<PAGE> 1
UNITED STATES
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 period ended: June 30, 1996
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number: 0-17385
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DYNA GROUP INTERNATIONAL, INC.
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(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
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(Address of principal executive offices) (Zip Code)
708 - 450-9200
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(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 June
30, 1996 was 7,482,925.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
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<TABLE>
<CAPTION>
ASSETS
------ June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 88,246 $ 157,007
Accounts receivable, less allowance
for doubtful accounts of $92,000 1,758,915 2,405,039
Inventories 4,249,992 3,667,195
Prepaid expenses and other 161,483 118,267
Deferred tax assets 61,372 61,372
------------ -----------
6,320,008 6,408,880
------------ -----------
PROPERTY AND EQUIPMENT, less
accumulated depreciation of
$2,235,311 and $2,038,929 1,113,604 1,137,353
------------ -----------
OTHER ASSETS:
Cost in excess of net assets of acquired
business, less accumulated amortization
of $110,903 and $100,963 24,849 34,789
Investment in joint venture 132,516 84,821
Due from joint venture 17,137 ----
Other 86,510 93,833
------------ -----------
261,012 213,443
------------ -----------
$ 7,694,624 $ 7,759,676
============ ===========
</TABLE>
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
----------------------------------------
----------------------------------------
<TABLE>
<CAPTION>
LIABILITIES AND June 30, December 31,
STOCKHOLDERS'EQUITY 1996 1995
-------------------- ------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable bank $ 2,125,000 $ 2,565,000
Notes payable related party 350,000 400,000
Accounts payable 1,024,845 642,026
Accrued expenses 414,310 458,423
Current maturities of long-term debt 150,311 150,311
----------- -----------
4,064,466 4,215,760
----------- -----------
LONG-TERM DEBT BANK: 611,136 685,652
----------- -----------
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 967,113 950,687
Retained earnings 2,196,235 2,063,460
Treasury stock - 696,779 and 714,557
shares, at cost (140,084) (143,657)
Unearned compensation (12,422) (20,406)
----------- -----------
3,019,022 2,858,264
----------- -----------
$ 7,694,624 $ 7,759,676
=========== ===========
</TABLE>
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
NET SALES $2,506,046 $2,123,768
COST OF SALES 1,355,643 1,096,405
---------- ----------
Gross profit 1,150,403 1,027,363
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,001,909 948,393
---------- ----------
Operating income 148,494 78,970
INTEREST EXPENSE 69,358 56,466
GAIN (LOSS) FROM JOINT VENTURE 47,695 ----
---------- ----------
Income before income
taxes 126,831 22,504
PROVISION FOR INCOME TAXES 48,196 8,552
---------- ----------
NET INCOME $ 78,635 $ 13,952
=========== ==========
INCOME PER COMMON SHARE $ .01 $ ----
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,482,925 7,466,480
</TABLE>
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
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------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
NET SALES $4,778,724 $4,164,207
COST OF SALES 2,628,340 2,125,703
---------- ----------
Gross profit 2,150,384 2,038,504
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,844,217 1,722,522
---------- ----------
Operating income 306,167 315,982
INTEREST EXPENSE 139,708 100,672
GAIN (LOSS) FROM JOINT VENTURE 47,695 (7,350)
---------- ----------
Income before income
taxes 214,154 207,960
PROVISION FOR INCOME TAXES 81,379 79,025
---------- ----------
NET INCOME $ 132,775 $ 128,935
========== ==========
INCOME PER COMMON SHARE $ .02 $ .02
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,475,306 7,485,022
</TABLE>
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
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--------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 132,775 $ 128,935
Adjustments to reconcile income from
operations to net cash used
by operating activities -
Depreciation and amortization 206,322 143,220
Provision for losses on accounts receivable 54,098 -----
Amortization of unearned compensation 7,984 7,063
(Gain) loss from joint venture (47,695) 7,350
Change in assets and liabilities:
Decrease in accounts receivable 592,026 112,154
Increase in inventories (582,797) (721,683)
Increase in prepaid expenses and other (43,216) (91,520)
Increase in accounts payable 382,819 293,716
Decrease in accrued expenses (44,113) (59,177)
Decrease (increase) in other assets 7,322 (55,701)
--------- ---------
Cash provided (used) by operating activities 665,525 (235,643)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (172,633) (215,070)
--------- ---------
Cash used by investing activities (172,633) (215,070)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (74,516) (70,446)
Increase (decrease) in notes payable (490,000) 385,000
Advance to joint venture (17,137) (60,000)
Issue treasury stock 20,000 -----
Repurchase common stock ------ (51,411)
--------- ---------
Cash provided (used) by financing activities (561,653) 203,143
--------- ---------
DECREASE IN CASH (68,761) (247,570)
CASH, beginning of period 157,007 305,610
--------- ---------
CASH, end of period $ 88,246 $ 58,040
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for -
Interest $ 129,106 $ 93,083
Income Taxes 142,781 90,273
</TABLE>
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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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, 1995.
The financial information included herein at June 30, 1996 and for the
three months and six months ended June 30, 1996 and June 30, 1995 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,
1995 was derived from the Company's audited financial statements for 1995.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- ------------------
<S> <C> <C>
Raw materials and work in process $ 1,160,467 $ 1,131,045
Finished goods 3,089,525 2,536,150
----------- -----------
$ 4,249,992 $ 3,667,195
=========== ===========
</TABLE>
NOTE 3 - STOCKHOLDERS' EQUITY
During the first quarter of 1996 the Company issued 17,778 shares of stock
from its treasury at a cost of $3,573, and an issuance price of $20,000 for the
acquisition of certain NFL licensing rights.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company's working capital ratio at June 30, 1996 increased to 1.6 to 1
from 1.5 to 1 at December 31, 1995. Cash in bank decreased by $68,761 during
the period.
Operating activities provided cash flow of $665,525 with income from
operations and non-cash adjustments providing $353,484. Changes in net working
capital provided $312,041. The net increase in working capital was primarily
due to vigorous collections of accounts receivable along with a large increase
in accounts payable. These increases were partially offset by increases in
inventories and prepaid expenses and a decrease in accrued expenses.
Capital expenditures for dies and molds used $172,633. Financing
activities used $561,653, primarily due to repayments on notes payable and
long-term debt.
At June 30, 1996, 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 June 30, 1996 approximately $260,000 was available for
borrowing. This line of credit was originally due to mature on June 30, 1996,
but was temporarily extended by the bank until August 30, 1996. The Company
anticipates a renewal of this agreement into 1997.
As of June 30, 1996, 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 June 30, 1996 as compared to the quarter
ended June 30, 1995 increased $382,278 or 18.0%. Gross margin percent decreased
to 45.9% as compared to 48.4% in 1995. This decrease is attributable to sales
mix.
Selling, general and administrative expenses as a percent of sales
decreased to 40% in 1996 from 44.7% in 1995. This decrease is due to
management's emphasis on cost control along with the fixed nature of many of
these costs which do not fluctuate with sales volume changes.
Interest expense increased as a result of higher borrowing levels as
compared to last year.
The Company's share of profits from its joint venture increased $47,695 as
compared to 1995. This was due to higher production levels in Mexico in 1996.
As a result of the foregoing, income before taxes increased $104,327 to
$126,831 and income after taxes increased $64,683 to $78,635.
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Net sales for the six months ended June 30, 1996 as compared to the six
months ended June 30, 1995 increased $614,517 or 14.8%. Gross margin percent
decreased 4.0% as a result of a change in sales mix.
Selling, general and administrative expenses as a percent of sales
decreased from 41.4% in 1995 to 38.6% in 1996. This decrease is due to
management's emphasis on cost control along with the fixed nature of many of
these costs which do not fluctuate with sales volume changes.
Interest expense for the six months ended June 30, 1996 increased over the
similar period in 1995 as a result of higher borrowing levels.
The Company's share of joint venture operations for the six months ended
June 30, 1996 was a gain of $47,695 compared to a loss of $7,350 for the same
period in 1995. This increase was due to higher production levels in Mexico in
1996 as compared to 1995.
As a result of the foregoing, income before taxes increased $6,194 to
$214,154 and income after taxes increased $3,840 to $132,775.
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PART II -- OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the stockholders was held on July 11, 1996.
(b) Three directors were elected and received the following votes for,
against or withheld:
Against or
For Withheld
--------- --------
1. Roger R. Tuttle 7,014,925 34,890
2. William M. Sandstrom 7,013,495 36,320
3. Jeffrey L. Smith 7,015,095 34,720
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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: August 7, 1996 /s/ Roger R. Tuttle
-------------- -----------------------------------------
(Signature) Roger R. Tuttle, Chairman of the Board
and Chief Executive
Officer
Date: August 7, 1996 /s/ Thomas J. Heslinga
-------------- -----------------------------------------
(Signature) Thomas J. Heslinga, Treasurer (Principal
Accounting and
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 88246
<SECURITIES> 0
<RECEIVABLES> 1850915
<ALLOWANCES> 92000
<INVENTORY> 4249992
<CURRENT-ASSETS> 6320008
<PP&E> 3348915
<DEPRECIATION> 2235311
<TOTAL-ASSETS> 7694624
<CURRENT-LIABILITIES> 4064466
<BONDS> 611136
<COMMON> 8180
0
0
<OTHER-SE> 3010842
<TOTAL-LIABILITY-AND-EQUITY> 7694624
<SALES> 4778724
<TOTAL-REVENUES> 4778724
<CGS> 2628340
<TOTAL-COSTS> 2628340
<OTHER-EXPENSES> 1844217
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139708
<INCOME-PRETAX> 214154
<INCOME-TAX> 81379
<INCOME-CONTINUING> 132775
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132775
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
