U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998
Commission file number: 0-12806
Dynatec International, Inc.
(Name of small business issuer in its charter)
Utah 87-0367267
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
3820 Great Lakes Drive
Salt Lake City, UT 84120
(Address of principal (Zip Code)
executive offices)
Issuer's telephone
number: (801) 973-9500
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock (Par Value $0.01 per share)
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 May 14, 1998, the Registrant had 2,780,112 shares of Common Stock
outstanding. The aggregate market value of voting stock held by non-affiliates
of the Company at May 14, 1998 was $20,728,768.
Transitional small business disclosure format. Yes__ No X
<PAGE>
INTRODUCTION
This Amendment No. 1 to the Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 1998, of Dynatec International, Inc. (the
"Company") is submitted to amend the following Items:
Part I - Financial Information
Item 1. Financial Statements (Incorporated by reference)
Item 2. Management's Discussion and Analysis
PART I. - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Reference is made to the attached Unaudited Consolidated Condensed
Financial Statements for the first quarter of calendar years 1998 and 1997.
These condensed financial statements are hereby incorporated by reference. The
information for the Company's first three months of calendar years 1998 and 1997
ended March 31, 1998 and 1997 is unaudited, but in the opinion of management
reflects all adjustments which are necessary for a fair presentation of
operations for such periods.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
For the quarter ended March 31, 1998, the Company generated total
revenues of $3,647,786 compared to total revenues of $2,554,618 in the prior
three month period ended March 31, 1997. Comparative period revenues increased
$1,093,168 or 43%.
Overall, the Company experienced net income of $103,878 for the first
quarter of 1998 compared to a net loss of $511,864 for the first quarter of
1997.
Telephone Accessories:
For the quarter ended March 31, 1998, there was an overall increase of
$254,997 (17%) in the revenues generated from the telephone accessory product
segment of the Company compared to total revenues for the quarter ended March
31, 1997. Although the sales mix for various shoulder rests changed slightly,
overall 1998 sales of shoulder rests remained fairly constant, increasing by
approximately $96,799 over 1997 sales. The remainder of the increase was
attributable to increased volume on sales of other telephone accessory products.
Hardware/Housewares:
The hardware/housewares products segment produced an increase in
revenues during the three month period ended March 31, 1998 of $189,151 or 23%
compared to the period ended March 31, 1997. During 1997, the Company introduced
several new drawer organizer products which have accounted for the majority of
the increase in the current year. Sales in this segment continue to grow as the
Company continues to aggressively market and expand the housewares product
lines.
Mass Market:
Sales in the mass market segment were $114,051 for the quarter ended
March 31, 1998 compared to $-0- for the quarter ended March 31, 1997. Virtually
all of the sales in this segment were to Dolgencorp, Inc. Historically, products
in this segment have consisted of cameras, audio cassette tapes, three piece
flashlights, and disposable lighters.
Flashlights:
Total sales in the flashlight segment were $190,941 compared to
$128,143 for the periods ended March 31, 1998 and 1997, respectively. In
February of 1998, Nordic Technologies, Inc. (Nordic), a wholly owned subsidiary
of the Company, signed a letter of intent setting forth terms and conditions to
form the basis of a joint venture/partnership with a flashlight supplier in
Taiwan. According to terms of this letter of intent, Nordic and the supplier
would each own 50% of the new company with Nordic occupying four of the seven
Board of Director seats of the new company. Other terms of the agreement are
still under negotiation.
<PAGE>
Telecommunications Headsets
Revenues in the telecommunication headset segment were $455,095 for the
quarter ending March 31, 1998 compared to $-0- for the same period in 1997. The
Company has been aggressively developing a line of telecommunications products
to include wired and wireless telephone headsets, telephones, conference
speakers, and other products. In first quarter 1998 initial orders for
telephonic amplifiers and headsets were filled with Lucent Technologies. The
Company has been able to secure pages in several catalogues of providers for
various office products which will be coming out during second and third
quarter.
Expenses
Overall gross margins of the Company for the quarters ending March 31, 1998
and 1997 were 37% and 30% , respectively. This overall increase in gross margin
is largely attributable to increased sales of telephone accessory and headset
products which have gross margins ranging from 35% to 50%.
The Company spent $33,200 and $136,154 in research and development expenses
for the quarters ending March 31, 1998 and 1997. Most of the research and
development expenses over these two periods was spent in developing the headset
and flashlight product lines. Research and development expenses have decreased
during 1998, as current year research and development efforts relate to product
enhancements as opposed to initial product development.
LIQUIDITY AND CAPITAL RESOURCES:
At March 31, 1998, the company experienced a net increase in its cash
position of $346,753 from December 31, 1997. The Company had a decrease in cash
from operations of $438,364. The majority of this decrease was caused by
increases in trade accounts receivable ($598,513) and inventory ($465,297)
offset by first quarter income. The increase in inventories was offset by a
corresponding increase in accounts payable of $238,221 for the same period. The
Company experienced a net increase in cash position resulting from the receipt
of funds ($940,000) pursuant to a Regulation S stock offering, as authorized by
the Board of Directors in March of 1997, partially offset by capital
expenditures of $167,478 in the quarter ending March 31, 1998. The Company
anticipates that the inventory and related payables will increase throughout
1998 as sales increase in the flashlight and telecommunication headset segments.
<PAGE>
Current assets increased from $5,092,374 at December 31, 1997 to $6,111,797
at March 31, 1998. Of this increase, approximately $465,297 reflects increases
in inventory which are offset by increases in accounts payable and the
obligation under a line of credit of $547,338 as the company prepares for
increased sales in calendar year 1998. Additionally, trade accounts receivable
also increased due to increased first quarter sales of approximately $168,323
over fourth quarter 1997.
Under the terms of a line-of credit agreement with a bank, the Company is
required to maintain certain financial covenants and ratios. The bank may
withdraw the line-of-credit upon default by the Company of various provisions in
the line-of-credit agreement. At March 31, 1997 the Company was not in
compliance with the provisions requiring a minimum current ratio of 1.5 to 1.
The ratio of total current assets to total current liabilities was 1.34 at March
31, 1998.
The Company has received a commitment letter from a financing institution
offering a new, larger line-of-credit to pay off the current line and to fund
future operations. In addition, the Board of Directors approved the terms of an
engagement letter with a financial services firm which provides for the
placement of $1,500,000 in convertible debentures and up to $10,000,000 in
common stock in the form of an equity line-of-credit.
In March 1998, the Company received $580,000 as a nonrefundable payment
under an agreement with a third party pursuant to which the third party acquired
nonexclusive rights to market certain of the Company's products internationally.
The cash paid to the Company was obtained from the sale of the Company's common
stock by such third party. The Company is therefore of the opinion that the
proceeds of such transaction were not attributable to the culmination of an
earnings process. Consequently, such proceeds have been accounted for as a
capital addition in the accompanying consolidated financial statements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on its behalf by
the undersigned hereunto duly authorized on the March 31, 1999.
DYNATEC INTERNATIONAL, INC.
/s/Frederick W. Volcansek, Sr.
-----------------------------------
Frederick W. Volcansek, Sr.
Chairman and Chief Executive Officer
/s/Paul A. Boyer
-----------------------------------
Paul A. Boyer
Senior Vice President-Chief Financial Officer
<PAGE>
DYNATEC INTERNATIONAL, INC.
CONDENSED FINANCIAL STATEMENTS
March 31, 1998 and 1997
<PAGE>
C O N T E N T S
Page
CONDENSED BALANCE SHEETS 3
CONDENSED STATEMENTS OF OPERATIONS 5
CONDENSED STATEMENTS OF CASH FLOWS 6
NOTES TO CONDENSED FINANCIAL STATEMENTS 8
<PAGE>
<TABLE>
<CAPTION>
DYNATEC INTERNATIONAL, INC.
Condensed Balance Sheets
March 31, 1998 and December 31, 1997
March 31, 1998 Dec. 31, 1997
ASSETS (Unaudited) (Audited)
------------------------------ ------------------------
(Restated-see Note2)
<S> <C> <C>
CURRENT ASSETS
Cash $ 679,647 $ 332,894
Trade accounts receivable, net of allowance for doubtful
accounts of $21,038 in 1998 and $29,684 in 1997 2,148,401 1,549,888
Related party and other receivables 53,520 426,131
Inventories (Note 2) 2,987,446 2,522,149
Prepaid expenses 226,468 234,120
Other 16,315 27,192
------------------------------ ------------------------
TOTAL CURRENT ASSETS 6,111,797 5,092,374
PROPERTY, PLANT AND EQUIPMENT, NET 3,941,811 3,941,587
OTHER ASSETS
Deposits 55,361 107,631
Intangible assets, net 251,633 267,825
------------------------------ ------------------------
TOTAL OTHER ASSETS 306,994 375,456
------------------------------ ------------------------
TOTAL ASSETS $ 10,360,602 $ 9,409,417
============================== ========================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
<PAGE>
<TABLE>
<CAPTION>
DYNATEC INTERNATIONAL, INC.
Condensed Balance Sheets (Continued)
March 31, 1998 and December 31, 1997
March 31, 1998 Dec. 31, 1997
LIABILITIES AND EQUITY (Unaudited) (Audited)
--------------------------- ---------------------------
(Restated-see Note2)
<S> <C> <C>
CURRENT LIABILITIES
Short-term note payable $ 1,653,873 $ 1,331,169
Current portion of long-term debt 745,845 1,003,477
Current portion of capital lease obligations 16,492 15,699
Accounts payable 1,230,853 992,632
Accounts payable-other 961,250 85,000
Accrued expenses 153,362 238,121
Accrued advertising 128,481 350,000
Accrued royalties payable 91,401 17,882
--------------------------- ---------------------------
TOTAL CURRENT LIABILITIES 4,981,557 4,033,980
LONG-TERM LIABILITIES
Long-term debt 1,899,259 1,994,355
Capital lease obligations 40,912 46,086
Deferred income taxes 5,036 5,036
--------------------------- ---------------------------
TOTAL LIABILITIES 6,926,764 6,079,457
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, authorized 100,000,000 shares
2,871,627 issued at March 31, 1998 and
2,859,940 issued at December 31, 1997 28,716 28,599
Treasury Stock, at cost, 91,515 shares (915,150) (915,150)
Additional paid-in capital 5,596,723 5,596,840
Accumulated deficit (1,276,451) (1,380,329)
--------------------------- ---------------------------
TOTAL STOCKHOLDERS' EQUITY 3,433,838 3,329,960
--------------------------- ---------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,360,602 $ 9,409,417
========================== =========================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements
<PAGE>
<TABLE>
<CAPTION>
DYNATEC INTERNATIONAL, INC.
Condensed Statements of Operations
For the Three Months ended March 31, 1998 and 1997
(Unaudited)
Three months Ended March Three months Ended
31,1998 March 31, 1997
--------------------------- --------------------------
(Restated-see Note 2)
<S> <C> <C>
REVENUE $ 3,647,786 $ 2,554,618
COST OF SALES 2,281,051 1,779,783
--------------------------- --------------------------
GROSS PROFIT 1,366,735 774,835
EXPENSES
Selling expenses 665,767 587,749
Research and development 33,200 136,154
General and administrative expenses 439,215 457,563
Provision for losses on accounts receivable - 5,000
--------------------------- --------------------------
TOTAL EXPENSES 1,138,182 1,186,466
--------------------------- --------------------------
OPERATING GAIN (LOSS) 228,553 (411,631)
OTHER INCOME/(EXPENSE)
Interest income 3,340 3,982
Interest expense (107,009) (103,715)
Loss on sale of asset (21,006) -
--------------------------- --------------------------
TOTAL OTHER EXPENSE (124,675) (99,733)
--------------------------- --------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 103,878 (511,364)
INCOME TAX EXPENSE (Note 6) - (500)
--------------------------- --------------------------
NET INCOME (LOSS) $ 103,878 $ (511,864)
=========================== ==========================
BASIC NET INCOME (LOSS) PER SHARE $ 0.04 $ (0.25)
========================== ==========================
DILUTED NET INCOME (LOSS) PER SHARE $ 0.03 $ (0.25)
========================== ==========================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
<TABLE>
<CAPTION>
DYNATEC INTERNATIONAL, INC.
Condensed Statements of Cash Flows
For the Three Months ended March 31, 1998 and 1997
(Unaudited)
Three months ended March Three months ended March
31, 1998 31, 1997
----------------------------- -----------------------------
(Restated-see Note2)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 103,878 $ (511,864)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation 87,333 110,670
Amortization 15,942 16,067
Loss on sale of assets 21,006 -
Provision for losses on accounts receivable - 5,000
Changes in operating assets and liabilities:
Trade accounts receivable (598,513) (391,145)
Related party and other accounts receivable 372,611 -
Inventories (465,297) (151,507)
Prepaid expenses 7,652 (15,719)
Other 10,877 6,500
Deposits 52,270 (30,290)
Accounts payable 238,221 401,658
Accounts payable-other (63,750) -
Accrued expenses (72,594) (62,725)
Accrued advertising (221,519) -
Accrued royalties payable 73,519 7,378
Income tax payable - 100
----------------------------- -----------------------------
NET CASH USED IN OPERATING ACTIVITIES $ (438,364) $ (615,877)
----------------------------- -----------------------------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
<TABLE>
<CAPTION>
DYNATEC INTERNATIONAL, INC.
Consdensed Statements of Cash Flows (Continued)
For the Three Months ended March 31, 1998 and 1997
(Unaudited)
Three Months ended March Three Months ended March
31, 1998 31, 1997
---------------------------- --------------------------
(Restated-see Note2)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of assets $ 47,000 $ -
Receivable from related parties - 60,876
Capital expenditures (167,478) (87,699)
---------------------------- --------------------------
NET CASH USED IN INVESTING ACTIVITIES (120,478) (26,823)
---------------------------- --------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit agreements 322,704 (372,215)
Increase in debt issuance costs - 3,255
Net borrowings (payments) on long-term debt (352,728) 339,811
Net payments on capital lease obligations (4,381) (6,808)
Proceeds from deposit for stock issuance 940,000 -
Issuance of Stock pursuant to Regulation S offerings - 500,000
---------------------------- --------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 905,595 464,043
---------------------------- --------------------------
INCREASE (DECREASE) IN CASH 346,753 (178,657)
CASH AT BEGINNING OF PERIOD 332,894 240,145
--------------------------- --------------------------
CASH AT END OF PERIOD $ 679,647 $ 61,488
=========================== ==========================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest $ 118,818 $ 93,587
Cash paid for income taxes - 400
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
DYNATEC INTERNATIONAL, INC.
Notes to Condensed Financial Statements
For the Three Months Ended March 31, 1998 and 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited, condensed financial statements
have been prepared in accordance with the instructions to
Form 10-QSB, and therefore, do not include all information
and footnotes necessary for a complete presentation of the
results of operations, the financial position, and cash
flows, in conformity with generally accepted accounting
principles. This report on Form 10-QSB for the three months
ended March 31, 1998 should be read in conjunction with the
Company's annual report on form 10-KSB for the year ended
December 31, 1997.
The accompanying unaudited condensed consolidated financial
balance sheets, statements of operations and cash flows
reflect all normal recurring adjustments which are, in
management's opinion, necessary for a fair presentation of
the Company's financial position, results of operation, and
cash flows. The results of operations for the interim period
ended March 27, 1998 are not necessarily indicative of the
results to be expected for the full year.
NOTE 2 - RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION
In March 1998, the Company received $580,000 as a
nonrefundable payment under an agreement with a third party
pursuant to which the third party acquired nonexclusive
rights to market certain of the Company's products
internationally. The cash paid to the Company was obtained
from the sale of the Company's common stock by such third
party. The Company is therefore of the opinion that the
proceeds of such transaction were not attributable to the
culmination of an earnings process. Consequently, such
proceeds have been accounted for as a capital addition in
the accompanying consolidated financial statements.
The following table outlines the revisions to the previously
reported condensed consolidated financial statements:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
------------------------------------------
As Restated As Previously Reported
------------- -----------------------
(Unaudited)
<S> <C> <C>
Product Revenue....................................... $3,647,786 $4,227,786
Gross profit.......................................... 1,366,735 1,946,735
Operating gain........................................ 228,553 808,553
Income from operations................................ 103,878 683,878
Net income............................................ 103,878 683,878
Basic net income per share............................ 0.04 0.25
Diluted net income per share.......................... 0.03 0.20
</TABLE>
<PAGE>
NOTE 2 - RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
-------------------------------------------
As Restated As Previously Reported
--------------- ----------------------
(Unaudited)
<S> <C> <C>
Related party and other receivables................... $ 53,520 $ 633,520
Accumulated deficit................................... (1,276,451) (696,451)
Total stockholders' equity............................ 3,433,838 4,013,838
</TABLE>
NOTE 3 - INVENTORIES
Effective January 31, 1998, the Company changed its method
of determining the cost of inventory from last-in, first-out
(LIFO) to first-in, first-out (FIFO). Historically, the
difference between the LIFO and current costs of inventories
has been immaterial.
Inventories, consisting principally of telephone accessory,
hardware/houseware, flashlights, telecommunication headsets,
and other miscellaneous products sold to mass market
merchandisers as of March 31, 1998 and December 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
----------- ------------
<S> <C> <C>
Raw $ 1,185,819 $ 831,483
Finished 1,801,627 1,690,666
------------ -------------
$ 2,987,446 $ 2,522,149
=========== ============
</TABLE>
NOTE 4 - NET EARNINGS PER SHARE
On December 31, 1997, the Company adopted the provisions of
FAS No. 128, Earnings Per Share. FAS 128 requires the
presentation of both basic and diluted earnings per share
(EPS). Basic EPS is the amount of net income or loss divided
by the weighted average number of shares of common stock
outstanding. Diluted EPS is the amount of income or loss for
the period divided by the weighted average number of shares
plus all potentially dilutive common shares.
<PAGE>
NOTE 4 - NET EARNINGS PER SHARE (Continued)
In calculating EPS, the earnings were the same for both the
basic and diluted calculation. The effect of common stock
options is not included in the 1997 calculation as such
options would be anti-dilutive. A reconciliation between the
basic and diluted weighted-average number of shares
outstanding as of March 31, 1998 and 1997 is summarized as
follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- -----------------
(Restated-see Note 2)
<S> <C> <C>
Basic weighted-average number of shares 2,779,982 2,047,982
Weighted-average number of common stock options 583,429 -
============================ =================
Diluted weighted-average number of shares 3,363,411 2,047,982
============================ =================
</TABLE>
NOTE 5 - YEAR 2000
During 1997, the Company developed a plan to deal with the
Year 2000 problem and began converting its computer systems
to be Year 2000 compliant. During the fourth quarter of 1997
and the first quarter of 1998, the Company began converting
to a new accounting and materials resource planning software
program. The Year 2000 problem is the result of the computer
programs being written using two digits rather than four to
define the applicable year. The Company is capitalizing
costs associated with the new software as the new software
is being implemented to provide better inventory tracking
and accounting controls. All other system changes are being
expensed as incurred. The Company does not anticipate any
year 2000 compliance problems.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Financial Accounting Standards No. 130
(SFAS 130), Reporting Comprehensive Income, effective
January 1, 1998. SFAS 130 establishes standards for
reporting and displaying comprehensive earnings and its
components in financial statements. As of March 31, 1998,
the Company has no items to report as components of
comprehensive income.
NOTE 7 - INCOME TAXES
The Company has net operating loss carryforwards from prior
years which will exceed the income generated in the first
quarter of 1998. The deferred tax asset related to these
carryfowards was fully reserved for as of December 31, 1997.
Accordingly, no income tax expense is being reported for the
period ended March 31, 1998.
<PAGE>
NOTE 8 - STOCKHOLDERS' EQUITY
As of March 31, 1998, $940,000 in funds, which is included
in accounts payable-other in the accompanying condensed
balance sheet, has been received in anticipation of future
Regulation S common stock offerings as approved by the Board
of Directors in March 1997. The terms and agreements for
these stock offerings are still under negotiation.
Regulation S stock is typically sold at a significant
discount from market value because of its restricted nature.
NOTE 9 - STOCK OPTIONS
A summary of stock options is as follows for the period ended March 31,
1998:
<TABLE>
<CAPTION>
FIXED OPTIONS: Shares
(Restated-see
Note 2) Exercise
(000's) Price
--------------- -------------
<S> <C> <C>
Outstanding at December 31, 1997 934 $2.50
Exercised (12) $2.50
===============
Outstanding at March 31, 1998 922 Various
===============
Options exercisable at March 31, 1998 184 $2.50
===============
Weighted average fair value of
options granted during first quarter... $0.00
Weighted average remaining
contractual life for exercisable
options at March 31, 1998 3.9 years
</TABLE>
<TABLE>
<CAPTION>
VARIABLE OPTIONS: Shares
(Restated-see
Note 2) Exercise
(000's) Price
--------------- -------------
<S> <C> <C>
Outstanding at December 31, 1997 945 $2.50
---------------
Outstanding at March 31, 1998 945 Various
===============
Weighted average fair value of
options granted during first quarter... $0.00
</TABLE>
<PAGE>
NOTE 10 - OTHER
In February of 1998, the Company's subsidiary, Nordic
Technologies, Inc. (Nordic), signed a letter of intent setting
forth terms and conditions to form the basis of a joint
venture/partnership with a flashlight supplier in Taiwan.
According to terms of this letter of intent, Nordic and the
supplier would each own 50% of the new company with Nordic
occupying four of the seven Board of Director seats of the new
company. Other terms of the agreement are still under
negotiation.
On April 2, 1998, the Board of Directors approved the terms of
an engagement letter with a financial services firm which
provides for the placement of $1,500,000 of Company
convertible debentures and up to $10,000,000 in common stock
in the form of an equity line of credit. Additionally, the
Company has received a commitment letter from a financing
institution offering a new, larger line-of-credit to pay off
the current line and to fund future operations.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
[TYPE] EX-27
<ARTICLE> 5
<CIK> 0000752208
<NAME> DYNATEC INTERNATIONAL, INC.
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 679,647
<SECURITIES> 0
<RECEIVABLES> 2,169,439
<ALLOWANCES> (21,038)
<INVENTORY> 2,987,446
<CURRENT-ASSETS> 6,111,797
<PP&E> 3,941,811
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,360,602
<CURRENT-LIABILITIES> 4,981,557
<BONDS> 0
0
0
<COMMON> 28,716
<OTHER-SE> 3,405,122
<TOTAL-LIABILITY-AND-EQUITY> 10,360,602
<SALES> 3,647,786
<TOTAL-REVENUES> 3,647,786
<CGS> 2,281,051
<TOTAL-COSTS> 3,419,233
<OTHER-EXPENSES> 124,675
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,009
<INCOME-PRETAX> 103,878
<INCOME-TAX> 0
<INCOME-CONTINUING> 103,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,878
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.03
</TABLE>
