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: March 31, 1999
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.)
1661 S. Sequin Ave., New Braunfels, Texas 78130
(Address of principal executive offices) (Zip Code)
830-620-4400
(Registrant's telephone number, including area code)
(1801 W. 16th Street, Broadview, Illinois, 60153.)
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, 1999 was 8,179,704.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
March 31, December 31,
1999 1998
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ (15,668) $ 12,481
Accounts receivable, less allowance
For doubtful accounts of $102,000 1,199,585 1,249,333
Inventories 2,635,789 2,311,124
Prepaid expenses and other 191,451 236,290
Refundable income taxes 14,671 14,671
Deferred tax assets 138,340 138,340
Due from joint venture 207,532 ----
---------- ----------
4,371,700 3,962,239
---------- ----------
PROPERTY AND EQUIPMENT
Net 364,549 408,093
---------- ----------
OTHER ASSETS:
Investment in joint venture 83,064 83,064
Other 48,770 59,502
---------- ----------
131,834 142,566
---------- ----------
$ 4,868,083 $ 4,512,898
========== ==========
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND
STOCKHOLDERS' EQUITY March 31, December 31,
1999 1998
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Revolving line of credit $ 731,151 $ 771,339
Notes payable related party 507,011 512,304
Accounts payable 577,268 363,297
Accrued expenses 183,331 39,716
Current maturities of long-term debt ---- 4,779
Income taxes payable 43,931 12,694
Due to joint venture ---- 32,774
---------- ----------
Total current liabilities $ 2,042,692 $ 1,736,903
---------- ----------
Deferred income taxes 18,608 18,608
Long-term debt, less current maturities 8,130 8,130
---------- ----------
Total liabilities 2,069,430 1,763,641
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 974,313 974,313
Retained earnings 1,961,951 1,912,555
Treasury stock - 681,779 and 696,779
shares, at cost (135,761) (135,761)
Unearned compensation (10,030) (10,030)
---------- ----------
2,798,653 2,749,257
---------- ----------
$ 4,868,083 $ 4,512,898
========== ==========
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended March 31,
1999 1998
---------- ----------
<S> <C> <C>
NET SALES $ 1,696,573 $ 1,489,120
COST OF GOODS SOLD 848,492 803,356
---------- ----------
Gross profit 848,081 685,764
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 746,161 578,840
---------- ----------
Operating Income/(Loss) 101,920 106,924
INTEREST EXPENSE 27,107 72,267
---------- ----------
Income/(Loss) before income taxes 74,813 34,657
PROVISION FOR INCOME TAXES 25,462 13,170
---------- ----------
NET INCOME/(LOSS) $ 49,351 $ 21,487
========== ==========
INCOME/(LOSS) PER COMMON SHARE $ .01 $ .00
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,497,925 7,497,925
See accompanying notes.
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DYNA GROUP INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three months Ended March 31,
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(Loss) $ 49,351 $ 21,487
Adjustments to reconcile loss to net
cash used by operating activities -
Depreciation and amortization 64,296 (29,689)
Provision for losses on accounts
receivable 10,045 24,134
Amortization of unearned compensation ---- 1,350
Change in assets and liabilities:
Decrease in accounts receivable 49,748 1,031,359
Increase in inventories (324,665) 175,247
Decrease in prepaid expenses and other 44,839 39,425
Increase in accounts payable 213,971 (97,285)
Increase in accrued expenses 164,852 10,526
Increase in due to joint venture (240,306) (59,833)
Decrease (increase) in other assets 10,732 (32,592)
---------- ----------
Cash provided (used) by operating
activities 42,863 1,084,129
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditure (20,752) (4,000)
Sale of land & building ---- ----
---------- ----------
Cash used by investing activities (20,752) (4,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (4,779) (12,497)
Increase (decrease) in notes payable (45,481) (1,075,000)
Issue treasury stock ---- ----
---------- ----------
Cash provided (used) by financing
activities (50,260) (1,087,497)
DECREASE IN CASH (28,149) (7,368)
---------- ----------
CASH, beginning of period 12,481 217,858
---------- ----------
CASH, end of period $ (15,668 $ 210,490
---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for -
Interest $ 27,107 112,385
Income Taxes ---- ----
See accompanying notes
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DYNA GROUP INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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 principals 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-KSB for the year ended December 31,
1998.
The financial information included herein at March 31, 1999 and for the
three months ended March 31, 1999 and March 31, 1998 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, 1998 was derived from the Company's audited financial statements for
1998.
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NOTE 2 - INVENTORIES
Inventories consist of the following:
March 31, 1999 December 31, 1998
<S> <C> <C>
Raw materials and work in process $ 150,730 $ 557,914
Work in process ---- 64,723
Finished goods 2,485,059 1,688,487
---------- ----------
$ 2,635,789 $ 2,311,124
========== ==========
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NOTE 3 - STOCKHOLDERS' EQUITY
During the first quarter of 1997 the Company issued 45,000 shares of
treasury stock to employees as a bonus. In connection with this
transaction, the Company recorded $16,200 in unearned compensation, which
is being amortized over three years. During the 2ND Quarter of 1998 the
Company purchased 27,778 shares at market price and issued those shares to
nine employees as a bonus.
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Page 7
NOTE 4 - ADJUSTMENTS
During the fourth quarter of 1997 the Company recorded an inventory
adjustment of $400,000 and a loss of $706,241. The financial statements
for the quarter ended March 31,1997 have been restated to reflect the
impact of this adjustment on the first quarter's operating results. For a
further explanation of this adjustment, refer to Note 15 of the Company's
10-KSB for the year ended December 31, 1997.
NOTE 5 - SUBSEQUENT EVENT
On May 1, 1998 the Company sold the land and building located in Illinois.
This sale resulted in a pre-tax gain of $288,000 for 1998. As a result of
this sale, the Company's long-term debt was reclassified as short-term debt
for December 31, 1997, and March 31, 1998 respectively. This land and
building in Illinois was also reclassified as a current asset for these
reporting periods. All principal and interest was paid in full at closing.
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 March 31, 1999 decreased to 2.1 from
to 2.3 at December 31, 1998. Cash in bank decreased by $28,149 during the
period.
For the first quarter ended March 31, 1999, operating activities provided
cash flow of $42,863. Changes in assets and liabilities provided
$355,185. The net increase related to assets and liabilities was primarily
due to significant increase of account payables and inventory.
During the first quarter of 1999, financing activities used $50,260 due to
repayments on notes payable and long-term debt. Effective April 3, 1998,
the Company secured a line of credit with a Texas bank with a maximum
borrowing limit of $4,000,000.
As of March 31, 1999, 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, 1999 as compared to the quarter
ended March 31, 1998 increased $207,453 or 14%. This increase in sales
primarily relates to the sports market, and over-all broadening of the
customer base.
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The gross margin percent increased to 50% as compared to 38.6% in 1998.
This was due to a greater portion of production being produced in Mexico at
a lower cost.
The total selling, general and administrative expenses increased 28.9%,
from $578,840 in 1998 to $746,161 in 1999. The increase in costs is due to
the sales mix selling a greater percentage of licensed products in which
royalties are paid.
Interest expense decreased by $45,160 as a result of lower average
borrowing levels in 1999 when compared to last year, despite slightly
higher interest rate.
For the first quarter of 1999 the Company's pre-tax income was $74,813 as
compared to the income for 1998 of $34,657. This change in earnings is
primarily due to the lower cost involved with having the majority of
production done in Mexico and the elimination of all expenses relating to
the Illinois operation.
Until May 1,1998 there were fixed costs involved in maintaining the
Broadview facility.
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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: May 17, 1999 /s/ Roger R. Tuttle
-------------------
(Signature) Roger R. Tuttle, Chairman of the Board and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> (15,668)
<SECURITIES> 0
<RECEIVABLES> 1,301,585
<ALLOWANCES> 102,000
<INVENTORY> 2,635,789
<CURRENT-ASSETS> 4,371,700
<PP&E> 2,839,007
<DEPRECIATION> 2,474,458
<TOTAL-ASSETS> 4,868,083
<CURRENT-LIABILITIES> 2,042,692
<BONDS> 0
0
0
<COMMON> 8,180
<OTHER-SE> 2,790,473
<TOTAL-LIABILITY-AND-EQUITY> 4,868,083
<SALES> 1,696,573
<TOTAL-REVENUES> 1,696,573
<CGS> 848,492
<TOTAL-COSTS> 848,492
<OTHER-EXPENSES> 746,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,107
<INCOME-PRETAX> 74,813
<INCOME-TAX> 25,462
<INCOME-CONTINUING> 49,351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,351
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
