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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended October 31, 2001

Commission File Number 0-5622

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

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

Registrant's telephone number, including area code: (818) 756-1388

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

Common Stock	Shares outstanding
Common Stock, $.15 Par Value	494,132

    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/  No / /

PUROFLOW INCORPORATED
Consolidated Balance Sheets (Unaudited)

			October 31, 2001			January 31, 2001
ASSETS
CURRENT ASSETS
	Cash		$	107,919		$	8,250
	Accounts receivable
	Net of allowance for doubtful accounts of $48,000 at
	October 31, 2001 and $25,000 at January 31, 2001			1,373,642			1,701,442
	Advances to officers & employees			2,150			3,125
	Deferred tax benefit			120,528			136,528
	Inventories			2,139,638			2,016,792
	Prepaid expenses and other current assets			79,588			114,068
		TOTAL CURRENT ASSETS		3,823,465			3,980,205
PROPERTY & EQUIPMENT
	Leasehold improvements			62,834			62,834
	Machinery and equipment			3,676,857			3,622,541
	Tooling and dies			398,892			376,307
				4,138,583			4,061,682
	Less accumulated depreciation and amortization			3,510,054			3,366,441
NET PROPERTY AND EQUIPMENT				628,529			695,241
DEFERRED TAXES				590,165			590,165
OTHER ASSETS				294,105			339,762
		TOTAL ASSETS	$	5,336,264		$	5,605,373
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Line of credit		$	520,000		$	544,000
	Notes payable, current			38,000			48,000
	Bank overdraft			—			34,698
	Accounts payable			417,490			506,207
	Accrued expenses			134,548			429,986
		TOTAL CURRENT LIABILITIES		1,110,038			1,562,891
	Long-term debt			—			44,200
		TOTAL LIABILITIES		1,110,038			1,607,091
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
		Outstanding 493,272 shares at January 31, 2001 and 494,132 at October 31, 2001		433,967			433,967
		Additional paid-in capital		5,141,767			5,141,767
		Accumulated deficit		(1,310,589	)		(1,538,533	)
		Less:
		Notes receivable from stockholders		(6,000	)		(6,000	)
		Treasury stock at cost		(32,919	)		(32,919	)
		TOTAL STOCKHOLDERS' EQUITY		4,226,226			3,998,282
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,336,264		$	5,605,373

See accompanying notes to the consolidated financial statements

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PUROFLOW INCORPORATED
Consolidated Statements of Operations
(Unaudited)

		Three months ended October 31,						Nine months ended October 31
		2001			2000			2001			2000
Net revenue		$	1,909,820		$	1,919,336		$	5,931,967		$	5,631,811
Cost of goods sold			1,306,014			1,326,423			4,175,632			3,855,581
	Gross profit		603,806			592,913			1,756,335			1,776,230
Selling, general and administrative expense			498,718			426,437			1,421,542			1,324,888
	Operating income		105,088			166,476			334,793			451,342
Interest expense			(10,945	)		(16,487	)		(38,895	)		(47,234	)
Other income			30			36			2,029			665
Amortization goodwill/non-compete			(16,768	)		(13,116	)		(45,656	)		(39,348	)
Income before taxes from continuing operations			77,405			136,909			252,271			365,425
Provision for income taxes			17,900			10,600			24,327			13,900
Income from continuing operations		$	59,505		$	126,309		$	227,944		$	351,525
Loss from discontinued operations		$	—		$	(79,887	)	$	—		$	(146,208	)
Net Income		$	59,505		$	46,422		$	227,944		$	205,317
Net income(Loss) per common share
	Basic earnings per share	$	0.12		$	0.09		$	0.46		$	0.41
	Diluted earnings per share	$	0.12		$	0.09		$	0.46		$	0.40
Weighted average number of shares
	Basic		494,132			493,272			494,132			504,101
	Diluted		494,926			498,587			495,165			509,785

See accompanying notes to the consolidated financial statements

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PUROFLOW INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)

				2001			2000
For the nine months ended October 31
CASH AT BEGINNING OF PERIOD				$	8,250		$	56,829
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income				227,944			205,317
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			143,613			154,955
		Amortization of Goodwill/Non-compete			45,656			39,348
		Provision for losses on accounts receivable			23,000			22,617
	Changes in operating assets and liabilities:
		Advances to Officers & Employees			975			900
		Accounts receivable			304,800			(183,357	)
		Inventories			(122,846	)		(364,249	)
		Prepaid expenses and other current assets			34,481			(1,048	)
		Deferred tax benefit			16,000			3,800
		Accounts payable & accrued expenses			(384,155	)		173,868
			Net cash provided by operating activities		289,468			52,151
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of property and equipment				(76,901	)		(62,492	)
			Net cash used in investing activities		(76,901	)		(62,492	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Bank Overdraft				(34,698	)		—
	Payments on long term debt				(54,200	)		(85,400	)
	Advances (Payments) on credit line				(24,000	)		44,000
			Net cash used by financing activities		(112,898	)		(41,400	)
NET INCREASE (DECREASE) IN CASH					99,669			(51,741	)
CASH AT END OF PERIOD				$	107,919		$	5,088

See accompanying notes to the consolidated financial statements

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

	COMMON STOCK PAR VALUE			ADDITIONAL PAID-IN CAPITAL			ACCUMULATED DEFICIT TOTAL			NOTES RECEIVABLE FROM STOCKHOLDERS AND TREASURY STOCK			TOTAL
Balance at January 31, 2000	$	441,277		$	5,682,729		$	(1,516,407	)	$	(587,191	)	$	4,020,408
Reversal of Notes Receivable on Stock Purchase and retirement of shares	$	(7,310	)	$	(540,962	)				$	548,272		$	—
Net Loss							$	(22,126	)				$	(22,126	)
Balance at January 31, 2001	$	433,967		$	5,141,767		$	(1,538,533	)	$	(38,919	)	$	3,998,282
Net Income							$	80,288					$	80,288
Balance at April 30, 2001	$	433,967		$	5,141,767		$	(1,458,245	)	$	(38,919	)	$	4,078,570
Net Income							$	88,151					$	88,151
Balance at July 31, 2001	$	433,967		$	5,141,767		$	(1,370,094	)	$	(38,919	)	$	4,166,721
Net Income							$	59,505					$	59,505
Balance at October 31, 2001	$	433,967		$	5,141,767		$	(1,310,589	)	$	(38,919	)	$	4,226,226

See accompanying notes to the financial statements

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

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

    The consolidated balance sheet at the end of the preceding fiscal year has been derived from the audited consolidated balance sheet contained in the Company's annual report on Form 10-K for the fiscal year ended January 31, 2001 (The "Form 10-KSB") and is presented for comparative purposes. All other financial statements are unaudited. In the opinion of management, all adjustments that include only normal recurring adjustments necessary to present fairly the financial position, results of operations and changes in financial positions for all periods presented have been made. The results of operations for interim periods are not necessarily indicative of the operating results for the full year.

    Footnote disclosures normally included in financial statements prepared in accordance with the generally accepted accounting principles have been omitted in accordance with the published rules and regulations of the Securities and Exchange Commission.

    The consolidated 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, 2001.

NOTE 2—INVENTORIES

    Inventories consist of the following:

		October 31, 2001		January 31, 2001
Raw materials and purchased parts			1,426,345		1,263,199
Work in process			376,279		394,580
Finished goods and assemblies			337,014		359,013
	Totals	$	2,139,638	$	2,016,792

NOTE 3—STOCKHOLDERS' EQUITY

    On February 17, 2000 the Board announced a plan to retire 920,000 shares of its common stock, from shares issued August 24, 1998, in return for cancellation of notes received by the company from employees and board members. The company received and retired 731,030 shares of common stock.

    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.

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NOTE 4—NET INCOME PER SHARE

    Reconciliation of basic and diluted earnings per share:

	INCOME		SHARES	PER-SHARE AMOUNT
9 Months Ended October 31, 2001
Basic earnings per share	$	227,944	494,132	$	.46
Effect of Dilutive Securities
Stock options			1,033
Diluted earnings per share	$	227,944	495,165	$	.46
9 Months Ended October 31, 2000
Basic earnings per share	$	205,317	504,101	$	.41
Effect of Dilutive Securities
Stock Options			5,684
Diluted earnings per share	$	205,317	509,785	$	.40

    Basic earnings per share is based on the weighted average number of shares outstanding. Diluted earnings per share include the effect of common stock equivalents when dilutive. Earnings per share for the nine months ended October 31, 2000 have been adjusted to reflect the fifteen to one reverse stock split.

NOTE 5—LINE OF CREDIT

    The Company has a $1,000,000 revolving credit line maturing on December 17, 2001. This credit line bears interest at the rate of prime plus 0.25% per annum and is secured primarily by the Company's accounts receivable and inventories. The terms of this loan agreement contains certain restrictive covenants, including maintenance of minimum working capital, net worth, and ratios of current liabilities and debt to net worth. There is an open balance of $520,000 as of October 31, 2001.

NOTE 6—INCOME TAXES

    The company complies with Financial Accounting Standards No. 109, Accounting for Income Taxes. The Company will use loss carryforwards to offset future federal income tax liability.

NOTE 7—DISCONTINUED OPERATIONS

    As of January 31, 2001 the Company elected a shutdown of its International Division, and all operations have been classified under loss from discontinued operations in fiscal years 2001 and 2000. The Company has provided a reserve for its estimated loss on the International Division during the phase-out period which expects will end on or about November 30, 2001. The provision was $211,000 of which none remains at October 31, 2001. There are no significant assets or liabilities of the International Division remaining on the books at October 31, 2001.

LIQUIDITY AND CAPITAL RESOURCES

    At October 31, 2001 and January 31, 2001, the Company had $107,919 and $8,250 respectively available in cash. The current ratio was 3.44 to 1 at October 31, 2001 compared to 2.55 to 1 at January 31, 2001. The Company maintains a revolving credit line of $1,000,000, of which $480,000 was available to fund operations at October 31, 2001.

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OPERATING ACTIVITIES

    Cash flow from operating activities for the nine months ended October 31, 2001 was increased by $289,468 as compared to $52,151 for the nine months ended October 31, 2000, mostly from faster collections and slower inventory growth.

INVESTING ACTIVITIES

    The Company invested $76,901 in new capital equipment in the first three quarters for upgrading computer equipment and for tooling and machinery in support of new PMA products.

FINANCING ACTIVITIES

    The Company's revolving credit line of $1,000,000 bears an interest rate of prime plus 0.25% per annum and is secured by the Company's accounts receivable and inventory of which $520,000 was outstanding at October 31, 2001. The Company obtained a loan of $236,000 for the purposes of paying a non-recurring judgment and the purchase of a blueprint copier. At October 31, 2001, the balance of this note was $38,000.

BUSINESS ACQUISITION

    On January 31, 1999 the Company acquired Quality Controlled Cleaning Corporation ("QCCC") for $550,630 including all costs of the acquisition. QCCC is a precision cleaning and repair company located in Commerce, California. The Company's acquisition resulted in goodwill of approximately $274,000 and a non-compete agreement of $50,000. The goodwill is amortized over 10 years and the non-compete over its term of 3 years.

    In addition to the purchase price, the agreement included a contingent payment of 50% of net sales in excess of $500,000 up to a maximum of $800,000 in the year ended January 31, 2000. The liability totaled $125,609 and was recorded as additional goodwill. This liability has been fully satisfied.

SEGMENT REPORTING NET SALES		9 Months @ October 31, 2001		9 Months @ October 31, 2000
Filtration		$	5,786,237	$	5,311,442
Contract Services		$	145,736	$	320,369
	Total	$	5,931,967	$	5,631,811

OPERATING INCOME	9 Months @ October 31, 2001			9 Months @ October 31, 2000
Filtration	$	455,708		$	506,985
Contract Services		(120,915	)		(55,643	)
	$	334,793		$	451,342

RESULTS OF OPERATIONS FOR QUARTER ENDED OCTOBER 31, 2001

REVENUES

    Sales were $1,909,820 for the three months ended October 31, 2001 compared to $1,919,336 for the same period in 2000, a .5% decrease of $9,516 due primarily to a decrease of contract services, offset by an increase in sales of filtration products.

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GROSS PROFIT

    Gross profit as a percentage of sales was 31.6% for the three months ended October 31, 2001 compared to 30.9% for the same period in 2000, representing higher margins for filtration products as a result of continued manufacturing efficiencies.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses as a percentage of sales was 26.1% for the three months ended October 31, 2001 compared to 22.2% for the same period last year due to increases in rent, legal and general insurance.

OPERATING INCOME

    Operating income for the three months ended October 31, 2001 was $105,088 or 5.5% compared to $166,476, an operating margin of 8.7% for the same period in 2000.

INTEREST CHARGES

    Interest expense for the three months ended October 31, 2001 was $10,945 compared to $16,487 for the same period in 2000.

RESULTS OF OPERATIONS FOR NINE MONTHS ENDED OCTOBER 31, 2001

REVENUE

    Sales were $5,931,967 for the nine months ended October 31, 2001 compared to $5,631,811 for the nine months ended October 31, 2000, a 5.3% increase of $300,156.

GROSS PROFIT

    Gross profit as a percentage of sales was 29.6% for the nine months ended October 31, 2001 compared to 31.5% for the nine months ended October 31, 2000, a decrease of 1.9%. Lower margins for the nine month period are attributed to product mix.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses were 23.9% for the nine months ended October 31, 2001 compared to 23.5% for the nine months ended October 31, 2000.

OPERATING INCOME

    Operating Income for the nine months ended October 31, 2000 was $334,793 or 5.6% compared to $451,342 or 8.0% for the nine months ended October 31, 2000.

INTEREST CHARGES

    Interest expense for the nine months ended October 31, 2001 was $38,895 compared to $47,234 for the nine months ended October 31, 2000.

PART ll—OTHER INFORMATION

ITEM 1. PENDING LEGAL PROCEEDINGS.

    The Company is not party, nor are its properties subject to, any material pending proceedings other than ordinary routine litigation incidental to the Company's business and the matters described above.

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ITEM 2. CHANGES IN SECURITIES

    None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

    None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

ITEM 5. OTHER INFORMATION

    None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    None.

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SIGNATURE

    Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed and on its behalf by the undersigned thereto, duly authorized.

	PUROFLOW INCORPORATED
Dec. 14, 2001	By:	/s/ MICHAEL H. FIGOFF Michael H. Figoff President/Chief Executive Officer

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QuickLinks

FORM 10-QSB
Consolidated Balance Sheets (Unaudited)
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statement of Stockholders' Equity
PUROFLOW INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. (Unaudited) October 31, 2001, January 31, 2001, and October 31, 2000
SIGNATURE