SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: Commission File No.:
January 31, 2001 0-24338
VARIFLEX, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-3164466
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
5152 North Commerce Avenue
Moorpark, California 93021
(Address of principal executive offices)
Registrant's telephone number, including area code:
(805) 523-0322
_______________________________________________________________
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_____
-----
As of March 16, 2001, there were 4,584,432 shares of Common Stock, $.001 par
value, outstanding.
VARIFLEX, INC.
INDEX
Page No.
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Part I - Financial Information
Item 1. Financial Statements
Consolidated balance Sheets at
January 31, 2001 and July 31, 2000............................................................ 3
Consolidated Statements of Operations for the
Three Month and Six Month Periods Ended January 31, 2001 and 2000............................. 4
Consolidated Statements of Cash Flows for the
Six Months Ended January 31, 2001 and 2000.................................................... 5
Notes to Consolidated Financial Statements.................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................... 8
Part II - Other Information
Item 1. Legal Proceedings............................................................................. 12
Item 4. Submission of Matters to a Vote of Security Holders........................................... 12
Item 6. Exhibits and Reports on Form 8-K.............................................................. 12
2
PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
VARIFLEX, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
January 31, July 31,
2001 2000
---- ----
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 9,824 $14,066
Trade accounts receivable, less allowances of $434 and
$421 as of January 31, 2001 and July 31, 2000, respectively 11,802 13,412
Inventory (finished goods) 13,241 7,899
Inventory (raw materials and work-in-process) 1,089 1,027
Deferred income taxes 1,757 1,192
Prepaid expenses and other current assets 509 1,502
------- -------
Total current assets 38,222 39,098
Property and equipment, net 314 261
Intangible assets 3,087 3,326
Other assets 595 532
------- -------
Total assets $42,218 $43,217
======= =======
Liabilities and stockholders' equity
Current liabilities:
Trade acceptances payable $ 621 $ 957
Accounts payable 2,043 1,869
Accrued warranty 1,050 1,101
Accrued salaries and related liabilities 585 1,204
Accrued co-op advertising 1,915 2,064
Accrued returns and allowances 1,042 1,367
Accrued product liability claims 440 414
Accrued product recall expenses 1,161 1,750
Income taxes payable - 221
Other accrued expenses 549 759
Current maturities of note payable 200 200
------- -------
Total current liabilities 9,606 11,906
Note payable, less current maturities 794 942
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, none issued and outstanding - -
Common stock, $.001 par value, 40,000,000 shares
authorized, 6,025,397 issued as of January 31, 2001
and July 31, 2000 9 9
Common stock warrants 702 702
Additional paid-in capital 21,023 21,023
Retained earnings 18,799 17,350
Treasury stock, at cost, 1,440,965 shares
as of January 31, 2001 and July 31, 2000 (8,715) (8,715)
------- -------
Total stockholders' equity 31,818 30,369
------- -------
Total liabilities and stockholders' equity $42,218 $43,217
======= =======
See accompanying notes.
3
VARIFLEX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Six months ended Three months ended
January 31, January 31,
---------------------------- -------------------------
2001 2000 2001 2000
------- ------- ------- -------
Net sales $35,435 $20,444 $15,477 $10,941
Cost of goods sold 28,451 16,178 12,687 8,591
------- ------- ------- -------
Gross profit 6,984 4,266 2,790 2,350
------- ------- ------- -------
Operating expenses:
Selling and marketing 2,982 2,026 1,341 1,144
General and administrative 2,342 3,066 1,060 1,631
------- ------- ------- -------
Total operating expenses 5,324 5,092 2,401 2,775
------- ------- ------- -------
Income (loss) from operations 1,660 (826) 389 (425)
------- ------- ------- -------
Other income (expense):
Loss on sale of marketable securities - (313) - (313)
Interest expense (52) - (26) -
Interest income and other 361 927 143 421
------- ------- ------- -------
Total other income (expense) 309 614 117 108
------- ------- ------- -------
Income (loss) before income taxes 1,969 (212) 506 (317)
Provision for income taxes 520 - 61 -
------- ------- ------- -------
Net income (loss) $ 1,449 $ (212) $ 445 $ (317)
======= ======= ======= =======
Net income (loss) per share of common stock:
Basic $ 0.32 $ (0.04) $ 0.10 $ (0.06)
======= ======= ======= =======
Diluted $ 0.31 $ (0.04) $ 0.09 $ (0.06)
======= ======= ======= =======
Weighted average shares outstanding:
Basic 4,584 5,359 4,584 5,206
======= ======= ======= =======
Diluted 4,692 5,359 4,707 5,206
======= ======= ======= =======
See accompanying notes.
4
VARIFLEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six months ended
January 31,
--------------------
2001 2000
------- -------
Operating activities
Net income (loss) $ 1,449 $ (212)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 69 87
Amortization of intangibles 239 42
Non-cash interest charge 52 -
Deferred income taxes (565) 297
Loss on sale of marketable securities - 313
Loss on disposal of fixed assets - 2
Changes in operating assets and liabilities:
Trade accounts receivable 1,610 (3,940)
Inventory (5,404) (6,222)
Prepaid expenses and other current assets 993 (237)
Trade acceptances payable (336) 1,014
Accounts payable 174 1,109
Accrued product recall expenses (589)
Other current liabilities (1,549) (102)
------- -------
Net cash used in operating activities (3,857) (7,849)
------- -------
Investing activities
Purchases of property and equipment (122) (96)
Proceeds from sale of assets - 4
Gross purchases of available-for-sale securities - (828)
Gross sales of available-for-sale securities - 10,151
Other assets (63) (531)
------- -------
Net cash provided by (used in) investing activities (185) 8,700
------- -------
Financing activities
Purchase of treasury shares - (3,391)
Principal payment on note payable (200) -
------- -------
Net cash used in financing activities (200) (3,391)
------- -------
Net decrease in cash (4,242) (2,540)
Cash and cash equivalents at beginning of period 14,066 5,343
------- -------
Cash and cash equivalents at end of period $ 9,824 $ 2,803
======= =======
Cash paid during the period for:
Interest $ - $ -
Income taxes $ 1,380 $ 378
See accompanying notes.
5
VARIFLEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended
January 31, 2001 are not necessarily indicative of the results that may be
expected for the full fiscal year. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended July 31, 2000.
Note 2. Reclassifications
Certain reclassifications have been made to the fiscal 2000 financial
statements to conform with fiscal 2001 presentation.
Note 3. Earnings per Share
Basic earnings per share excludes any dilutive effects of options, warrants
and convertible securities. Diluted earnings per share includes the dilutive
effects of stock options and warrants. For the three and six month periods
ended January 31, 2001, the number of shares used in the calculation of diluted
earnings per share included 122,579 shares and 107,916 shares, respectively,
issuable under stock options and warrants using the treasury stock method. For
the three and six month periods ended January 31, 2000, diluted earnings per
share excluded the effect of all options and warrants as their effect would have
been antidilutive.
Note 4. Comprehensive Income (Loss)
In accordance with Statement 130, "Reporting Comprehensive Income,"
unrealized gains or losses on the Company's available-for-sale securities are
included in other comprehensive income (loss). Total comprehensive income
(loss), which consists of net income (loss) and other comprehensive income
(loss) for the period, amounted to $445,000 and $1,449,000, respectively, for
the three and six month periods ended January 31, 2001 and amounted to $21,000
and ($530,000), respectively, for the three and six month periods ended January
31, 2000.
6
Note 5. Segment Information
Pursuant to Statement of Financial Accounting Standards No. 131 ("SFAS No.
131"), "Disclosures about Segments of an Enterprise and Related Information,"
the Company has determined, based on its internal system of management reporting
and its assessment of performance as a single operating unit, that during the
three months ended January 31, 2001 and 2000, it operated in only one segment.
The Company classifies its products into similar product groupings. The action
sport products include in-line skates, skateboards, and scooters. The outdoor
products include portable instant canopies and springless trampolines. The
protective products include recreational protective equipment, such as wrist
guards, elbow pads and knee pads, and helmets.
Sales of similar products within the segment are as follows:
Six months ended Three months ended
January 31, January 31,
---------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
(In thousands) (In thousands)
Action sport products $ 23,884 $ 15,403 $ 9,274 $ 7,958
Outdoor products 6,253 2,625 3,171 1,665
Protective products 6,286 2,365 3,470 1,277
Other products 391 793 162 440
-------- -------- -------- --------
Total gross sales 36,814 21,186 16,077 11,340
Returns and allowances (1,379) (742) (600) (399)
-------- -------- -------- --------
Total net sales $ 35,435 $ 20,444 $ 15,477 $ 10,941
======== ======== ======== ========
Note 6. Legal Proceedings
On October 31, 2000, Razor USA LLC, a Delaware limited liability company,
filed a complaint in the United States District Court for the Central District
of California in Los Angeles (the "Court") against the Company and 17 other
entities (the "Razor Action"). The Complaint alleged, among other things, that
the Company's "Stinger" model nonmotorized scooter, as originally designed,
infringed a patent issued to the plaintiff on October 31, 2000, the day the
lawsuit was filed. The Complaint sought unspecified monetary damages, costs,
expenses, and attorneys' fees, an injunction, and the destruction of all
allegedly infringing products.
In August 2000, prior to the issuance of the patent in the Razor Action,
the Company redesigned the "Stinger" model nonmotorized scooter. On November
14, 2000, during a hearing on the plaintiff's application for a temporary
restraining order, the plaintiff acknowledged that the Company's "Stinger" model
nonmotorized scooter, as currently designed, did not infringe plaintiff's
patent. Accordingly, the Court did not include the Company as a party subject
to a temporary restraining order issued against the other defendants.
Similarly, the Court did not include the Company as a party subject to a
preliminary injunction order issued against several of the other defendants on
December 5, 2000.
On February 2, 2001, the plaintiff and the Company entered into a
confidential Settlement Agreement whereby each party released the other party
from any further liability with respect to the Razor Action. On February 9,
2001, the Razor Action was dismissed with prejudice by the Court. The
resolution of the Razor Action did not have a material adverse effect on the
Company's business, financial condition, results of operations, or cash flows.
7
From time to time the Company is involved in other claims and lawsuits
(including those involved in product liability) arising in the ordinary course
of its business. In the opinion of management, all of these claims and lawsuits
are covered by insurance or these matters will not have a material adverse
effect on the Company's business, financial condition, results of operations, or
cash flows.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
Overview
--------
The Company is a leading distributor and wholesaler in the United States of
in-line skates, skateboards, scooters, recreational protective equipment (such
as wrist guards, elbow pads and knee pads used by skaters and skateboarders) and
helmets, portable instant canopies, and springless trampolines. The Company
designs and develops these products which are then manufactured to the Company's
detailed specifications by independent contractors. The Company distributes its
products throughout the United States and in foreign countries.
Results of Operations
---------------------
Net Sales. Net sales for the second quarter of fiscal 2001 (the quarter
----------
ended January 31, 2001) totaled $15,477,000 compared to $10,941,000 for the
second quarter of fiscal 2000, representing an increase of $4,536,000 or 41%.
For the six months ended January 31, 2001, net sales totaled $35,435,000
compared to $20,444,000 for the corresponding period of the prior year,
representing an increase of $14,991,000 or 73%. The increase in net sales for
the second quarter and the six months primarily resulted from increases in sales
of all of the Company's product categories, except for a decrease in sales of
in-line skates.
The following table shows the Company's major product categories as a
percentage of total gross sales for the second quarter and first six months of
fiscal 2001 compared to the second quarter and first six months of fiscal 2000.
Action sport products include in-line skates, skateboards, and scooters (which
were separately reported for the second quarter and first six months of fiscal
2000). The outdoor products include portable instant canopies and springless
trampolines (which were separately reported for the second quarter and first six
months of fiscal 2000). Protective products include recreational protective
equipment, such as wrist guards, elbow pads and knee pads, and helmets (which
were reported as recreational safety and athletic protective products for the
second quarter and first six months of fiscal 2000):
Quarter ended Six months ended
January 31, January 31,
-------------------- ----------------
2001 2000 2001 2000
------- ------- ------ ------
Action sport products 58% 70% 65% 73%
Outdoor products 20% 15% 17% 12%
Protective products 21% 11% 17% 11%
Other products 1% 4% 1% 4%
------- ------- ------ ------
Total 100% 100% 100% 100%
======= ======= ====== ======
8
Gross Profit. Gross profit for the second quarter of fiscal 2001 totaled
-------------
$2,790,000 compared to $2,350,000 for the second quarter of fiscal 2000, an
increase of $440,000 or 19%. The Company's gross margin was 18.0% of net sales
for the quarter ended January 31, 2001, compared to 21.5% for the quarter ended
January 31, 2000. The decrease in gross margin percentage was primarily the
result of sales of certain scooters at lower margins as well as inventory
reserves established as a result of the slowdown in the retail sector, offset to
a lesser degree by increased sales of higher margin products such as canopies,
recreational protective equipment and helmets, and trampolines. The decrease
for the quarter was also due to increased royalty fee costs, inventory storage
costs, and workers' compensation insurance costs. Gross margin was 19.7% for
the six months ended January 31, 2001, compared to 20.9% for the six months
ended January 31, 2000. The decrease in gross margin was primarily due to the
same factors that impacted the second quarter, as discussed above. There can be
no assurance that the Company can continue to obtain its products from suppliers
at sufficiently low costs to fully offset the downward pressure on sales prices
for certain product categories in order to sustain or improve present gross
profit margins.
Operating Expenses. The Company's selling and marketing expenses totaled
------------------
$1,341,000, for the second quarter of fiscal 2001, compared to $1,144,000 in the
second quarter of 2000, an increase of $197,000 or 17%. Selling and marketing
expenses for the second quarter of fiscal 2001 thus amounted to 8.7% of net
sales, compared to 10.5% during the second quarter of fiscal 2000. For the six
months ended January 31, 2001, selling and marketing expenses totaled $2,982,000
compared to $2,026,000 for the corresponding period of the prior year,
representing an increase of $956,000 or 47%. Selling and marketing expenses for
the first six months of fiscal 2001 thus amounted to 8.4% of net sales, compared
to 9.9% during the first six months of fiscal 2000. The increase in the dollar
amount for the second quarter and first six months of fiscal 2001 was primarily
due to increases in various expenses, such as co-op advertising and sales
commissions, that are directly related to sales and increased correspondingly
with the higher sales levels discussed in the net sales section. The decrease
in expenses as a percentage of net sales was primarily due to certain expenses,
such as salaries and wages and some promotional expenses, that are fixed in
amount and are not directly related to the increased net sales discussed above.
General and administrative expenses totaled $1,060,000 in the second
quarter of 2001, compared to $1,631,000 in the second quarter of 2000, a
decrease of $571,000 or 35%. General and administrative expenses for the second
quarter of fiscal 2001 amounted to 6.8% of net sales, compared to 14.9% during
the second quarter of 2000. For the six months ended January 31, 2001, general
and administrative expenses totaled $2,342,000 compared to $3,066,000 for the
corresponding period of the prior year, representing a decrease of $724,000 or
24%. General and administrative expenses for the first six months of fiscal
2001 amounted to 6.6% of net sales, compared to 15.0% during the first six
months of fiscal 2000. These decreases in both the second quarter and first six
months of fiscal 2001 are primarily due to a decrease in legal expenses, offset
to a lesser extent by an increase in amortization of intangible assets.
9
Other Income (Expense). Other income totaled $117,000 in the second
----------------------
quarter of 2001, compared to $108,000 in the second quarter of 2000, an increase
of $9,000 or 8%. The increase in other income for the second quarter of fiscal
2001 was primarily due to realized losses from the sale of marketable securities
recorded in fiscal 2000 offset by decreased interest income as a result of the
Company having a reduced amount of marketable securities and cash equivalents.
For the six months ended January 31, 2001, other income totaled $309,000
compared to $614,000 for the corresponding period of the prior year, a decrease
of $305,000 or 50%. The decrease in other income for the first six months of
fiscal 2001 was primarily due to decreased interest income as a result of the
Company having a reduced amount of marketable securities and cash equivalents,
offset to a lesser extent by the realized losses from the sale of marketable
securities recorded in fiscal 2000.
Provision for Income Taxes. The income tax provision for the second
---------------------------
quarter and first six months of fiscal 2001 was $61,000 and $520,000
respectively, or 12% and 26% of income before income taxes. The effective rate
is less than the federal statutory rate due to changes in the valuation
allowance. There was no provision for income taxes for the first quarter and
first six months of fiscal 2000 due to changes in the valuation allowance. At
January 31, 2001, the Company has a valuation allowance of approximately $1.8
million against its net deferred tax assets. To the extent that the Company
generates sufficient ordinary income in the future, approximately $300,000 of
the valuation allowance may be further reversed as a reduction of income tax
expense and thereby reduce the effective tax rate. Approximately $1.5 million
of the valuation allowance would only be reversed and reflected as a reduction
of income tax expense if the Company generates qualifying capital gain income,
which is not expected to occur in the foreseeable future.
Liquidity and Capital Resources
-------------------------------
The Company has a credit agreement with a major bank providing a
$16,000,000 revolving line of credit which is subject to a borrowing base that
is calculated monthly. The borrowing base is based on a percentage of eligible
receivables, inventory and short-term investments. The line of credit provides
for cash advances to a maximum of $7,000,000 and the issuance of commercial
letters of credit. The agreement, which expires December 31, 2001, is secured
by inventory and receivables and contains certain financial covenants. The cash
advances portion of the line of credit bears interest at the bank's prime rate,
which was 8.75% at January 31, 2001.
Cash and cash equivalents totaled $9,824,000 as of January 31, 2001,
compared to $14,066,000 as of July 31, 2000. Net working capital as of January
31, 2001 was $28,616,000, compared to $27,192,000 as of July 31, 2000, and the
Company's current ratio was 4.0:1 as of January 31, 2001, compared to 3.3:1 as
of July 31, 2000. The increases in working capital and current ratio were
primarily due to cash used in and generated from operations, increases in
inventory, and decreases in various accruals for expenses, offset by a decrease
in accounts receivable.
The Company had long-term debt of $794,000 as of January 31, 2001, compared
to $942,000 as of July 31, 2000, with the decrease due to a payment made during
the first quarter. The Company had net stockholders' equity of $31,818,000 as of
January 31, 2001, compared to $30,369,000 as of July 31, 2000, with the
difference due to operating results for the six months ended January 31, 2001.
10
Sensitivity
-----------
The Company does not believe that the fluctuation in the value of the
dollar in relation to the currency of its suppliers has any significant material
and adverse impact on the Company's ability to purchase products at agreed upon
prices. Typically, the Company and its suppliers negotiate prices in U.S.
Dollars and payments to suppliers are also made in U.S. Dollars. Nonetheless,
there can be no assurance that the value of the dollar will not have an impact
upon the Company in the future.
The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's investment in short-term instruments and
money market funds. The Company also has interest rate sensitivity related to
its revolving direct advance line of credit.
Risks Associated With Forward Looking Statements
------------------------------------------------
From time to time, the Company may make certain statements that contain
"forward-looking" information or 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. Words such as "believe", "can", "will", and
similar expressions are intended to identify such forward-looking statements.
Forward-looking statements may be made by management orally or in writing,
including, but not limited to, in press releases, as part of the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in this Report, and in the Company's other filings with the Securities
Exchange Commission. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. Such forward-
looking statements are subject to certain risks, uncertainties and assumptions,
including, without limitation those identified below. Should one or more of
these risks or uncertainties materialize, or should any of the underlying
assumptions prove incorrect, actual results of current or future operations may
vary materially from those anticipated, estimated, or projected. The Company
undertakes no obligations to revise or update any forward-looking statements in
order to reflect events or circumstances that may arise after the date of this
report.
General. There are several risks and uncertainties that may affect the
--------
future operating results, business and financial condition of the Company,
including, but not limited to: (1) the risk of reduction in consumer demand for
the product categories in which the Company does business or the Company's
products in particular; (2) a slowdown in economic conditions in general and the
retail sector in particular; (3) the risk of loss of one or more of the
Company's major customers; (4) the risks inherent in the design, development,
and sale of new products and product enhancements, including those associated
with patent issues and marketability; (5) the risk that the Company may not be
able to continue to provide its products at prices that are competitive or that
it can continue to design and market products that appeal to consumers even if
price-competitive; (6) pricing pressures; (7) the risk that the Company may
not be able to obtain its products and supplies on substantially similar terms,
including cost, in order to sustain its operating margins; (8) the risks
inherent in legal proceedings; (9) the uncertainty regarding the consumer
response to the recall of certain of the Company's X Games helmets which did not
comply with all applicable Consumer Product Safety Commission standards and on-
going regulation under these standards; and (10) the uncertainty regarding the
reaction of the retailers to the recall. Readers are also encouraged to refer
to the Company's most recent annual report on Form 10-K for a further discussion
of the Company's business and the risks and opportunities attendant thereto.
11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
See Note 6 to Notes to Consolidated Financial Statements included in
Part I of this Form 10-Q, which is incorporated herein by this
reference.
Item 4. Submissions of Matters to Vote of Security Holders
--------------------------------------------------
At the Annual Meeting of Stockholders on December 1, 2000, the following
matters were voted on and approved:
1. Six Directors were elected to the Board of Directors to hold office
for a one-year term or until their successors are elected and
qualified. The following persons were elected: Kenneth N. Berns,
Michael T. Carr, Loren Hildebrand, Raymond (Ray) H. Losi, Raymond
(Jay) H. Losi II and Mark S. Siegel. A total of 4,531,102 shares
voted, representing 98.8% of the Company's total shares outstanding.
None of the shares voting abstained. Following is a summary of the
votes for and against each Director:
Votes Votes
For Against
Kenneth N. Berns 4,508,517 22,585
Michael T. Carr 4,508,517 22,585
Loren Hildebrand 4,508,517 22,585
Raymond H. Losi 4,508,517 22,585
Raymond H. Losi II 4,508,517 22,585
Mark S. Siegel 4,508,517 22,585
2. The Board's selection of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ended July 31,
2001 was ratified. 4,508,892 shares of common stock voted in favor
of the proposal, 22,010 shares voted against and 200 shares
abstained.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
---------
None
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed by the Registrant during
the quarter to which this Form 10-Q relates.
12
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.
VARIFLEX, INC.
March 16, 2001 /s/ Raymond H. Losi II
---------------------------------------------------------
Raymond H. Losi II
Chief Executive Officer (Principal Executive Officer)
March 16, 2001 /s/ Roger M. Wasserman
------------------------
Roger M. Wasserman
Chief Financial Officer
(Principal Financial and Accounting Officer)
13