SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended Commission File Number
March 31, 2000 0-11686
DYNAMIC SCIENCES INTERNATIONAL, INC.
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(Exact name of Registrant as specified in its charter)
NEVADA 94-3226065
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
6130 Variel Avenue
Woodland Hills, California 91367 (818)226-6245
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(Address of principal executive offices and telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act.
Common Stock - $.00l Par Value
$1.00 Cumulative Convertible Preferred Stock - $.0l Par Value
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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__
No X
-
As of March 31, 2000 , the Registrant had 32,808,680 shares of the
Company's Common Stock outstanding. The aggregate market value of the voting
stock held by non-affiliates was $2,624,694 computed by reference to the average
of the low bid and high ask prices on March 31, 2000.
Documents Incorporated By Reference
NONE
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Item 1. Financial Statements
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DYNAMIC SCIENCES INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
( In Thousands )
ASSETS
Current Assets 31 March 2000 31 December 1999
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<S> <C> <C>
Accounts receivable, net $ 113 $ 5
Inventories 994 913
Prepaid expenses and other current assets 76 65
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Total current assets 1183 983
Property and equipment, at cost
Machinery and equipment 358 358
Office furniture and fixtures 6 6
Leasehold improvements 16 16
Less accumulated depreciation and amortization 318 310
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Total fixed assets, net 62 70
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Other assets
Other intangible assets, net of amortization 1537 1546
Deposits 8 8
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Total other assets 1545 1554
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TOTAL ASSETS $ 2,790 $ 2,607
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LIABILITIES & STOCKHOLDERS' EQUITY
March 31, 2000 December 31, 1999
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current liabilities
Short-term notes payable $ - $ 2
Accounts payable 191 133
Payroll taxes payable 1,260 1233
Income taxes payable 2 2
Deferred income 42 42
Current portion of long term debt 6 5
Other accrued liabilities 491 483
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Total current liabilities 1,992 1,900
Long-term liabilities
Long-term debt, net of current portion 475 475
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TOTAL LIABILITIES 2,467 2,375
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000 shares authorized
Series A -- outstanding 2,935,000, stated at par 1,443 1,443
Series B to Series G -- outstanding 4,144,188 after deducting
1,855,800 canceled shares in treasury, started at par 60 60
Common stock, $.001 par value, 250,000,000 shares authorized
33,565,329 issued and outstanding including
17,746,517 subscribed, stated at par 33 32
Additional paid-in capital 527 448
Notes receivable from shareholders, non-interest bearing (160) (160)
Retained deficit (1,515) (1,526)
Less treasury stock, at cost, 1,855,800 Preferred stock B-G shares (65) (65)
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TOTAL STOCKHOLDERS' EQUITY 323 232
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,790 $ 2,607
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DYNAMIC SCIENCES INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 3 months ended
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March 31, 2000 March 31, 1999
<S> <C> <C>
Sales $ 288 $ 453
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TOTAL REVENUE 288 453
TOTAL COST OF SALES 129 207
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GROSS PROFIT 159 246
OPERATING EXPENSES
Selling, general, and administrative 122 183
Research & development net of new software 18 23
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TOTAL OPERATING EXPENSE 140 206
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INCOME (LOSS) FROM OPERATIONS 19 40
OTHER INCOME AND EXPENSES
Interest expense 8 9
Interest income - -
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TOTAL OTHER INCOME AND EXPENSES 8 9
INCOME (LOSS) BEFORE PROVISION FOR TAXES 11 31
PROVISION FOR TAXES 0 0
NET INCOME (LOSS) $ 11 $ 31
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BASIC EARNINGS (LOSS) PER SHARE $ .0003 $ .0009
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WEIGHTED NUMBER OF SHARES OUTSTANDING 32,808,680 32,052,031
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<CAPTION>
DYNAMIC SCIENCES INTERNATIONAL, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTER
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ENDED MARCH 31,
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CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999
(UNAUDITED) (RESTATED)
<S> <C> <C>
Net income (loss) $ 11 $ 31
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and Amoritization 57 57
Issuance of common stock for rent expenses 1 0
Issuance of additional paid-in capital for rent expenses 79 0
(Increase) decrease in:
Accounts receivable (142) (104)
Inventory (81) 32
Prepaid expenses (11) 0
(Decrease) increase in:
Accounts payable 52 9
Accrued expenses 35 0
NET CASH PROVIDED BY OPERATING ACTIVITIES 1 25
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 0 (5)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short term debt (1) 5
Repayment of long term debt 0 (25)
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NET CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES (1) (20)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR - -
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CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ - $ -
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Item 2. Management's Discussion and Analysis of Financial Condition and
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First Quarter of 2000 Compared to First Quarter of 1999
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Total net sales for the first quarter of year 2000 decreased $165,000 or 36%
From the first quarter of 1999 primarily due to the 1999 quarter sales being
larger than previous quarters with delivery of a DSI-9000 system to Europe .
The Company's sales volume is affected by its dependence on a market generated
by governmental agency requirements and their budget allocations.
Gross profit decreased by $87,000 or 35% from Q1 1999 as a result of decreased
sales with cost of sales remaining proportionally the same.
Research and development costs decreased $5,000 or 22% from Q1 Fiscal 1999 to
Q1, 2000. As a percentage of sales, R & D expenses increased from 5% in 1999 to
6% in 2000. The decrease in dollars spent was the result of development efforts
on the R-1550 Receiver nearing completion.
Selling, general and administrative expenses decreased $61,000 or 33% from 1999.
As a percentage of sales, those expenses represented 40% in 1999 and 42% in
2000.
The gross profit from DSII operations in Q1 1999 of $40,000 decreased to $19,000
in Q1 of 2000. As a percentage of sales, this was 8.8% in 1999 and 6.6% in
2000, or a decrease of 2.2% decrease of profit as a percent of sales. Operating
income was a profit of 31,000 in Q1 1999 and a profit of $11,000 in Q1 2000 or
as a percentage of sales 6.8% in 1999, and 3.8% in 2000.The Company capitalized
$ 19,000 in Q1 2000 in software development costs on new projects. These costs
will be written off over the next five years.
Interest expense decreased $1,000 or 11%.
Liquidity and Capital Resources
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At March 31, 2000, the Company was not encumbered by bank debt, and its
working capital was $323,000, a increase of $81,000 from December 31, 1990. The
Company is presently committed to generating working capital requirements from
internal operations, while external-financing resources will continue to be
pursued. Due to the nature of its products, the Company has been able to
negotiate prompt payment schedules with some of its customers. The process is
expected to continue during 2000. Short-term liquidity problems have developed
due to delayed sales and the lack of external financing resources. Long-term
liquidity would be dependent on achieving sales projections.
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Exhibits:
2.1 Copy of the Plan and Agreement of merger by and among National
Pay Telephone Corporation, a Nevada corporation, NPT Acquisition,
Inc., a California corporation, and Dynamic Sciences, Inc., a
California corporation dated December 12, 1986, is incorporated
by reference to the Registrant's Form 8-K filed December 30,
1986.
2.2 Copy of the Agreement dated September 22, 1986, by and between
National Pay Telephone Corporation and Dynamic Sciences, Inc. is
incorporated by reference to the Registrant's Form 8-K filed on
December 30, 1986.
2.3 Copy of the Purchase and Sale Agreement dated December 26, 1986,
between National Pay Telephone Corporation and David J. Stein and
associates, Inc., is incorporated by reference to the
Registrant's Form 8-K filed on December 30, 1986.
2.4 Financial Statements for Affiliate Company, Phoebus Secure
Technologies Corporation, is incorporated by reference to the
Registrant's Form 10-K for the year ended December 31, 1989.
3.1 Copy of Registrant's Articles of Incorporation and Amendment
thereto is incorporated by reference to SEC File #2-86622-LA,
Exhibit 3.1, filed on September 17, 1983.
3.2 Copy of Registrant's amended by-laws was filed as an Exhibit 3.1
on Form 8-K dated December 30, 1986 and is incorporated by
reference.
4.1 Copy of Stock Certificate for $1.00 Cumulative Convertible
Preferred Stock (Series "A"), is incorporated by reference to the
Registrant's Form 10-K for the fiscal year ended July 31, 1986.
4.2 Form of Certificate of Determination for the $1.00 Cumulative
Preferred Stock is incorporated by reference to Exhibit 4.2 to
Registration Statement of the Registrant on Form S-l, #33-5232,
as filed on or about April 30, 1986.
4.3 Copy of Stock Certificate for Cumulative Convertible Preferred
Stock Series "B-G" is incorporated by reference to the
Registrant's Form 10-K for fiscal year end December 31, 1986.
4.4 Copy of Certificate of Determination (corrected) filed with the
Secretary of the State of Nevada in connection with the
Cumulative Convertible Preferred Stock Series "B-G." Conversion
rights may be exercised for Series "C" on November 14, 1987; for
Series "D" on May 14, 1988; for Series "E" on November 14, 1988;
for Series "F" on May 14, 1989; and for Series "G" on November
14, 1989. This document is incorporated by reference to the
Registrant's Form 10-K for fiscal year ended December 31, 1986.
22.1 List of Subsidiaries of the Registrant.
Form 8-K Reports
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There were no filings made on Form 8-K during the quarter ending December 31,
1999.
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SIGNATURES
Pursuant to the requirements of Section 13, or 115(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: 8 August, 2000 Dynamic Sciences International, Inc.
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By: /s/ Eli I. Shiri
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Eli I. Shiri
Chairman of the board
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