SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1995
Commission File Number 0-5628
DYNAMIC AMERICAN CORPORATION
----------------------------------
(Exact Name of Company as Specified in its Charter)
Utah 87-0267027
--------- --------------------------
(State of Incorporation) (IRS Employer Identification Number)
476 Wilson Avenue, Novato, California 94947
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Company's Telephone Number,
Including Area Code (415)897-1380
Securities registered pursuant to Section 12(g) of the Act:
Common stock of $.001 par value per share
------------------------------------------
(Title of Class)
Indicate by check mark whether the Company (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
company was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.[ x ] Yes No [ ].
As of August 2, 1996, the aggregate market value of the common shares
held by non affiliates was approximately $2,625,000.
The number of shares outstanding of the Company's common stock as of
September 30, 1995:
Common Stock 2,115,000
---------------- ----------------------------
(Title of Class) (Number of Shares outstanding)
<PAGE>
<PAGE>
There are no documents incorporated by reference in this Annual Report on Form
10-K.
Note: Please be advised that the Company originally filed Form 10-K for the
year ending September 30, 1995 on or about August 2, 1996, that report
included financial statements prepared by the Company's auditors.
Subsequently, the Company learned that said financial statements were prepared
in draft form only and were not suitable for submission to the SEC or
dissemination to the public. Subsequently, the auditors concluded their audit
of the Company's books and records and have produced the financial statements
attached hereto. This amended 10-K contains the Company's complete audited
financial statements for the nine months ended September 30, 1995.
PART I
Item 1. Business
---------
(A) General development of business:
Dynamic American Corporation (the Company) was incorporated September 29,
1961, in the state of Utah as a general business corporation, originally under
the name of National Land Corporation. The company was organized for the
purpose of investing in and developing raw land. During the 1960's the
company acquired numerous parcels of raw land which it held as investment or
to subdivide and to resell.
In the 1970's, the Company began to diversify its activities. This was
accomplished through a series of mergers. The company engaged in
manufacturing operations related to plastic printing plates for the newspaper
industry, gaskets, seals and hydraulic and pneumatic tools and supplies in
subsidiaries known as Dyna-Flex International Corporation, Basic American
Corporation and New Draulics, Inc., and the name of the company was changed to
Dynamic American Corporation in order to reflect the diversification of
business in which it was then becoming involved. At this time emphasis was
again shifted to real estate operations.
Through various purchases and acquisitions by merger the Company continued to
build up its real estate holdings for the next decade, while at the same time
engaging in vigorous efforts to market and sell subdivided parcels of land and
larger unsubdivided tracts.
During 1983, the Company formed Camelot International Resort corporation and
transferred land holdings located in Duchesne County, Utah into this
subsidiary company. The Company then began development of Camelot Resort as a
Private Membership camping resort. Membership sales began in 1985. The
subsidiary was sold at the end of 1990.
Manufacturing operations continued through 1984 after which time Dyna-Flex
International Corporation and New Draulics, Inc. were sold. Through a
subsidiary known as Dynamic Technologies Corporation, the Company again
returned to manufacturing in 1988 initiated by the acquisition of the
exclusive license to make, use and sell a certain patented air-suspended
impact attrition mill ("attrition mill") which pulverizes and crushes ore and
other materials. During 1989, the Company expended significant resources to
develop the product and during this same year realized their first sales of
the product. The attrition mill was marketed under the "Dyna-Mill" trademark.
During 1991, the Company sold the attrition mill operation and, effective
December 30, 1991, merged with Dynamic Technologies Corporation. These assets
were reacquired by the Company in 1992.
During 1990, the Company's main activity was in its real estate segment which
was expanded to include sales of used modular housing. Due to the Company's
historical operating losses combined with the tightened monetary policies of
financial institutions, funding for the various real estate projects was
difficult. This forced a delay and/or cancellation of various planned
projects and generally negatively impacted the growth and development of the
Company's business segments. Due in part to this pressure, the Company looked
to accelerate sales of assets held for resale as a source to expand the
business as opposed to borrowing. The Company packaged for sale the various
assets being held for resale consisting of its modular housing inventory,
long-term notes receivable, real estate held for resale and a partially
completed real estate project together with related equipment. This sale was
made to TLM Investments, Inc. (TLM) and was completed April 1, 1991 with an
effective date of December 31, 1990.
In 1991, the Company exchanged the note receivable for TLM for 10,000 tons of
precious metal ore concentrates and entered into production arrangements with
a third party (Century 2000 Corporation) to recover the precious metals from
the ore concentrates using new techniques to break complex ores.
During 1992, the Company incorporated an energy subsidiary DACO Energy Group
and on June 30, 1992 it acquired natural gas assets totaling $2,126,500 by
issuing 2,424,500 shares of the Company's common stock. In 1993, the Company
exchanged these assets for an additional 25,000 tons of the ore concentrates.
In 1994, the Company disposed of the assets relating to the attrition mill
operation in settlement of a lawsuit and note payable to the inventor and
seller. The Company has presently determined to pursue the processing and
extraction of the precious metals in the ore concentrates.
Pursuant to a shareholders meeting held in December 1994, wherein the Board of
Directors were duly authorized by the shareholders, on June 22, 1995 the
Company effected a reverse split of the Company's common stock on the basis of
1 for 20. Additionally, the Articles of Incorporation were restated to
conform to current state law and raise the authorized common shares to
50,000,000 shares. The par value of the common shares was changed to $0.001,
and the company authorized the creation of Preferred Share categories A, B and
C with the preferences to be determined by the Board of Directors.
Accompanying the reverse split was a change in the Company's trading symbol
from DACO to DACQ and the issuance of a new Cusip Number which is 267843209.
During the first quarter of 1996 the Board of Directors authorized an increase
in common shares from 50,000,000 to 200,000,000. The par value remained the
same.
(B) Narrative description of business:
On July 17, 1995 the Company entered into an agreement to acquire 100% of the
assets of Bolivian Tin & Silver, S.A. The original agreement required the
Company to issue 20,000,000 class A convertible preferred stock, for a total
purchase price of $43,268,878.
The entire transaction with Bolivian Tin & Silver Company, per the contract,
was in escrow until September 18, 1995 or earlier as determined by management
of the Company. The escrow period provided the Company the opportunity to
conduct and conclude due diligence procedures to determine the production and
profitability of the mines and smelter. As of September 18, 1995, on the
motion of the president, Alan Burton, the Company closed escrow and concluded
the acquisition. Pursuant to the instructions of Bolivian Tin & Silver,
during the fourth quarter of 1995, all of the class A convertible preferred
shares have been converted to common shares. Accordingly, the Company has
issued 20,000,000 common shares per the instructions of Bolivian Tin & Silver.
During the fourth quarter of 1995, it became apparent that the value of the
Company's common shares was rapidly declining as reported on the OTC
Electronic Bulletin Board, where bid and ask prices for the Company's common
shares are quoted. The result was that the value of the holdings of Bolivian
Tin & Silver in the Company had fallen well below the value of the assets
conveyed to the Company. Further, such events had created a tremendous burden
for Bolivian Tin & Silver to the extent that Bolivian Tin & Silver had
suggested to the Company, they might have sought recision of the asset
purchase agreement. After consideration, the Board agreed to issue 1,000,000
Class B convertible preferred stock to Bolivian Tin & Silver with the
following provisions:
a. Each share has a face and redemption value of $38.00 per share.
b. Each share shall earn a non-cumulative dividend of three (3%)
percent.
c. Each share is convertible for the Company's common stock at any
time, upon request and notice of Bolivian Tin & Silver, and such conversion
shall occur at the average bid and ask price on the day of said conversion.
Each preferred share shall be converted for as many common shares as are
necessary to retire the preferred share at its face redemption value (bid and
ask price is determined in the public market place for the Company's shares on
the NASDAQ OTC Electronic Bulletin Board, operated by the National Association
of Securities Dealers in the United States).
d. The convertible preferred shares shall have no voting rights.
e. The convertible preferred shares shall be preferred over all common
shareholders in the event of liquidation of the assets of the Company up to
their face or redemption value.
f. The Company may redeem such shares at any time after ten (10) years
from the date of issuance for their face and redemption value if the shares
have not been converted into common shares.
Item 2. Properties
-----------
On July 17, 1995 the Company entered into an agreement to acquire 100% of the
assets of Bolivian Tin & Silver, which includes all of the assets of
Operaciones Metalurgicas, a tin smelting operation located in Oruro, Bolivia,
and 100% of the property rights in the Monte Blanco mining group, 100% of the
property rights in the Chojnacota mining group and 100% of those rights owned
pursuant to the Cabo Piroja lease/purchase contract.
The tin smelter is operational and was under the control of the same family
for over 50 years until acquired by Bolivian Tin & Silver. Most of those
years the tin smelter produced a profit. Recently, the smelter was retro-
fitted with German State-of-the-art equipment, which makes it one of the only,
if not the only, smelter in the world capable of processing low grade tin
concentrates. Management of the acquired companies have represented that a
three phase capital investment program could bring total revenue of the mines
and smelter to a level that exceeds $37,000,000 per year, with about a 50% net
operating margin.
The entire transaction, per the contract, was in escrow until September 18,
1995. The escrow period was to provide the Company the opportunity to conduct
and conclude due diligence procedures to determine the production and
profitability of the mines and smelter.
During the escrow period, Alan Burton, president of the Company at that time,
directed the efforts of certain consultants and professionals conducting due
diligence procedures for the Company. Based on gathered information and
industry experience, Mr. Burton has prepared a report regarding the viability
of the acquisition. Based upon the report, the input of professionals and
consultants and the action of the Board of Directors, the transaction has been
concluded and the acquisition is complete. A copy of Mr. Burton's report was
an exhibit to the Company's 10-Q filing for the period ending June 30, 1995.
Item 3. Legal Proceedings
-----------------
On September 30, 1995 the Company had no pending litigation.
Item 4. Submission of Matters to a Vote of Security Holders
----------------------------------------------------
No matters were placed before the shareholders for a vote during the fiscal
year ending September 30, 1995.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholders
Matters
------------------------------------------------------------------
(a) Market information - The principal market on which the Company's
common stock is traded is the National Association of Securities Dealers
Automated Quotations System (NASDAQ Electronic Bulletin Board) under the
symbol of DACQ. The following is market information for the stock (quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions):
1995 Low Bid High Bid
-------------- --------- ----------
1st Quarter $ .06 $ .06
2nd Quarter $ .06 $ .06
3rd Quarter $ .75 $8.86
1994 Low Bid High Bid
-------------- ---------- ----------
1st Quarter .06 .06
2nd Quarter .06 .06
3rd Quarter .06 .06
4th Quarter .06 .06
1993 Low Bid High Bid
-------------- ---------- ---------
1st Quarter .25 .50
2nd Quarter .188 .50
3rd Quarter .188 .50
4th Quarter .06 .06
(b) Shareholders - The number of shareholders of record of the
Company's common stock on July 10, 1996 is approximately 3,408.
(c) Dividends - No cash dividends have been declared by the Company for
the two most recent fiscal years.
Item 6. Selected Consolidated Financial Data
----------------------------------------
In Thousands Except Per Share Amounts
--------------------------------------
Sept. 30 December 31,
1995 1994 1993
---------- -------- ----------
Revenues $ - $ - $ -
Income (loss) from
continuing operations (172) (56) (109)
Income (loss) from
discontinued operations -0- 117 -0-
Income (loss) from
continuing operations
per common share (.28) (.15) (.28)
Total assets at
year end 47,544 4,346 4,680
Notes and contracts
payable 309 300 650
Cash dividends
per share None None None
* NOTE - The figures for the year 1995 are recorded as of September 30, as
the Company elected to change its fiscal year end to September 30, 1995 to
coincide with the fiscal year end of its operating subsidiaries in Bolivia.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------
A major factor which management considers in evaluating the financial
condition and liquidity of the company is its debt structure. Management
emphasizes maintaining a low debt level to increase the liquidity and
stability of the Company in an uncertain economic environment. The Company's
level of debt is shown by the following ratios:
Leverage Ratios 1995 1994 1993
---------------- ------- ------- ------
Debt to assets 10.6% 8.6% 16.0%
Total debt to equity 955.4% 9.4% 19.0%
It should be noted that the total debt-to-equity ratio is effected by the
"mezzanine" booking of $38,000,000 in convertible preferred shares
outstanding. The Company considers these shares equity. In time the Company
believes that such shares shall be recorded as equity by its auditors. If
this were to occur, the total debt-to-equity ratio would be 11.9%.
Capital Requirements
- ----------------------
Conclusion of the acquisition of the assets of Bolivian Tin & Silver has
created a condition wherein the Company will require capital to maximize the
value of the investment in the acquired assets. Currently management is
considering possible capital requirements of up to $10,000,000 for general
capital improvements to enhance the overall viability and profitability of the
projects. Generally it is considered by management that the investment, if
made, would be expended as follows:
(a) About $2,000,000 for capital improvements and operating capital
for the tin smelter. Of this amount, $500,000 would be invested in a
revolving concentrate purchase fund. This revolving concentrate purchase fund,
if funded, is expected to dramatically increase revenues and earnings of the
tin smelter.
It should be noted that pursuant to certain arrangements with the German
corporation, $200,000 was deposited in the revolving concentrate purchase fund
as of January, 1996. The result was an immediate increase in revenue to
annual rate of $6,000,000 per year.
(b) About $5,000,000 invested in mine and mill development to
increase the likelihood of a continuing long-term stream of tin concentrates
for the smelter.
(c) About $3,000,000 in a hydro-electric generation plant. Such an
investment, if funded, could substantially reduce the overall cost of
electricity, a major cost of tin production. It is estimated that electrical
cost would be reduced from $0.07 per KWH to $0.01 per KWH. Experts who have
visited the site indicate a high likelihood that there is sufficient natural
resource energy to make a hydro-electric generation plant feasible.
Except as described below, the Company has no firm plans as to how it could
obtain sufficient capital to maximize its investment and meet the afore-
described capital requirements. At this time, the following options are being
considered by management, together with investment bankers and other
consultants:
(a) Public offering of shares to raise equity capital.
(b) Borrowing.
(c) Private placements.
(d) Sale of convertible debentures or debt instruments.
At the time of publication of this report, the Company has made some
progress on its capital requirement as follows:
(a) A subsidiary of the Company has entered into an agreement with a
German corporation, whereby the German corporation has delivered $1,000,000
cash to the Company's subsidiary in exchange for right to purchase a minority
interest in the Company's tin smelter in Bolivia.
(b) The Company has received an offer with Vanity A.V.V. Aruba for
$11,000,000 in financing in exchange for 25% of the Company's outstanding
shares and 30% of the Company's Bolivian assets. This offer is subject to
satisfactory completion of an on-site inspection of the Company's assets in
Bolivia and satisfactory completion of a contract memorializing the agreement
between the parties. These undertakings have commenced at the time of
publication of this report.
(c) The Company, from time to time, has issued shares for services
and in consideration of private placements to meet on-going operating expenses
and capital expenditures.
Results of Operations
- ----------------------
This report includes the Company's first audited financial statement for the
period ending only a few days after the dynamic and sweeping reorganization of
the Company's structure and assets. Accordingly, revenue and earnings or
losses that are a result of the afore described reorganization will be
reported in subsequent quarterly and annual reports.
Effect of Recently Issued Financial Accounting Standards
- ---------------------------------------------------------
For a discussion of the effect of recently issued financial accounting
standards, see note 2 of notes to financial Statements.
Item 8. Financial Statements and Supplementary Data
--------------------------------------------
See financial statements and supplementary financial data listed in Item 14.
Change in Fiscal Year End. The Company elected to change the fiscal year end
from December 31 to September 30. The purpose of this change is for the
financial statement of the Company to coincide with its fiscal year end of its
operating subsidiaries in Bolivia. The accompanying financial statements are
for the nine months ended September 30, 1995.
Item 9. Changes in and Disagreement with Accountants on Accounting
and Financial Disclosure
--------------------------------------------------------------
There were no changes in or disagreements with accountants on accounting and
financial disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------
(a) Identification of the Directors
Became Position
Name of Director Age Director with Company
------------------ ---- ----------- --------------
Jethro J. Barlow 44 1991 President
J. Edwards Cox 60 1995 Vice President
Directors serve until successors are elected.
(b) Identification of Executive Officers
Served
Name Age Position As Such Since
---------------- ----- -------------- --------------
Jethro J. Barlow 44 President 1991
J. Edwards Cox 60 Vice President 1995
(c) Identification of certain employees
Fernando Pero, who is responsible for operations and development at the
Company's Bolivian subsidiaries, is a key employee. His family owned and
operated the same properties prior to their sale to Bolivian Tin & Silver in
1995.
(d) Business Experience
(1) Jethro J. Barlow has been involved in business management
since 1970 and has served in various positions with privately held
corporations. He holds a Bachelors degree in Business Administration,
Associates Degrees in Accounting and Marketing, and has been a practicing
Certified Public Accountant in the State of Utah since 1976.
(2) J. Edwards Cox, age 60, has been involved with the Company
since 1995. He serves as both Vice President and Director. Since the
resignation of Alan Burton, former President, Mr. Cox has been acting
President pursuing those duties formerly performed by Mr. Burton. Mr. Cox
operates a computer software company entitled Financial Planning Systems which
sells custom computer software to financial planners and insurance agents. He
has also been involved in various other business enterprises throughout his
life.
(e) Involvement in certain legal proceedings - There have been no
events under any bankruptcy act, no criminal proceedings and no judgements or
injunctions material to the evaluation of the ability and integrity of any
director/ executive officer during the past five years.
Item 11. Executive Compensation
------------------------
(a) Cash compensation
(1) No Officer or Director was compensated in an amount over
$50,000 during the year 1995.
(2) Bonuses and deferred compensation - None
(b) Compensation pursuant to plans:
(1) None
(2) None
(3) None
(4) None
(c) Other compensation - None
Item 12. Security Ownership of Certain Beneficial Owners and Management
---------------------------------------------------------------
(a) Security ownership of certain beneficial owners:
Number
Name and Address of Shares Percent of
Title of Class of Beneficial Owner Owned Class
-------------- ------------------- ---------- ------------
Common Jethro J. Barlow 193,676 .005%
P.O. Box 549
Hildale, Utah 84784
(b) Security ownership of management - see (a) above
(c) Change in control - The largest shareholder of the Company is
Bolivian Tin & Silver.
Item 13. Certain Relationships and Related Transactions
-------------------------------------------------
(a) Transactions with management and others - None
(b) Certain business relationships - None
(c) Indebtedness of management - None
Item 14. Exhibits, Consolidated Financial Statement Schedules and Reports
on Form 8-K
------------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) Financial Statements and Report of
Independent Public Accountants F-1 to F-13
Financial Statements Schedules:
Schedule II (Rule 12-03) - Amounts Receivable from Related
Parties for the nine months ended September 30,1995, and the
years ended December 31, 1994 and 1993. F-14
Schedule V (Rule 12-06) - Property Plant and Equipment for
the nine months ended September 30,1995, and the year ended
December 31, 1994. F-15
Schedule VI (Rule 12-09) - Valuation and Qualifying Accounts
for the nine months ended September 30, 1995, and the years
ended December 31, 1994 and 1993. F-16
Schedule X (Rule 12-11) - Supplementary Income Statement
Information for the nine months ended September 30, 1995, and
the years ended December 31, 1994 and 1993. F-17
Schedules other than those listed above are omitted because of the absence of
conditions under which they are required or because the information is shown
in the financial statements.
(2) Exhibits
--------
i Articles of incorporation and by-laws (*)
ii Material contracts
iii Consent of Jones, Jensen & CO. CPA's
(*)Included in original Form 10 filing which is hereby
incorporated by reference.
(2)See Part I, Item 1.
Exhibits other than those listed above are omitted because of the absence
of conditions under which they are required.
(b) Reports on Form 8-K. No Form 8-K was filed by the Company during
the fourth quarter of 1995.
(c) Exhibits - see Item (a) (2) above.
(d) Separate financial statements not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DYNAMIC AMERICAN CORPORATION
(Company)
By: /s/ J.Edwards Cox
-------------------------------------
J. Edwards Cox
Vice President-Director
Date:
---------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Dynamic American Corporation
We have audited the accompanying consolidated balance sheets of Dynamic
American Corporation and subsidiaries as of September 30, 1995 and December
31, 1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for the nine months ended September 30, 1995, and the
years ended December 31, 1994 and 1993. These consolidated financial
statements are the responsibility of the Company's management. Our audit also
includes the consolidated financial statement schedules listed in the index at
Item 14. These consolidated financial statements and consolidated financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements and financial statement schedules based on our audits.
We did not audit the financial statements of Operaciones Metalurgicas and
Chojnacota Mining Group, wholly owned subsidiaries, which statements reflect
total assets of $42,891,830 and $377,048, respectively (after revaluation) as
of September 30, 1995. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Operaciones Metalurgicas and Chojnacota Mining Group, is
based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatements. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the financial position of Dynamic
American Corporation and subsidiaries as of September 30, 1995 and December
31, 1994 and the results of their operations and their cash flows for the nine
months ended September 30, 1995 and the years ended December 31, 1994 and 1993
in conformity with generally accepted accounting principles. Also, in our
opinion, such consolidated financial statement schedules identified in Item
14, when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly in all material respects the information set
forth herein.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company's recurring losses from operations and
net accumulated deficit raise substantial doubt about its ability to continue
as a going concern. Management's plan concerning these matters are also
described in Note 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
August 14, 1996
<PAGE>
DYNAMIC AMERICAN CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<PAGE>
C O N T E N T S
Independent Auditors' Report 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 6
Consolidated Statements of Stockholders' Equity (Deficit) 7
Consolidated Statements of Cash Flows 9
Notes to the Consolidated Financial Statements 11
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1995 1994
---- ----
CURRENT ASSETS
Cash 7,485 $ -
Inventory (Note 2) 752,978 -
Prepaid expenses 15,955 -
------ -----
Total Current Assets 776,418 -
------- -----
PROPERTY AND EQUIPMENT
Equipment, mineral reserves and
mining claims (Note 4) 38,600,000 -
Ore concentrates (Note 2) 4,345,968 4,345,968
--------- ---------
Total Property and Equipment 42,945,968 4,345,968
---------- ---------
OTHER ASSETS
Organization costs (Note 1) 203,646 -
Goodwill (Note 1) 3,296,387 -
Value added tax credit 296,408 -
Investments 12,665 -
Other 12,325 -
------ -----
Total Other Assets 3,821,431 -
--------- -----
TOTAL ASSETS $47,543,817 $ 4,345,968
----------- -----------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
1995 1994
---- ----
CURRENT LIABILITIES
Notes and contracts payable (Note 5) $ 307,421 $ 300,000
Accounts payable - related parties
(Note 8) 29,983 3,783
Accounts payable and accrued liabilities
(Note 12) 1,270,311 70,439
--------- ------
Total Current Liabilities 1,607,715 374,222
--------- --------
LONG TERM DEBT
Long-term debt (Note 5) - -
Long-term payables (Note 11) 3,283,223 -
Reserve for severance pay (Note 10) 148,030 -
------- -----
Total Long-term Debt 3,431,253 -
--------- -----
Total Liabilities 5,038,968 374,222
--------- -------
CLASS B CONVERTIBLE PREFERRED STOCK
(NOTE 9) 38,000,000 -
---------- -----
COMMITMENTS AND CONTINGENCIES (NOTE 7) - -
----- -----
STOCKHOLDERS' EQUITY
Class A preferred stock - $0.001 par
value; 50,000,000 shares
authorized; 20,000,000 shares issued
and outstanding 20,000 -
Common stock - $0.001 par value;
50,000,000 shares authorized;
2,115,000 and 365,000 shares issued
outstanding, respectively 2,115 365
Additional paid-in capital 8,656,670 7,973,420
Accumulated deficit (4,152,136) (3,980,239)
Less treasury stock, at cost -
30,000 and 30,000
shares, respectively (21,800) (21,800)
------- --------
Total Stockholders' Equity 4,504,849 3,971,746
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $47,543,817 $4,345,968
----------- ----------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Nine
Months ended For the Years Ended
September 30, December 31,
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
REVENUES $ - $ - $ -
EXPENSES
General and administrative 134,812 53,824 109,609
Other expense 37,085 2,062 213
------ ----- ---
Total Expenses 171,897 55,886 109,822
------- ------ -------
Loss from Operations Before
Income
Taxes and Discontinued
Operations (171,897) (55,886) (109,822)
INCOME TAX EXPENSE - - -
GAIN (LOSS) FROM DISCONTINUED
OPERATIONS - 117,253 -
----- ------- -----
NET INCOME (LOSS) $(171,897) $ 61,367 $(109,822)
---------- -------- ----------
GAIN (LOSS) PER COMMON SHARE
Loss from continuing
operations $ (0.28) $ (0.13) $ (0.28)
Discontinued operations - 0.28 -
----- ---- -----
TOTAL $ (0.28) $ 0.15 (0.28)
-------- ------- ------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 618,272 417,273 393,523
------- ------- -------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Statements of Stockholders Equity
<TABLE>
<CAPTION>
Common Stock Prefered Stock Additional Treasury Stock
------------ --------------- Paid-in Accumulated --------------
Shares Amount Shares Amount Capital Deficit Shares Amount
------ ------ ------ ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1992 398,000 $ 398 - $ - $8,687,887 $(3,931,784) 1,074,500 $(1,074,500)
Shares issued for
mineral properties 100,000 100 - - 359,900 - - -
Cancellation of
stock subscriptions - - - - - - - -
Cancellation of
treasury stock (53,500) (53) - - (1,074,447) - (1,074,500) 1,074,500
Net loss for the
year ended December
31, 1993 - - - - - (109,822) - -
--- --- --- --- --- --------- --- ---
Balance,
December 31, 1993 444,500 445 - - 7,973,340 (4,041,606) - -
Cancellation of
common stock (79,500) (80) - - 80 - - -
Purchase of
treasury stock - - - - - - 30,000 (21,800)
Net incomefor the year
ended December 31, 1994 - - - - - 61,367 - -
--- --- --- --- --- ------ --- ---
Balance, December 31,
1994 365,000 $ 365 - $ - $7,973,420 $(3,980,239) 30,000 $ (21,800)
------- ------ --- ----- ---------- ----------- ------- -----------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Statements of Stockholders Equity (Continued)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional Treasury Stock
------------ --------------- Paid-in Accumulated --------------
Shares Amount Shares Amount Capital Deficit Shares Amount
------ ------ ------ ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 365,000 $ 365 - $ - $7,973,420 $(3,980,239) 30,000 $(21,800)
Common stock issued
for services rendered 1,750,000 1,750 - - 103,250 - - -
Class A preferred
shares issued for
subsidiary - - 20,000,000 20,000 580,000 - - -
Net loss for the nine
months ended September
30, 1995 - - - - - (171,897) - -
--- --- --- --- --- --------- --- ---
Balance,
September 30, 1995 2,115,000 $2,115 20,000,000 $20,000 $8,656,670 $(4,152,136) 30,000 $(21,800)
--------- ------ ---------- ------- --------- ----------- ------- --------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Nine
Months ended For the Years Ended
September 30, December 31,
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(171,897) $ 61,367 $(109,822)
Adjustments to reconcile
income (loss) to net cash
used by operating
activities
Gain from sale of assets - (117,253) -
Shares issued for services 105,000 - -
Changes in operating assets
and liabilities
Decrease in notes and
contract receivable - - 260,375
Increase in inventories - - (187,875)
Increase (decrease) in
accounts payable
and accrued liabilities 66,983 (22,421) 36,444
------ --------- ------
Net Cash Provided (Used) By
Operating Activities 86 (78,307) (878)
-- -------- -----
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
----- ----- -----
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes and
contracts payable - 100,000 -
Purchase of treasury shares - (21,800) -
----- -------- -----
Net Cash Provided (Used)
By Financing Activities - 78,200 -
----- ------ -----
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 86 (107) (878)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR - 107 985
----- --- ---
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 86 $ - $ 107
------ ---- -------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid for interest $ - $ - $ 213
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Consolidated Statements of Cash Flows (Continued)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During 1995, the following transactions were recorded by the Company.
1- The Company issued 1,750,000 shares of common stock valued at $105,000 for
services rendered.
2- The Company issued 20,000,000 shares of Class A preferred stock and
1,000,000 shares of Class B preferred stock in exchange for all of the shares
of Bolivian Tin & Silver, S.A.
During 1994, the following transactions were recorded by the Company:
1- The Company entered into a settlement agreement that discharged a $650,000
note payable and accrued interest of $1,709 to a former shareholder in
exchange for the return of 1,500,000 shares of the Company's common stock, the
return to the former shareholder of certain mineral inventory and equipment
recorded on the books at $276,900 and securities recorded at $57,556, and
$200,000 in cash.
2- The Company acquired stock for the treasury in exchange for a $21,800
increase in a note payable.
During 1993, the following transactions were recorded by the Company:
1- The Company purchased ore concentrates in exchange for the Company's oil
and gas properties and in exchange for 2,000,000 shares of common stock
valued at $0.18 per share.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 1 - ORGANIZATION, CHANGE IN CONTROL, AND BASIS OF PRESENTATION
Organization
- ------------
Dynamic American Corporation (Dynamic) was incorporated in the state of Utah
on September 29, 1961 for the purpose of investing in and developing raw land
to be held for investment or resale. Since its incorporation in 1961, Dynamic
has acquired, through merger or through licensing agreements, various mining,
manufacturing and real estate development operations.
Basis of Presentation
- ---------------------
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company had net loss of
$171,897 for the nine months ended September 30, 1995, non-cash net income of
$61,367 for the year ended December 31, 1994 and net loss of $109,822 for the
year ended December 31, 1993. The Company did not generate sufficient cash
flow from operations to pay operating and overhead expenses in 1995, 1994 and
1993. During 1993, 25,000 tons of ore concentrates were acquired by the
Company in exchange for 2,000,000 shares of the Company's common stock valued
at $360,000 and its oil and gas properties carried at a cost of $2,294,374.
No gain or loss was recognized on the exchanges. The Company also entered
into a research and precious metal recovery agreement with Century 2000
Corporation, an unrelated company, which has developed a proprietary method
for recovering precious metals from concentrates.
The process used to recover the metals has not been tested in a commercial
setting. Dynamic's ability to pay future operating and overhead expenses and
to continue as a going concern depends upon the commercial success of metals.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
On September 18, 1995 the Company purchased certain assets from Bolivian Tin &
Silver, S.A. which is comprised of Operaciones Metalurgicas (OM) and
Chojnacota Mining Group (CM) for $42,891,830 and $377,048, respectively. The
acquisition is accounted for as a combination under the purchase method of
accounting with acquired assets recorded a their fair market value which
approximates cost.
CM was organized in Peru on August 18, 1989 for the purpose of exploration and
processing of minerals. OM was organized in Bolivia on July 18, 1988 for the
purpose of mining and processing tin.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Dynamic American Corporation (the
Company) conform to generally accepted accounting principles. The following
is a summary of the more significant of such policies:
a. Accounting Method
- --------------------
The Company's financial statements are prepared using the accrual method of
accounting. The successful efforts method of accounting is used for ore
production activities. During the year the Company changed from a calendar
year end to a September year end.
b. Inventory - Ore Concentrates
Inventories consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Concentrates $19,132 $ -
General materials 77,994 -
Inventory in process 445,250 -
Finished inventory 140,522 -
Concentrates and others in transit 70,080 -
------ -----
Total $752,978 $ -
-------- -----
</TABLE>
Ore concentrates of $4,345,968 are stated at the lower of cost or estimated
realizable value. Cost represents the carrying value of the assets exchanged
for the ore concentrates in nonmonetary transactions as described in Note 1.
No gain or loss was recognized on the exchanges. Based on the evaluation of
independent specialists, the estimated realizable value of the ore
concentrates, which contain gold, silver, and other precious metals, exceeds
the carrying value.
c. Income Taxes
- ---------------
No tax benefit has been reported in the financial statements because the
Company believes there is a 50% or greater chance the carryforwards will
expire unused. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same amount.
d. Loss Per Common Share
- ------------------------
The computation of loss per common share is based on the weighted average
number of shares outstanding during the year.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Cash Equivalents
- -------------------
For purposes of the statements of cash flows, the Company considers short-term
interest bearing deposits with a maturity of three months or less when
purchased to be cash equivalents. The common stock equivalents are anti-
dilutive.
f. Concentrations of Risk
- -------------------------
The Company sells its products in the United States and South America. The
Company extends credit to its customers.
Credit losses, if any, have been provided for in the financial statements and
are based on management's expectations. The Company's accounts receivable are
subject to potential concentrations of credit risk. The Company does not
believe that it is subject to any unusual risks, or significant risks in the
normal course of its business.
g. Goodwill
- -----------
The excess purchase price over the fair value of the assets acquired in the
purchase of Operaciones Metalurgicas has been recorded as goodwill.
Amortization of goodwill is determined using the straight-line method over 5
years.
h. Estimates
- ------------
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses.
i. Principles of Consolidation
- ------------------------------
The consolidated financial statements include those of Dynamic American
Corporation (the Company) and its wholly owned subsidiaries Operaciones
Metalurgicas (OM) and Chojnacota Mining Group (CM). All significant
intercompany accounts and transactions have been eliminated.
j. Organization and Installation Costs
- --------------------------------------
Costs incurred for organization of the Company and moving the plant and
smelter have been capitalized. Amortization of these costs is determined
using the straight-line method over 5 years.
NOTE 3 - PURCHASE OF INVENTORY, EQUIPMENT, LAND AND BUILDINGS
During 1992, the Company incorporated an energy subsidiary DACO Energy Group
and on June 30, 1992 it acquired natural gas assets totaling $2,126,500 by
issuing 2,424,500 shares of the Company's common stock. In 1993, these assets
were exchanged for ore concentrates.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment purchased consisted of the following at September 30,
1995 and December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Land, equipment, and smelter $20,000,000 $ -
Ore reserves 9,300,000 -
Tailing reserves 9,300,000 -
Accumulated depreciation - -
----- -----
Total - net $38,600,000 $ -
----------- -----
</TABLE>
Total depreciation at September 30, 1995 and December 31, 1994 was $-0- and $-
0-, respectively.
NOTE 5 - NOTES AND CONTRACTS PAYABLE
The following is a summary of notes and contracts payable outstanding at
September 30, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Note payable to an officer of the Company,
unsecured and non-interest bearing, due
July 1, 1996. $300,000 $300,000
Note payable to an bank, at 18% interest,
requires monthly principal and interest
payments of $1,302, matures April 1996. 7,421 -
----- -----
Total notes and contracts payable $307,421 $300,000
Less Current Portion (307,421) (300,000)
--------- ---------
Total Long-term Debt $ - $ -
----- -----
Current maturities at September 30, 1995.
1996 $307,421
--------
</TABLE>
NOTE 6 - INCOME TAXES
At September 30, 1995, the Company had federal and state net operating losses
of approximately $6,050,000, which may be carried forward through 2010 to
offset future taxable income and income taxes, respectively.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 7 - COMMITMENTS AND CONTINGENCIES
a) Litigation
In 1993, a creditor sued the Company for the $650,000 of indebtedness and
other claims. The lawsuit was settled on August 27, 1994 with the Company's
equipment inventory, the return of 1,500,000 common shares and $200,000 cash
as payment in full for the $650,000 debt and accrued interest of $1,709.
b) Royalty
In connection with the purchase of the ore concentrates, the Company has
agreed to pay a royalty of $100 per ton if the precious metals extracted
exceed $265 per ton.
NOTE 8 - RELATED PARTY TRANSACTIONS
For the nine months ended September 30, 1995 and the year ended December 31,
1994, the Company incurred expenses of $34,950 and $34,930 to a wholly-owned
company of the Company's President and its Secretary, for management,
accounting, computer support, and administrative services. At September 30,
1995 and December 31, 1994 the balance due was $29,983 and $3,783,
respectively.
NOTE 9 - STOCK TRANSACTIONS
The Company issued 20,000,000 shares of Class A convertible preferred stock
and 1,000,000 shares of Class B convertible preferred stock to acquire
Bolivian Tin & Silver, S. A. (see Note 1). The Class A preferred stock has a
redemption value of $2.00 per share and the Class B preferred stock has a
redemption value of $38.00 dollars per share and a noncumulative dividend of
3.0%. The Class B preferred stock is not included in stockholders' equity due
to the redemption preference. The shares have no voting rights but are
convertible into common stock. The Class A preferred stock is convertible on
a one share for one share basis. The Class B conversion rate is determined by
dividing $38.00 by the trading value of the common stock at the time of
conversion.
A special meeting of the shareholders was held on December 10, 1994. The
following items were approved at the meeting although the Board of Directors
did not act on the approval until June 22, 1995:
1 - A 1 for 20 reverse stock split of all of the outstanding shares of the
Company's common stock.
2 - Amend the Articles of Incorporation to change the par value from $1.00 to
$.001. Additionally, the Company will increase the number of shares
authorized from 10,000,000 to 50,000,000.
3 - The creation of preferred stock classes A, B, and C.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 10 - RESERVE FOR SEVERANCE PAY
This reserve covers the total of the legal obligations for paying of severance
pay for salary to individuals that retire voluntarily after having completed a
period of continuous employment of five years or longer.
NOTE 11 - LONG-TERM PAYABLE
The Company has long-term, non-interest bearing related party liabilities as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Base Metal Synergy (Bolivia) S.A. $3,199,830 $ -
Terry Turner 32,932 -
Mario Clavijo 50,461 -
------ -----
Total $3,283,223 $ -
---------- -----
</TABLE>
NOTE 12 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company's account payable and accrued liabilities were comprised of the
following items:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---- ----
Accounts payable $ 932,123 $70,439
Accrued salaries and wages 150,025 -
Accrued taxes 50,124 -
Advances from suppliers and metal sales 61,793 -
Other payables 76,246 -
------ -----
$1,270,311 $70,439
---------- -------
</TABLE>
NOTE 13 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS
The historical information contained herein has been consolidated on a
proforma basis. The purchase of assets from Bolivian Tin & Silver S.A. as
described in Note 1 was effective September 18, 1995. The purchase has been
presented as though it was effective January 1, 1995 and 1994. All
significant accounting policies for OM and CM are the same as the Company's as
defined in Note 1.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 13 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
For the
Year Ended
September 30, For the Nine Months Ended
1995 September 30, 1995
---- ------------------
<S> <C> <C> <C> <C>
Chojnacota Operaciones Dynamic Proforma
Mining Group Metalurgicas American Combined
------------ ------------ -------- --------
SALES $ 29,598 $1,947,790 $ - $ 1,977,388
COST OF SALES 16,325 1,531,561 - 1,547,886
------ --------- ----- ---------
GROSS PROFIT 13,273 416,229 - 429,502
------ ------- ----- -------
EXPENSES
General and
administrative 54,162 412,133 134,812 601,107
Other expenses 97,795 559,656 37,085 694,536
------ ------- ------ -------
Total Expenses 151,957 971,789 171,897 1,295,643
------- ------- ------- ---------
NET (LOSS) $(138,684) $(555,560) $(171,897) $ (866,141)
---------- ---------- ---------- -----------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 13 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
For the
Year Ended
September 30, For the Nine Months Ended
1995 September 30, 1995
---- ------------------
<S> <C> <C> <C> <C>
Chojnacota Operaciones Dynamic Proforma
Mining Group Metalurgicas American Combined
------------ ------------ -------- --------
SALES $ 49,872 $1,562,999 $ - $ 1,612,871
COST OF SALES 63,107 1,146,235 - 1,209,342
------ --------- ----- ---------
GROSS PROFIT (13,235) 416,764 - 403,529
-------- ------- ----- -------
EXPENSES
General and
administrative 126,163 327,883 53,824 507,870
Other expenses
(Income) (95,715) 543,580 2,062 449,927
(Gain) from
discontinued
operations - - (117,253) (117,253)
----- ----- -------- ---------
Total Expenses
(Income) 30,448 871,463 (61,367) 840,544
------ ------- -------- -------
NET INCOME (LOSS) $(43,683) $(454,699) $ 61,367 $(437,015)
--------- ---------- -------- ----------
</TABLE>
NOTE 14 - SUBSEQUENT EVENTS
The Company entered into an agreement during 1996 with Mr. Hans Bottcher a
German financier (Bottcher) who agreed to invest $200,000 as a revolving tin
concentrate purchase fund. The terms are as follows:
a) Term of 1 year;
<PAGE>
b) Financier will receive 25% of the net proceeds from each concentrate sold;
c) The balance of proceeds would be used for net operating expenses with any
balance returning to the rotating fund.
In the second quarter 1996, Bottcher headed a group of retired German
metalurgists and financiers who agreed to provide the Company with a
$1,000,000 line of credit on an "as needed-draw down" basis. The terms of the
loan were:
a) Term of 2 years;
DYNAMIC AMERICAN CORPORATION
Notes to the Consolidated Financial Statements
September 30, 1995 and December 31, 1994
NOTE 14 - SUBSEQUENT EVENTS (Continued)
b) Monthly payments of $60,000 or 25% of the monthly net concentrates sold,
whichever is greater;
c) A right to purchase a 30% interest in the smelter of the subsidiary at the
end of 2 years, at a reasonable appraised price.
d) Interest will accrue at an average rate of 5.25%.
The Company has drawn down all $1,000,000 on the line of credit.
During 1996 an agreement was reached between the Company and Base Metal
Synergy, (BMS) a related party creditor for the settlement of amounts owed.
BMS agreed to reduce the approximate amounts owed of $3,000,000 to $1,000,000
under the following terms:
a) 36 equal monthly payments of $30,000;
b) The resulting $80,000 excess will be deemed to be a one-time interest
payment;
c) BMS has a lien on the Monte Blanco mining concessions, until paid-in full.
The Class A preferred stock was converted to 20,000,000 shares of common stock
on November 27, 1995.
The Company issued 38,500,000 shares of common stock subsequent to year-end to
various individuals for consulting services. The services were valued at
$0.03 per share.
During the 1st quarter of 1996 the Board of Directors authorized an increase
in common shares from 50,000,000 to 200,000,000. The par value remained the
same.
<PAGE>
DYNAMIC AMERICAN CORPORATION
Amount Receivable from Related Parties
September 30, 1995, December 31, 1994 and 1993
<TABLE>
<CAPTION>
Balance at Balance
Beginning Amounts At End
Of Period Additions Collected Of Period
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Year ended September 30, 1995
Former directors of the Company NONE NONE NONE NONE
---- ---- ---- ----
Year ended December 31, 1994
Former directors of the Company NONE NONE NONE NONE
---- ---- ---- ----
Year ended December 31, 1993
Former directors of the Company NONE NONE NONE NONE
---- ---- ---- ----
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Property, Plant and Equipment
September 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Other
Balance at Changes Balance at
beginning Additions Add(deduct) End
Classification Of Period At Cost Retirements Describe Of Period
- -------------- --------- ------- ----------- -------- ---------
Ore concentrates $4,345,968 $ - $ - $ - $4,345,968
---------- ----- ----- ------ ----------
Total $4,345,968 $ - $ - $ - $4,345,968
---------- ----- ----- ----- ----------
</TABLE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Valuation and Qualifying Accounts
September 30, 1995, December 31, 1994 and 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Additions
Balance at Charged to Balance
Beginning Costs and At End
Of Year Expenses Deduction Of Year
------- -------- --------- -------
Description
- -----------
INVENTORY VALUATION RESERVE
1995 NONE NONE NONE NONE
---- ---- ---- ----
1994 $499,099 NONE 499,099(1) NONE
-------- ---- ---------- ----
1993 $499,099 NONE NONE $499,099
-------- ---- ---- --------
ALLOWANCE FOR UNCOLLECTIBLE
ACCOUNTS
1995 NONE NONE NONE NONE
---- ---- ---- ----
1994 NONE NONE NONE NONE
---- ---- ---- ----
1993 $25,452 NONE $25,452 NONE
------- ---- ------- ----
</TABLE>
(1) Related asset was disposed of during the year.
<PAGE>
<PAGE>
DYNAMIC AMERICAN CORPORATION
Supplementary Income Statement Information
September 30, 1995, December 31, 1994, and 1993
<TABLE>
<CAPTION>
<S> <C>
Charged to
Costs and
Description of Item Expenses
- ------------------- --------
Year ended September 30, 1995:
Maintenance and repairs $ -
Taxes, other than payroll and income taxes -
Year ended December 31, 1994:
Maintenance and repairs 325
Taxes, other than payroll and income taxes 585
Year ended December 31, 1993:
Maintenance and repairs -
Taxes, other than payroll and income taxes 4,751
</TABLE>
There was no amortization of intangible assets, pre-operating cost, or similar
deferrals, royalties, or advertising costs which exceeded 1% of total revenues
for the years ended September 30, 1995, December 31, 1994, and 1993.
<PAGE>
