<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIODS ENDED NOVEMBER 30, 1995.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-16250
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DYNATEM, INC.
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(Exact name of small business issuer as
specified in its charter)
CALIFORNIA 95-3627099
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23263 MADERO, SUITE C, MISSION VIEJO, CALIFORNIA 92691
- ------------------------------------------------------
(Address of principal executive offices)
(714) 855-3235
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(Issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
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
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On December 31, 1995, there were 1,418,400 shares of the issuer's Common
Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
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DYNATEM, INC.
INDEX
<TABLE>
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at November 30, 1995
and May 31, 1995 1
Statements of Operations for the Three
Months Ended November 30, 1995
and 1994 2
Statements of Operations for the Six
Months Ended November 30, 1995
and 1994 3
Statements of Cash Flows for the Six
Months Ended November 30, 1995
and 1994 4
Notes to Financial Statements 5,6
Item 2. Management's Discussion and Analysis or
Plan of Operation 7
Part II. Other Information 8
</TABLE>
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DYNATEM, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
1995 1995
------------ -----------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 486,615 $ 497,611
Accounts receivable 458,749 245,283
Inventories (note 2) 273,440 258,651
Prepaid expenses 2,002 9,799
----------- -----------
Total current assets $ 1,220,806 $ 1,011,344
----------- -----------
Note Receivable 12,555 13,985
Plant and equipment, net 30,944 40,253
Other assets 70,744 39,155
----------- -----------
$ 1,335,049 $ 1,104,737
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 381,913 $ 127,809
Accrued expenses 53,450 47,381
----------- -----------
Total current liabilities $ 435,363 $ 175,190
----------- -----------
Shareholders' equity:
Common stock, no par value authorized
50,000,000 shares; issued 1,418,400 shares
at November 30, 1995 and May 31, 1995 $ 2,383,385 $ 2,383,385
Accumulated deficit (1,483,699) (1,453,838)
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Total shareholders' equity 899,686 929,547
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$ 1,335,049 $ 1,104,737
=========== ===========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
DYNATEM, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Net Sales $ 613,718 $ 578,217
Cost of Sales 460,495 425,832
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Gross profit 153,223 152,385
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Operating expenses:
Selling, general and administrative 166,629 151,470
Research and development 41,080 29,713
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Total operating expenses 207,709 181,183
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Operating loss (54,486) (28,798)
Other income, net 2,785 2,173
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Net loss $ (51,701) $ (26,625)
========== ==========
Loss per share (note 3) $ (.04) $ (.02)
========== ==========
Weighted average shares outstanding (note 3) 1,418,400 1,418,400
========== ==========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
DYNATEM, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Net Sales $1,401,139 $1,296,675
Cost of Sales 1,046,945 933,243
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Gross profit 354,194 363,432
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Operating expenses:
Selling, general and administrative 322,036 298,842
Research and development 67,680 64,836
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Total operating expenses 389,716 363,678
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Operating loss (35,522) (246)
Other income, net 6,461 4,466
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Net income (loss) before taxes (29,061) 4,220
Provision for income taxes 800 800
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Net income (loss) (29,861) $ 3,420
========== ==========
Earnings (loss) per share (note 3) $ (.03) $ .01
========== ==========
Weighted average shares outstanding
(note 3) 1,418,400 1,418,400
========== ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
DYNATEM, INC.
STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (29,861) $ 3,420
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 9,309 8,279
Change in assets and liabilities:
<Increase> in receivables (213,466) (43,985)
<Increase> decrease in inventories (14,789) 66,740
Decrease in prepaid expenses 7,797 2,413
<Increase> in other assets (31,589) (13,337)
Increase in accounts payable 254,104 94,718
Increase in accrued expenses 6,069 6,172
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Total adjustments 17,435 121,000
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Net cash provided by (used in)
operating activities (12,426) 124,420
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Cash flows from investing activities:
Equipment additions (5,231)
Repayment of notes receivable 1,430 1,430
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Net cash used in investing activities 1,430 (3,801)
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Net increase <decrease> in cash $ (10,996) $ 120,619
Cash, beginning balance 497,611 298,410
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Cash, ending balance $ 486,615 $ 419,029
========= =========
Supplemental disclosures of
cash flow information:
Cash paid during the quarter for:
Taxes $ - $ 800
========= =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
DYNATEM, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Interim Accounting Policy
-------------------------
In the opinion of the Company's management, the accompanying unaudited
statements include only normal recurring adjustments necessary for a fair
presentation of the Company's financial position and the results of
operations and cash flows for the three and six months ended November 30,
1995 and 1994. Although the Company believes that the disclosures in these
financial statements are adequate to ensure that the information presented
is not misleading, certain information and footnote information normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
the rules and regulations of the Securities and Exchange Commission.
Results of operations for interim periods are not necessarily indicative of
results of operations to be expected for the full year.
(2) Inventories
-----------
A summary of inventories follows:
<TABLE>
<CAPTION>
May 31, 1995 November 30, 1995
------------ -----------------
<S> <C> <C>
Finished Goods $ 40,641 $ 39,300
Work-in-process 70,604 31,024
Raw Materials 147,406 203,116
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$258,651 $273,440
======== ========
</TABLE>
(3) Earnings (loss) Per Share
-------------------------
Earnings (loss) per common share is computed based on the weighted average
number of common shares outstanding during the periods presented. The
potential exercise of stock options and warrants are not included in the
computation of net income (loss) per share because their effect would not
impact per share information or would be antidilutive.
(4) Foreign Currency transactions
-----------------------------
For the six months ended November 30, 1995, transactions gains and losses
contributed to the drop of the gross margin due to the higher exchange rate
of the German DeutschMark versus the U.S. Dollar representing a 3% increase
in the cost of sales as compared to the prior year ended November 30,
1994.
5
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DYNATEM, INC.
(5) Income taxes
------------
Income tax expense for the six months ended November 30, 1995 and 1994 are
not considered material due to the utilization of net operating loss
carryforwards.
Significant deferred tax assets of the Company consist of the net operating
loss carryforwards for federal and state tax purposes of approximately
$1,647,000 and $187,000 at November 30, 1995, respectively.
(6) Concentration of Credit Risk
----------------------------
During the six months ended November 30, 1995 and 1994, one customer
accounted for 38% and 42% of sales, respectively. In addition, one
supplier represented 60% and 49% of total purchases of inventory,
respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Revenue for the three months ended November 30, 1995, was $613,718, $35,501
higher than the same period a year ago for an increase of 6%. For the six months
ended November 30, 1995, net sales were $1,401,139, $104,464 higher than the
corresponding period in the previous fiscal year, for an increase of 8%.
The Company attributes this modest sales increase to revenues earned on the CDC
and Zetec contracts which amounted to approximately $644,568 during the six
months ended November 30, 1995. Net sales of the OR products in the six months
ended November 30, 1995, were 78% of total net sales compared to 67% of total
net sales for the same period the previous year.
Cost of sales for the three months ended November 30, 1995, was $460,495 or 75%
of net sales and compares to $425,832 or 74% of net sales in the same period a
year ago. For the six months ended November 30, 1995, cost of sales of
$1,046,945 represented 75% of net sales and compares to $933,243 and 72% for the
same period a year ago. The increase in the cost of sales as a percentage of net
sales is the result of a higher sales volume of the distributed products coupled
with a lower exchange rate of the U.S. Dollar against the DeutschMark, and in
part, higher cost of the product mix. The Company realizes a lower margin from
sales of OR products than from sales of products manufactured by the Company.
Operating costs for the three-month and six-month period ended November 30,
1995, were slightly higher than the corresponding periods a year ago. The
increase was due in large part to the advertising expenses, trade shows, and
other marketing expenses related to OR sales, as well as research and
development expenses for the Company's own proprietary products.
The three-month and six-month period ended November 30, 1995, reflect net losses
of $51,701 and $29,861 respectively, compared to a net loss of $26,625 and a net
profit of $3,420 for the corresponding periods a year ago. The changes in
operating results for the three-month and six-month periods ended November 30,
1995, were the result of a combination of factors as explained above.
At November 30, 1995, the Company had a current ratio of 2.8:1 compared to 3.3:1
as of May 31, 1995. The net worth for the Company at November 30, 1995, was
$899,686 compared to $824,920 at November 30, 1994. Management believes its
present working capital will be sufficient for the Company's existing operating
activities.
7
<PAGE>
PART II. OTHER INFORMATION
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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On October 6, 1995, the Company held its annual meeting of shareholders. In
addition to the election of directors, the shareholders approved the appointment
of the accounting firm of Corbin & Wertz as its independent auditors for the
fiscal year ending May 31, 1996. There were 994,432 votes case in favor of the
appointment and no votes were withheld or voted against such appointment.
The tabulation of the votes cast for and against each director are set forth
opposite their names below. There were no abstentions.
<TABLE>
<CAPTION>
DIRECTORS YES NO
- --------- ------- ------
<S> <C> <C>
Robert Anslow 994,432 0
Harry Cavanaugh 994,432 0
Eileen DeSwert 994,432 0
Richard Jackson 994,432 0
Costis Toregas 994,432 0
</TABLE>
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DYNATEM, INC.
January 11, 1995 By:
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Eileen DeSwert
President and Chief
Executive Officer
January 11, 1995 By:
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Belen Ramos
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> MAY-31-1995 NOV-30-1995
<PERIOD-START> JUN-01-1995 SEP-01-1995
<PERIOD-END> NOV-30-1995 NOV-30-1995
<CASH> 497,611 486,615
<SECURITIES> 0 0
<RECEIVABLES> 245,283 458,749
<ALLOWANCES> 0 0
<INVENTORY> 258,651 273,440
<CURRENT-ASSETS> 1,011,344 1,220,806
<PP&E> 40,253 30,944
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,104,737 1,335,049
<CURRENT-LIABILITIES> 175,190 435,363
<BONDS> 0 0
<COMMON> 2,383,385 2,383,385
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,104,737 1,335,069
<SALES> 1,401,139 613,718
<TOTAL-REVENUES> 1,401,139 613,718
<CGS> 1,046,945 460,495
<TOTAL-COSTS> 1,046,945 460,495
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (29,061) (51,701)
<INCOME-TAX> 800 0
<INCOME-CONTINUING> (29,861) (51,701)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (29,861) (51,701)
<EPS-PRIMARY> (0.03) (0.04)
<EPS-DILUTED> 0 0
</TABLE>
