,014,165		2,159,755
Deferred tax benefit	145,235		145,235
Prepaid expenses and other current assets	114,576		123,986
TOTAL CURRENT ASSETS	3,577,207		3,640,493
PROPERTY & EQUIPMENT
Leasehold improvements	113,535		63,914
Machinery and equipment	3,701,827		3,669,356
Tooling and dies	400,325		397,205
Construction in progress	172,091		106,854
	4,387,778		4,237,329
Less accumulated depreciation and amortization	3,636,323		3,546,793
NET PROPERTY AND EQUIPMENT	751,455		690,536
Deferred tax benefit	589,985		589,985
Other assets	29,722		29,722
TOTAL ASSETS	$ 4,948,369	$	4,950,736
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit	$ 244,376	$	510,000
Accounts payable	328,122		402,773
Accrued expenses	394,605		516,664
Current portion of long-term debt	71,762		17,133
Current portion of capital lease	3,225		6,299
TOTAL CURRENT LIABILITIES	1,042,090		1,452,869
Long-term debt	200,769		18,473
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10 per share authorized—500,000 shares—issued none
Common stock, par value $.15 per share authorized—12,000,000 shares, 494,306 shares outstanding at July 31, 2002 and 494,306 shares outstanding at January 31, 2002	433,967		433,967
Additional paid-in capital	5,141,767		5,141,767
Accumulated deficit	(1,831,305	)	(2,057,421	)
Less:
Notes receivable from stockholders	(6,000	)	(6,000	)
Treasury stock at cost	(32,919	)	(32,919	)
TOTAL STOCKHOLDERS' EQUITY	3,705,510		3,479,394
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 4,948,369	$	4,950,736

end of user-specified TAGGED TABLE

See accompanying notes to the consolidated financial statements

2

ZEQ.=1,SEQ=2,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=578260,FOLIO='2',FILE='DISK006:[02WLA6.02WLA1636]DE1636A.;4',USER='CTAFT',CD='13-SEP-2002;13:33'

PUROFLOW INCORPORATED Consolidated Statements of Operations (Unaudited)

User-specified TAGGED TABLE

	Three months ended July 31, — 2002	2001			Six months ended July 31 — 2002	2001
Net revenue	$ 1,732,504	$	1,791,820		$ 3,356,566	$	3,953,855
Cost of goods sold	1,068,633		1,174,151		2,181,384		2,787,386
Gross profit	663,871		617,669		1,175,182		1,166,469
Selling, general and administrative expenses	551,792		439,508		974,744		834,056
Operating income	112,079		178,161		200,438		332,413
Interest expense	(7,281	)	(11,935	)	(14,467	)	(27,950	)
Other income	451		45		54,565		1,999
Amortization goodwill/non-compete	—		(15,108	)	—		(28,888	)
Income before taxes from continuing operations	105,249		151,163		240,536		277,574
Provision for income taxes	4,200		3,897		14,420		6,427
Income from continuing operations	101,049		147,266		226,116		271,147
Loss from discontinued operations	—		(59,115	)	—		(102,708	)
Net Income	$ 101,049	$	88,151		$ 226,116	$	168,439
Earnings per share:
Basic earnings per share, continuing operations	$ 0.20	$	0.30		$ 0.46	$	0.55
Basic earnings per share, discontinued operations	$ —	$	(0.12	)	$ —	$	(0.21	)
Total	$ 0.20	$	0.18		$ 0.46	$	0.34
Diluted earnings per share, continuing operations	$ 0.20	$	0.30		$ 0.46	$	0.55
Diluted earnings per share, discontinued operations	$ —	$	(0.12	)	$ —	$	(0.21	)
Total	$ 0.20	$	0.18		$ 0.46	$	0.34
Weighted average number of shares:
Basic	494,306		493,273		494,306		493,273
Diluted	494,645		494,490		494,799		494,480

end of user-specified TAGGED TABLE

See accompanying notes to the consolidated financial statements

3

ZEQ.=2,SEQ=3,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=145725,FOLIO='3',FILE='DISK006:[02WLA6.02WLA1636]DE1636B.;2',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

PUROFLOW INCORPORATED Statements of Consolidated Cash Flows (Unaudited)

User-specified TAGGED TABLE

	Six Months Ended July 31, — 2002	2001
CASH AT BEGINNING OF PERIOD	$ 123,330	$	8,250
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	226,116		168,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	89,530		96,825
Amortization of goodwill / non-compete	—		28,888
Provision for losses on accounts receivable	—		10,696
Changes in operating assets and liabilities:
Accounts receivable	23,364		156,172
Inventories	145,590		18,040
Prepaid expenses and other current assets	9,410		15,882
Accounts payable & accrued expenses	(196,710	)	(341,637	)
Net cash provided by operating activities	297,300		153,305
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(150,449	)	(33,175	)
Net cash used for investing activities	(150,449	)	(33,175	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft	—		(34,698	)
Principal payments on notes payable	(3,073	)	—
Payment of long-term debt	—		(32,200	)
Payment on credit facility	(28,700	)	(9,000	)
Net cash used for financing activities	(31,773	)	(75,898	)
NET INCREASE IN CASH	115,078		44,232
CASH AT END OF PERIOD	$ 238,408	$	52,482

end of user-specified TAGGED TABLE

See accompanying notes to the consolidated financial statements

4

ZEQ.=1,SEQ=4,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=20327,FOLIO='4',FILE='DISK006:[02WLA6.02WLA1636]DG1636A.;2',USER='CTAFT',CD='13-SEP-2002;13:33'

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

User-specified TAGGED TABLE

Balance at January 31, 2001	COMMON STOCK PAR VALUE — $ 433,967	ADDITIONAL PAID-IN CAPITAL — $ 5,141,767	ACCUMULATED DEFICIT TOTAL — $ (1,538,533	)	NOTES RECEIVABLE FROM STOCKHOLDERS AND TREASURY STOCK — $ (38,919	)	TOTAL — $ 3,998,282
Net Loss			$ (518,888	)			$ (518,888	)
Balance at January 31, 2002	$ 433,967	$ 5,141,767	$ (2,057,421	)	$ (38,919	)	$ 3,479,394
Net Income			$ 125,067				$ 80,288
Balance at April 30, 2002	$ 433,967	$ 5,141,767	$ (1,932,354	)	$ (38,919	)	$ 3,604,461
Net Income			$ 101,049				$ 101,049
Balance at July 31, 2002	$ 433,967	$ 5,141,767	$ (1,831,305	)	$ (38,919	)	$ 3,705,510

end of user-specified TAGGED TABLE

See accompanying notes to the consolidated financial statements

5

ZEQ.=2,SEQ=5,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=222170,FOLIO='5',FILE='DISK006:[02WLA6.02WLA1636]DG1636B.;2',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

PUROFLOW INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) July 31, 2002, January 31, 2002, and July 31, 2001

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, 2002 (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 financial 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, 2002.

NOTE 2—INVENTORIES

Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis, and consist of the following items:

User-specified TAGGED TABLE

	July 31, 2002	January 31, 2002
Raw materials and purchased parts	$ 1,363,835	$ 1,417,418
Work in process	268,247	376,047
Finished goods and assemblies	382,083	366,290
Totals	$ 2,014,165	$ 2,159,755

end of user-specified TAGGED TABLE

NOTE 3—STOCKHOLDERS' EQUITY

On February 17, 2000 the Board entered into a plan to retire 61,333 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 48,735 shares of common stock.

On August 27, 2001 at a duly called meeting of the stockholders, stockholders voted in favor of an amendment authorizing a fifteen to one reverse stock split. On October 8, 2001 the Board initiated this "Reverse Stock Split" where every share issued and outstanding prior to the effective date (October 8, 2001) shall be reclassified and continued as one-fifteenth of one share of common stock, without any action on the part of the holder.

6

ZEQ.=1,SEQ=6,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=1015257,FOLIO='6',FILE='DISK006:[02WLA6.02WLA1636]DI1636A.;2',USER='CTAFT',CD='13-SEP-2002;13:33'

NOTE 4—NET INCOME PER SHARE

Reconciliation of basic and diluted earnings per share:

User-specified TAGGED TABLE

	INCOME	SHARES	PER-SHARE AMOUNT
Six Months Ended July 31, 2002
Basic earnings per share	$ 226,116	494,306	$ 0.46
Effect of Dilutive Securities Stock options	—	493
Diluted earnings per share	$ 226,116	494,799	$ 0.46
Six Months Ended July 31, 2001
Basic earnings per share	$ 168,439	493,273	$ 0.34
Effect of Diluted Securities
Stock options	—	1,207
Diluted earnings per share	$ 168,439	494,480	$ 0.34

end of user-specified TAGGED TABLE

Basic earnings per share has been determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share has been determined using the weighted average number of common shares and equivalents (representing the dilutive effect of stock options) outstanding during the period. The Company's net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share.

NOTE 5—LINE OF CREDIT

The Company has a $1,000,000 credit facility made up of two credit agreements with the bank. 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 these loan agreements contain certain restrictive covenants, including maintenance of minimum working capital, net worth, and ratios of current liabilities and debt to net worth.

One agreement is a $250,000 term note that is payable over four years that expires in March 2006, and the other is a $750,000 revolving line of credit that expires in December 2002. The Company was in compliance with all of its covenants on the credit facility at July 31, 2002.

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, 2002 the Company elected to shut down its Quality Controlled Cleaning division and all operations have been reclassified under loss from discontinued operations in fiscal years 2001 and 2002. The Company has provided for its estimated loss on the Quality Controlled Cleaning division during the phase-out period which it expects will end during fiscal year 2003. The balance of the provision is $288,663 at July 31, 2002 and is included in accrued expenses.

NOTE 8—SEGMENT REPORTING

Due to the discontinuance of the Quality Controlled Cleaning Corporation business segment, the Company operates in only one business segment.

7

ZEQ.=2,SEQ=7,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=120114,FOLIO='7',FILE='DISK006:[02WLA6.02WLA1636]DI1636A.;2',USER='CTAFT',CD='13-SEP-2002;13:33'

NOTE 9—RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations." SFAS 141 requires the purchase method of accounting for all business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. The Company does not expect the adoption of SFAS 141 to have a material effect on its financial condition or results of operations.

In July 2001, the FASB issued Statement of Financial Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets," which requires the discontinuance of goodwill amortization. SFAS 142 is required to be applied for fiscal years beginning after December 15, 2001, with certain early adoption permitted. The Company does not expect the adoption of SFAS 142 to have a material effect on its financial condition or results of operations.

In August 2001, the FASB issued Statement of Financial Accounting Standards No. 143 (SFAS 143), "Accounting for Asset Retirement Obligations." SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The Company is in the process of assessing the effect of adopting SFAS 143, which will be effective for the Company's 2003 fiscal year.

In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. The Company is in the process of assessing the effect of adopting SFAS 144, which will be effective for the Company's 2003 fiscal year.

8

ZEQ.=3,SEQ=8,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=200318,FOLIO='8',FILE='DISK006:[02WLA6.02WLA1636]DI1636A.;2',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-QSB contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, (including without limitation, the Company's future gross profit, selling, general and administrative expenses, the Company's financial position, working capital and seasonal variances in the Company's operations, as well as general market conditions) though the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this Form 10-QSB will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

Results of Operations

Net Revenues

Net revenues were $1,732,504 for the three months ended July 31, 2002 compared to $1,791,820 for the three months ended July 31, 2001. The 3.3% decrease is due primarily to a decline in the volume of air bag products sold. Net revenues were $$3,356,566 for the six months ended July 31, 2002 compared to $3,953,855 for the six months ended July 31, 2001. The 15.1% decrease is due primarily to the combination of the decline in air bag products sold combined with lower revenues of its distributor based filtration products due to the industry downturn which began in the second half of 2001.

Gross Margin

Gross margin as a percentage of net revenues was 38.3% for the three months ended July 31, 2002 compared to 34.5% for the three months ended July 31, 2001. The 3.8% increase in gross margin was attributable to the higher concentration of high performance filtration products sold which traditionally are a higher margin product than the airbag products. Gross margin as a percentage of net revenues for the six months ended July 31, 2002 was 35.0% compared to 29.5% for the six months ended July 31, 2001. The 5.5% increase in gross margin was due to the combination of the higher concentration of high performance filtration products sold combined with the associated greater absorption of factory overhead.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $551,792 or 31.8% of net revenues for the three months ended July 31, 2002 compared to $439,508 or 24.5% of net revenues for the three months ended July 31, 2001. The $112,284 increase is due to an increase in selling and marketing compensation and travel expenses as the Company has hired two additional representatives to support its filtration product line. Selling, general and administrative expenses were $974,744 or 29.0% of net revenues for the six months ended July 31, 2002 compared to $834,056 or 21.1% of net revenues for the six months ended July 31, 2001. The $140,688 increase was primarily due to the increase in compensation expenses for selling and marketing and the increase in legal and discretionary expenses for general and administration.

9

ZEQ.=1,SEQ=9,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=778568,FOLIO='9',FILE='DISK006:[02WLA6.02WLA1636]DK1636A.;3',USER='CTAFT',CD='13-SEP-2002;13:33'

Operating Income

Operating income was $112,079 or 6.5% of net revenues for the three months ended July 31, 2002 compared to $178,161 or 9.9% of net revenues for the three months ended July 31, 2001. The $66,082 decrease in operating income is attributable to the lower net revenues recorded which were offset by the higher gross margins generated. In addition, higher selling and marketing compensation and travel costs contributed to the decline in operating income. Operating income was $200,438 or 6.0% of net revenues for the six months ended July 31, 2002 compared to $332,413 or 8.4% of revenues for the six months ended July 31, 2001. The $131,975 decrease in operating income was primarily due to the combination of the lower revenues generated in the first six months of fiscal 2003 and the higher operating expenses.

Other Income

Other income was $451 for the three months ended July 31, 2002 compared to $45 for the three months ended July 31, 2001. For the six months ended July 31, 2002 other income was $54,565 compared to $1,999 for the six months ended July 31, 2001. The $52,566 increase in other income was due to an early exit payment made by the Company's former landlord for the relocation of the organization in February 2002.

Financial Condition, Liquidity and Capital Resources

At July 31, 2002 and January 31, 2002, the Company had $238,408 and $123,330 respectively available in cash. The Company's financial condition remained strong, with a ratio of current assets to current liabilities of 3.4:1 at July 31, 2002 compared to 2.5:1 at January 31, 2002.

The Company generated cash from operating activities of $297,300 which consisted primarily of the income earned from operations in the first six months of fiscal year 2003. In addition, the Company has reduced inventories by $145,590 while reducing payables by $196,710 in the first six months of fiscal year 2003.

Cash used for investing activities of $150,449 primarily represented the investment made in the construction of a new clean room in the Company's new facility. In addition, the Company has incurred costs for the leasehold improvements necessary in the development of the new facility that it occupies.

Net cash used for financing activities of $31,773 included $3,073 to pay the principal balance of an outstanding notes payable and $28,700 to pay down the principal balance of the credit facility. At April 30, 2002, $250,000 of the line of credit was converted to a four-year term note.

With its present capital resources, available credit from its credit facilities and cash flow from operations, the Company believes that is should have sufficient resources to meet its operating needs for the next twelve months and to provide for debt maturities and capital expenditures.

10

ZEQ.=2,SEQ=10,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=575192,FOLIO='10',FILE='DISK006:[02WLA6.02WLA1636]DK1636A.;3',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

PART II—OTHER INFORMATION

User-specified TAGGED TABLE

ITEM 1.	PENDING LEGAL PROCEEDINGS
	None
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.

end of user-specified TAGGED TABLE

11

ZEQ.=1,SEQ=11,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=260969,FOLIO='11',FILE='DISK006:[02WLA6.02WLA1636]DM1636A.;5',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

TOC_END

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.

User-specified TAGGED TABLE

September 13, 2002	PUROFLOW INCORPORATED — By:	/s/ MICHAEL H. FIGOFF Michael H. Figoff President/Chief Executive Officer

end of user-specified TAGGED TABLE

12

ZEQ.=1,SEQ=12,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1",CHK=342532,FOLIO='12',FILE='DISK006:[02WLA6.02WLA1636]DO1636A.;2',USER='CTAFT',CD='13-SEP-2002;13:33' THIS IS THE END OF A COMPOSITION COMPONENT

QuickLinks

TOC_BEGIN PUROFLOW INCORPORATED Consolidated Balance Sheets (Unaudited) PUROFLOW INCORPORATED Consolidated Statements of Operations (Unaudited) TOC_BEGIN PUROFLOW INCORPORATED Statements of Consolidated Cash Flows (Unaudited) PUROFLOW INCORPORATED AND SUBSIDIARIES Consolidated Statement of Stockholders' Equity (Unaudited) TOC_BEGIN PUROFLOW INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) July 31, 2002, January 31, 2002, and July 31, 2001 TOC_BEGIN

TOC_BEGIN

TOC_BEGIN SIGNATURE SEQ=,FILE='QUICKLINK',USER=BKYNARD,SEQ=,EFW="2089336",CP="PUROFLOW INCORPORATED",DN="1" TOCEXISTFLAG