10QSB 1 procyon10qsb093005.txt PERIOD ENDED 09-30-05 SECURITIES & EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB [x] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarterly Period Ended September 30, 2005 [ ] Transition Report Under Section 13 or 18(d) of the Exchange Act Commission File Number: 0-17449 PROCYON CORPORATION --------------------------------------------------------------- (Exact Name of Small Business Issuer as specified in its charter) COLORADO 59-3280822 ---------------------- ---------------------------------- (State of Incorporation) (IRS Employer Identification Number) 1300 S. Highland Ave. Clearwater, FL 33756 ---------------------------- (Address of Principal Offices) (727) 447-2998 ------------------------- (Issuer's Telephone Number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for 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 [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common stock, no par value; 8,039,588 shares outstanding as of November 8, 2005 Transitional Small Business Disclosure Format (check one) Yes [ ] No [X] PART I. FINANCIAL INFORMATION Item Page ---- ITEM 1. FINANCIAL STATEMENTS.............................................. 3 Index to Financial Statements ----------------------------- Financial Statements: Consolidated Balance Sheets............................................... 3 Consolidated Statements of Operations .................................... 4 Consolidated Statements of Cash Flows .................................... 5 Notes to Financial Statements ............................................ 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................. 9 ITEM 3. CONTROLS AND PROCEDURES .......................................... 12 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION................................................. 12 ITEM 6. EXHIBITS ......................................................... 13 SIGNATURES................................................................ 13 2
PROCYON CORPORATION & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 2005 & June 30, 2005 September 30 June 30 2005 2005 ----------- ----------- (unaudited) (audited) ASSETS CURRENT ASSETS Cash $ 30,747 $ 26,580 Accounts receivable, less allowance of $2,500 for doubtful accounts 157,342 145,973 Prepaid expenses 47,009 54,606 Inventories 114,965 146,323 Deferred tax asset 164,899 151,461 ----------- ----------- TOTAL CURRENT ASSETS 514,962 524,943 PROPERTY AND EQUIPMENT, NET 74,840 77,501 OTHER ASSETS Certificates of deposit plus accrued interest, restricted 0 17,114 Deposits 9,335 9,335 ----------- ----------- TOTAL OTHER ASSETS 9,335 26,449 TOTAL ASSETS $ 599,137 $ 628,893 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of capital lease obligations $ 1,504 $ 2,360 Accounts payable 71,387 100,499 Accrued expenses 52,307 72,760 ----------- ----------- TOTAL CURRENT LIABILITIES 125,198 175,619 LONG-TERM LIABILITIES Note payable to related party 0 90,000 Deferred tax liability 10,662 11,275 ----------- ----------- TOTAL LONG-TERM LIABILITIES 10,662 101,275 STOCKHOLDERS' EQUITY Preferred stock, 496,000,000 shares authorized; none issued Series A Cumulative Convertible Preferred stock, no par value; 4,000,000 shares authorized; 214,900 shares issued and outstanding 170,750 170,750 Common stock, no par value, 80,000,000 shares authorized; 8,039,588 shares issued and outstanding 4,400,876 4,400,876 Paid-in capital 6,000 6,000 Accumulated deficit (4,114,349) (4,225,627) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 463,277 351,999 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 599,137 $ 628,893 =========== =========== The accompanying notes are an integral part of these financial statements 3
PROCYON CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended September 30, 2005 and 2004 Three Months Three Months Ended Ended Sept. 30, Sept. 30, 2005 2004 ----------- ----------- (unaudited) (unaudited) NET SALES $ 550,103 $ 545,369 COST OF SALES 133,994 132,951 ----------- ----------- GROSS PROFIT 416,109 412,418 OPERATING EXPENSES Salaries and Benefits 153,305 156,033 Selling, General and Administrative 163,270 148,991 ----------- ----------- 316,575 305,024 INCOME FROM OPERATIONS 99,534 107,394 OTHER INCOME (EXPENSE) Interest Expense (2,647) (4,213) Interest Income 340 66 Other Income 0 20 ----------- ----------- (2,307) (4,127) ----------- ----------- INCOME BEFORE INCOME TAXES 97,227 103,267 INCOME TAX BENEFIT 14,051 22,130 ----------- ----------- NET INCOME 111,278 125,397 Dividend requirements on preferred stock 5,373 (5,678) ----------- ----------- Basic net income available to common shares $ 105,905 $ 119,719 =========== =========== Basic net income per common share $ 0.01 $ 0.01 Weighted average number of common shares outstanding 8,055,827 8,041,544 =========== =========== Diluted net income per common share $ 0.01 $ 0.01 Weighted average number of common shares outstanding, basic and diluted 8,382,294 8,381,396 =========== =========== The accompanying notes are an integral part of these financial statements 4
PROCYON CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 2005 and 2004 Three Months Three Months Ended Ended Sept. 30 Sept. 30 2005 2004 --------- --------- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 111,278 $ 125,397 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 5,771 6,800 Deferred Income Taxes (14,051) (22,130) Decrease (increase) in: Accounts Receivable (11,369) 25,234 Inventories 31,358 (27,461) Prepaid expenses 7,597 4,713 Other assets 17,114 (9,293) Increase (decrease) in: Accounts payable (29,111) (17,905) Accrued expenses (20,453) (11,199) --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 98,134 74,156 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property & equipment (3,111) 0 --------- --------- NET CASH USED BY INVESTING ACTIVITIES (3,111) 0 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from note payable related party 0 10,000 Payments on note payable related party (90,000) (54,352) Payments on capital lease obligations (856) (2,324) Payments on long term note payable trade 0 (83) --------- --------- NET CASH USED BY FINANCING ACTIVITIES (90,856) (46,759) NET CHANGE IN CASH 4,167 27,397 CASH AT BEGINNING OF PERIOD 26,580 14,608 --------- --------- CASH AT END OF PERIOD $ 30,747 $ 42,005 ========= ========= SUPPLEMENTAL DISCLOSURES Interest Paid $ 2,647 $ 4,213 Taxes Paid $ -- $ -- The accompanying notes are an integral part of these financial statements. 5
Notes to Financial Statements NOTE A - SUMMARY OF ACCOUNTING POLICIES The interim financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's audited financial statements dated June 30, 2005. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Management of the Company has prepared the accompanying unaudited condensed financial statements prepared in conformity with generally accepted accounting principles, which require the use of management estimates, contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the period presented and to make the financial statements not misleading. STOCK-BASED COMPENSATION The Company accounts for stock-based employee compensation arrangements using the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25") and has elected to follow the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), as amended by SFAS 148, "Accounting for Stock-Based Compensation - Transition and Disclosure. Under the intrinsic value method, the Company recognizes compensation expense only to the extent that the exercise price of the Company's employee stock options is less than the market price of the underlying stock on the date of grant. SFAS No. 123 requires the presentation of pro forma information as if the Company has accounted for its employee stock options granted under the fair value method. There were no options granted during the quarters ended September 30, 2005 and 2004. The following table illustrates the effect on net income and earnings per share for the three months ended September 30, 2005, and 2004 had the Company applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation. 3 months 3 months ending ending 2005 2004 ----------- ----------- Net income applicable to common stock: As reported $ 105,905 $ 119,719 Pro forma adjustment for compensation -- -- ----------- ----------- Pro forma $ 105,905 $ 119,719 =========== =========== Income per common share: Basic - as reported $ .01 $ .01 Basic - pro forma $ .01 $ .01 Diluted - as reported $ .01 $ .01 Diluted - pro forma $ .01 $ .01 6 The fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. The Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do not have the characteristics of traded options, therefore, the option valuation models do not necessarily provide a reliable measure of the fair value of our options. Equity instruments issued, if any, to non-employees in exchange for goods, fees and services are accounted for under the fair value based method of SFAS No. 123. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123(R) ("SFAS 123R"), "Share-Based Payment," which is a revision of SFAS No. 123. SFAS 123R is effective for small business publicly-traded companies for interim or annual periods beginning after December 15, 2005, supersedes Accounting Principles Board Opinion no. 25, "Accounting for Stock Issued to Employees," and amends Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows." SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values and will rescind the acceptance of pro forma disclosure. SFAS 123R will be effective for small public companies with the first interim or annual reporting period of the first fiscal year beginning on or after December 15, 2005. The Company has not yet determined the impact in adopting SFAS 123R. NOTE B - INVENTORIES Inventories consisted of the following: September 30, June 30, 2005 2005 ---- ---- Finished Goods $ 49,396 $ 79,358 Raw Materials $ 65,569 $ 66,965 ---------- ---------- $ 114,965 $ 146,323 ========== ========== NOTE C - STOCKHOLDERS' EQUITY During January 1995, the Company's Board of Directors authorized the issuance of up to 4,000,000 shares of Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"). The preferred stockholders are entitled to receive, as and if declared by the board of directors, quarterly dividends at an annual rate of $.10 per share of Series A Preferred Stock per annum. Dividends will accrue without interest and will be cumulative from the date of issuance of the Series A Preferred Stock and will be payable quarterly in arrears in cash or publicly traded common stock when and if declared by the Board of Directors. As of September 30, 2005, no dividends have been declared. Dividends in arrears on the outstanding preferred shares total $179,744 as of September 30, 2005. Holders of the Preferred Stock have the right to convert their shares of Preferred Stock into an equal number of shares of Common Stock of the Company. In addition, Preferred Stock holders have the right to vote the number of shares into which their shares are convertible into Common Stock. Such preferred shares will automatically convert into one share of Common Stock at the close of a public offering of Common Stock by the Company provided the Company receives gross proceeds of at least $1,000,000, and the initial offering price of the Common Stock sold in such offering is equal to or in excess of $1 per share. 7
The Company is obligated to reserve an adequate number of shares of its common stock to satisfy the conversion of all the outstanding Series A Preferred Stock. NOTE D - INCOME TAXES AND AVAILABLE CARRYFORWARD As of September 30, 2005, the Company had consolidated income tax net operating loss ("NOL") carryforward for federal income tax purposes of approximately $4,259,000. The NOL will expire in various years ending through the year 2022. The components of the provision for income taxes (benefits) are attributable to continuing operations as follows: September 30, September 30, 2005 2004 ----------- ----------- Current Federal $ -- $ -- State - -- ----------- ----------- - -- Deferred Federal (12,696) (19,118) State (1,355) (3,012) ----------- ----------- (14,051) (22,130) ----------- ----------- Income tax (benefit) $ (14,051) $ (22,130) =========== =========== Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: Current Non-Current ----------- ----------- Deferred tax assets: NOL carryforward $ 163,958 $ 1,438,562 Contribution carryforward -- 2,767 Allowance for doubtful accounts 941 -- ----------- ----------- 164,899 1,441,329 Deferred tax (liabilities): Excess of tax over book depreciation -- (10,662) ----------- ----------- -- (10,662) Valuation allowance for deferred tax asset -- (1,441,329) ----------- ----------- Net deferred tax asset (liability) $ 164,899 $ (10,662) =========== =========== 8
The change in the valuation allowance is as follows: September 30, 2005 $ 1,441,329 June 30, 2005 $ 1,492,017 ----------- Decrease in valuation allowance $ 50,688 =========== The decrease in the valuation allowance is due to an increase in the expected Net Operating Loss carryforward utilization. A valuation allowance of approximately $1,441,000 has been provided to reduce the asset to the net amount of tax benefit management believes it will more likely than not realize. As time passes, management will be able to better assess the amount of tax benefit the Company expects to realize from using the carryforward. NOTE E - RECENT ACCOUNTING PRONOUNCEMENT In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share - Based Payment" SFAS 123 (Revised) addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123 (Revised) requires an entity to recognize the grant-date fair-value of stock options and other equity-based compensation issued to employees in the income statement. The revised statement generally requires that an entity account for those transactions using the fair-value-based method, and eliminates the intrinsic value method of accounting in APB 25, which was permitted under SFAS No. 123, as originally issued. The revised statement requires entities to disclose information about the nature of the share-based payment transactions and the effects of those transactions on the financial statements. SFAS No. 123 (Revised) is effective for small public companies with the first interim or annual reporting period of the first fiscal year beginning on or after December 15, 2005. The Company is currently evaluating the impact that this statement will have on its financial condition or results of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis should be read in conjunction with the unaudited Condensed Financial Statements and Notes thereto appearing elsewhere in this report. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 This Report on Form 10-QSB, including Management's Discussion and Analysis or Plan of Operation, contains forward-looking statements. When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," "hope,""believe" and similar expressions, variations of these words or the negative of those words, and, any statement regarding possible or assumed future results of operations of the Company's business, the markets for its products, anticipated expenditures, regulatory developments or competition, or other statements regarding matters that are not historical facts, are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions and financial trends including, without 9 limitation, business conditions in the skin and wound care market and the general economy, competitive factors, changes in product mix, production delays, manufacturing capabilities, and other risks or uncertainties detailed in other of the Company's Securities and Exchange Commission filings. Such statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company's actual plan of operations, business strategy, operating results and financial position could differ materially from those expressed in, or implied by, such forward-looking statements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company's condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures. A summary of those significant accounting policies can be found in the Notes to the Consolidated Financial Statements included in the Company's annual report on 10-KSB, for the year ended June 30, 2005, which was filed with the Securities and Exchange Commission on September 28, 2005. The estimates used by management are based upon the Company's historical experiences combined with management's understanding of current facts and circumstances. Certain of the Company's accounting policies are considered critical as they are both important to the portrayal of the Company's financial condition and the results of its operations and require significant or complex judgments on the part of management. Accounts receivable allowance Accounts receivable allowance consists of an allowance for doubtful accounts. The valuation of accounts receivable is based upon the credit-worthiness of customers and third-party payers as well as historical collection experience. Allowances for doubtful accounts are recorded as a selling, general and administrative expense for estimated amounts expected to be uncollectible from third-party payers and customers. The Company bases its estimates on its historical collection experience, current trends, credit policy and on the analysis of accounts by aging category. Advertising and Marketing The Company uses several forms of advertising, including sponsorships to agencies who represent the professionals in their respective fields. The Company expenses these sponsorships over the term of the advertising arrangements, on a straight line basis. Other forms of advertising used by the Company include professional journal ads, and mailing campaigns. These forms of advertising are expensed when incurred. Income Tax The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and the tax basis of assets and liabilities using enacted tax provisions currently in effect and rates applicable to the periods in which the differences are expected to affect taxable income. Revenue Recognition The Company recognizes revenue related to product sales upon the shipment of such orders to customers, provided that the risk of loss has passed to the customer and the Company has received and verified any written documentation required to bill Medicare, other third-party payers and customers. The Company records revenue at the amounts expected to be collected from Medicare, other third-party payers and directly from 10 customers. The Company delays recognizing revenue for shipments where the Company has not received the required documentation, until the period when such documentation is received. The Company calculates Medicare reimbursements based upon government-established reimbursement prices. The reimbursements that Medicare pays the Company are subject to review by government regulators. Medicare reimburses at 80% of the government-determined reimbursement prices and the Company bills the remaining balance to either third-party payers, such as insurance companies, or directly to the customers. Stock Based Compensation The Company accounts for stock-based employee compensation arrangements using the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25") and has elected to follow the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), as amended by SFAS 148, "Accounting for Stock - Based Compensation - Transition and Disclosure." Under the intrinsic value method, the Company recognizes compensation expense only to the extent that the exercise price of the Company's employee stock options is less than the market price of the underlying stock on the date of grant. SFAS No. 123 requires the presentation of pro forma information as if the Company has accounted for its employee stock options granted under the fair value method. There were no options granted during the quarters ended September 30, 2005 and 2004. Financial Condition As of September 30, 2005, the Company's principal sources of liquid assets included cash of $30,747, inventories of $114,965, and net accounts receivable of $157,342. The Company had net working capital of $389,764, and long-term debt of $10,662 at September 30, 2005. During the three months ended September 30, 2005, cash increased from $26,580 as of June 30, 2005 to $30,747. Operating activities provided cash of $98,134 during the period, consisting primarily of net income of $111,278. Cash used in financing activities was $90,856 as compared to cash used by financing activities of $46,759 for the corresponding period in 2004. The Company recorded deferred tax assets of $164,899, and deferred tax liability of $10,662, at September 30, 2005. A valuation allowance of approximately $1,441,000 has been recorded to reduce the asset to the net amount of expected tax benefit management believes it will more likely than not realize. As time passes, management will be able to better assess the amount of tax benefit the Company expects to realize. Results of Operations Comparison of the three months ended September 30, 2005 and 2004. Net sales during the quarter ended September 30, 2005 were $550,103, as compared to $545,369 in the quarter ended September 30, 2004, an increase of $4,734, or 1%. Increases in sales continue for the Company as sales grow from Amerx's newest product, the Amerigel impregnated gauze. Sales from the Sirius subsidiary continue to grow as the customer base for diabetics continues to grow. Gross profit during the quarter ended September 30, 2005 was $416,109, as compared to $412,418 during the quarter ended September 30, 2004, an increase of 3,691, or 1%. As a percentage of net sales, gross profit was 76% in the quarter ended September 30, 2005 and the corresponding quarter in 2004. Gross profit increased for the three months overall. 11 Operating expenses during the quarter ended September 30, 2005, were $316,575, consisting of $153,305 in salaries and benefits, and $163,270 in selling, general and administrative expenses. This compares to operating expenses during the quarter ended September 30, 2004 of $305,024, consisting of $156,033 in salaries and benefits, and $148,991 in selling, general and administrative expenses. Expenses for the quarter ended September 30, 2005 increased compared to the corresponding quarter in 2004 by 4%. Salaries decrease due to the compensation missing that would have been paid to the former Chief Executive Officer. Selling, general and administrative cost rose slightly as Amerx has increased advertising and sponsorships for different groups within the professional market. Operating profit decreased by $7,860 (7%) to $99,534 for the quarter ended September 30, 2005, from $107,394 in the comparable quarter of the prior year. Net Profit (before dividend requirements for Preferred Shares) was $97,227 during the quarter ended September 30, 2005, as compared to $103,267 during the quarter ended September 30, 2004. The Company continues to try to improve its cash position. Amerx continues to pursue marketing to further brand the Amerigel name in the market place. Management believes that marketing efforts will assist the Company in reaching its long term goals. The Company also believes that sales will continue to increase as the Company finds new markets for both its products and services. The Amerigel products overall acceptance has grown steadily in the physician market. This has also made for a favorable introduction of Amerx's newest product the Amerigel impregnated gauze. ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures Management of the Company, with the participation of the President and Principal Executive, Financial and Accounting Officer, has conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, management, including the President and Principal Executive, Financial and Accounting Officer, has concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective in ensuring that all material information relating to the Company required to be disclosed in this report has been made known to management in a timely manner and ensuring that this information is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and regulations. (b) Changes in Internal Controls Over Financial Reporting During the first fiscal quarter of 2006, the Company did not institute any significant changes in its internal control over financial reporting that materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION. On August 27, 2005, John C. Anderson, the Company's President, Chief Executive Officer, Chairman of the Board and Director died. On September 22, 2005, the Board of Directors voted to fill the board vacancy and Chairman of the Board vacancy caused by the death of John C. Anderson, by appointing Regina W. Anderson, to these positions. Further, the Board of Directors voted to fill the vacancy in the Chief Executive Officer position by appointing Ms. Anderson to fill that position, but to commence on November 1, 2005. As of September 22, 2005 through November 1, 2005, the Board of Directors appointed James B. Anderson, our Chief Financial Officer, to act as Interim Chief Executive Officer. Ms Anderson commenced her duties as Chief Executive Officer on November 1, 2005. 12 ITEM 6. EXHIBITS (A) EXHIBITS 31.1 Certification of Regina W. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) 31.2 Certification of James B. Anderson pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) 32.1 Certification Pursuant to 18 U.S.C.ss.1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized. PROCYON CORPORATION November 14, 2005 By: /s/ REGINA W. ANDERSON ----------------- -------------------------------- Date Regina W. Anderson, Chief Executive Officer 13