SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1997
Commission File Number 0-12516
Dynamic Healthcare Technologies, Inc.
(Exact name of registrant as specified in its charter)
Florida 59-3389871
(State of Incorporation) (IRS E.I.N.)
101 Southhall Lane, Suite 210, Maitland, Florida 32751
(Address of principal executive offices) (ZIP Code)
(407) 875-9991
(Registrant's telephone number, including area code)
Indicate by checkmark 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
Indicate by checkmark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a Court.
Yes No
As of April 18, 1997, there were 17,064,853 shares outstanding,
par value $.01 per share, of the issuer's only class of common
stock.
This report consists of fifteen (15) pages.
The index to exhibits appears on page fourteen (14).
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
See attached statements following this item number.
2
<TABLE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
December 31, March 31,
1996 1997
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $11,332,526 $10,760,706
Restricted cash 60,000 --
Accounts receivable, net 5,272,754 4,206,732
Unbilled receivables 1,924,297 2,039,284
Contracts receivable - current 336,499 1,210,679
Other current assets 1,055,356 794,919
Total current assets 19,981,432 19,012,320
Property and equipment, net 2,582,147 2,884,502
Capitalized software development costs, net 4,544,963 4,952,008
Goodwill, net 2,478,103 2,376,184
Contracts receivable - non-current 356,337 1,197,771
Other assets 64,063 68,175
$30,007,045 $30,490,960
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $2,597,141 $1,817,483
Deferred Revenue 4,543,596 3,896,556
Advance billings 2,746,474 1,404,459
Other 410,687 363,392
Total current liabilities 10,297,898 7,481,890
Other 222,682 177,198
Total liabilities 10,520,580 7,659,088
Shareholders' equity:
Series CM preferred stock ($.01 par
value; 6,000 shares authorized, issued
and outstanding as of December 31, 1996
and March 31, 1997). 60 60
Common stock ($.01 par value; authorized
20,000,000 shares; issued and outstanding
16,757,153 and 17,064,853 shares as of
December 31, 1996 and March 31, 1997,
respectively). 167,572 170,649
Additional paid-in capital 43,419,806 43,729,893
Accumulated deficit (24,100,973) (21,068,730)
Total shareholders' equity 19,486,465 22,831,872
$30,007,045 $30,490,960
See notes to condensed consolidated financial statements.
</TABLE>
3
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended March 31,
1996 1997
<S> <C> <C>
Operating revenues:
Computer system equipment sales and support $ 475,068 $ 464,155
Application software licenses 270,267 5,128,138
Software support 1,009,164 2,313,381
Services and other 555,339 1,764,485
Total operating revenues 2,309,838 9,670,159
Costs and expenses:
Cost of products sold 404,311 577,343
Client services expense 752,449 2,413,833
Software development costs 348,259 1,192,119
Sales and marketing 683,674 1,449,371
General and administrative 444,603 1,184,631
Total costs and expenses 2,633,296 6,817,297
Operating income (loss) (323,458) 2,852,862
Other income (expense):
Interest expense and financing costs (77,681) (9,607)
Interest income and other 34,228 188,988
Total other income (expense) (43,453) 179,381
Net earnings (loss) before income taxes (366,911) 3,032,243
Income taxes - current -- --
Net earnings (loss) $ (366,911) $ 3,032,243
Earnings (loss) per common share primary
and fully diluted $ (0.06) $ 0.17
Weighted average number of common and common
equivalent shares outstanding 6,611,646 17,637,238
See notes to condensed consolidated financial statements.
</TABLE>
4
DYNAMIC HEALTHCARE TECHNOLOGIRES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Three Months Ended March 31,
1996 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (366,911) $3,032,243
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 283,224 649,917
Changes in assets and liabilities:
Accounts receivable 732,210 1,066,022
Unbilled receivables 25,374 (114,987)
Contract receivable -- (1,715,614)
Other (134,779) 160,054
Accounts payable and accrued expenses 189,180 (779,658)
Deferred revenue (338,225) (647,040)
Advance billings (13,411) (1,342,015)
Net cash provided by (used in) operating activities 376,662 308,922
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs (285,415) (714,092)
Purchases of property and equipment (151,659) (494,330)
Restricted cash released -- 60,000
Net cash provided by (used in) investing
activities (437,074) (1,148,422)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 313,164
Repayment of bank note payable (21,624) --
Preferred stock dividends paid (24,844) --
Other (18,840) (45,484)
Net cash flows provided by (used in)
financing activities (65,308) 267,680
Net increase (decrease) in cash and cash equivalents (125,720) (571,820)
Cash and cash equivalents, beginning of period 2,290,366 11,332,526
Cash and cash equivalents, end of period $2,164,646 $10,760,706
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Interest paid $ 77,681 $ 9,607
Income taxes paid (received) $ -- $ --
See notes to condensed consolidated financial statements.
</TABLE>
5
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1997
(A) Unaudited Financial Statements:
The accompanying unaudited Condensed Consolidated Balance Sheets
as of March 31, 1997, Condensed Consolidated Statements of
Operations for the three month periods ended March 31, 1996 and
1997, and Condensed Consolidated Statements of Cash Flows for
the three month periods ended March 31, 1996 and 1997, have been
prepared by management in conformity with generally accepted
accounting principles for interim financial statements and with
instructions to Form 10-Q and Regulation S-X. Accordingly, they
do not include all the disclosures required by generally
accepted accounting principles for complete financial
statements. All adjustments and accruals considered necessary
for fair presentation of financial information have been
included in the opinion of management. Operating results for
the three month period ended March 31, 1997, are not necessarily
indicative of the operating results which may be expected for
the year ending December 31, 1997.
(B) Reclassifications:
Certain reclassifications have been made to the 1996 financial
statements to conform to classifications used in 1997.
(C) Contracts Receivable:
Contracts receivable represents revenues earned by the Company
and receivable from customers under long-term financing
arrangements.
During the quarter ended March 31, 1997, the Company entered
into a value-added re-marketing agreement with Sunquest
Information Systems, Inc. ("Sunquest") for the non-exclusive
sale of CoPath Client/Server product licenses. The initial
license fee of $3,000,000 is receivable in three (3) annual
installments of $1,000,000 on February 7, 1997, 1998 and 1999.
As of March 31, 1997 contract receivables includes $1,798,349
under this contract representing the present value of the two
remaining installments with an imputed interest rate of 8.25%.
Also included in contracts receivable are amounts due from
customers in monthly installments of principal and interest,
which provided for initial five year terms.
The future minimum principal payments to be received under
contract receivables are summarized as follows:
For the Year Ending March 31,
1998 $1,210,679
1999 1,168,657
2000 29,114
2001 and thereafter --
$2,408,450
(D) Dynacor Acquisition:
On March 17, 1997 the Company signed a Letter of Intent agreeing
in principle to acquire all of the outstanding common shares of
Dynacor, Inc. ("Dynacor"), of Apple Valley, Minnesota, in
exchange for 250,000 shares of the Company's common stock. The
transaction is expected to be accounted for as a pooling of
interest and is subject to definitive agreements and approvals
of the Dynacor shareholders and the Boards of both companies.
6
Item 2. Management's discussion and analysis of financial
condition and results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company is a leading provider of enterprise-wide,
patient-centered healthcare information systems. These systems
enable hospitals, physician practice groups and integrated
delivery networks to capture, store, archive and retrieve
clinical, financial and administrative patient information. The
Company's products enhance productivity, reduce costs and
improve the quality of patient care by providing on-line access
to patient information previously maintained on a variety of
media, including paper, X-ray film, magnetic disk, video and
audio. The Company's current product lines include clinical
information systems for use in laboratory, anatomic pathology,
radiology and anesthesiology applications as well as imaging and
electronic health record solutions. The Company provides
support for all of its systems and provides systems integration
and other consulting services to over 550 customers. Key
customers include the University of California at Los Angeles
Medical Center, University of Illinois at Chicago Medical
Center, Methodist Hospital of Memphis, Memorial Sloan-Kettering
Cancer Center, Ohio State University Hospital, Columbia/HCA,
Greater Dayton Area Hospital Association, Advocate Health Care,
Temple University Hospital, UniHealth and Orlando Regional
Health System.
The Company's new electronic health record product,
DynamicVision, provides connectivity and enabling technologies
which integrate the Company's clinical and imaging information
systems, as well as those from other companies, to create an
open architecture, multi-media clinical workstation.
DynamicVision provides prompt and simultaneous on-line access to
information stored in various systems and data repositories
located at multiple sites. This information can include
documents, medical images such as X-rays, MRIs and CAT scans,
and video and audio recordings. DynamicVision announced general
availability in November of 1996.
The Company's revenues are derived from the licensing and sale
of systems comprised of internally developed software and third
party software and hardware, professional services, maintenance
and support services. The Company's services include
implementation and training, product management and customer
software development. Revenues from professional services and
maintenance and support services typically increase as the
number of installed systems increases. Computer system
equipment sales revenues are generally recognized when hardware
is shipped. Computer system equipment sales and support
revenues include hardware support contracts for a specific
period from which revenue is recognized ratably over the
corresponding contract period. Application software license
revenues are recognized when application software is delivered
to the customer. Installation and training service revenues,
included with application software licenses, are recognized as
the services are performed. Software support revenues
principally include contracts for remote dial-up problem
diagnosis, maintenance and corrective support services, each of
which covers a specified period for which revenue is recognized
ratably over the corresponding contract period. Services and
other revenues include custom programming services,
post-contract support obligations and other services, which are
provided under separate contract and are recognized as services
are performed.
Cost of products sold includes the cost of hardware sold, costs
of third party software licenses and hardware support
subcontracts. Client service expense includes the direct and
indirect costs associated with implementation and support
personnel. Software development costs include the direct and
indirect salaries and wages of software research and development
personnel, direct research and development expenses, and
software amortization expense, reduced by capitalized software
development costs. Software development costs are expenses
until such time as technological feasibility is established and
then are capitalized in compliance with Statement of Financial
Accounting Standards No. 86 "Accounting for Costs of Computer
Software to be Sold, Leased or Otherwise Marketed." Sales and
marketing costs include direct and indirect salaries,
commissions, joint marketing costs, advertising, trade show
costs, user group costs and travel and entertainment expenses
related to the sale and marketing of the Company's products and
services. General and administrative expenses include salaries
and expenses for corporate administration, financial, legal and
human resources.
7
The sales cycle for the Company's systems is typically six to 18
months from initial contact to contract signing. The product
delivery cycle is variable. When application software licenses
are provided by modem, product delivery is immediate. In other
instances, product delivery is over two or more years,
particularly with enterprise-wide electronic healthcare record
solutions involving significant and continuing customer service
requirements. Accordingly, the product delivery cycle depends
upon the combination of products purchased and the
implementation plan defined by the customer in the master sales
agreement. Each customer contract is separately negotiated.
The installation schedule for a clinical information systems, or
departmental electronic healthcare record implementations,
typically require six to twelve months. Under its standard
master sales agreement, the Company generally receives a partial
payment upon execution of the agreement, a hardware installment
payment upon delivery of hardware, installation progress
payments upon the completion of defined milestones and final
payment upon system acceptance.
In February 1997, the Company entered into a value added
re-marketing agreement with Sunquest Information Systems, Inc.
(NASDAQ: SUNQ) of Tucson, Arizona. Under the terms of the
agreement Sunquest will pay an initial licensing fee of
$3,000,000 to sub-license Dynamic's CoPath client server
anatomic pathology solution ("CoPath C/S") to their existing
customers. New Sunquest customers licensing CoPath C/S will pay
a separate licensing fee, and Dynamic will receive ongoing
annual maintenance and monthly consulting fees for all
continuing services rendered under this agreement.
Also in February 1997, the Company signed a agreement under
which Dynamic will sell HealthPoint ACS(TM), an advanced clinical
system for the office-based physician in the ambulatory setting.
Under the terms of this agreement, Dynamic will also provide
implementation services, training and telephone support to its
HealthPoint ACS clients.
On March 17, 1997, the Company signed a Letter of Intent
agreeing in principal to acquire all of the outstanding common
shares of Dynacor, Inc. ("Dynacor"), of Apple Valley, Minnesota,
in exchange for 250,000 shares of the Company's common stock.
The transaction is expected to be accounted for as a pooling of
interest and is subject to definitive agreements and approvals
of the Dynacor shareholders and the Boards of both companies.
Dynacor employs 43 people and reported revenue of approximately
$3.2 million for the year ended June 30, 1996.
In March 1997, the Company announced the general availability of
CoPath C/S having placed the product in use at the University of
California, San Francisco Medical Center and at the New York
Hospital - Cornell Medical center. Both of these academic
medical centers were previously beta sites for CoPath C/S.
The following table sets forth, for the three month periods
ended March 31, 1996 and 1997, certain items in the Company's
statements of operations as a percentage of total operating
revenues:
<TABLE>
Three Months Ended
March 31,
1996 1997
<S> <C> <C>
Operating revenues:
Computer system equipment sales and support 20.6% 4.8%
Application software licenses 11.7 53.0
Software support 43.7 23.9
Services and other 24.0 18.3
Total revenues 100.0 100.0
Operating expenses:
Cost of products sold 17.5 6.0
Client services expense 32.6 25.0
Software development costs 15.1 12.3
Sales and marketing 29.6 15.0
General and administrative 19.2 12.2
Total operating expenses 114.0 70.5
Operating income (loss) (14.0) 29.5
Other income (expense) (1.9) 1.9
Net earnings (loss) (15.9)% 31.4%
</TABLE>
8
Results of Operations
(Three months ended March 31, 1997 compared to three months
ended March 31, 1996)
Revenues. During the quarter ended March 31, 1997 the Company
reported record quarterly revenues of $9,670,000, an increase of
$7,360,000 over revenues for the same period 1996. This
increase represents an increase of more than 300%, and is
principally attributable to the acquisitions made in 1996. On
May 1, 1996, the Company acquired Dimensional Medicine, Inc.
("DMI"), adding a radiology information system product line, and
on December 17, 1996 acquired Collaborative Medical Systems,
Inc. ("CoMed"), adding an anatomic pathology information system
product line to the Company's existing product lines.
Radiology and pathology revenues reported during the first
quarter of 1997 were $824,000 and $6,969,000, respectively.
Computer system equipment sales and support revenues decreased
to 4.8% of total revenues for the first quarter of 1997,
compared to 20.6% for the first quarter of 1996. Emphasis was
placed during the first quarter of 1997, on perfecting
completion of the Sunquest re-marketing agreement and delivering
pathology systems to Department of Defense ("DOD"), hospitals
under an existing sub-contract to the United States Defense
Supply Service. Neither the Sunquest agreement nor deliveries
to the Department of Defense hospitals have any hardware
deliverables. Management does expect a higher involvement in
the delivery of computer hardware to customers in connection
with the DynamicVision, pathology and radiology product lines
due to the Company's increasing emphasis of offering a sole
source solution to customers.
Application software license revenue during the first quarter of
1997, increased by $4,858,000 over the same period a year ago,
from $270,000 to $5,128,000. The Company recognized initial
pathology application software license revenue of $2,777,000
under the value added re-marketing agreement with Sunquest,
representing the present value of the minimum payments due from
Sunquest. In addition, during the first quarter of 1997, the
Company continued to deliver CoPath product to hospitals under
existing subcontracts to the United States Defense Supply
Service. As a result, pathology application software revenues
of $4,836,000 were recognized during the first quarter of 1997,
with no such corresponding pathology revenue recognized during
the first quarter of 1996.
Software support revenues increased $1,304,000 to $2,313,000 for
the first quarter of 1997, compared to $1,009,000 for the same
period one year ago. The acquisitions of DMI and CoMed resulted
in first quarter 1997 software support revenues from radiology
and pathology product lines of $385,000 and $941,000,
respectively. As of March 31, 1997, recurring support revenues
of $1.8 million and $5.3 million result from the acquisitions of
radiology and pathology product lines acquired in 1996.
Completing delivery of the pathology system sales during the
first quarter of 1997 was essential toward increasing the
current annualized billable support base to $11.3 million.
Service and other revenues increased by $1,209,000 to $1,764,000
from $555,000. This increase principally results from the
training and implementation services in connection with system
installations to the DOD hospitals.
Cost of Products Sold. Cost of products sold as a percent of
total revenues for the first quarter of 1997 declined to 6% from
17.5 % for the same period 1996. Hardware revenues during the
first quarter 1997 similarly decreased to 4.8% from 20.6% of
total revenues for the first quarter 1996, due to the
significant increase in application software license revenues
and the absence of hardware deliverables to either Sunquest or
the DOD hospitals. However, during the first quarter of 1997,
approximately $160,000 of costs attributable to third party
software licensing were included in the cost of products sold.
This results from the purchase of the mumps operating system in
connection with both pathology and radiology system sales and
royalties to IBM in connection with imaging sales.
Client Services Expense. Client services expense for the first
quarter 1997 increased $1,662,000 to $2,414,000 from $752,000
for the first quarter 1996. However, as a percentage of total
revenues during the respective quarters, client services expense
actually declined to 25% from 32.6%. The Company previously
reported increased staffing in connection with the 1996
acquisitions of DMI and CoMed, and the introduction of the
DynamicVision product line. This increase in professional
staffing was more than offset by the increase in total revenues
for the quarter.
Software Development Costs. Software development costs for the
first quarter 1997 declined to 12.3% of total operating revenues
from 15.1% incurred during the first quarter 1996. As outlined
in the secondary offering, development efforts significantly
increased as part of the Company's overall growth strategy. As
such, the Company capitalized $707,000 of software development
costs during the first quarter 1997 compared to $285,000 for the
same period of 1996. The intensified development effort during
the quarter was further prompted by the initial licensing sale
to Sunquest of the CoPath Client Server product, and resulted in
the general availability of the CoPath Client Server product in
March 1997.
9
Sales and Marketing. Sales and marketing costs for the first
quarter 1997 as a percentage of total revenues, declined to 15%
from 29.6% for the same period of 1996. During 1996 and the
first quarter of 1997, the Company expanded and trained a
national sales and marketing force in connection with the
Company's external growth plans and in preparation for the
launch of the Company's new DynamicVision product line.
However, this increase in sales and marketing costs incurred
during the first quarter 1997 of $766,000 as compared to first
quarter 1996, was more than offset by the increase in total
revenues.
General and Administrative Expenses. General and administrative
expenses for the first quarter of 1997 increased by $740,000,
but declined to 12.2% of total revenues from 19.2% incurred
during the first quarter of 1996. The increased expenses
include $148,000 accrued under the Company's Management
Incentive Compensation Plan ("MIC Plan"), approximately $192,000
of non-recurring employment and termination costs principally
resulting from relocating CoMed administration to the Company's
headquarters, and ongoing management and administrative expenses
in connection with the acquisitions of DMI and CoMed during
1996. No MIC Plan compensation was incurred during the first
quarter of 1996. These expense increases were more than offset
by the growth in revenues during the period.
Other Income (Expense). Net other income for the first quarter
1997 increased by $223,000 to $179,000, as compared to net other
expense of approximately $44,000 for the same period 1996.
Interest income increased by $155,000, and interest expense
decreased by $68,000 during the first quarter of 1997
principally due to the availability of proceeds resulting from
the Company's successful secondary offering completed in the
fourth quarter of 1996.
Liquidity and Capital Resources
As of March 31, 1997 the Company had cash equivalents of
$10,761,000, working capital of $11,530,000, and a working
capital ratio of 2.5 to 1.
Accounts receivable as of March 31, 1997 decreased by $1,066,000
from the balance on December 31, 1996, principally as a result
of the seasonal billing fluctuation associated with a
concentration of renewal software support contracts with a
January 1 start date. These contracts were previously billed in
1996, in advance of the applicable start date. This seasonal
fluctuation also accounted for the $647,000 decline in deferred
revenue as of March 31, 1997 compared to the level at December
31, 1996. As of March 31, 1997, the Company has annualized
billable software support contracts of $11.3 million.
Contracts receivable as of March 31, 1997 increased $1,715,000
to $2,408,000 as compared to the balance of $693,000 on December
31, 1996. The Company entered into a licensing agreement with
Sunquest resulting in initial licensing fees receivable in three
installments of $1,000,000 each. The first installment was
collected upon signing on February 7, 1997. The remaining two
installments are due no later than February 7, 1998 and February
7, 1999, and as of March 31, 1997 had a carrying value of
$1,798,000. The remaining change is attributable to scheduled
collections on monthly installment receivables from radiology
information system customers.
During the first quarter 1997 the Company capitalized $714,000
of software development costs and purchased $494,000 of
additional property and equipment. Increased development
efforts resulted in the general availability of CoPath Client
Server during the first quarter of 1997. The Company also
continued to develop enhancements to DynamicVision, and began
developing a client server version of Maxifile for radiology.
Property purchases were made primarily to accommodate the growth
of the Company. First, the Company uniformly equipped the
offices of the recently acquired CoMed operation in Waltham.
Additionally, the Company acquired computer equipment for the
sales force to automate pipeline management. The Company plans
to continue an aggressive internal and external growth strategy.
Accounts payable and accrued expenses declined $780,000 to
$1,817,000 as of March 31, 1997 from $2,597,000 as of December
31, 1996. This fluctuation results primarily from the December
17, 1996 acquisition of CoMed. The Company not only accrued
$557,000 of acquisition related costs at year end, $420,000 of
which were paid prior to March 31, 1997, but thoroughly reviewed
all vendor payments during transition of the accounting systems
to Florida. This resulted in initially extending the payment
cycle. Similarly, other current assets as of March 31, 1997
declined $260,000 to $795,000 from the 1996 year end balance of
$1,055,000, as a result of realization of other asset balances
acquired through CoMed. The cash surrender value of terminated
life insurance of approximately $134,000 collected by the
Company, and vendor advances returned to the Company of
approximately $145,000 significantly accounted for this change.
10
Advanced billings as of March 31, 1997 declined by $1,342,000 to
$1,404,000 from the 1996 year end balance of $2,746,000.
Deliveries to the DOD hospitals during the first quarter of 1997
were significantly billed and paid in advance.
During the first quarter of 1997 the Company received $313,000
in proceeds from the exercise of employee options.
The Company intends to continue to enhance its product and
service offerings and to seek market expansion opportunities
beyond the general release of DynamicVision in November 1996,
the general release of CoPath Client Server product during the
first quarter of 1997, and the 1996 acquisitions of CoMed and
DMI. The Company is actively pursuing the acquisition of
Dynacor in a transaction expected to be accounted for as a
pooling during the second quarter of 1997.
Inflation and Changing Prices
The Company believes inflation has not had a material effect on
the Company's operations or its financial condition. Changing
prices within the marketplace could have a material effect upon
the cost of materials sold and the related price of software and
hardware sales.<PAGE>
PART II. OTHER INFORMATION
11
Item 1. Legal Proceedings
There have been no material developments in existing or pending
legal proceedings involving the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
(a) Indebtedness:
None
(b) Dividend Arrearage:
None
Item 4. Submission of Matters to a Vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11: Statement Regarding Computation of Per Share
Earnings.
(b) The following report on Form 8-K was filed by the
Registrant during the quarter ended March 31, 1997:
Item Reported Date of Report Financial Statements Filed
Acquisition of February 3, 1997 Balance sheets of Collaborative Medical
Collaborative Systems, Inc. as of December 31, 1994
Medical Systems, and 1995, and September 30, 1996
Inc. (unaudited).
Statements of Operations of
Collaborative Medical Systems, Inc.
for the years ended December 31, 1993,
1994 and 1995, and for the nine months
ended September 30, 1995 (unaudited)
and 1996 (unaudited).
Statements of Changes in Stockholders'
Equity of Collaborative Medical
Systems, Inc. for the years ended
December 31, 1993, 1994 and 1995.
Statements of Cash Flows of
Collaborative Medical Systems, Inc.
for the years ended December 31, 1993,
1994 and 1995, and for the nine months
ended September 30, 1995 (unaudited)
and 1996 (unaudited).
12
SIGNATURES
Pursuant to 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 hereunto duly authorized.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
(Registrant)
Date: May 6, 1997 /S/MITCHEL J. LASKEY
Mitchel J. Laskey
President, Chief Executive Officer
and Treasurer
Date: May 6, 1997 /S/PAUL S. GLOVER
Paul S. Glover
Vice President of Finance and
Cheif Financial Officer
13
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Index to Exhibits
Description of Exhibit Page Number
Exhibit 11: Statement regarding computation of per share
earnings 15
14
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Exhibit 11
Computation of Weighted Average Number of Shares Outstanding and
Per Share Earnings
<TABLE>
Three Months Ended
March 31, (Unaudited)
1996 1997
<S> <C> <C>
Earning (loss) available for common shareholders:
Net earnings (loss) $(369,911) $3,032,243
Weighted average number of common shares outstanding
and earnings per share:
Primary:
Weighted average number of common shares
outstanding 6,611,646 16,993,493
Dilutive effect of options and warrants using
treasury stock method -- 643,745
Weighted average number of common and common
equivalent shares outstanding 6,611,646 17,637,238
Earnings (loss) per share - primary $ (0.06) $ 0.17
Fully diluted:
Weighted average number of common shares
outstanding 6,611,646 16,993,493
Dilutive effect of options and warrants using
treasury stock method -- 656,353
Dilutive effect of contingently issuable shares -- 237,500
Weighted average number of common and common
equivalent shares outstanding assuming full
dilution 6,611,646 17,887,346
Earnings (loss) per share - fully diluted $ (0.06) $ 0.17
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,760,706
<SECURITIES> 0
<RECEIVABLES> 4,532,834
<ALLOWANCES> 326,102
<INVENTORY> 0
<CURRENT-ASSETS> 19,012,320
<PP&E> 5,429,162
<DEPRECIATION> 2,544,660
<TOTAL-ASSETS> 30,490,960
<CURRENT-LIABILITIES> 7,481,890
<BONDS> 177,198
<COMMON> 170,649
0
60
<OTHER-SE> 22,661,163
<TOTAL-LIABILITY-AND-EQUITY> 30,490,960
<SALES> 464,155
<TOTAL-REVENUES> 9,670,159
<CGS> 577,343
<TOTAL-COSTS> 6,817,297
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,607
<INCOME-PRETAX> 3,032,243
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,032,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,032,243
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
