<PAGE>
DYNATEC INTERNATIONAL, INC.
3820 West Great Lakes Drive
Salt Lake City, UT 84120
(801) 973-9500
(800) 722-7425
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of Stockholders of Dynatec International, Inc., will be
held at the Company headquarters, 3820 West Great Lakes Drive, Salt Lake City,
Utah on November 12, 1996 at 2:00 p.m., local time, for the following purposes.
1. To elect the directors of the Corporation
2. To approve the appointment by the Board of Directors of the firm of
Kartchner & Purser to audit the books and accounts of the Corporation for the
current fiscal year.
3. To approve the 1996 Employee Incentive Stock Option Plan of the
Corporation.
4. To transact any such other business as may come before the meeting or
any adjournment thereof.
The close of business on August 30, 1996 has been fixed as the record date
for determining stockholders entitled to notice of, and to vote at, the meeting.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own, or for which you have voting rights. To make sure your shares are
represented, please complete and mail the enclosed proxy.
Dated this 30th day of August, 1996.
BY THE ORDER OF THE BOARD OF DIRECTORS
----------------------------------------------
David J. White, Secretary
<PAGE>
DYNATEC INTERNATIONAL, INC.
3820 West Great Lakes Drive
Salt Lake City, Utah 84120
Telephone No. (801) 973-9500
Toll Free No. (800) 722-7425
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of Dynatec
International, Inc., a Utah Corporation, (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Stockholders ("the Meeting") of the Company to be held on Tuesday, November
12, 1996, and any adjournment thereof. A copy of the Notice of Meeting
accompanies this Proxy Statement.
Only Stockholders of record at the close of business on August 30, 1996,
the record date for the meeting will be entitled to notice of and to vote at the
Meeting. On the record date, August 30, 1996, the Company had issued 945,423
shares of common stock. Each share of stock is entitled to one vote. All
abstentions and broker non-votes shall not be counted as votes either for or
against a proposal.
Stockholders who execute proxies may revoke them by giving written notice
to the Secretary of the Company at any time before such proxies are voted.
Attendance at the Meeting shall not have the effect of revoking a proxy unless
the stockholder so attending shall, in writing, so notify the secretary of the
meeting at any time prior to the voting of the Proxy.
The Board of Directors does not know of any matters other than those
outlined in the Notice of Annual Meeting of Stockholders that are expected to be
presented for consideration at the Meeting. However, if other matters properly
come before the Meeting, the persons named in the accompanying Proxy intend to
vote thereon in accordance with their own business judgement.
Directors of the Company will be elected by a plurality vote of the
outstanding shares of common stock present and entitled to vote at the meeting.
<PAGE>
CORPORATE MATTERS
The Company will bear the cost of the Meeting and the cost of soliciting
proxies, including the cost of mailing the proxy material. In addition to
solicitation by mail, directors, officers, and regular employees of the Company
(who will not be specifically compensated for such services) may solicit proxies
by telephone or otherwise. Arrangements will be made with brokerage houses and
other custodians, nominees, and fiduciaries to forward proxies and proxy
material to their principals, and the Company will reimburse them for their
expense.
All proxies received pursuant to this solicitation will be voted except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the proxy
solicited by the Board of Directors of the Company intend to vote in favor of
all proposals.
ELECTION OF DIRECTORS
At the meeting, five (5) directors are to be elected, each to hold office until
the next annual meeting and until his respective successor has been elected and
qualified. If any nominee listed in the table below should become unavailable
for any reason, which the management does not anticipate, the proxy will be
voted for any substitute nominee or nominees who may be selected by the
management prior to or at the meeting, or, if no substitute is selected by the
management prior to or at the meeting, for a motion to reduce the membership of
the Board to the number of nominees available.
The information contained in this Proxy Statement concerning the nominees
and their security holdings has been furnished by them to the Company.
3
<PAGE>
DIRECTORS AND DIRECTOR NOMINEE'S
<TABLE>
Name and Office Principal Occupation During
Held in the the past Five Years and Other
Corporation Age Directorships
- --------------- --- -----------------------------
<S> <C> <C>
Donald M. Wood 51 Chief Executive Officer of the Company since
Chief Executive Officer November 1995; President and CEO from 1982
Director and until November 1995, officer and
Director Nominee director of Softalk, Inc. Since July,
1982; prior to 1982, employed by Bank of
America, N.T. & S.A. serving as Vice
President and head of the Sao Paulo, Brazil
Office.
Fredrick R. Jack 53 President of Dynatec since November 1995.
President Executive Vice-President of Dynatec since
Director and December of 1994. Vice-President of Marketing
Director Nominee of Dynatec since April, 1983 and
Secretary of Dynatec since April, 1985.
Mr. Jack also serves as President and a
Director of Softalk, Inc., a wholly owned
subsidiary of Dynatec. Prior to April, 1983,
Mr. Jack served as the Vice President of
Marketing for Softalk, Inc.
Reed Newbold 51 Independent financial planner and consultant,
Director and Mr. Newbold served as an assistant
Director Nominee Vice-President of Tracy Collins Bank & Trust
in 1987. He was also employed as a mortgage
loan officer with Salt Lake Mortgage in 1985 &
1986, and as the Executive V.P. of Heritage
Bank from 1981 to 1985.
Frederick W. Volcansek 51 Mr. Volcansek is an International Market
Director and Development Consultant who provides
Director Nominee services to Fortune 500 companies. Mr.
Volcansek was U.S. Deputy Under Secretary
of Commerce in Washington from 1988 until
1992.
David J. White 39 Secretary of the Company since November
Executive Vice- 1995. Executive Vice-President of Dynatec
President, Secretary since December 1994. Vice-President of
Finance of Dynatec since December 1987,
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Director and Controller of Dynatec from February 1985
Director Nominee until December 1987, Mr. White is a
licensed Certified Public Accountant in
the State of Utah.
</TABLE>
Mr. Wood was originally elected as a director of the Company in April,
1983. Mr. Jack was initially elected as a director in April, 1987. Mr. Newbold
and Mr. Volcansek were elected to the Board in December 1988. Mr. White was
elected to the Board of Directors by Board action in November 1991.
All directors and executive officers have filed all applicable section 16
reports as required.
OTHER INFORMATION REGARDING THE BOARD
The Board of Directors of the Company held five meetings in the six month
transitional period ended December 31, 1995. None of the directors participated
in less than 75% of the meetings held during the year. During the the six month
transitional period ended December 31, 1995, each Board member was paid $2,000
for each of the meetings attended.
None of the directors, officers, or 5% owners of the stock of the Company
is involved in any significant legal proceedings adverse to the Company, or has
a material interest adverse to the Company.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
A proposal will be presented at the meeting to approve the appointment of
Kartchner & Purser as the Company's independent public accountants.
1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN
At a regularly scheduled meeting of the Board of Directors held on February
27, 1996 the board approved the adoption of a 1996 Employee Incentive Stock
Option Plan.
The plan involves the granting of an option to purchase 200,000 shares of
the authorized common stock of the company. The exercise price of the options
is required to be the fair market value of the stock as of the date of grant,
except in the case of beneficial owners, in which case the exercise price must
be no less than 110% of fair market value of the stock. Fair market value is
defined as the bid price on the date of grant of the option.
The intention of management is to use the plan to retain and reward key
employees of the company.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following chart sets forth the ownership or claimed ownership of
certain individuals and entities. This chart discloses those persons known by
the Board of Directors to have, or to claim to have, beneficial ownership of
more than 5% of the outstanding shares of the common stock of the Company as of
the record date; of all directors of the Company; and of the directors and
officers of the Company as a group.
Amount and Percent
Nature of of Class
Name and Address of Beneficial as of
Beneficial Owner Ownership 4/12/96
- ------------------- ---------- --------
Ditta Limited Partnership 45,887 (1) 4.9%
1819 E. Southern
Mesa, AZ 85204
WAC Research, Inc. 228,700 (2) 24.2%
1553 East Hackamore
Mesa, AZ 85203
Donald M. Wood 159,262 (3) 16.8%
Fredrick R. Jack 16,006 1.7%
David J. White 14,000 1.5%
Reed Newbold 2,200 (4)
All directors and
officers as a
group (five persons) 420,168 (5) 44.4%
______________
(1) Ditta Limited Partnership is an Arizona limited partnership.
(2) WAC Research is owned equally by Mr. Donald M. Wood and Annalee
Wood, wife of Mr. Donald M. Wood.
(3) This reflects the 112,471 shares owned by Annalee G. Wood, wife of
Donald M. Wood, the 8,000 shares held by dependent children of Mr.
Wood and the 38,791 shares held by Mr. Wood. Mr. Wood is also
deemed the beneficial owner of the 228,700 shares owned by WAC
Research, Inc.
(4) Ownership is less than 1% of the outstanding shares of the Company.
(5) Includes WAC Research shares, as explained in note (3) above.
6
<PAGE>
EXECUTIVE COMPENSATION
The table set forth below contains information about the remuneration
received and accrued during the last calendar year and prior two calendar years
from the Company and its subsidiaries by each of the most highly compensated
executive officers of the Corporation whose remuneration for that year exceeded
$100,000.
Dynatec International, Inc
Summary Compensation Table
<TABLE>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Other
Year Annual Restricted (3) All other
Ended (2) Compen- Stock Options/ LTIP Compen-
Name and Decem. Salary Bonus sation Award(s) SARs Payouts sation
Principal Position 31 ($) ($) ($)(1) ($) (#) ($) ($)(4)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald M. Wood 1995 194,330 1,421 12,000 - - -
- - Chief Executive 1994 159,421 21,600 5,000 -
Officer 1993 172,633 23,467 7,000 n/a 18,000 n/a (4)
F. Randy Jack 1995 142,215 1,522 12,000 - - -
- - President 1994 122,722 15,840 5,000 -
1993 130,471 18,993 7,000 n/a 13,000 n/a (4)
David J. White 1995 94,312 1,218 10,000 - - -
- - Executive 1994 80,850 10,368 5,000 -
Vice President 1993 91,998 14,289 7,000 n/a 10,000 n/a (4)
</TABLE>
(1) Total cash compensation shown above does not include the value of
company owned vehicles and insurance payments made on behalf of
officers. Such items are included on the individual officers W-2's.
The amounts shown as other annual compensation are directors fees
received during the calendar year.
(2) Bonus compensation includes time in service bonus and merit bonus at
discretion of the Board of Directors.
(3) Stock options were awarded pursuant to the 1987 and 1989 Incentive
Stock Option Plans.
7
<PAGE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
- -----------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Percent of Total
Options/SARs
Options/ Granted to
SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
Donald M. Wood - - - -
F. Randy Jack - - - -
David J. White - - - -
- -----------------------------------------------------------------------------
(4) Mr. Wood, Mr. Jack and Mr. White have respectively five, four and
three years employment contracts with the Company. The contracts call
for annual renewals. The contracts may be terminated with written
notice prior to year-end and severance would be equal to the remaining
term of the contract. Compensation to be paid under the contracts is
equal to current base salary as well as vacation, health insurance,
vehicle privileges and an annual cost of living increase. In the
event of a merger, acquisition or transfer of assets the contract must
then be honored by the surviving entity.
In September 1986, the Company's stockholders approved an Incentive Stock
Option Plan (the "1987 Plan"), for the benefit of the officers and employees of
the Company, and of its subsidiaries. No formal criteria was established to
determine the amount of benefits to be granted pursuant to the 1987 Plan. Also,
in March, 1990, the Company's stockholders approved an additional Incentive
Stock Option Plan (the "1989 Plan") for the benefit of the officers and managers
of the Company. Formal criteria tied to profitability were established to
determine the benefits to be granted under the 1989 plan. The Plans provide that
options are granted at exercise prices equal to the market value as of the date
the option is granted. As of the proxy date, all shares have been granted and
exercised under these plans.
At a regularly scheduled meeting of the Board of Directors held on
February 27, 1996 the board approved the adoption of a 1996 Employee Incentive
Stock Option Plan.
The plan involves the granting of an option to purchase 200,000 shares of
the authorized common stock of the company. The exercise price of the options
is required to be the fair market value of the stock as of the date of grant,
except in the case of beneficial owners, in which case the exercise price must
be no less than 110% of fair market value of the stock. Fair market value is
defined as the bid price on the date of grant of the option.
8
<PAGE>
The intention of management is to use the plan to retain and reward key
employees of the company.
In calendar year 1995, the Company provided a medical and health insurance
program for all salaried and office employees. All full-time salaried and
office employees of the Company were entitled to the payment by the Company of
health insurance premiums after certain mandatory waiting periods.
9
<PAGE>
BUSINESS
1.1 GENERAL DESCRIPTION OF THE BUSINESS OF THE COMPANY - MARKETING AND
MARKET SEGMENT INFORMATION. Dynatec International, Inc., is engaged in the
manufacture and distribution of consumer products.
TELEPHONE ACCESSORIES.
Historically the telephone accessory products have been the principal
source of revenues for the Company. The telephone shoulder rest products are
currently distributed by the Company under the trade names of "Softalk" (R)
"Mini-Softalk" (TM) "Softalk II" and "Universal Phone Rest". Other telephone
accessory products include "Twisstop," "Twist Cord," "Value Pack" and Telephone
Accessory Packaging.
In the six month transitional period ended December 31, 1995, revenues from
the telephone accessory products accounted for 62.7% of the total revenues of
the Company. In fiscal years 1995 and 1994 the telephone accessories accounted
for 61.2% and 62.7% respectively, of revenues of the Company.
It is anticipated that this segment will account for a similar percentage
of Company revenues in calendar year 1996. Sixteen percent of the telephone
accessory products revenues and ten percent of total Company revenues are
derived through sales to AT&T. United Stationers accounted for thirteen percent
of telephone accessory products revenues and eight percent of total company
revenues. Gemini Industries accounted for twenty four percent of telephone
accessories revenue and fifteen percent of total company revenue. S.P. Richards
accounted for thirteen percent of telephone accessory revenue and eight percent
of total company revenue. These products are additionally sold principally
through Sears stores, various office products stores and office products super
stores. The Company began to package various telephone accessory items for AT&T
Technology in fiscal year 1995. Revenues from packaging in the six month period
amounted to $61,900. AT&T has made the decision to discontinue the packaging.
HARDWARE/HOUSEWARES PRODUCTS.
During the six month transitional period ended December 31, 1995, the
hardware/housewares products of the Company accounted for 27.0% of the
revenues of the Company. In fiscal years 1995 and 1994 this segment accounted
for 27.0% and 23.3% respectively, of the revenues of the Company. The
hardware products currently being sold by the Company include the
"Expand-A-Shelf", "Mini Expand-A-Shelf", "Mega Expand-A-Shelf", "Expandable
Book Shelf", "Sofstop", "Cover-Up", "Hide It", "Sofstop II", "The Wedge",
"Super Wedge" and "Fuji Film."
During the six month transitional period ended December 31, 1995, thirty
two percent of the Hardware Products segment sales were made to National
Hardware Manufacturing. The sales to National represented nine percent of total
company revenues.
The hardware products are being sold directly to retail stores,
distributors and catalogs including National Manufacturing, Lechters, Container
Store, Home Depot, Hannover House, Target, Williams Sonoma and others.
10
<PAGE>
BATTERY PRODUCT LINE.
In fiscal year 1993 the company signed a distribution agreement to
represent Fuji Novel Batteries in various domestic markets. In fiscal years
1994 and 1995 the company renewed the agreement and obtained the rights to
Mexico. The company mainly markets dry cell alkaline batteries. The company
markets the majority of the batteries to office product dealers and wholesalers
as well as several accounts in Mexico. During the six month transitional period
ended December 31, 1995 the battery product line sales were ten percent of total
company revenues. The company has not renewed the license agreement due to low
margins and a price increase from Fuji for 1996.
MISCELLANEOUS PRODUCTS.
Miscellaneous products of the Company include the "Softalk Erasable Board"
a soft wipe erasable planning board for office and personal use.
The miscellaneous products segment accounted for less than one percent of
total Company revenues in the six month transitional period ended December 31,
1995. In 1994 and 1993 it accounted for less than one percent and 1.3% of the
revenues of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS.
The Consolidated Statements of Financial Position of the Company, as shown
in the financial statements attached hereto, reflect the financial position of
the Company.
The Consolidated Statements of Operations of the Company, as shown in the
attached financial statements, reflect the Company's operations.
Results of Operations: For the six month transitional period ended
December 31, 1995, the Company experienced total revenues of $5,230,971
compared to total revenues of $8,979,939 in the prior twelve month fiscal
year ended June 30, 1995. Revenues for the six month period ended
December 31, 1994 were $4,876,650. Comparative period revenues increased
$354,321 or 7%.
In the six month transitional period ended December 31, 1995, there was an
increase of $468,429 (17%) in the revenues generated from the telephone
accessory product segment of the Company. This increase was a result of several
factors including a decrease in the sales of Softalk of $171,958 (16%), an
increase in Mini Softalk sales of $60,250 (26%) and an increase in Universal
Softalk sales of $288,727 (212%). The Softalk II experienced a sales increase
of $226,516 (93%) over the prior six month period ended December 31, 1994. The
Value Pack product experienced sales of $13,659. Collectively the shoulder rest
products had increased sales of $417,194. The increase is mainly attributable
to increased superstore sales and additional sales to wholesalers. The Twisstop
product revenues increased by $129,404 (15%). The Twist Cord product
experienced a sales increase of $14,425 (20%). The Twisstop and Twist Cord
products increased due to increased sales to customers and wholesalers. The
Company began packaging for AT&T in fiscal 1995. During the year, the Company
packaged a line of cellular accessory products for AT&T. Total packaging
revenues amounted to $61,900 for the six month transitional period ended
December 31, 1995. This represents a decrease of $92,594 (60%) over the same
period of the prior fiscal year. AT&T has made the decision to discontinue
product packaging.
11
<PAGE>
The Hardware/Housewares products segment produced an increase in revenues
during the six month transitional period ended December 31, 1995 of $154,246 or
12%.
The increase in the hardware products segment is partially a result of an
increase in sales of the shelf products. Expand-A-Shelf and Mini Expand-A-Shelf
increased sales by $35,675 (7%), and $2,012 (4%) respectively. Collectively the
shelf products accounted for revenues of $792,635. The shelf sales increases
are due to an expanded customer base as well as the increased market penetration
of the Expand-A-Shelf and Mini Shelves. The Mega Expand-A-Shelf experienced a
sales decrease of $33,164 (13%) during the six month transitional period ended
December 31, 1995. The Coverup line had decreased sales of $6,141 (3%), while
the Sofstop line showed an increase of $117,545 (88%). During fiscal year 1995
the company introduced the Hide It door bump product. This product experienced
sales of $2,126.
The Wedge product line sales increased by $3,930 (7%) over the same period
for the prior calendar year.
The Expandable Bookshelf product was introduced in the transitional period
and enjoyed sales of $50,604.
Fuji Film products showed a sales decrease of $5,245 (17%) for the six
month transitional period ended December 31, 1995
Miscellaneous product sales were $13,750 all from the erasable boards.
These declined in sales by $7,616 (36%).
The battery product line experienced sales of $524,103 in the six month
transitional period ended December 31, 1995, compared to sales of $784,841 for
the prior six month period ended December 31, 1994. This represents a decrease
of $260,738 (36%) mainly attributed to the economic crises in Mexico as well as
the decision by the Company late in the year to discontinue the battery line as
a business.
Net income increased from a net income of $20,931 for the six month period
ended December 31, 1994 to a net income of $64,183 over the six month period
ended December 31, 1995. The increase can be substantially attributable to the
increase in sales of the most profitable items of the Company.
LIQUIDITY AND CAPITAL RESOURCES: During the six month transitional period
ended December 31, 1995, the company experienced an increase in its cash
position of $53,361. The cash position increase is a function of a net decrease
in cash provided by investing activities due mainly to capital expenditures, a
net increase in cash from financing activities (line of credit borrowings) and
an increase in cash provided from operations.
Long-term liabilities increased from $443,562 at June 30, 1995 to
$554,488 at December 31, 1995. Short term liabilities increased from
$1,702,061 at June 30, 1995 to $2,733,300 at December 31, 1995. The increase
is due to increased debt, particularly the construction of a warehouse and
office facility and the debt incurred with that construction. Upon
completion of long-term financing, the short-term liabilities will decrease
thereby improving current ratios. The long-term project financing is
expected to be consummated in the fall of 1996. Stockholders' equity
increased from $2,698,310 for fiscal year ended June 30, 1995 to $2,782,641
for the six month transitional period ended December 31, 1995.
12
<PAGE>
Total debt to worth ratio was .79 at fiscal year-end 1995 versus 1.18 at
December 31, 1995.
The ratio of total current assets to total current liabilities was 1.75 at
the end of fiscal 1995 compared to 1.17 at December 31, 1995. The changes in
the debt to work and current ratios are due mainly to construction financing as
explained above in the Liquidity and Capital resources paragraph.
Impact of Inflation and Changing Prices: There was some impact on the
Company by reason of inflation during the past fiscal year. Freight carriers
used by the Company increased their rates in calendar year 1995. Also, prices
increased for raw materials used in injection and blow molded products as well
as for packaging.
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Reference is made to the consolidated statements of Financial position and
operations of the company which are incorporated as part of this proxy statement
and which contain the Consolidated Financial Statements for fiscal years 1995,
1994 and the six month transitional period ended December 31, 1995. Reference is
also made to "Impact of Inflation and Changing Prices" set forth above.
The Consolidated Statements of Financial Position of the Company, as shown
in the Financial Statements, reflect the financial position of the Company.
The Consolidated Statements of Operations of the Company, as shown in the
Financial Statements, reflect the Company's operations.
13
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in connection
with, and is limited by, the more complete information in the attached
Consolidated Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Transition
Period Fiscal Year Ended
Ended 12/31/95 1995 1994 1993 1992 1991
-------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Telephone
accessories 3,278,000 5,495,000 5,659,000 5,763,000 4,624,000 4,086,000
Hardware Products 1,415,000 2,423,000 2,100,000 1,673,000 1,408,000 953,000
Batteries 524,000 1,032,000 1,187,000 - - -
Other 14,000 30,000 75,000 98,000 141,000 92,000
--------- --------- --------- --------- --------- ---------
Total Revenues 5,231,000 8,980,000 9,021,000 7,534,000 6,173,000 5,131,000
Income (loss) from
continuing operations
before taxes 110,000 (28,000) 346,000 511,000 430,000 50,000
Income tax expense
(benefit) 46,000 33,000 55,000 3,000 3,000 11,000
Income (loss) from
continuing operations 64,000 5,000 291,000 508,000 427,000 39,000
Discontinued Operations - - - - - (394,000)
Extraordinary Items - - - - - -
Net Income (loss) 64,000 5,000 291,000 508,000 427,000 (355,000)
Total assets 6,070,000 4,844,000 4,279,000 3,598,000 2,963,000 2,522,000
Stockholder's equity 2,783,000 2,698,000 2,678,000 2,008,000 1,502,000 1,053,000
Long term debt 584,488 444,000 419,000 560,000 136,000 198,000
Shares outstanding 941,000 935,000 874,000 767,000 3,841,000 3,665,000
Earnings (loss) per share (1):
Continuing operations .07 .01 .35 .66 .56 .06
Discontinued Operations - - - - - (.54)
Extraordinary items - - - - - -
--------- --------- --------- --------- --------- ---------
Net Earnings (loss) per
share .07 .01 .35 .66 .56 (.48)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(1) Earnings per share calculations reflect 10-for-1 reverse stock split
in June, 1990 and 5-for-1 reverse split in November 1992.
14
<PAGE>
SECURITIES OF THE COMPANY
MARKET INFORMATION AND DIVIDENDS
The stock of the Company is traded over-the-counter primarily in the states
of California, Illinois, Florida, New York, Texas, and Utah. The Company's stock
is listed on the NASD Automated Quotation System (NASDAQ), under the symbol
DYNX. As of the 26th day of August, 1996 there were 1,174 record holders of the
stock of the Company and 945,423 shares of stock were outstanding. Provided
below is the price range of the Company's stock for the three most recent fiscal
years, and as of the record date. The referenced quotations reflect inter-dealer
prices without retail markup, markdown or commissions, and may not necessarily
represent actual transactions.
PRICE RANGE OF COMMON STOCK
Bid Prices
Calendar Year High Low
- ------------- ---- ---
1993 - 1st Quarter 2.80 1.90
1993 - 2nd Quarter 2.38 1.55
1993 - 3rd Quarter 7.00 3.25
1993 - 4th Quarter 6.13 5.13
1994 - 1st Quarter 6.00 5.25
1994 - 2nd Quarter 6.38 5.38
1994 - 3rd Quarter 7.00 6.25
1994 - 4th Quarter 7.38 6.75
1995 - 1st Quarter 7.50 7.00
1995 - 2nd Quarter 7.38 7.00
1995 - 3rd Quarter 7.75 6.50
1995 - 4th Quarter 6.50 6.25
August 26, 1996 4.00 4.00
The Company has paid no dividends on common stock during its two most
recent years, and has no present intention to pay dividends in calendar year
1996.
15
<PAGE>
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The Company's subsidiary, Softalk, Inc. maintains a royalty agreement for
patent and trade-mark rights on telephone accessories from WAC Research, a Utah
corporation. Donald M. Wood, CEO and director of the Company is the beneficial
owner of one-half of WAC Research. In August 1986, WAC Research, Inc. purchased
a 10% royalty right from the inventor of Softalk and related products in a
private transaction. This involved both cash and stock in a transaction valued
between one and two million dollars being paid to Practical Innovations, Inc.
At that time, WAC determined in conjunction with the Board of Directors of
Dynatec that the 10% royalty was onerous and not sustainable; therefore, WAC
agreed to lower the royalty to 5%.
It is anticipated that approximately $200,000 of royalties will be accrued
or paid to WAC Research in calendar year 1996. During the six month
transitional period ended December 31, 1995 Softalk, Inc. paid $70,000 to WAC
Research in payment of royalties.
Mr. Wood, the CEO and a Director of the Company, has guaranteed certain
bank lines of credit and an equipment loan of the Company. The balances owing
on the bank lines and loans at December 31, 1995 were $2,242,727. During the
six month transitional period ended December 31, 1995, the highest amount of the
bank lines and equipment notes was $2,242,727.
Mr. Wood, the CEO and a Director of the Company is the beneficial owner of
rental property in Park City, Utah which the Company leases on an annual basis.
The Company uses the property for travel, promotional work, lodging and
entertainment for customers, suppliers and employees. The total amount paid by
the Company for operating, maintenance and general care of the property for the
six month transitional period ended December 31, 1995 was $42,000.
During 1995, the Company sold all rights and interest in various
discontinued products to WAC Research for $150,000 in the form of a demand note
bearing 8% interest. As part of the transaction, inventory and molds were also
sold at cost to WAC. During calendar years 1996 and 1995, WAC assumed
responsibility for various travel and other expenses related to Dynatec.
Over the past several years WAC has entered into various agreements with
Dynatec including the reduction of royalties which has helped Dynatec increase
it's profitability and cash flow. In fact, WAC has significantly lowered
royalties in the past to accommodate Dynatec.
The royalty reduction, purchase of molds, rights and products, as well as
the assumption of expenses as explained above were done in an effort to increase
the profitability and/or cash flows of the Company. Management is currently
negotiating with WAC Research in regards to the disposition of these items.
Management is confident that a solution beneficial to the Company can be reached
with WAC.
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SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1997
must submit the same in writing so as to be received at the executive office of
the Company on or before January 1, 1997. Such proposals must also meet the
other requirements of the rules of the Securities & Exchange Commission relating
to stockholders' proposals.
ADDITIONAL INFORMATION
The Annual Report on Form 10-KSB for the six month transitional period
ending December 31, 1995 and fiscal years ending June 30, 1995, and 1994
including the financial statements, selected financial data, Management's
Discussion and analysis of financial condition, and schedules thereto, is hereby
incorporated by reference into this Proxy Statement. A copy of any of the above
mentioned documents are available without charge to stockholders upon written
request to the secretary of the Company, Dynatec International, Inc., 3820 West
Great Lakes Drive, Salt Lake City, Utah 84120.
17
<PAGE>
THE STATEMENTS IN THIS PROXY STATEMENT AND ACCOMPANYING MATERIALS ARE FOR
THE INFORMATION OF SHAREHOLDERS OF DYNATEC INTERNATIONAL, INC. THIS PROXY
STATEMENT AND ACCOMPANYING DOCUMENTS ARE NEITHER AN OFFER TO SELL NOR A
SOLICITATION OF OFFERS TO BUY ANY SECURITIES. NO ONE SHOULD BUY OR SELL ANY
SECURITY BY REASON OF ANY STATEMENT IN THIS PROXY STATEMENT, OR ANY ACCOMPANYING
MATERIALS.
DATED this 30th day of August, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
----------------------------------------
David J. White, Secretary
18
<PAGE>
DYNATEC INTERNATIONAL, INC.
3820 West Great Lakes Drive
Salt Lake City, UT 84120
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
NOVEMBER 12, 1996
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned shareholder(s) appoint(s) Donald M. Wood with power of
substitution, to represent and to vote on behalf of the undersigned, all of the
shares of Common Stock of Dynatec International, Inc., which the undersigned is
entitled to vote at the annual meeting of shareholders, to be held at the
Company headquarters, 3820 West Great Lakes Drive, Salt Lake City, Utah,
Tuesday, November 12, 1996 at 2:00 p.m., and at any adjournment thereof,
revoking all proxies heretofore given with respect to such stock, upon the
following proposals more fully described in the accompanying Proxy Statement,
receipt of which is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1) and (2).
1. ELECTION OF DIRECTORS
( ) For all nominees listed below (except as marked to the contrary below).
( ) Withhold authority to vote for all nominees listed below.
Donald M. Wood Fredrick R. Jack David J. White
Reed D. Newbold Frederick W. Volcansek
INSTRUCTION: (To withhold authority to vote for any individual nominee,
write the nominee's name on the space provided below).
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<PAGE>
2. PROPOSAL TO APPROVE THE APPOINTMENT of Kartchner & Purser as the independent
public accountants of the corporation.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. PROPOSAL TO APPROVE THE 1996 Employee Incentive Stock Option Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. In their discretion, the proxy is authorized to vote upon such other matters
as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. Where direction is not made, this proxy will be
voted for proposals 1, 2 and 3.
Please sign exactly as the name appears on the stock certificate as shown on the
label below. When shares are held by joint tenants, both should sign. When
signing as attorney, as executor, administrator, trustee or guardian, please
give title as such. When signing as a corporation, please sign in full
corporate name by President or other authorized officer. If you sign for a
partnership, please sign partnership name by an authorized person.
DATED this _________ day of ___________ 1996.
Our records indicate the following:
-----------------------------------
Signature
-----------------------------------
Signature (if held jointly)
PLEASE MARK, DATE, SIGN, AND RETURN THE PROXY BALLOT
PROMPTLY USING THE ENCLOSED ENVELOPE.
IF YOU ARE NOT IN AGREEMENT WITH THE INFORMATION ABOVE
PLEASE NOTE HERE.
