United States
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 fiscal quarter ended: June 30, 2000
Commission file number: 0-26449
DYNAMIC IMAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0903895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3418 North Ocean Boulevard
Fort Lauderdale, Florida 33308
(Address of principal executive offices)
(Zip code)
(954) 564-1133
(Registrant's telephone number, including area code)
Indicate by check mark whether 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 [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of June 30, 2000: 6,873,585 shares of common stock, $.001 par
value per share.
<PAGE>
DYNAMIC IMAGING GROUP, INC.
FORM 10-QSB
QUARTERLY PERIOD ENDED June 30, 2000
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheet (Unaudited)
June 30, 2000...................................................... 2
Consolidated Statements of Operations (Unaudited)
For the Three and Six Months Ended June 30, 2000 and 1999.......... 3
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2000 and 1999.................... 4
Notes to Consolidated Financial Statements........................... 5-8
Item 2 - Management's Discussion and Analysis or Plan
of Operations............................................... 9-11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings............................................. 12
Item 2 - Changes in Securities and Use of Proceeds..................... 12
Item 4 - Submission of Matters to a Vote of Security Holders........... 12
Item 6 - Exhibits and Reports on Form 8-K.............................. 12
Signatures............................................................. 13
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 2000
(Unaudited)
ASSETS
CURRENT ASSETS:
Accounts Receivable $ 86,366
Subscription Receivable 7,500
Inventories 26,037
-------
Total Current Assets 119,903
PROPERTY AND EQUIPMENT - Net 136,792
MARKETABLE EQUITY SECURITIES 24,000
DUE FROM RELATED PARTIES 31,600
GOODWILL - Net 172,813
SECURITY DEPOSITS 2,990
-------
Total Assets $ 488,098
=======
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Note Payable $ 50,000
Accounts Payable and Accrued Expenses 398,832
Accrued Salaries 198,502
Customer Deposits 16,749
Due to Related Party 25,000
-------
Total Current Liabilities 689,083
-------
STOCKHOLDERS' DEFICIT:
Preferred Stock (No Par Value; 5,000,000 Shares
Authorized; No Shares Issued and Outstanding) -
Common Stock ($.001 Par Value; 50,000,000 Shares Authorized;
6,873,585 Shares Issued and Outstanding) 6,874
Additional Paid-in Capital 1,949,977
Accumulated Deficit (2,157,836)
-----------
Total Stockholders' Deficit (200,985)
-----------
Total Liabilities and Stockholders' Deficit $ 488,098
===========
See notes to consolidated financial statements
-2-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------- ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 200,493 $ 144,393 $ 418,302 $ 190,272
COST OF SALES 86,442 95,968 181,617 108,443
--------- --------- --------- ---------
GROSS PROFIT 114,051 48,425 236,685 81,829
--------- --------- --------- ---------
OPERATING EXPENSES:
Consulting Fees 57,060 - 131,670 -
Contract Labor 61,004 44,439 122,912 80,208
Depreciation and Amortization 7,187 2,000 12,187 3,000
Professional Fees 19,477 9,151 37,265 15,566
Rent 27,847 16,614 55,454 31,878
Salaries 114,679 124,700 232,196 234,575
Other Selling, General and Administrative 114,177 58,135 235,797 170,138
--------- --------- --------- ---------
Total Operating Expenses 401,431 255,039 827,481 535,365
--------- --------- --------- ---------
LOSS FROM OPERATIONS (287,380) (206,614) (590,796) (453,536)
OTHER EXPENSES:
Interest Expense 76,987 - 76,987 -
--------- --------- --------- ---------
NET LOSS $ (364,367) $(206,614) $(667,783) $(453,536)
========= ========= ========= =========
BASIC AND DILUTED:
Net Loss Per Common Share $ (0.06) $ (0.04) $ (0.11) $ (0.08)
========= ========= ========= =========
Weighted Common Shares Outstanding 6,192,074 5,551,550 6,049,693 5,431,369
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
--------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (667,783) $ (453,536)
Adjustments to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Depreciation and Amortization 12,187 3,000
Recognition of Officers Compensation on Donated Services - 60,000
Common Stock Issued for Services 128,251 2,000
Interest Expense Recognized for Issuance of Common Stock 75,000 -
(Increase) Decrease in:
Accounts Receivable (58,580) (8,238)
Inventories (20,574) -
Due from Related Parties 57,541 (159,607)
Security Deposits - (1,000)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 99,501 222,847
Accrued Salaries 126,002 -
Customer Deposits (690) 5,082
----------- -----------
Net Cash Flows Used in Operating Activities (249,145) (329,452)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash from Acquisition 1,276 -
Acquisition of Property and Equipment (15,981) (96,286)
----------- -----------
Net Cash Flows Used in Investing Activities (14,705) (96,286)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Subscriptions Receivable 30,500 -
Proceeds from Issuance of Common Stock 205,000 425,485
Due to Related Party 25,000 (7,408)
----------- -----------
Net Cash Flows Provided by Financing Activities 260,500 418,077
----------- -----------
Net Increase (Decrease ) in Cash (3,350) (7,661)
Cash - Beginning of Period 3,350 10,047
----------- -----------
Cash - End of Period $ - $ 2,386
=========== ===========
SUPPLEMENTAL INFORMATION:
Cash Paid During Year for:
Interest and Taxes $ - $ -
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Common Stock for Acquisition $ 175,000 $ -
=========== ===========
Issuance of Common Stock for Subscription Receivable $ - $ 382,000
=========== ===========
Issuance of Common Stock for Marketable Equity Securities $ 24,000 $ -
=========== ===========
Details of Acquisition:
Fair value of assets $ 26,777 $ -
Liabilities (377) -
Common stock issued (26,400) -
----------- -----------
Net cash paid for acquisition $ - $ -
=========== ===========
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND GOING CONCERN
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. The consolidated
financial statements include the accounts of the Company and its subsidiaries.
All significant intercompany accounts and transactions have been eliminated.
These consolidated financial statements should be read in conjunction with the
financial statements for the year ended December 31, 1999 and notes thereto
contained in the Report on Form 10-KSB of Dynamic Imaging Group, Inc. (the
"Company") as filed with the Securities and Exchange Commission. The results of
operations for the six months ended June 30, 2000 are not necessarily indicative
of the results for the full fiscal year ending December 31, 2000.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. Since its inception, the Company
has continued to suffer recurring losses from operations that to date, total
$2,157,836. At June 30, 2000, the Company had a working capital deficit of
$569,180. These factors among others may indicate the Company will be unable to
continue as a going concern for a reasonable period of time. The accompanying
consolidated financial statements do not include any adjustments relating to the
outcome of this uncertainty.
The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis. The
Company's primary source of liquidity has been from the cash generated by its
operations and through the private placement of equity and debt securities. The
Company is presently developing its infrastructure and ramping up operations of
its business in order to eventually achieve profitable operations. However,
there can be no assurance that the Company will be successful in achieving
profitability or acquiring additional capital or that such capital, if
available, will be on terms and conditions favorable to the Company. Based upon
its current business plan, the Company believes it will generate sufficient cash
flow through operations and external sources of capital to continue to meet its
obligations in a timely manner.
NOTE 2- LOSS PER SHARE
Basic earnings per share is computed by dividing net loss by weighted average
number of shares of common stock outstanding during each period. Diluted loss
per share is computed by dividing net loss by the weighted average number of
shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. Diluted loss per common share is not
presented because it is anti-dilutive.
-5-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
NOTE 3 - DUE FROM RELATED PARTY
The Company advanced funds to a company affiliated through common officers. The
advances are non-interest bearing and are payable on demand. At June 30, 2000,
advances to this company amounted to $31,600.
NOTE 4 - ACQUISITIONS
During January 2000, the Company acquired 100% of the outstanding stock of Digi
of Fort Lauderdale, Inc. in exchange for 33,000 shares of Company stock with a
fair value of $26,400. The Company is accounting for this acquisition using the
purchase method of accounting. The purchase price equaled the fair value of net
liabilities assumed. The results of operations of Digi of Fort Lauderdale, Inc.
are included in the accompanying financial statements from January 1, 2000
(effective date of acquisition) to June 30, 2000. Digi of Fort Lauderdale, Inc.
commenced operations subsequent to June 30, 1999. Therefore, unaudited pro forma
consolidated results of operations have not been presented. Subsequent to June
30, 2000, the Company sold 50% of its interest in Digi of Fort Lauderdale, Inc.
to a third party. See Note 9 - Subsequent Event for additional information.
On May 15 2000, the Company acquired 100% of the outstanding stock of Peerless
Solutions, Inc. (Peerless) in exchange for 350,000 shares of Company stock with
a fair value of $175,000. As part of the acquisition, Peerless changed its name
to DIGI eSolutions, Inc. (eSolutions). In addition to these shares, the Peerless
shareholders shall be entitled to receive from the Company no later than June
30, 2003, his or her proportionate shares of contingent shares of common stock
of the Company. Said shares shall bear a restrictive Rule 144 legend according
to the Securities Act of 1933. The number of contingent shares is determined by
dividing the Contingent Sum by the Stipulated Value. The Contingent Sum is equal
to Five (5) times the average annual net earnings of DIGI eSolutions determined
for each of the following thirteen (13) and twelve (12) month periods beginning
on May 1, 2000 and ending on May 31, 2003. Peerless provides businesses with a
wide range of e-commerce services including development of business to business
applications, state of the art web technology and staff augmentation services.
The Company is accounting for this acquisition using the purchase method of
accounting. The purchase price exceeded the fair value of net assets acquired by
$175,000. As of May 15, 2000, eSolutions did not have assets, liabilities or
operations. The excess has been applied to goodwill and is being amortized on a
straight-line basis over 10 years. For the quarter ended June 30, 2000,
amortization expense amounted to $2,187.
NOTE 5 - MARKETABLE EQUITY SECURITIES
Marketable equity securities are classified into one of three categories:
trading, available-for-sale, or held-to-maturity. Trading securities are
acquired and held principally for the purpose of selling them in the near term.
Held-to-maturity securities are those securities that the Company has the
ability and intent to hold to maturity. All other securities not included in the
trading and held-to-maturity categories are available-for-sale securities.
Management determines the appropriate classifications of marketable equity
securities at the time they are acquired and evaluates the continuing
appropriateness of the classification at each balance sheet date. At June 30,
2000, the Company held only available-for-sale securities, which are reported at
fair value with unrealized gains and losses excluded from earnings and reported
as a separate component of stockholders' deficit. At June 30, 2000, their is no
unrealized gain or loss recognized.
-6-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
NOTE 6 - NOTE PAYABLE
The Company has a note payable to an unaffiliated third party. The note is
non-interest bearing, non-collateralized, and is payable on April 1, 2000. As of
June 30, 2000, the note payable to this third party amounted to $50,000. In
connection with this note payable, the Company issued 50,000 restricted common
shares in 1999. The value of the consideration, $40,000 based on the fair value
price per share of $.80, was reflected as interest expense and charged to
operations in the year ended December 31, 1999. If the note is not repaid on
April 1, 2000, a penalty of 50,000 shares per month shall be paid to the third
party. During the quarter ended June 30, 2000, the Company issued 150,000 shares
of common stock in accordance with this penalty. These shares were valued at
approximately $.50 per share, the fair values. As of August 1, 2000, the note
had not been repaid.
NOTE 7- STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock
The Company is authorized to issue 5,000,000 shares of Preferred Stock with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors.
Common Stock
During January 2000, the Company issued 80,000 shares of restricted common stock
for $40,000 in cash and marketable equity securities with a fair market value of
$24,000.
During January 2000, the Company issued 33,000 shares of restricted common stock
at a fair value price of $.80 in exchange for 100% of the outstanding shares of
Digi of Fort Lauderdale, Inc.
During the three month period ended March 31, 2000, the Company issued 82,000
shares of restricted common stock in exchange for professional services
rendered. These shares were valued at $.80 to $2.50 per share, the fair values,
and charged to operations.
During January 2000, the Company authorized the issuance of 310,000 shares of
restricted common stock to a third party at a fair value price of $.50 per
share. The shares had been issued for net proceeds of $155,000.
During March 2000, the Company issued 10,000 shares of restricted common stock
for proceeds of $10,000.
On May 15, 2000, the Company entered into a stock exchange and plan of
reorganization agreement with Peerless Solutions, Inc. The Company agreed to
exchange 350,000 shares of its restricted common stock for 100% of Peerless
Solutions, Inc. These shares were valued at approximately $.50 per share, the
fair value at date of issuance.
-7-
<PAGE>
DYNAMIC IMAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
NOTE 7- STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
During June 2000, the Company issued 150,000 shares of restricted common stock
as payment of interest expense on a note payable. These shares were valued at
approximately $.50 per share, the fair value at the date of issuance.
During May and June 2000, the Company issued 101,500 shares of restricted common
stock in exchange for professional services rendered. These shares were valued
at $.50 per share, the fair value at the date of issuance, and charged to
operations.
NOTE 8 -COMPREHENSIVE INCOME
The Company uses Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income." This pronouncement sets forth requirements for
disclosure of the Company's comprehensive income and accumulated other
comprehensive items. In general, comprehensive income combines net income and
"other comprehensive items," which represent certain amounts that are reported
as components of stockholders' equity in the accompanying balance sheet,
including foreign currency translation adjustments. For the six months ending
June 30, 2000, the Company had no comprehensive income.
NOTE 9 - SUBSEQUENT EVENTS
On July 10, 2000, the Company issued a convertible debenture and borrowed
$27,826 from a third party. The entire outstanding debt plus interest
aggregating $65,000 shall be due and payable on October 10, 2000. The aggregate
debt amounting to $65,000 shall be convertible, at default, at the option of the
lender, into shares of the Company's common stock at a conversion price of $1.00
per share or 65,000 shares.
On July 1, 2000, the Company sold 50% of its interest in Digi of Fort
Lauderdale, Inc. to a stockholder and former employee and entered into a joint
venture agreement. As consideration, the sum of $20,000 shall be paid to the
Company. The purchaser surrendered to the Company 10,000 shares of the Company's
stock to be held in the purchaser's name for six months. The common shares may
be sold on the open market by the Company at a value equal or greater than $2.00
per share at any time prior to the last day of the sixth month.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
This report on Form 10-QSB contains certain forward-looking statements, which
are subject to risks and uncertainties which could cause actual results to
differ materially from those discussed in the forward-looking statements and
from historical results of operations. Among the risks and uncertainties which
could cause such a difference are those relating to our dependence upon certain
key personnel, our ability to manage its growth, our success in implementing the
business strategy, our success in arranging financing where required, and the
risk of economic and market factors affecting the us or our customers. Many of
such risk factors are beyond our control.
Six and three months ended June 30, 2000 compared to six and three months ended
June30, 1999.
Net sales for the six and three months ended June 30, 2000 were $418,302 and
$200,493, respectively, as compared to net sales for the six and three months
ended June 30, 1999 of $190,272 and $144,393. This increase is principally due
to volume and rate increases in our existing markets, as well as revenues
associated with new store operations in Miami and Fort Lauderdale, Florida.
For the six and three months ended June 30, 2000, cost of sales amounted to
$181,617 and $86,442 or 43 % of net sales as compared to $108,443 and $95,968 or
56% and 66 % of net sales, for the six and three months ended June 30, 1999,
respectively. We recognize a greater gross profit margin from graphic sales as
compared to display sales. Net sales and gross profits depend in part on the
volume and mix of display sales, graphic sales and rental sales. Graphic
products have a higher gross margin with a relatively lower sales transaction
amount per customer, while display sales have a comparably lower gross profit
margin with a relatively higher sales transaction amount per customer. During
the six months ended June 30, 2000, displays sales accounted for approximately
69% of net sales as compared to approximately 76% of net sales for the six
months ended June 30, 1999. Accordingly, we recognized gross profit margins of
53% for the six and three months ended June 30, 2000 as compared to gross profit
margins of 44% and 34% for the six and three months ended June 30, 1999,
respectively.
Consulting fees were $131,670 and $57,060 for the six and three months ended
June 30, 2000, respectively, as compared to $-0- for the six and three months
ended June 30, 1999. The increase is primarily attributable to investment
banking and other fees incurred in connection with our stock sales.
Additionally, during May and June 2000, we issued 101,500 shares of common stock
in exchange for professional and consulting services rendered. These shares were
valued at $.50 per share, the fair value, and charged to consulting fees.
Contract labor expenses include costs and commissions related to our sales force
that is comprised of both direct employees of the Company (included in salaries)
and independent sales representatives. Contract labor also includes costs of
certain individuals related to administration and purchasing who are engaged on
a contractual basis. Contract labor expenses were $122,912 and $61,004 for the
six and three months ended June 30, 2000, respectively, as compared to $80,208
and $44,439 for the six and three months ended June 30, 1999. The increase in
contract labor is attributable to our growth and need to support our existing
products and service business as well as to provide the infrastructure for
future growth.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations (Continued)
Professional fees were $37,265 and $19,477 for the six and three months ended
June 30, 2000, respectively, as compared to $15,566 and $9,151 for the six and
three months ended June 30, 1999. The increase is attributable to the fact that
we incurred additional legal and accounting fees in connection with the filing
of our registration statement on Form 10-SB, as filed and subsequently amended,
during fiscal 2000.
Rent expense was $55,454 and $27,847 for the six and three months ended June 30,
2000 as compared to $31,878 and $16,614 for the six and three months ended June
30, 1999. The increase was directly attributable to the acquisition of our
wholly owned subsidiary, Digi of Fort Lauderdale, Inc.
Salaries were $232,196 and $114,679 for the six and three months ended June 30,
2000, respectively, as compared to $234,575 and $124,700 for the six and three
months ended June 30, 1999. Salary figures have remained comparatively steady
over the periods. We anticipate head count to remain consistent. We will
continue to use contract labor as necessary to complete projects and to generate
sales.
Other selling, general and administrative expenses, which include travel and
entertainment, insurance, auto, telephone and other expenses, were $235,797 and
$114,177 for the six and three months ended June 30, 2000 as compared to
$170,138 and $58,135 for the six and three months ended June 30, 1999. The
increase is primarily attributable to increased sale and marketing efforts.
Additional, we have incurred additional travel and entertainment expenses
related to our SEC filings and stock registration.
Interest expense was $76,987 for the six and three months ended June 30, 2000,
respectively, as compared to $-0- for the six and three months ended June 30,
1999. The increase was directly attributable to our issuance 150,000 shares of
common stock as payment of interest expense on a note payable. These shares were
valued at approximately $.50 per share, the fair values.
As a result of the foregoing factors, we incurred losses of approximately
$667,783 or ($.11) per share for the six months ended June 30, 2000 as compared
to a loss of approximately $453,536 or ($.08) per share for the six months ended
June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, we had a stockholders' deficiency of approximately $201,000.
Since our inception, we have incurred losses of approximately $2,158,000. Our
operations and growth have been funded by the sale of common stock with gross
proceeds of approximately $880,000 and working capital borrowings amounting to
$50,000. Additionally, on July 10, 2000, we issued a convertible debenture and
borrowed $27,826 from a third party. This entire outstanding debt plus interest
aggregating $65,000 shall be due and payable on October 10, 2000. The aggregate
debt amounting to $65,000 shall be convertible, at default, at the option of the
lender, into shares of the Company's common stock at a conversion price of $1.00
per share or 65,000 shares. These funds were used for working capital and
capital expenditures.
-10-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
We have no other material commitments for capital expenditures. We believe that
we have sufficient liquidity to meet all of our cash requirements for the next
twelve months through cost reductions and increased marketing efforts together
with additional proceeds from common stock sales. A key element of our strategy
is to continue to expand our sales force and to evaluate opportunities to expand
through acquisition of companies engaged in similar and related complementary
businesses. During May 2000, we acquired 100% of the outstanding stock of
Peerless Solutions, Inc. (Peerless) in exchange for 350,000 shares of Company
stock with a fair value of $175,000. As part of the acquisition, Peerless
changed its name to DIGI eSolutions, Inc. (eSolutions). Esolutions provides
businesses with a wide range of e-commerce services including development of
business to business applications, state of the art web technology and staff
augmentation services. We expect eSolutions to generate revenues and cash flow
aggregating $400,000 during the fourth quarter of the calendar year. Any
additional acquisitions may require additional capital, although there can be no
assurances that any acquisitions will be completed. Also, we believe that
additional funding will be necessary to expand our market share.
During the six months ended June 30, 2000, our operating cash requirement was
$224,145 attributable to a net loss of $667,783 mitigated by non-cash charges
for depreciation and amortization of $12,187, stock based compensation of
$128,251 and stock issued for interest expense of $75,000. The net remaining
shortfall was primarily funded by the net sale of common stock for $235,500
received during the six months ended June 30, 2000. Partially offsetting this
funding were capital expenditures of $15,981.
During the six months ended June 30, 1999, our operating cash requirement was
$336,860 attributable to a net loss of $453,536 mitigated by non-cash charges
for depreciation and amortization of $3,000, stock based compensation of $2,000
and the recognition of officers compensation on donated services of $60,000. The
net remaining shortfall was primarily funded by the net sale of common stock for
$425,485 received during the six months ended June 30, 1999. Partially
offsetting this funding were capital expenditures related to the acquisitions of
trade show displays to be used in our display rental business of $96,286.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not involved in any material litigation
Item 2. Changes in Securities and Use of Proceeds
During January 2000, the Company issued 80,000 shares of restricted common
stock for $40,000 in cash and marketable equity securities with a fair market
value of $24,000.
During January 2000, the Company issued 33,000 shares of restricted common
stock at a fair value price of $.80 in exchange for 100% of the outstanding
shares of Digi of Fort Lauderdale, Inc.
During the three month period ended March 31, 2000, the Company issued
82,000 shares of restricted common stock in exchange for professional services
rendered. These shares were valued at $.80 to $2.50 per share, the fair values,
and charged to operations.
During January 2000, the Company authorized the issuance of 310,000 shares
of restricted common stock to a third party at a fair value price of $.50 per
share. The shares had been issued for net proceeds of $155,000.
During March 2000, the Company issued 10,000 shares of restricted common
stock for proceeds of $10,000.
On May 15, 2000, the Company entered into a stock exchange and plan of
reorganization agreement with Peerless Solutions, Inc. The Company agreed to
exchange 350,000 shares of its restricted common stock for 100% of Peerless
Solutions, Inc. These shares were valued at approximately $.50 per share, the
fair value at date of issuance.
During June 2000, the Company issued 150,000 shares of restricted common
stock as payment of interest expense on a note payable. These shares were valued
at approximately $.50 per share, the fair value at the date of issuance.
During May and June 2000, the Company issued 101,500 shares of restricted
common stock in exchange for professional services rendered. These shares were
valued at $.50 per share, the fair value at the date of issuance, and charged to
operations.
Item 4. Submission of Matters to Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10.1) Stock exchange agreement and plan of reorganization
with Peerless Solutions, Inc.
(27) Financial Data Schedule
(b) There were no current reports on Form 8-K filed by us during the
six months ended June 30, 2000.
-12-
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SIGNATURES
In accordance with the requirements 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.
DYNAMIC IMAGING GROUP, INC.
Dated: August 18, 2000 By:/s/Gary Morgan
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Gary Morgan, Chief Executive Officer
Dated: August 18, 2000 By:/s/Roland Breton
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Roland Breton, President
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