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, 1998
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
As of April 22, 1998, there were 18,034,260 shares outstanding,
par value $.01 per share, of the issuer's only class of common
stock.
This report consists of sixteen (16) pages.
The index to exhibits appears on page fifteen (15).
Page 1
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
See attached statements following this item number.
Page 2
Independent Auditors' Review Report
Board of Directors
Dynamic Healthcare Technologies, Inc.:
We have reviewed the condensed consolidated balance sheet of
Dynamic Healthcare Technologies, Inc. as of March 31, 1998, and
the related condensed consolidated statements of operations and
cash flows for the three-month period then ended. These
condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope that an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet of
Dynamic Healthcare Technologies, Inc. as of December 31, 1997
and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated February 27, 1998, we
expressed an unqualified opinion on these consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December
31, 1997, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which is has
been derived.
/S/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Orlando, Florida
May 4, 1998
Page 3
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
<TABLE>
December 31, 1997 March 31, 1998
<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 6,465,685 $ 3,469,603
Accounts receivable, net 6,066,305 4,959,649
Unbilled receivables 2,900,702 3,027,972
Contracts receivable - current 1,409,571 1,306,292
Prepaid Expenses 738,773 828,823
Other current assets 53,265 29,359
Total current assets 17,634,301 13,621,698
Property and equipment, net 3,699,761 3,938,816
Capitalized software development costs, net 7,830,349 8,355,637
Goodwill, net 2,070,581 1,968,695
Contracts receivable - non-current 1,682,780 823,392
Other assets 59,258 61,347
$32,977,030 $28,769,585
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 3,023,349 $ 3,124,385
Deferred revenue 6,456,120 5,314,183
Advance billings 1,259,876 1,069,926
Other 361,107 292,111
Total current liabilities 11,100,452 9,800,605
Other 453,788 412,061
Total liabilities 11,554,240 10,212,666
Shareholders' equity:
Common stock ($.01 par value; authorized
40,000,000 shares; issued and outstanding
18,008,210 and 18,034,260 shares at
December 31, 1997 and March 31, 1998,
respectively) 180,082 180,343
Additional paid-in capital 44,300,707 44,353,784
Deficit (23,057,999) (25,977,208)
Total shareholders' equity 21,422,790 18,556,919
$32,977,030 $28,769,585
See notes to condensed consolidated financial statements.
</TABLE>
Page 4
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended March 31,
1997 1998
<S> <C> <C>
Operating revenues:
Computer system equipment sales and support $ 746,100 $ 684,159
Application software licenses 5,509,740 977,555
Software support 2,559,111 2,970,503
Services and other 1,933,085 1,401,585
Total operating revenues 10,748,036 6,033,802
Costs and expenses:
Cost of products sold 791,738 631,956
Client services expense 2,764,873 2,939,347
Software development costs 1,358,341 1,735,612
Sales and marketing 1,744,930 2,697,744
General and administrative 1,284,016 1,043,742
Total costs and expenses 7,943,898 9,048,401
Operating income (loss) 2,804,138 (3,014,599)
Other income (expense):
Interest expense and financing costs (18,529) (13,074)
Interest income and other 189,147 108,464
Total other income (expense) 170,618 95,390
Earnings (loss) before income taxes 2,974,756 (2,919,209)
Income taxes -- --
Net earnings (loss) $ 2,974,756 $ (2,919,209)
Net earning (loss) available for common
shareholders $ 2,974,756 $ (2,919,209)
Earnings (loss) per common share
Basic and diluted $ 0.17 $ (0.16)
Weighted average number of common shares
outstanding 17,243,493 18,028,823
See notes to condensed consolidated financial statements.
</TABLE>
Page 5
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Three Months Ended March 31,
1997 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 2,974,756 $ (2,919,209)
Adjustments to reconcile net earnings (loss)
to net cash provided (used) by operating
activities:
Depreciation and amortization 730,035 817,534
Changes in assets and liabilities:
Accounts receivable 905,792 1,106,656
Unbilled receivables (24,154) (127,270)
Contracts receivable (1,715,614) 962,667
Other 134,934 (110,719)
Accounts payable and accrued expenses (615,951) 101,036
Deferred revenue (754,539) (1,141,937)
Advance billings (1,222,168) (189,950)
Net cash provided (used) by operating activities 413,091 (1,501,192)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs (759,368) (941,023)
Purchases of property and equipment (495,483) (538,968)
Restricted cash released/(deposited) 60,000 --
Net cash used in investing activities (1,194,851) (1,479,991)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 313,164 53,338
Borrowings (repayments) on longterm debt and
capital lease obligations (45,918) (61,215)
Other (6,399) (7,022)
Net cash provided (used) by financing activities 260,847 (14,899)
Net (decrease) in cash and cash equivalents (520,913) (2,996,082)
Cash and cash equivalents, beginning of period 11,450,436 6,465,685
Cash and cash equivalents, end of period $10,929,523 $ 3,469,603
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 18,529 $ 13,074
Income taxes paid (received) $ -- $ --
See notes to condensed consolidated financial statements.
</TABLE>
Page 6
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1998
(A) Unaudited Financial Statements:
The accompanying consolidated financial statements 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, and are of a normal
recurring nature. Quarterly results of operations are not
necessarily indicative of annual results. These statements
should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Dynamic
Healthcare Technologies, Inc. 1997 Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
(B) Subsequent Event:
On April 28, 1998 the Company signed a loan commitment for a
$5,000,000 Revolving Line of Credit and a $200,000 Guidance Line
of Credit with a commercial bank. Subject to fulfillment of the
lender's requirements, the Revolving Line of Credit will be for
one year secured by all existing Company assets, interest
thereon will be payable monthly in arrears at the bank's prime
rate, and will be based on advance formulas tied to receivables.
The Guidance Line of Credit would be available to fund 80% of
future capital purchases, would require monthly principal and
interest payments amortized over three years at the bank's prime
rate, and would mature in one year. The lender's obligation to
close on the above facilities is conditioned upon a satisfactory
pre-closing audit by the lender, and completion by the Company
of a cash equity infusion of $2,760,000 on terms satisfactory to
the lender.
(C) New Accounting Pronouncement:
The Company adopted Statement of Position ("SOP") 97-2 for
software transactions entered into beginning January 1, 1998.
The impact of SOP 97-2 does not materially alter the Company's
revenue recognition methods.
Page 7
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 provides 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 600 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 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 is expensed 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.
The sales cycle for the Company's systems is typically six to
eighteen 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.
Page 8
On January 7, 1998 the Company announced the appointment of
Scott E. Waldrop to the newly created position of Senior Vice
President and Chief Operating Officer. Waldrop joined the
Company from Columbia/HCA Healthcare Corporation ("Columbia") of
Nashville, TN. As Vice President, Information Systems
Development for Columbia, he led a team of more than 450 people
in establishing information strategies, product development or
selection, and product support for all facilities and business
lines.
On February 18, 1998 the Company announced five key appointments
with responsibility for implementing corporate and product
initiatives. Four of these appointments augment Dynamic's
management team: Brian Paige, Vice President of Development; Jim
Busby, Director of Sales for the Electronic Health Record Group;
Curt Thornton, Director of Consultant Relations; and Cynthia
Sucher, Director of Corporate Communications. The fifth, George
Naxera, has been named Program Director for the AutoCyte Image
Management System ("AIMS"), which provides imaging capabilities
for Dynamic's CoPath anatomic pathology solution.
On March 18, 1998 the Company reported that Mr. Nikhil Bhatt,
Senior Vice President and Chief Technical Officer had
voluntarily resigned from the Company. Mr. Bhatt will be
transitioning his current responsibilities through May 31, 1998
and will continue to serve as an Executive Advisor to the
Company through May 31, 1999.
The following table sets forth, for the three month periods
ended March 31, 1997 and 1998, certain items in the Company's
statements of operations as a percentage of total operating
revenues:
<TABLE>
Three Months Ended
September 30,
1997 1998
<S> <C> <C>
Operating revenues:
Computer system equipment sales and support 6.9 % 11.4 %
Application software licenses 51.3 % 16.2 %
Software support 23.8 % 49.2 %
Services and other 18.0 % 23.2 %
Total revenues 100.0 % 100.0 %
Operating expenses:
Cost of products sold 7.4 % 10.5 %
Client services expense 25.7 % 48.7 %
Software development costs 12.6 % 28.8 %
Sales and marketing 16.2 % 44.7 %
General and administrative 12.0 % 17.3 %
Total operating expenses 73.9 % 150.0 %
Operating income (loss) 26.1 % (50.0)%
Other income (expense) 1.6 % 1.6 %
Net earnings (loss) 27.7 % (48.4)%
</TABLE>
Page 9
Results of Operations
(Three months ended March 31, 1998 compared to three months
ended March 31, 1997)
Revenues. During the quarter ended March 31, 1998 the Company
reported revenues of $6,034,000 a decrease of $4,714,000 from
revenues for the same period 1997. During the first quarter of
1997, the Company recognized initial pathology application
software license revenue of $2,777,000 under the value added
re-marketing agreement with Sunquest (the "Sunquest Agreement"),
and approximately $2,286,000 of revenue from pathology
deliveries to the United States Department of Defense ("DOD"),
hospitals under a sub-contract to the United States Defense
Supply Service. During the first quarter of 1998, only $75,000
of revenue was recognized under the Sunquest Agreement. In
addition, government revenue of only $277,000 was recognized
during the first quarter of 1998. The Company is however, a
subcontractor under a Teaming Agreement with a prime contractor
who was awarded a multi-year contract in April 1998 for services
to the Office of the Assistant Secretary of Defense for Health
Affairs. The Prime Contractor on this project has not yet
awarded any firm subcontract to the Company.
Computer system equipment sales and support revenues increased
to 11.4% of total revenues for the first quarter of 1998,
compared to 6.9% for the first quarter of 1997, but declined by
$62,000. Neither the Sunquest Agreement nor deliveries to the
Department of Defense hospitals had any associated hardware
revenue. Management does expect a higher involvement in the
delivery of computer hardware to customers in connection with
the Company's increasing emphasis of offering a sole source
solution to customers.
Application software license revenue during the first quarter of
1998, decreased by $4,532,000 over the same period a year ago,
from $5,510,000 to $978,000. The Company recognized initial
pathology application software license revenue of $2,777,000
under the Sunquest Agreement during the first quarter of 1997,
and only $50,000 of application software license revenue
thereunder during the first quarter of 1998. Also, during the
first quarter of 1998, the Company recognized only $152,000 of
pathology application software license revenue from government
customers. This represents a $1,382,000 decrease from the
$1,534,000 of application software license revenue recognized
during the first quarter of 1997 through deliveries under a
completed U. S. Government sub-contract agreement. In addition,
other pathology application software license revenue decreased
by $292,000 principally due to the timing of sales cycles
following the introduction of the CoPath Client Server product
in March 1997. As a result, pathology application software
license revenue decreased by $4,401,000. Laboratory software
application license revenue declined by $246,000 principally due
to the May 1997 acquisition of Dynacor, Inc. Initial new
laboratory sales cycles were disrupted by the consolidation
process. In addition, application software license revenues in
imaging and radiology increased nominally by $94,000 and
$19,000, respectively.
Software support revenues increased $411,000 to $2,970,000 for
the first quarter of 1998, compared to $2,559,000 for the same
period one year ago. This increase is principally attributable
to successful implementations of new systems. As of March 31,
1998, the recurring annualized billable support base has
increased to $12.6 million, with an additional $1.2 million of
annualized software support revenue anticipated to be generated
from delivery of the Company's existing new systems backlog.
Service and other revenues decreased by $531,000 to $1,402,000
from $1,933,000. This decrease principally results from the
training and implementation services in connection with system
installations to the DOD hospitals completed in 1997. There was
no such corresponding revenue during the first quarter of 1998.
Cost of Products Sold. Cost of products sold as a percent of
total revenues for the first quarter of 1998 increased to 10.5%
from 7.4 % for the same period 1997. Hardware revenues during
the first quarter 1998 similarly increased to 11.4% from 6.9% of
total revenues for the first quarter 1997, due to the
significant decrease in application software license revenues
and the absence of hardware deliverables to either Sunquest or
the DOD hospitals. In addition, third party software costs
decreased to $52,000 during the first quarter of 1998 compared
to $160,000 incurred during the first quarter of 1997,
principally due to the decline in purchases of the mumps
operating system licenses as a result of the decrease in
application software license revenue and the shift to the client
server platform.
Client Services Expense. Client services expense for the first
quarter 1998 increased $174,000 to $2,939,000 from $2,765,000
for the first quarter 1997, increasing as a percentage of sales
from 25.7% to 48.7%. The Company previously reported increased
staffing in connection with the 1996 acquisitions of DMI and
CoMed, the introduction of the DynamicVision product line in
November 1996, and new product releases in 1997. During 1997,
the Company released for
Page 10
general availability client server
versions of CoPath (March 1997), and Maxifile (December 1997),
and new releases of PACsPlus+ (October 1997), and DynamicVision
(October 1997). The unanticipated elongation of initial product
sales cycles for these new products resulted in a significant
decline in quarterly revenues and a disproportionate burden in
client services expense.
Software Development Costs. Software development costs for the
first quarter 1998 increased to 28.8% of total operating
revenues from 12.6% incurred during the first quarter 1997.
Development efforts continued to increase as part of the
Company's overall growth strategy. As such, the Company
capitalized $941,000 or 41.6% of total software development
costs during the first quarter 1998 compared to $759,000 or
43.5% of total software development costs for the same period of
1997. The intensified development effort during the quarter
resulted in image enabling the Company's client server product
releases for radiology and pathology, and has provided more
uniformity within the Company's product line.
Sales and Marketing. Sales and marketing costs for the first
quarter 1998 as a percentage of total revenues, increased to
44.7% from 16.2% for the same period of 1997. During 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 latest
product releases. This resulted in an increase in sales and
marketing costs incurred during the first quarter of 1998 of
$953,000 as compared to similar costs for the first quarter of
1997.
General and Administrative Expenses. General and administrative
expenses for the first quarter of 1998 decreased by $240,000,
but increased to 17.3% of total revenues from 12.0% incurred
during the first quarter of 1997. The decreased expenses
include a $56,000 reduction in amounts accrued under the
Company's Management Incentive Compensation Plan ("MIC Plan"),
and other savings associated with relocating CoMed and Dynacor
administration to the Company's headquarters.
Other Income (Expense). Net other income for the first quarter
1998 decreased by $76,000 to $95,000, as compared to
approximately $171,000 for the same period 1997. Interest
income decreased by $81,000 during the first quarter of 1998
principally due to the cash used by operating and investing
activities.
Liquidity and Capital Resources
As of March 31, 1998 the Company had cash equivalents of
$3,470,000, working capital of $3,821,000, and a working capital
ratio of 1.39 to 1.
Accounts receivable as of March 31, 1998 decreased by $1,107,000
from the balance on December 31, 1997, 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
1997, in advance of the applicable start date. This seasonal
fluctuation also accounted for the $1,142,000 decline in
deferred revenue as of March 31, 1998 compared to the level at
December 31, 1997. As of March 31, 1998, the Company has
annualized billable software support contracts of $12.6 million.
Contracts receivable as of March 31, 1998 decreased $962,000 to
$2,130,000 as compared to the balance of $3,092,000 on December
31, 1997. The Company collected the second of three $1,000,000
installments due under the Sunquest Agreement. The remaining
installment is due no later than February 7, 1999. As of March
31, 1998 the Sunquest Agreement had a carrying value of
approximately $935,000. The remaining change in contracts
receivable results from scheduled collections on monthly
installment receivables from radiology information system
customers. As of March 31, 1998, all contracts receivable were
within applicable payment terms.
During the first quarter 1998 the Company capitalized $941,000
of software development costs and purchased $539,000 of
additional property and equipment. Development efforts during
the first quarter of 1998 resulted in image enabling the
Company's client server product releases for radiology and
pathology, and has provided more uniformity within the Company's
product line.
The Company also continued to develop enhancements to
DynamicVision and PACsPlus+. Property purchases were made
primarily to accommodate the growth of the Company. The
Company acquired a new trade show booth to adequately display
the entire suite of products, equipped the sales force with
laptop computers for product demonstration, purchased new
software for pipeline management and purchased a sales database.
The Company expects to continue to invest in software
development and continued internal growth.
Page 11
Accounts payable and accrued expenses increased $101,000 to
$3,124,000 as of March 31, 1998 from $3,023,000 as of December
31, 1997. As a result of the Company's plan to fund the 401K
Plan employer match with common stock the matching contribution
has been accrued pending shareholder approval.
Advanced billings as of March 31, 1998 declined by $190,000 to
$1,070,000 from the 1997 year end balance of $1,260,000. During
the first quarter of 1998 a larger percentage of revenue was
attributed to add on sales for which a lower level of deposit is
required.
During the first quarter of 1998 the Company received $53,000 in
proceeds from the exercise of director and employee options.
The Company intends to continue to enhance its product and
service offerings and to seek market expansion opportunities
beyond the recent product releases. The Company's ability to
meet its future working capital requirements is dependent on the
Company's ability to restore and maintain profitable operations
or to obtain suitable additional financing.
On April 28, 1998 the Company signed a loan commitment for a
$5,000,000 Revolving Line of Credit and a $200,000 Guidance Line
of Credit with a commercial bank. Subject to fulfillment of the
lender's requirements, the Revolving Line of Credit will be for
one year secured by all existing Company assets, interest
thereon will be payable monthly in arrears at the bank's prime
rate, and will be based on advance formulas tied to receivables.
The Guidance Line of Credit would be available to fund 80% of
future capital purchases, would require monthly principal and
interest payments amortized over three years at the bank's prime
rate, and would mature in one year. The lender's obligation to
close on the above facilities is conditioned upon a satisfactory
pre-closing audit by the lender, and completion by the Company
of a cash equity infusion of $2,760,000 on terms satisfactory to
the lender.
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.
Forward-Looking Statements
This report contains certain forward-looking statements, which
are qualified by the risks and uncertainties described from time
to time in the Company's reports filed with the Securities and
Exchange Commission, including the Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
Page 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
The information required by this item is incorporated by
reference to Footnote (B) of the condensed consolidated
financial statements included in Part I therein.
Item 3. Defaults Upon Senior Securities
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) Reports on Form 8-K:
None
Page 13
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 7, 1998 /S/MITCHEL J. LASKEY
Mitchel J. Laskey
President, CEO and Treasurer
Date: May 7, 1998 /S/PAUL S. GLOVER
Paul S. Glover
Vice President of Finance, CFO and Secretary
Page 14
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Index to Exhibits
Description of Exhibit Page Number
Exhibit 11: Statement regarding computation of
per share earnings 16
Page 15
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Exhibit 11
Computation of Weighted Average Number of Shares Outstanding and
Earnings Per Share
<TABLE>
Three Months Ended March 31,
(Unaudited)
1997 1998
<S> <C> <C>
Earnings (loss) available for common shareholders:
Net earnings (loss) $ 2,974,756 $ (2,919,209)
Common and common equivalent shares outstanding
Basic:
Weighted average number of common shares
outstanding 17,243,493 18,028,823
Diluted:
Weighted average number of common shares
outstanding 17,243,493 18,028,823
Dilutive effect of options and warrants average
market price 643,745 --
Weighted average number of common and common
equivalent shares
Outstanding assuming full dilution 17,887,238 18,028,823
Earnings (loss) per share basic and diluted $ 0.17 $ (0.16)
</TABLE>
Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,469,603
<SECURITIES> 0
<RECEIVABLES> 5,268,929
<ALLOWANCES> 309,280
<INVENTORY> 0
<CURRENT-ASSETS> 13,621,698
<PP&E> 7,728,012
<DEPRECIATION> 3,789,196
<TOTAL-ASSETS> 28,769,585
<CURRENT-LIABILITIES> 9,800,605
<BONDS> 412,061
180,343
0
<COMMON> 0
<OTHER-SE> 18,376,576
<TOTAL-LIABILITY-AND-EQUITY> 18,556,919
<SALES> 684,159
<TOTAL-REVENUES> 6,033,802
<CGS> 631,956
<TOTAL-COSTS> 9,048,401
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,074
<INCOME-PRETAX> (2,919,209)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,919,209)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,919,209)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
