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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 period ended August 31, 2000.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-16250
DYNATEM, INC.
(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) (Zip Code)
Issuer's telephone number (949) 855-3235
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 August 31, 2000, 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
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at August 31, 2000
and May 31, 2000 1
Statements of Operations for the Three
Months Ended August 31, 2000
and 1999 2
Statements of Cash Flows for the Three
Months Ended August 31, 2000
and 1999 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis or
Plan of Operation 5,6
Part II. Other Information 7
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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DYNATEM, INC.
BALANCE SHEETS
August 31, May 31,
2000 2000
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(Unaudited) (Audited)
ASSETS
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Current assets:
Cash and cash equivalents $ 158,775 $ 265,265
Accounts receivable, net 191,972 334,173
Inventories (note 2) 715,257 459,434
Prepaid expenses 10,104 22,647
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Total current assets 1,076,108 1,081,519
Note receivable 1,526 2,046
Property and equipment, net 39,909 41,516
Other assets 48,872 32,042
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$ 1,166,415 $ 1,157,123
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
Accounts payable $ 236,839 $ 209,556
Accrued expenses 74,622 71,689
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Total current liabilities 311,461 281,245
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Shareholders' equity:
Common stock, no par value, 50,000,000
authorized shares; 1,418,400 shares
issued and outstanding 2,383,385 2,383,385
Accumulated deficit (1,528,431) (1,507,507)
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Total shareholders' equity 854,954 875,878
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$ 1,166,415 $ 1,157,123
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See accompanying notes to financial statements.
1
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DYNATEM, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended August 31, 2000 and 1999
2000 1999
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Net sales $ 426,757 $ 323,675
Cost of sales 270,266 233,939
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Gross profit 156,491 89,736
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Operating expenses:
Selling, general and administrative 129,417 135,477
Research and development 51,598 45,147
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Total operating expenses 181,015 180,624
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Operating loss (24,524) (90,888)
Other income, net 3,600 3,082
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Loss before income taxes (20,924) (87,806)
Provision for income taxes - -
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Net loss $ (20,924) $ (87,806)
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Loss per share (note 3) $ (.01) $ (.06)
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Weighted average common shares outstanding
(note 3) 1,418,400 1,418,400
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See accompanying notes to financial statements.
2
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DYNATEM, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended August 31, 2000 and 1999
2000 1999
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Cash flows from operating activities:
Net loss $ (20,924) $ (87,806)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 1,607 2,371
Changes in operating assets
and liabilities:
Accounts receivables 142,201 (19,066)
Inventories (255,823) 36,731
Prepaid expenses 12,543 6,331
Accounts payable 27,283 55,553
Accrued expenses 2,933 5,319
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Total adjustments (69,256) 87,239
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Net cash used in operating activities (90,180) (567)
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Cash flows from investing activities:
Increase in other assets (16,830) (15,767)
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Cash flows from financing activities:
Repayment of notes receivable 520 390
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Net decrease in cash and cash equivalents (106,490) (15,944)
Cash and cash equivalents, beginning balance 265,265 434,091
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Cash and cash equivalents, ending balance $ 158,775 $ 418,147
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Supplemental disclosures of
cash flow information:
Cash paid during the quarter for:
Income taxes $ - $ -
========= =========
See accompanying notes to financial statements.
3
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DYNATEM INC.
Notes to Financial Statements
(1) Interim Accounting Policy
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In the opinion of the Company's management, the accompanying unaudited
statements include all adjustments including only normal recurring
adjustments necessary for a fair presentation of the financial position of
the Company as of August 31, 2000, and the results of operations and cash
flows for the three months ended August 31, 2000 and 1999. Although the
Company believes that the disclosures in these financial statements are
adequate to make the information presented 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
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A summary of inventories follows:
August 31, 2000 May 31,2000
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Finished goods $ 28,610 $ 15,553
Work-in-process 207,425 132,472
Raw materials 479,222 311,409
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$ 715,257 $ 459,434
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(3) Earnings (loss) Per Share
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Earnings (loss) per common share is computed based on the weighted average
number of common shares outstanding during the period presented. The
potential exercise of stock options and warrants are not included in the
computation of net income (loss) per share because the effect would not
impact per share information or would be antidilutive.
(4) Foreign Currency Transactions
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For the three months ended August 31, 2000 and 1999, transactions gains and
losses are not material to the financial statements taken as a whole.
4
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DYNATEM, INC.
Item 2. Management's Discussion and Analysis or Plan of Operation
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Revenues for the first quarter ended August 31, 2000 and 1999 were $426,757 and
$323,675, respectively. The increase is the result of an increased demand in the
market for the DRC1 product.
Cost of sales for the three months ended August 31, 2000, was $270,266 or 63% of
net sales and compares to $233,939 or 72% of net sales in the same period a year
ago. The decrease in cost of sales as a percent of net sales was the result of
improved margins of the DRC1 and other related products.
Operating expenses for the three months ended August 31, 2000 were $129,417
compared to $135,477 in the same period a year ago. The decrease of 4% is
attributable to the cost reduction program initiated by the Company since last
year, which is still in effect in some departments.
Research and development expenses were $51,598 and $45,147 for the three months
ended August 31, 2000 and 1999, respectively. These expenses are related to the
continued development of the DRC1 and new VME products such as the DPC2 boards
and the D2070 boards.
The results of operations for the three months ended August 31, 2000 and 1999,
reflect net losses of $20,924 and $87,806, respectively. The loss this quarter
is the result of delays in scheduled shipment of approximately $290,000 in
product sales out of our $1.412M backlog, due to some delayed delivery of
component parts.
Income tax expense for the three months ended August 31, 2000 and 1999 are not
considered material due to losses incurred during such periods. Utilization of
net operating loss carry forwards will expire in various years through 2020.
Inventory for the three months ended August 31, 2000 was $715,257 compared to
$376,108 in the same period a year ago. The increase relates to stocking of some
hard-to-obtain allocated component parts. The strong economy has led to long
lead times for some semiconductor devices and other parts. Obtaining the
necessary electronic components from which to fabricate our products has become
a challenge for the Company, given its relatively small size.
5
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DYNATEM, INC.
The Company is in the process of obtaining a credit line to meet its short-term
working capital needs over the next 12 months.
At August 31, 2000, the Company had a current ratio of 3.45:1 compared to a
ratio of 3.85:1 at May 31, 2000. The decrease is due to the slight increase in
payables, due to the purchase of hard-to-obtain highly allocated inventory
components. The net worth of the Company at August 31, 2000 was $854,954,
compared to $875,878 as of May 31, 2000.
6
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DYNATEM, INC.
PART II. OTHER INFORMATION
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Items 1 through 5 have been omitted because there is nothing material to report
and there has been no report on Form 8-K during the quarter ended August 31,
2000.
SIGNATURES
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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.
October 9, 2000 By: /s/ Eileen DeSwert
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Eileen DeSwert, President and
Chief Executive Officer
October 9, 2000 By: /s/ Belen Ramos
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Belen Ramos, Chief Financial
Officer
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