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Previous: AUSTRIA FUND INC, N-30D, 1995-05-02 |
Next: GEOTEK COMMUNICATIONS INC, 10-K405/A, 1995-05-02 |
<PAGE> 1
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Ouarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended: March 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number: 0-17385
DYNA GROUP INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0404753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 W. 16th Street, Broadview, Illinois 60153
(Address of principal executive offices) (Zip Code)
708 - 450-9200
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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.
[ X ] Yes [ ] No
The number of shares outstanding of the registrant's common stock as of
March 31, 1995 was 7,431,647.
<PAGE> 2
Page 2
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
------ 1995 1994
-------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 139,603 $ 305,610
Accounts receivable, less allowance
for doubtful accounts of $92,000 1,780,208 1,915,466
Inventories 2,806,938 2,379,669
Prepaid expenses and other 220,586 111,589
Deferred tax assets 71,660 71,660
------------ ------------
5,018,995 4,783,994
------------ ------------
PROPERTY AND EQUIPMENT, less
accumulated depreciation of
$1,723,289 and $1,661,778 1,100,820 1,060,108
------------ ------------
OTHER ASSETS:
Cost in excess of net assets of acquired
business, less accumulated amortization
of $86,054 and $81,084 49,698 54,668
Investment in joint venture 18,140 25,490
Due from joint venture 93,648 39,441
Other 91,560 76,085
------------ ------------
253,046 195,684
------------ ------------
$ 6,372,861 $ 6,039,786
============ ============
</TABLE>
See accompanying notes.
<PAGE> 3
Page 3
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES AND March 31, December 31,
--------------- 1995 1994
STOCKHOLDERS EQUITY -------- -----------
------------------- (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable to banks $ 950,000 $ 740,000
Notes payable related party 500,000 500,000
Accounts payable 775,047 648,650
Accrued expenses 445,898 481,829
Current maturities of long-term debt 145,480 145,480
----------- -----------
2,816,425 2,515,959
----------- -----------
LONG-TERM DEBT BANK: 801,351 835,197
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value - authorized,
100,000,000 shares; issued 8,179,704 8,180 8,180
Capital in excess of par value 944,574 944,574
Retained earnings 1,974,118 1,859,135
Treasury stock - 748,057 and
684,057 (151,607) (100,196)
Unearned compensation (20,180) (23,063)
----------- -----------
2,755,085 2,688,630
----------- -----------
$ 6,372,861 $ 6,039,786
=========== ===========
</TABLE>
See accompanying notes.
<PAGE> 4
Page 4
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------
1995 1994
---- ----
<S> <C> <C>
NET SALES $ 2,040,439 $ 2,006,691
COST OF SALES 1,029,298 1,122,563
----------- -----------
Gross profit 1,011,141 884,128
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 774,129 733,558
----------- -----------
Operating income 237,012 150,570
INTEREST EXPENSE 44,206 38,057
----------- -----------
LOSS FROM JOINT VENTURE (7,350) ----
----------- -----------
Income from operations
before income taxes 185,456 112,513
PROVISION FOR INCOME TAXES 70,473 42,980
----------- -----------
Income from continuing
operations 114,983 69,533
----------- -----------
NET INCOME $ 114,983 $ 69,533
=========== ===========
INCOME PER COMMON SHARE $ .02 $ .01
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,496,814 7,432,990
</TABLE>
See accompanying notes.
<PAGE> 5
Page 5
DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994
---- ----
<S> <C> <C>
Income from continuing operations $ 114,983 $ 69,533
Adjustments to reconcile income from
continuing operations to net cash used
by operating activities -
Depreciation and amortization 66,481 63,680
Provision for losses on accounts receivable ---------- ---------
Amortization of unearned compensation 2,883 1,388
Other ---------- 9,962
Loss from joint venture 7,350 ---------
Change in assets and liabilities:
Decrease in accounts receivable 135,258 618,986
Increase in inventories (427,269) (132,085)
Decrease (increase) in prepaid expenses and other (108,997) 15,444
Increase in accounts payable 126,397 49,171
Decrease in accrued expenses (35,931) (72,370)
Increase in other assets (39,682) (6,310)
---------- --------
Cash (used) provided by operating activities (158,527) 617,399
---------- --------
CASH FL0WS FR0M INVESTING ACTIVITIES:
Capital expenditures (102,223) (92,679)
---------- --------
Cash used by investing activities (102,223) (92,679)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (33,846) (8,030)
Increase (decrease) in notes payable 210,000 (701,000)
Advance to joint venture (30,000) ----
Repurchase common stock (51,411) ----
---------- --------
Cash provided (used) by financing activities 94,743 (709,030)
---------- --------
DECREASE IN CASH (166,007) (184,310)
CASH, beginning of period 305,610 290,870
---------- --------
CASH, end of period $ 139,603 $ 106,560
=========== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest $ 42,485 $ 28,095
Income Taxes 90,273 41,894
</TABLE>
See accompanying notes.
<PAGE> 6
Page 6
DYNA GROUP INTERNATI0NAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL INFORMATION
The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to or as permitted by such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the consolidated financial statements and footnotes
thereto contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
The financial information included herein at March 31, 1995 and for the
three months ended March 31, 1995 and March 31, 1994 is unaudited and, in the
opinion of the Company, reflects all adjustments (which includes only normal
recurring adjustments) necessary for the fair presentation of financial position
as of that date and the results of operations for those periods. The information
in the consolidated balance sheet as of December 31, 1994 was derived from the
Company's audited financial statements for 1994.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Raw materials and work in process $ 1,315,967 $ 839,827
Finished goods 1,490,970 1,539,842
------------ -----------
$ 2,806,937 $ 2,379,669
============ ===========
</TABLE>
NOTE 3 - NOTES PAYABLE
The Company has an agreement with a bank that provides for maximum
aggregate borrowing of $2,750,000 on qualified accounts receivable and
inventories as defined. This debt is represented by a revolving credit note with
a due date of June 30, 1995, and with interest payable at prime plus 3/4 percent
(9.75% at March 31, 1995). The note is collateralized by accounts receivable and
inventory. The Company was in compliance with all of its bank covenants at March
31, 1995. The Company anticipates renewing this agreement.
<PAGE> 7
Page 7
DYNA GROUP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - NOTE PAYABLE TO RELATED PARTY
In December 1994, the Company borrowed $560,000 from a bank to repay the
long-term debt due to the major stockholder, concurrently the major stockholder
loaned the Company $500,000 as evidenced by a promissory note due December 14,
1995 with interest at prime plus 1/2 percent (9.5% at March 31, 1995). The
proceeds from this loan were used to reduce current indebtedness to the bank.
NOTE 5 - INCOME TAXES
The provision for income taxes from continuing operations for the
quarters ended March 31, 1995 and March 31, 1994 reflect the Company's estimated
effective income tax rate for the full year. These effective rates differed
from the federal statuory income tax rate primarily because of the graduated
federal income tax rate structure.
NOTE 6 - LONG-TERM DEBT
In September 1993, the Company borrowed $465,159, with interest at
7.74%, secured by land and building, and payable in monthly installments of
$5,580 for principal and interest, through September 17, 1998, at which time the
balance of the principal is due. The proceeds from this borrowing were used to
repay the previous 9% first mortgage loan. The outstanding balance on this debt
was $414,367 at March 31, 1995.
In December 1994, the Company borrowed $560,000, secured by a personal
investment account of the major stockholder, and a second mortgage on the land
and building. This note is payable in monthly installments of $9,333 plus
interest at prime plus 1/2% (9.5% at March 31, 1995) through December 14, 1999.
The proceeds from this note were used to retire the long-term indebtedness of
$536,211 to the major stockholder. The outstanding balance on this debt was
$532,000 at March 31, 1995.
NOTE 7 - STOCKHOLDERS' EQUITY
During the first quarter of 1995 the Company repurchased 64,000 shares
of stock for its treasury at a cost of $51,411.
<PAGE> 8
Page 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Company's working capital ratio declined to approximately 1.8 to 1,
net cash in bank decreased by $166,007.
Operating activities used $158,527. Income from operations and non-cash
adjustments provided $191,697. Changes in net working capital items and other
assets used $350,224. Net working capital decreased primarily as a result of
increases in inventory and prepaid expenses. These increases are the result of
new product introductions and in anticipation of future sale requirements. This
use of cash was in part offset by a moderate decrease in accounts receivable and
a moderate increase in accounts payable. Capital expenditures, primarily dies
and molds used $102,223. Financing activities provided $94,743. Payments on
long-term debt, the repurchase of common stock and an advance to our joint
venture used $115,257. While an increase in notes payable provided $210,000.
At March 31, 1995 the Company has a revolving line of credit with a bank
allowing borrowing up to $2,750,000 against qualified accounts receivable and
inventory. At March 31, 1995 approximately $60,000 was available for borrowing.
This line of credit is due June 30, 1995. The Company anticipates renewing this
agreement.
As of March 31, 1995, there are no material commitments for future
capital expenditures, and management does not anticipate any major expenditures
in the foreseeable future. It is management's belief that the Company's present
facilities will be adequate to meet its current and future needs.
Results of Operations
Net sales for the quarter ended March 31, 1995 as compared to March 31,
1994 increased $33,748. Gross margin increased to 50% as compared to 44% in
1994. This increase is attributable to sales mix and the fact that the 1994
gross margin was effected by a large job with a lower margin than normal.
Selling, general and administrative expenses as a percent of sales
increased to 39% in 1995 from 38% in 1994. This nominal increase is the result
of added sales and support personnel. The Company is retaining its emphasis on
cost control, but felt this added cost necessary to expand and service our
customer base.
Interest expense increased moderately as a result of the increase in
prime interest rates.
The Company's joint venture operation showed a nominal loss of $7,350.
It is anticipated that as the volume of work done by the joint venture increases
this will become profitable and cost savings will be realized.
As a result of the foregoing, income before taxes increased $72,943 to
$185,456 and income after taxes increased $45,450 or 65% to $114,983.
<PAGE> 9
Page 9
SIGNATURES
Pursuant to the requirements 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.
DYNA GROUP INTERNATIONAL, INC.
-----------------------------
(Registrant)
Date: May 1, 1995 /s/ Roger R. Tuttle
-----------------------------
(Signature) Roger R. Tuttle, Chairman
of the Board and Chief
Executive Officer
Date: May 1, 1995 /s/ William M. Sandstrom
-----------------------------
(Signature) William M. Sandstrom,
Treasurer (Principal
Accounting and Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 139,603
<SECURITIES> 0
<RECEIVABLES> 1,872,208
<ALLOWANCES> 92,000
<INVENTORY> 2,806,938
<CURRENT-ASSETS> 5,018,995
<PP&E> 2,824,109
<DEPRECIATION> 1,723,289
<TOTAL-ASSETS> 6,372,861
<CURRENT-LIABILITIES> 2,816,425
<BONDS> 801,351
<COMMON> 8,180
0
0
<OTHER-SE> 2,746,905
<TOTAL-LIABILITY-AND-EQUITY> 6,372,861
<SALES> 2,040,439
<TOTAL-REVENUES> 2,040,439
<CGS> 1,029,298
<TOTAL-COSTS> 1,029,298
<OTHER-EXPENSES> 781,479
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,206
<INCOME-PRETAX> 185,456
<INCOME-TAX> 70,473
<INCOME-CONTINUING> 114,983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,983
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
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