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, 2002 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 15, 2002, there were 4,603,771 shares of Common Stock, $.001 par
value, outstanding.
VARIFLEX, INC.
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at
January 31, 2002 and July 31, 2001......................... 3
Consolidated Statements of Operations for the
Three Month and Six Month Periods Ended January 31,
2002 and 2001.............................................. 4
Consolidated Statements of Cash Flows for the
Six Months Ended January 31, 2002 and 2001................. 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.......................................... 13
Item 4. Submission of Matters to a Vote of Security Holders........ 13
Item 6. Exhibits and Reports on Form 8-K........................... 13
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,
2002 2001
---- ----
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 17,499 $ 16,612
Trade accounts receivable, less allowances of $482 and
$436 as of January 31, 2002 and July 31, 2001, respectively 4,881 8,067
Inventory (finished goods) 7,908 7,437
Inventory (raw materials and work-in-process) 699 727
Deferred income taxes 902 1,337
Prepaid expenses and other current assets 972 1,677
---------- ------------
Total current assets 32,861 35,857
Property and equipment, net 340 295
Intangible assets 2,609 2,848
Other assets 453 574
---------- ------------
Total assets $ 36,263 $ 39,574
========== ============
Liabilities and stockholders' equity
Current liabilities:
Trade acceptances payable $ 956 $ 537
Accounts payable 624 1,141
Accrued warranty 593 848
Accrued salaries and related liabilities 722 684
Accrued co-op advertising 1,612 1,882
Accrued returns and allowances 933 730
Accrued product liability claims 363 418
Other accrued expenses 241 573
Current maturities of note payable 200 200
---------- ------------
Total current liabilities 6,244 7,013
Note payable, less current maturities 692 846
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, 6,044,736 issued and outstanding as of
January 31, 2002 and July 31, 2001 9 9
Common stock warrants 702 702
Additional paid-in capital 21,023 21,023
Retained earnings 16,308 18,696
Treasury stock, at cost, 1,440,965 shares
as of January 31, 2002 and July 31, 2001 (8,715) (8,715)
---------- ------------
Total stockholders' equity 29,327 31,715
---------- ------------
Total liabilities and stockholders' equity $ 36,263 $ 39,574
========== ============
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,
------------------------------------- -------------------------------------
2002 2001 2002 2001
--------------- --------------- --------------- ---------------
Net sales $ 16,506 $ 34,311 $ 6,767 $ 15,185
Cost of goods sold 15,050 28,451 6,337 12,687
--------------- --------------- --------------- ---------------
Gross profit 1,456 5,860 430 2,498
--------------- --------------- --------------- ---------------
Operating expenses:
Selling and marketing 997 1,858 492 1,049
General and administrative 3,044 2,342 1,513 1,060
--------------- --------------- --------------- ---------------
Total operating expenses 4,041 4,200 2,005 2,109
--------------- --------------- --------------- ---------------
Income (loss) from operations (2,585) 1,660 (1,575) 389
--------------- --------------- --------------- ---------------
Other income (expense):
Interest expense (46) (52) (23) (26)
Interest income and other 243 361 104 143
--------------- --------------- --------------- ---------------
Total other income (expense) 197 309 81 117
--------------- --------------- --------------- ---------------
Income (loss) before income taxes (2,388) 1,969 (1,494) 506
Provision for income taxes - 520 - 61
--------------- --------------- --------------- ---------------
Net income (loss) $ (2,388) $ 1,449 $ (1,494) $ 445
=============== =============== =============== ===============
Net income (loss) per share of common stock:
Basic $ (0.52) $ 0.32 $ (0.32) $ 0.10
=============== =============== =============== ===============
Diluted $ (0.52) $ 0.31 $ (0.32) $ 0.09
=============== =============== =============== ===============
Weighted average shares outstanding:
Basic 4,601 4,584 4,604 4,584
=============== =============== =============== ===============
Diluted 4,601 4,692 4,604 4,707
=============== =============== =============== ===============
See accompanying notes.
4
VARIFLEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six months ended
January 31,
----------------------------------------
2002 2001
------------------- ------------------
Operating activities
Net income (loss) $ (2,388) $ 1,449
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 59 69
Amortization of intangibles 239 239
Non-cash interest charge 46 52
Deferred income taxes 435 (565)
Provision for bad debts 46 313
Changes in operating assets and liabilities:
Trade accounts receivable 3,140 1,597
Inventory (443) (5,404)
Prepaid expenses and other current assets 706 993
Trade acceptances payable 419 (336)
Accounts payable (517) 174
Accrued product recall expenses - (589)
Other current liabilities (672) (1,849)
------------------- ------------------
Net cash provided by (used in) operating activities 1,070 (3,857)
------------------- ------------------
Investing activities
Purchases of property and equipment (104) (122)
Other assets 121 (63)
------------------- ------------------
Net cash provided by (used in) investing activities 17 (185)
------------------- ------------------
Financing activities
Principal payment on note payable (200) (200)
------------------- ------------------
Net cash used in financing activities (200) (200)
------------------- ------------------
Net increase (decrease) in cash 887 (4,242)
Cash and cash equivalents at beginning of period 16,612 14,066
------------------- ------------------
Cash and cash equivalents at end of period $ 17,499 $ 9,824
=================== ==================
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, 2002 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, 2001.
Note 2. Reclassifications
Certain reclassifications have been made to the fiscal 2001 financial
statements to conform with fiscal 2002 presentation. (See Note 4)
Note 3. Earnings per Share
Basic earnings per share exclude any dilutive effects of options, warrants
and convertible securities. Diluted earnings per share include the dilutive
effects of stock options and warrants. For the three and six month periods
ended January 31, 2002, diluted earnings per share excluded the effect of all
options and warrants as their effect would have been antidilutive. 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
Note 4. Cooperative Advertising
As of August 1, 2001, the Company adopted the Emerging Issue Task Force
(EITF) Issue 00-25, "Vendor Income Statement Characterization of Consideration
from a Vendor to a Retailer." EITF 00-25 requires consideration paid by a
vendor to a retailer, such as slotting fees and cooperative advertising, be
classified as a reduction of revenue in the vendor's income statement (instead
of an expense) unless certain criteria are met. Accordingly, certain charges
for cooperative advertising are reflected as a reduction of revenue. Prior year
financial statements have been reclassified to conform to the requirements of
EITF 00-25.
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 and six months ended January 31, 2002 and 2001, 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, knee pads, and helmets.
Sales of similar products within the segment are as follows:
Six months ended Three months ended
January 31, January 31,
----------- -----------
2002 2001 2002 2001
---- ---- ---- ----
Action sport products $ 8,209 $ 23,884 $ 3,049 $ 9,274
Outdoor products 6,580 6,253 3,041 3,171
Protective products 2,758 6,286 995 3,470
Other products 159 391 63 162
-------- -------- ------- --------
Total gross sales 17,706 36,814 7,148 16,077
Returns and allowances (715) (1,379) (189) (600)
Cooperative advertising (485) (1,124) (192) (292)
-------- -------- ------- --------
Total net sales $ 16,506 $ 34,311 $ 6,767 $ 15,185
======== ======== ======= ========
Note 6. Legal Proceedings
On December 19, 2001, JumpSport Inc., a California Corporation, filed a
complaint in the United States District Court for the Northern District of
California against the Company and 10 other entities (the "JumpSport Action").
The Complaint alleged, among other things, that the Company's trampoline
enclosures infringed and continues to infringe two patents owned by the
plaintiff. The Complaint prays for an injunction, unspecified monetary damages,
treble damages, costs and attorneys' fees.
The Company believes it has meritorious defenses to the claims alleged in
the JumpSport Action and intends to conduct a vigorous defense. The Company
does not believe that the outcome of the JumpSport Action will have a material
adverse effect on the Company's business, financial condition, results of
operations or cash flows.
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. Management does not believe these matters will have a material
adverse effect on the Company's business, financial condition, results of
operations, or cash flows.
7
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, 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 2002 (the quarter
----------
ended January 31, 2002) totaled $6,767,000 compared to $15,185,000 for the
second quarter of fiscal 2001, representing a decrease of $8,418,000 or 55%.
For the six months ended January 31, 2002, net sales totaled $16,506,000
compared to $34,311,000 for the corresponding period of the prior year,
representing a decrease of $17,805,000 or 52%. The decrease in net sales for
the second quarter and the six months primarily resulted from decreases in
action sports and protective product categories, including the significant drop
in mini-scooter sales attributable to mini-scooters being popular in the first
half of fiscal 2001, with the popularity dropping off significantly thereafter.
Further impacting the decrease in sales was the impact of the recessionary
climate.
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 2002 compared to the second quarter and first six months of fiscal 2001.
Action sport products include in-line skates, skateboards, and scooters.
Outdoor products include portable instant canopies and springless trampolines.
Protective products include recreational protective equipment, such as wrist
guards, elbow pads, knee pads and helmets.
Six months ended January 31, Quarter ended January 31,
---------------------------- -------------------------
2002 2001 2002 2001
---- ---- ---- ----
Action sport products 46% 65% 43% 58%
Outdoor products 37% 17% 43% 20%
Protective products 16% 17% 13% 21%
Other products 1% 1% 1% 1%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
8
Gross Profit. Gross profit for the second quarter of fiscal 2002 totaled
-------------
$430,000 compared to $2,498,000 for the second quarter of fiscal 2001, a
decrease of $2,068,000 or 83%. The Company's gross margin was 6.4% of net sales
for the quarter ended January 31, 2002, compared to 16.5% for the quarter ended
January 31, 2001. The decrease in gross margin percentage was primarily the
result of a substantial portion of labor and overhead costs being fixed in
nature, and therefore, not decreasing with lower sales volumes. In addition, the
Company incurred significant increases in product liability and commercial
general liability insurance costs. Gross profit for the six months ended January
31, 2002 totaled $1,456,000 compared to $5,860,000 in fiscal 2001, a decrease of
$4,404,000 or 75%. Gross margin was 8.8% for the six months ended January 31,
2002, compared to 17.1% for the six months ended January 31, 2001. The decrease
in gross margin was primarily due to the same factors that impacted the second
quarter, as discussed above.
Operating Expenses. The Company's selling and marketing expenses totaled
------------------
$492,000, for the second quarter of fiscal 2002, compared to $1,049,000 in the
second quarter of 2001, a decrease of $557,000 or 53%. Selling and marketing
expenses for the second quarter of fiscal 2002 amounted to 7.3% of net sales,
compared to 6.9% during the second quarter of fiscal 2001. For the six months
ended January 31, 2002, selling and marketing expenses totaled $997,000 compared
to $1,858,000 for the corresponding period of the prior year, representing a
decrease of $861,000 or 46%. Selling and marketing expenses for the first six
months of fiscal 2002 amounted to 6.0% of net sales, compared to 5.4% during the
first six months of fiscal 2001. The decrease in the dollar amount for the
second quarter and first six months of fiscal 2002 was primarily due to a
decrease in commission expense as a result of the lower sales level discussed
above. The increase in expenses as a percentage of net sales was primarily due
to certain expenses, such as salaries, wages and trade show expenses that are
basically fixed in nature and are not directly related to the decreased net
sales discussed above.
General and administrative expenses totaled $1,513,000 in the second
quarter of 2002, compared to $1,060,000 in the second quarter of 2001, an
increase of $453,000 or 42.7%. General and administrative expenses for the
second quarter of fiscal 2002 amounted to 22.4% of net sales, compared to 7.0%
during the second quarter of 2001. For the six months ended January 31, 2002,
general and administrative expenses totaled $3,044,000 compared to $2,342,000
for the corresponding period of the prior year, representing an increase of
$702,000 or 30.0%. General and administrative expenses for the first six months
of fiscal 2002 amounted to 18.4% of net sales, compared to 6.8% during the first
six months of fiscal 2001. The increase in general and administrative expense
for fiscal 2002 is primarily due to an increase in product development expense
as a result of increased emphasis by the Company in product development. To a
lesser extent, general and administrative expenses increased due to higher legal
fees in the current year as a result of the Company having received a legal fee
reimbursement in the previous year.
Other Income (Expense). Other income totaled $81,000 in the second quarter
----------------------
of 2002, compared to $117,000 in the second quarter of 2001, a decrease of
$36,000 or 30.8%. For the six months ended January 31, 2002, other income
totaled $197,000 compared to $309,000 for the corresponding period of the prior
year, a decrease of $112,000 or 36.3%. The decrease for the second quarter and
first six months was primarily due to decreased interest rates available on the
Company's marketable securities and cash equivalents.
Provision for Income Taxes. The income tax provision for the second
---------------------------
quarter and first six months of fiscal 2002 was zero due to changes in the
valuation allowance. The income tax provision for the second quarter and first
six months of fiscal 2001 was $61,000 and $520,000
9
respectively, or 12% and 26% of income before income taxes. The effective rate
differs from the federal statutory rate due to changes in the valuation
allowance, certain expenses not deductible for tax purposes and state taxes. At
January 31, 2002, the Company has a valuation allowance of approximately $2.6
million against a portion of its net deferred tax assets. To the extent that the
Company generates sufficient taxable ordinary income in the future, the
valuation allowance may be reduced. Should the Company not generate sufficient
taxable income in the future, the valuation may need to be increased.
Approximately $1.3 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
-------------------------------
Cash and cash equivalents totaled $17,499,000 as of January 31, 2002,
compared to $16,612,000 as of July 31, 2001. The cash equivalents are invested
in money market funds which consist of investment-grade short-term instruments.
The Company currently plans to continue investing cash equivalents in this
manner. Net working capital as of January 31, 2002 was $26,615,000, compared to
$28,844,000 as of July 31, 2001, and the Company's current ratio was 5.3:1 as of
January 31, 2002, compared to 5.1:1 as of July 31, 2001. The decrease in
working capital was primarily due to decreases in accounts receivable and
deferred income taxes, partially offset by an increase in cash and cash
equivalents, inventory, and a decrease in current liabilities.
At January 31, 2002, the Company had a credit agreement with a major bank
providing for an $11,000,000 revolving line of credit. At January 31, 2002,
approximately $3,500,000 in letters of credit were issued through this credit
facility. Effective January 31, 2002, the Company obtained the bank's waiver of
the Company's non-compliance with the minimum tangible net worth covenant in its
credit agreement. On February 28, 2002, the Company chose not to renew the
credit agreement and it, therefore, expired. The letters of credit that were
issued and outstanding at February 28, 2002 in the amount of $2,200,000 remain
in place. The Company has a written commitment from another major bank for a
$9,000,000 secured credit facility. The Company believes that it current cash
position is sufficient to satisfy its short term funding requirements. To fund
long term growth, the Company expects to enter into the above credit facility or
alternative financing.
Certain statements in this report are considered "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements involve risks and uncertainties. Words and phrases
such as "expect", "believes" and similar expressions reflecting something other
than historical fact are intended to identify forward-looking statements, but
are not the exclusive means of identifying such statements. Future results may
be adversely affected by various factors including a continuation of the general
economic and consumer spending slowdown and of the pervasive weakness throughout
the retail industry; the risk that the Company may not continue to expand and
diversify its business and product lines; the risk of loss of one or more of the
Company's major customers; 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 its products are
price competitive. See the Company's fiscal year 2001 Form 10-K and other
filings with the Securities and Exchange Commission for greater detail regarding
factors that constitute cautionary statements with respect to such forward-
looking statements, including certain risks and uncertainties that could cause
actual results to differ materially from those in such forward-looking
statements. 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.
10
The Company had long-term debt of $692,000 as of January 31, 2002, compared
to $846,000 as of July 31, 2001, with the decrease due to a payment made during
the first six months of the year. The Company had net stockholders' equity of
$29,327,000 as of January 31, 2002, compared to $31,715,000 as of July 31, 2001,
with the difference due to operating results for the six months ended January
31, 2002.
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.
Critical Accounting Policies
----------------------------
Use of Estimates
----------------
Financial statements prepared in accordance with generally accepted
accounting principles require management to make estimates and judgments that
affect amounts and disclosures reported in the financial statements. Actual
results could differ from those estimates. Significant estimates made in
preparing the consolidated financial statements include allowances made against
accounts receivable, reserves taken against inventory, accruals for sales
returns and allowances, warranty, product liability claims, and other litigation
related matters.
Accounts Receivable
-------------------
Accounts receivable consist primarily of amounts due to us from our normal
business activities. The Company's ability to collect outstanding receivables
from our customers is critical to our operating performance and cash flows. We
maintain an allowance for doubtful accounts to reflect the estimated expected
uncollectability of accounts receivable based on past collection history and
specific risks identified through participation in certain credit bureaus.
Inventory
---------
Inventories consist primarily of finished products purchased in bulk
categories to be sold to our customers. We state our inventories at lower of
cost or market. In assessing the ultimate realization of inventories, we are
required to make judgments as to the future selling prices and demand
requirements and compare that with the current or committed inventory levels.
In addition, an allowance for obsolete inventory is maintained to reflect the
expected unsaleable or unrefundable inventory based on an evaluation of slow-
moving products.
Revenue Recognition
-------------------
We recognize revenue when products are shipped. Sales are shown net of
returns, discounts, and cooperative advertising.
11
Warranties/Returns
------------------
The Company records a liability for the estimated costs of product
warranties and returns at the time revenue is recognized. The Company's
warranty and returns obligations are affected by product failure rates, material
usage, and service delivery costs incurred in correcting a product failure. The
estimate of costs to service its warranty and returns obligation is based on
historical experience and expectation of future conditions. To the extent the
Company experiences increased warranty claim and returns activity or increased
costs with servicing those claims, its warranty and returns accrual will
increase resulting in decreased gross profit.
Deferred Taxes
--------------
The Company records a valuation allowance to reduce tax assets to the
amount that is more likely than not to be realized. Realization of our deferred
tax assets is principally dependent upon our achievement of projected future
taxable income. Our judgment regarding future profitability may change due to
future market conditions and other factors. These changes, if any, may require
possible material adjustments to these deferred tax asset balances.
12
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.
Item 4. Submissions of Matters to Vote of Security Holders
--------------------------------------------------
At the Annual Meeting of Stockholders on December 3, 2001, 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 4,597,602
shares voted, representing 99.9% 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 4,229,932 367,670
Michael T. Carr 4,229,932 367,670
Loren Hildebrand 4,229,932 367,670
Raymond H. Losi 4,229,932 367,670
Raymond H. Losi II 4,229,932 367,670
Mark S. Siegel 4,229,932 367,670
2. An amendment to the 1994 Variflex Stock Plan was approved.
4,211,052 shares of common stock voted in favor of the proposal,
385,720 shares voted against and 830 shares abstained.
3. The Board's selection of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ended July 31,
2002 was ratified. 4,588,677 shares of common stock voted in favor
of the proposal, and 8,925 shares voted against.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
---------
10.8.1 - Employment agreement dated January 24, 2002, with
Petar Katurich
(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.
13
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 15, 2002 /s/ Raymond H. Losi II
------------------------------------------------------
Raymond H. Losi II
Chief Executive Officer (Principal Executive
Officer)
March 15, 2002 /s/ Petar Katurich
------------------------------------------------------
Petar Katurich
Chief Financial Officer (Principal Financial and
Accounting Officer)
14