DYNA GROUP INTERNATIONAL INC
10KSB40, 2000-03-30
COSTUME JEWELRY & NOVELTIES
Previous: TECHNOLOGY FUNDING SECURED INVESTORS III, 10-K, 2000-03-30
Next: EUROPA CRUISES CORP, NT 10-K, 2000-03-30




                               UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549
                                FORM 10-KSB

  [x] Annual Report Pursuant to Section 13 or 15 (d) of the Securities
      and Exchange Act of 1934.

         For the fiscal year ended:    December 31, 1999

  [ ] Transition Report pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934.    (No fee required.)

                    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. Seguin Street New Braunfels, Texas   78130
            -----------------------------------------------------
            (Address or principal executive offices)   (zip code)

  Registrant's telephone number, including area code:    (830)  620-4400

  Securities registered pursuant to Section 12 (b) of the Act:      None

  Securities registered pursuant to Section 12 (g) of the Act:

              Common Stock,   $.001 par value per share
                           (Title of Class)

  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.

                           Yes  X     No ________

  Indicate by check mark if disclosure  of delinquent filers pursuant  to
  Item 405  of Regulation  S-K (Sect.  229.405 of  this chapter)  is  not
  contained herein,  and  will not  be  contained,  to the  best  of  the
  registrant's knowledge, in definitive  proxy or information  statements
  incorporated by  reference in  Part  III of  this  Form 10-KSB  or  any
  amendment to this form 10-K (X).

  The net sales for the year ended December 31, 1999 were $9,293,363.

  The aggregate market value of the voting stock held by non-affiliated
  of the registrant as of March 24, 2000 was $2,340,463.

  The number of shares outstanding of the registrant's common stock as of
  March 24, 2000 was 8,179,704.

  DOCUMENTS INCORPORATED BY REFERENCE

  None.
<PAGE>
                                  Part I

  Item 1.        Business

  General

       Dyna Group  International,  Inc.   (the  "Company")  is  a  Nevada
  corporation and conducts all of its  business through its wholly  owned
  subsidiary, Great American  Products, Inc.   ("Great  American").   The
  Company was an inactive publicly  held corporation (formerly Red  Creek
  Investments, Inc.) until August 22, 1986, when the Company acquired all
  of the outstanding  stock of Dyna  Tour Corporation  ("Dyna Tour")  and
  simultaneously changed its name to Dyna Group International, Inc.   The
  Company acquired  Great  American  on December  15,  1986,  XLM,  Inc.,
  ("XL") on  January  1,  1987  and  Great  American  Marketing  Services
  Corporation, ("American Marketing") on November 1, 1989.

       In  September  1989,  the  Company  decided  to  discontinue   the
  operations of its Dyna Tour subsidiary.  In September 1992, the Company
  decided to discontinue  the operations of  its wholly owned  subsidiary
  American Marketing.    In December  1992,  the distributorship  of  the
  Company's  wholly  owned  subsidiary,  XL,  was  discontinued,  and  in
  February 1993, XL completed the sale of its tire inventory and  backlog
  of orders to General  Tire, Inc.  Great  American Products remains  the
  only operations of the parent Dyna Group International, Inc.

       In August 1994, the Company entered into a joint venture agreement
  with Mexican individuals for the manufacturing of its products.

       In January 1997,  the Company  leased a  manufacturing/warehousing
  facility in New  Braunfels, Texas, to  move its  corporate offices  and
  plant operations from Broadview, IL to the Texas facility.

       During 1998, the  Company completed the  move to  Texas, sold  the
  Broadview, IL. facility and increased production in Mexico.

       Financial projections  for 2000  indicate  that the  Company  will
  increase revenues, increase gross profit margins and increase operating
  profits.  The Company does not expect any significant changes to  occur
  in its location, operations or marketing directions.  The Company  will
  investigate acquisitions opportunities as they appear.
<PAGE>
  Forward Looking Statements

       This annual report for the year ended  December 31, 1999,  as well
  as other public documents  of  the  Company,  contains  forward-looking
  statements which  involve known  and unknown  risks, uncertainties  and
  other factors  which  may  cause the  actual  results,  performance  or
  achievement of the Company to be  materially different from any  future
  results, performance  or  achievements  expressed or  implied  by  such
  forward  looking  statements.      Such  statements  include,   without
  limitation, the  Company's  expectations  and estimates  as  to  future
  financial performance,  cash flows  from  operations and  capital,  are
  urged to consider statements which use the terms "believes", "intends,"
  "expects," "plans," "estimates," "anticipated," or "anticipates," to be
  uncertain and forward looking.  In  addition to other factors that  may
  be discussed  in  the  Company's  following  with  the  Securities  and
  Exchange Commission,  including  this report,  the  following  factors,
  among others  could  cause  the  Company's  actual  results  to  differ
  materially.

  Products and Sales

       The Company designs, manufactures,  and markets lines of  consumer
  products,  as  well  as  products  for  industry  used  as  advertising
  specialties and premiums, utilizing pewter centrifugally cast in rubber
  molds.   These products  include belt  buckles, model  miniatures,  key
  chains, picture frames,  as well as  pewter decorated glassware,  caps,
  ceramic ware, pewter decorated wall and desk decor, and pewter enhanced
  keepsake boxes.  All of the  Company's centrifugally cast products  are
  designed at the Company's New Braunfels,  Texas facility.  Most of  the
  manufacturing and painting of the cast products are performed in Mexico
  with the remainder done in New Braunfels, Texas.

       The Company's  Great  American  subsidiary  has  obtained  license
  agreements with Nascar  and 17 drivers,  the National Football  League,
  Major  League  Baseball,  the  National  Basketball  Association,   the
  National Hockey League, World Championship Wrestling, Jack Daniels  and
  over 70  Colleges and  Universities.   The  Company is  continuing  its
  efforts to  expand its  license agreements  in other  areas, as  it  is
  management's belief that licensed  products will enhance the  Company's
  image and present new opportunities for market expansion.  In 1999  the
  company signed new  2 year agreements  with Harley-Davidson,  Chevrolet
  and Ford.  As license  agreements must  be periodically  renewed it  is
  management's belief that future extensions  will continue to allow  the
  Company to market licensed products, and management does not anticipate
  any cancellations  or  non-renewals.    The  majority  of  the  license
  agreements have annual renewals.  The remaining license agreements  can
  range from two years to automatic rollover renewals.

       The business of the Company is affected by seasonal factors.   The
  Company does experience  an increase in  inventory   levels during  the
  third  quarter  of  the  year  followed  by  an  increase  in  accounts
  receivable during the  fourth quarter.   Inventory  levels at  December
  31,1999 were slightly higher by $86,913  when compared to December  31,
  1998.   The raw  materials used  in the  manufacture of  the  Company's
  centrifugally  cast  products  are  readily  available  from   numerous
  sources. Extension of credit  terms to its  customers range from normal
  30 days terms to 90 days from the date of invoice.
<PAGE>
  Marketing and Distribution

       Products are sold through the Company's own sales force, including
  sales made  via telemarketing  and  direct sales,  through  independent
  commissioned sales representatives,  and through  distributors.   As of
  December 31, 1999, the Company's sales force and  related support staff
  numbered  11  persons.   The  Company  also  utilizes approximately  80
  independent,  commissioned  sales   representatives.  The  products are
  also produced for sales to the premium/advertising specialty  industry,
  and    are    also  sold  through    independent   commissioned   sales
  representatives and invoiced  directly to ad specialty distributors  or
  end users for purposes of sales promotions and incentives.

  Foreign operations and Export Sales

       In August 1994, the Company entered into a joint venture agreement
  with Mexican individuals for the production of its cast products.   The
  Company has experienced  reduced production  costs.   Sales to  markets
  outside the  USA have  declined  as the  market  for belt  buckles  has
  declined both internationally and domestically.

  Major Customers

       The  Company  has  over  4,000  customers.    One  major  customer
  accounted for 18%  of sales  in 1999.  The top  10 customers  represent
  49.7% of the company's revenues.

  Competition

       Operations in the consumer  goods industry involve the  production
  and sale of cast products, and pewter enhanced glassware.   The Company
  believes that  it  is a  significant  factor  in the  market  for  cast
  products to  Nascar  and  sports markets.      It currently  is  not  a
  significant factor in the  overall market for  glassware.  The  Company
  competes in  the consumer  goods industry  primarily  on the  basis  of
  quality workmanship and competitive pricing.  The Company also sells to
  the premium ad specialty market, which  is not a significant factor  in
  the overall business.

  Employees

       The Company employs 84 full time people, of whom 21 are engaged in
  sales and administration, 5 in creative design and 58 in manufacturing,
  assembly, shipping, and warehousing.

  Equipment

       The Company's  New  Braunfels,  Texas, facility  is  equipped  for
  manufacturing, assembly, packaging, and shipping of centrifugally  cast
  pewter, consumer products and pewter  enhanced glass and ceramic  ware.
  All of the Company's equipment is considered to be in good condition.
<PAGE>
  Item 2.        Property

       The Company's executive office is located in a 40,000 square  foot
  facility leased  from  a  major shareholder  at  1661  S.  Seguin,  New
  Braunfels, Texas 78130.  The building is considered to be in  excellent
  condition.

       The terms of this lease are summarized below.

                            Approximate Area      Lease        Monthly
     Type of Facility        in Square Feet     Expiration     Rental
     ----------------        --------------     ----------     ------
  Manufact/Warehouse-Texas        40,000        12/31/10      $14,557

       In May of 1998 the Broadview, IL facility was sold.



  Item 3.        Legal Proceedings

       The Company has filed a lawsuit with the courts of Comal County in
  July 1998 against  National Starch and  its subsidiary  Perma Bond  for
  losses realized as a result of the failure for its adhesive during June
  through October of 1997. A court date of May 1, 2000 has been scheduled
  for the trial by jury


  Item 4.        Submission of Matters to a Vote of Security Holders

       Not applicable.


                                 Part II

  Item 5.        Market for Registrant's Common Equity and Related
                 Stockholder Matters
<PAGE>
  Market Information

       The Company's Common Stock trades over  the counter on the  NASDAQ
  bulletin board under the symbol DGIX.   The following table sets  forth
  for the  periods indicated  the high  and low  bid quotations  for  the
  Company's Common Stock.  The quotations  represent prices in the  over-
  the-counter market between  dealers in  securities and  do not  include
  retail markup, markdown, or commissions.

                                             High Bid       Low Bid
                                             ---------     ---------
  1999           4th Quarter                $ 7    /16    $12    /32
                 3rd Quarter                 151/2 /32     12    /32
                 2nd Quarter                 121/2 /32     11    /32
                 1st Quarter                  7    /16      7    /32


  1998           4th Quarter                $121/2 /32    $ 61/2 /32
                 3rd Quarter                 15    /32      7    /32
                 2nd Quarter                 15    /32      7    /32
                 1st Quarter                 13    /32      9    /32


  Holders
  -------                                   Approximate number of holders
  Title of Class                            of record as of March 2000
  --------------                            --------------------------
     Common Stock, par value                            328
       $.001 per share


  Dividends

       There have been no  dividends paid on  the Company's Common  Stock
  since inception.  It is currently expected that any additional earnings
  the Company realizes will be retained to finance growth.  Dividends are
  restricted by the covenants stated in the Credit and Security Agreement
  between the Company and Norwest Business Credit, Inc.

  Item 6.        Management's Discussion and Analysis of Financial
                 Condition and Results of Operations

       Set forth  below is  a discussion  and analysis  of the  financial
  condition and  operating results  of the  Company's operations.    This
  discussion  should  be  read  in  conjunction  with  the   accompanying
  consolidated financial statements and notes.


  Liquidity and Capital Resources

       The Company has a current ratio in 1999 of 2.2 to 1, which was  no
  change to 1998 ratio  of 2.2 to 1.   Net cash decreased  by  $1,985  in
  1999.
<PAGE>
       Operating activities  provided $145,530  of  cash in  1999,  which
  includes a $270,905  increase in  net working  capital.    Net  working
  capital  increased  principally  due  to  the $370,643  increase  trade
  accounts receivable.  The account receivable increase was due primarily
  to  holiday orders  being shipped  later in  the season.  The inventory
  increase is attributed to scheduled  early January shipments for  Super
  Bowl items.

       Investing  activities   used   $238,811  primarily   for   capital
  expenditures.  Financing  activities provided $91,296  that relates  to
  proceeds needed  to  cover  cash overdraft  resulting  from  day-to-day
  activities.

       On April 3, 1998 the Company  entered into a banking  relationship
  with Norwest  Business Credit,  which  provides  a $4,000,000  line  of
  credit,  based upon receivables and inventory.   The borrowing base  is
  calculated by taking 80% of eligible account receivables  plus  55%  of
  eligible inventory.  This credit line is subject to several affirmative
  and  negative  covenants.  The affirmative   covenants  include  report
  requirements,  books  and  records  inspection,  account  verification,
  compliance with laws, payment of taxes and other claims, maintenance of
  properties,  insurance,   preservation   of  existence,   delivery   of
  instruments, collateral account, performance  by the borrower,  minimum
  debt service coverage ratio, minimum net losses, and proceeds from sale
  of  real  property.      The  negative  covenants  include  liens   and
  indebtedness, guaranties, investments and subsidiaries, dividends,  and
  capital expenditures.   As of December  31, 1999  the outstanding  loan
  balance was $769,219.


  Results of Operations

                             1999 versus 1998

       Net  sales  for  the  year  ending  December 31,  1999,  increased
  $978,355 or 11.8% as compared to 1998.   The growth in revenues is  due
  to the introduction of new products and excellent sell-through which is
  generating faster reorders.  Foreign sales for 1999 decreased from 1998
  by $148,497 or 53%.  Buckles  have represented the majority of  foreign
  sales.  The market for buckles both domestic and foreign is declining.

       Gross profit increased $384,571 or 10.5% in 1999 over 1998.  Gross
  profit margins remain virtually  the same, 43.6% vs.  44.1%.  Sales  to
  one major customer were below our  forecasted margin.  The  liquidation
  and closeout of  dated merchandise also  impacted our  forecast of  46%
  gross profit margin.

       Selling, general and administrative  expenses increased   $454,925
  or 14.5% over 1998.  Royalties paid on licensed merchandise sales is  a
  selling expense.  Royalties increased from $585,172  to  $684,536.  The
  sales staff wages and associated expenses also  increased from  1998 by
  $176,379,  due  to an increase  in  staffing  levels.  The Company also
  incurred $115,000 in  legal  expense  in  1999 as opposed to $26,906 in
  1998. This expense was associated with the Perma Bond lawsuit. Interest
  expense decreased in 1999 by $110,438 from $246,142 in 1998 to $135,704
  in 1999.  Interest  expense, despite higher  interest rates, was  lower
  because of the overall reduction of debt and lower levels of borrowing.
<PAGE>
       Operating income for the year was $459,739 as compared to $530,093
  in 1998; a decline  of $70,354.  This  is attributed to slightly  lower
  gross profit margin and higher SG&A expenses previously mentioned.

       Net income was $231,192 in 1999  as compared to $523,849 in  1998.
  In 1998, the gain on sales  of Broadview facility contributed  $244,579
  to the net profit.  The reduction in the deferred income tax  valuation
  allowance reduce income  tax expense in  1998 by  $182,000 compared  to
  1999.


                             1998 versus 1997

       Net sales  for  the year  ended  December 31,  1998  decreased  by
  $964,735 or 10.4 % as compared to 1997.   The decrease was a result  of
  several factors.   First the Company  decided to  reduce its  marketing
  efforts to the  gift and ad  specialty markets, which  had been  losing
  money.  Sales were also negatively  impacted by the product failure  of
  the Perma Bond adhesive discussed in legal proceedings, which  occurred
  in the third and fourth quarters  of 1997, and carried over into  1998.
  The loss of revenues in these areas was offset by increases in revenues
  in NASCAR, and other licensed products sales.

       Gross profit margins increased from 33.1% in 1997 to 44.1% in 1998
  as a result of lower cost of goods produced by our Mexico joint venture
  and a focus on higher profit margin products and markets.  Reduction in
  U.S. labor resulted in  shifting production to Mexico  in the last  six
  months.

       Selling, general, and  administration expenses decreased  $561,321
  or 15.2% as a direct result of the changes previously mentioned and our
  prompt shipping, which reduce  backorders and related customer  service
  costs.

       Interest expense decreased $87,773 as a result of lower  borrowing
  levels throughout the year.  Increased profitability reduced  inventory
  and reduced account receivables have contributed to reducing the debt.

       The  joint  venture  plant  produced  an  estimated  80%  of   our
  production in the  first six months  of 1998,  however U.S.  production
  still generated a  loss.   In the  second half  of the  year, the  U.S.
  production decreased, and the Mexico production was increased resulting
  in profitable operations.

       Net earnings increased  from a  year-to-date loss  of $706,241  in
  1997 to a  net income of  $523,849, in 1998  despite reduced  revenues.
  The increase in net  income had earnings per  share effect of a  $(.09)
  per share loss in 1997 versus a $.07 per share net earnings in 1998.

  Y2K Compliance

       The Company began analyzing its year 2000 (Y2K) readiness in March
  of 1998.  At that  time, the Company estimated  the cost not to  exceed
  $10,000 and expected to begin year 2000 changes in the third quarter of
  1998. The company completed  all Y2K compliance in  ample time and  did
  not  incur  any   difficulties.   The  cost  associated  with  the  Y2K
  compliance did not exceed the $10,000 budgeted.
<PAGE>
       The Year  2000 issue  is the  result  of computer  programs  being
  written using  two digits  rather than  four to  define the  applicable
  year.    Computer  programs  that  have  date-sensitive  software   may
  recognize a date using "00" as the Year 1900 rather than the Year 2000.
  This could  result  in  a system  failure  or  miscalculations  causing
  disruptions of operations,  including among other  things, a  temporary
  inability to process transactions, and  invoices, or engage in  similar
  normal business activities.

       The Company modified or replaced portions of its software so  that
  its computer systems would properly  utilize dates beyond December  31,
  1999.  The  Company's telephone system  was also  upgraded to  properly
  utilize dates beyond December 31, 1999.  The Company presently believes
  that with  modifications  to  existing  software,  conversions  to  new
  software, and  modifications to  the telephone  system, the  Year  2000
  issue can be mitigated.  The Company was informed during the 4th Qtr of
  1999, that the current computer hardware  and software would no  longer
  be serviced  effective July  2000.   Therefore the  Company decided  to
  purchase a  new  hardware  and software  package.    It  was  initially
  estimated to  cost $150,000  to $200,000.   In  actuality, the  Company
  spent $85,000 for the complete conversion.  The company implemented the
  new hardware  and software  on March  6,  2000.   The company  has  not
  incurred any difficulties.


  Item 7.        Financial Statements and Supplementary Data

       See financial  statements set  forth in  Item  13 of  this  annual
  report.

  New Accounting Pronouncements

       SFAS No. 133,  ACCOUNTING FOR DERIVATIVE  INSTRUMENTS AND  HEDGING
  ACTIVITIES requires companies to recognize all derivatives contracts as
  either assets or liabilities in the  balance sheet and to measure  them
  at fair value.   If  certain conditions are  met, a  derivative may  be
  specifically designed as a  hedge, the objective of  which is to  match
  the timing of gain or loss  recognition on the hedging derivative  with
  the recognition of  (i) the  changes in the  fair value  of the  hedged
  asset or liability that are attributable to the hedged risk or (ii) the
  earnings effect of the hedged forecasted transaction.  For a derivative
  not designed as a hedging instrument, the gain or loss is recognized in
  income in the  period of change.   SFAS No.  133 is  effective for  all
  fiscal  quarters  of  fiscal  years  beginning  after  June  15,  1999.
  Historically, the  Company has  not entered  into derivative  contracts
  either  to   hedge  existing   risks  or   for  speculative   purposes.
  Accordingly, the Company does not expect  adoption of the new  standard
  to have a material effect on its financial statements

       SOP  98-5,  "REPORTING  ON  THE  COSTS  OF  START-UP  ACTIVITIES,"
  requires all  start-up  and  organizational costs  to  be  expensed  as
  incurred.    It also  requires all  remaining historically  capitalized
  amounts of these costs existing at the date of adoption to be  expensed
  and reported  as  the  cumulative effect  of  a  change  in  accounting
  principles.  SOP 98-5 is effective for all fiscal years beginning after
  December 31, 1998.  The  adoption of SOP 98-5  did not have a  material
  effect the Company's financial statements.
<PAGE>
       SFAS No. 135, "     RECISSION OF  FINANCIAL  ACCOUNTING  STANDARDS
  BOARD NO. 75 ("SFAS NO. 75") AND TECHNICAL CORRECTIONS," rescinds  SFAS
  No. 75 and amends Statement of Financial Accounting Standards Board No.
  35.  SFAS No. 135 also  amends other existing authoritative  literature
  to make various  technical corrections, clarify  meanings, or  describe
  applicability under changed conditions.  SFAS No. 135 is effective  for
  financial statements issued for fiscal years ending after February  15,
  1999.  The adoption of SFAS No. 135  did not have a material effect  on
  the Company's financial statements


                                 Part III

  Item 10.        Directors and Executive Officers of the Registrant

       The executive officers and directors of the Company are listed  in
  the table below, and brief summaries  of their business experience  and
  certain  other  information  with  respect   to  them  are  set   forth
  thereafter:

  Name                     Age       Position
  -------------------      ---       ------------------------------------
  Roger R. Tuttle          52        Chairman of the Board of Directors,
                                     and Chief Executive
                                     Officer and President of Great
                                     American Products

  Jeffrey L. Smith         44        Secretary, Vice President and
                                     General Manager of Great
                                     American Products, and a Director

  Mark Gottsacker          43        Treasurer, Vice President of Sales &
                                     Marketing of Great
                                     American Products, and a Director

       All directors of the Company serve in such capacity until the next
  annual meeting of the  Company's Stockholders following their  election
  and until their successors have been  elected and qualify.  Subject  to
  their contract rights as to compensation, a majority may remove with or
  without cause, officers at any time of the Board Directors.

       Roger R. Tuttle has served as  Chairman of the Board of  Directors
  and Chief Executive  Officer of  the Company  since August  1986.   Mr.
  Tuttle served as  President of Great  American from  1974 to  September
  1989.  In December 1991, Mr. Tuttle resumed the President's position at
  Great American.

       Jeffrey L. Smith has served as Vice President and General  Manager
  of Great American Products since October 1991.  Prior to this and since
  1985 Mr. Smith served as the General Manager of Great American's Retail
  division.  Mr. Smith was appointed Secretary and a Director in  October
  1992.

       Mark Gottsacker has served as Treasurer and a Director since  July
  1998. Mr. Gottsacker has  served has Vice President  of Sales of  Great
  American Products.     Since June  1997,  which is  when he  began  his
  employment with  Great  American Products.    From 1993  to  1997,  Mr.
  Gottsacker was the general manager of Alamo Harley Davidson.
<PAGE>

  Item 11.        Executive Compensation

  Cash Compensation

       The following  table  sets forth  all  cash compensation  paid  or
  accrued by the  Company for services  rendered during  the years  ended
  December 31, 1999, and 1998 to  each director and executive officer  of
  the Company whose aggregate cash compensation exceeded $100,000:
<TABLE>

                                                   Other Annual    Long Term
     Name              Year   Salary     Bonus     Compensation   Compensation
  -------------------  ----   -------    -----     ------------   ------------
  <S>                  <C>   <C>          <C>       <C>             <C>
  Roger R. Tuttle      1999  $139,229     ----        ----           ----
  Chairman of the      1998  $141,163     ----        ----           ----
  Board of Directors,  1997  $138,500     ----      $3,850           ----
  And Chief Executive
  Officer

</TABLE>
       The Company provides certain executive officers and employees with
  fringe benefits.  These benefits, valued at their incremental cost, for
  any individual do not exceed 10% of reported cash compensation for such
  individual.

       Directors currently are not paid any fees for attendance at
  meetings of the Board of Directors.

  Compensation Pursuant to Plan

       The Company has a 401k Profit Sharing Plan and Trust for  eligible
  employees.  Employees of the Company  who have completed six months  of
  service are eligible to participate in the Plan under which the Company
  contributes amounts determined  from time  to time  at its  discretion.
  Company contributions vest in specified percentages per year commencing
  after 2  years and  generally  become fully  vested  after 6  years  of
  employment with the Company.  The annual contributions and  forfeitures
  allotted to any participant may not exceed the lesser of $10,000 or 25%
  of the  participant's  total  compensation.    Benefits  generally  are
  payable upon death or upon termination  of employment with the  Company
  or age 65.   Participants' account balances under  the Trust as of  the
  year ended December 31, 1999 for all executive officers as a group  and
  for Mr. Tuttle were $354,420 and $301,186 respectively.
<PAGE>
  Item 12.       Security Ownership of Certain Beneficial Owners and
                 Management
<TABLE>
       The following table provides information  as of December 31,  1999
  for each person who owned more than five (5%) percent of the  Company's
  Common Stock beneficially and by each director and each officer and all
  officers and directors as a group:

                    Name and                   Amount and
   Title            Address of                 Nature of          Percent
  Of Class       Beneficial Owner         Beneficial Ownership    of Class
  --------       ----------------         --------------------    --------
  <S>            <C>                           <C>                  <C>
  Security Ownership of Management:

  Common Stock   Tuttle Investments LTD        3,406,778            41.6%
                 1661 S. Seguin
                 New Braunfels, TX  78130

  Common Stock   All Directors and             3,498,778            42.8%
                 Officers as a Group

</TABLE>
       (1)       Starting in 1994 to January 1999, Mr. Tuttle has  gifted
            103,000 shares  to each  of his  children.   Mr.  Tuttle  has
            guardianship and  retains the  voting rights.   In  1999  Mr.
            Tuttle  formed  Tuttle  Investments  LTD,  a  family  limited
            partnership.  3,300,000 shares were gifted to the partnership
            in which Tuttle is the general partner and retains control.

  Item 13.  Certain Relationships and Related Transactions

       The Company has a note payable to Roger R. Tuttle, the Chairman of
  the Board, which is summarized as follows:

       Unsecured promissory note, due 12/31/00
       both principal and accrued interest payable
       to the major stockholder, interest at prime
       plus /% (8.75% at December 31, 1999)                   $509,758

       This note payable is subordinate  to Norwest Business Credit.  Mr.
  Tuttle is also a  guarantor of the line  of credit at Norwest  Business
  Credit.

       The Company  leases the  New Braunfels,  Texas facility  from  Mr.
  Tuttle for a monthly rental fee of $14,557.  The lease expires December
  31, 2010.
<PAGE>
                                  PART IV

  Item 14.       Exhibits, Financial Statements Schedules, and Reports on
                 Form 8-K

       (a)  1. Financial Statements:
                                                                      Page
                                                                      ----
            Dyna Group International, Inc. and Subsidiary

            Report of Independent Certified Public Accountants          16

            Consolidated Balance Sheets - December 31, 1999 and 1998    11

            Consolidated Statements of Operations - for the years
              ended December 31, 1999and 1998                           11

            Consolidated Statements of Changes in Stockholders'
              Equity - for the years ended December 31, 1999
              and 1998                                                  11

              Consolidated Statements of Cash Flows - for the
                years ended December 31, 1999 and 1998                  21

            Notes to Consolidated Financial Statements                  22


            2.          Exhibits:

            Reference is made to "Exhibit Index" beginning on page 31
            herein.

       (b)       Reports on Form 8-K

            An 8-K was filed in October 1998, notifying the change of
            auditors.
<PAGE>
  SIGNATURES
  -----------

       Pursuant to  the  requirements  of Section  13  or  15(b)  of  the
  Securities and 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)





  By   /s/ Roger R. Tuttle                         Date: March 29,2000
       -------------------                         -------------------
       Roger R. Tuttle, Chairman of the Board and
                        Chief Executive Officer


       Pursuant to the requirements of the Securities Exchange Act of
  1934, this report has been signed below by the following persons on
  behalf of the registrant and in the capacities and on the date
  indicated.



  By   /s/ Roger R. Tuttle                         Date: March 29,2000
       -------------------                         -------------------
       Roger R. Tuttle, Chairman of the Board and
                        Chief Executive Officer



  By   /s/ Jeffrey L. Smith                        Date: March 29,2000
       -------------------                         -------------------
       Jeffrey L. Smith, Secretary and Director


  By   /s/ Mark Gottsacker                         Date: March 29,2000
       -------------------                         -------------------
       Mark Gottsacker, Treasurer and Director


<PAGE>


                               EXHIBIT INDEX

  2 (a) Plan  and  Articles  of  Merger  between  Red Creek  Investments,
       Inc. and  Dyna Group  International, Inc.  dated August  22,  1986
       (incorporated  by  reference   to  Exhibit  2   (a)  to  Form   10
       Registration Statement File No. 0-17385).

  (b)  Agreement   and   Plan  of   Reorganization  between   Red   Creek
       Investments, Inc. and Dyna Tour Corporation dated August 22,  1986
       (incorporated  by  reference   to  Exhibit  2   (b)  to  Form   10
       Registration Statement File No. 0-17385)

  (c)  Agreement   and  Plan   of  Reorganization   between  Dyna   Group
       International,  Inc.  and  Great  American  Products,  Inc.  dated
       December 26, 1986 (incorporated by reference  to Exhibit 2 (c)  to
       Form 10 Registration Statement File NO. 0-17385).

  (d)  Agreement   and  Plan   of  Reorganization   between  Dyna   Group
       International, Inc. and XL Marketing Corporation dated  January 1,
       1997  (incorporated by reference  to  Exhibit  2 (d)  to   Form 10
       Registration Statement File No. 0-17385).

  3 (a)     Articles  of  Incorporation  (incorporated  by  reference  to
       Exhibit 3 (a) to Form 10 Registration Statement File No. 0-17385).

    (b)     By-Laws  (incorporation by reference to Exhibit 3 (b) to Form
       10 Registration Statement File NO. 0-17385).

  4 (a)     Specimen Common stock Certificate (incorporated by  reference
       to  Exhibit  4  (a)  to  Form 10  Registration Statement  File NO.
       0-17385).

 10 (a)    Asset  Purchase  Agreements  between General  Tire,  Inc.  and
       Hibdon Tire Centers, Inc. dated February 26, 1993 (incorporated by
       reference to Exhibit 10.1 and 10.2 to Form 8-K dated February  26,
       1993, Commission File NO. 0-17385).

  27   Financial Data Schedule

<PAGE>

               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                     Page
                                                                     ----
   Report of Independent Accountants                                 F-2

   Consolidated Balance Sheets as of December 31, 1999 and 1998      F-3

   Consolidated Statements of Income for the Years Ended
     December 31, 1999 and 1998                                      F-4

   Consolidated Statements of Changes in Stockholders' Equity
     for the Years Ended December 31, 1999 and 1998                  F-5

   Consolidated Statements of Cash Flows for the Years Ended
     December 31, 1999 and 1998                                      F-6

   Notes to Consolidated Financial Statements                        F-7

<PAGE>



                    REPORT OF INDEPENDENT ACCOUNTANTS




        To the Board of Directors and Stockholders
        Dyna Group International, Inc. and Subsidiary


        We  have audited the accompanying  consolidated balance sheets
        of   Dyna  Group  International,  Inc.   and  Subsidiary  (the
        "Company")  as of December 31, 1999 and  1998, and the related
        consolidated  statements of  income, changes  in stockholders'
        equity,  and  cash flows  for  the years  then  ended.   These
        financial  statements are the responsibility  of the Company's
        management.   Our responsibility is  to express an  opinion on
        these consolidated financial statements based on our audits.

        We conducted  our audits in accordance with generally accepted
        auditing standards.   Those standards require that we plan and
        perform  the  audits  to  obtain  reasonable  assurance  about
        whether   the  financial  statements  are   free  of  material
        misstatement.   An audit includes examining, on  a test basis,
        evidence   supporting  the  amounts  and  disclosures  in  the
        financial  statements.  An  audit also includes  assessing the
        accounting  principles used and significant  estimates made by
        management,  as  well  as  evaluating  the  overall  financial
        statement presentation.   We believe that our audits provide a
        reasonable basis for our opinion.

        In   our  opinion,   the  consolidated   financial  statements
        referred  to above present  fairly, in all  material respects,
        the    consolidated   financial   position   of   Dyna   Group
        International,  Inc. and  Subsidiary as  of December  31, 1999
        and  1998, and  the consolidated  results of  their operations
        and  their cash flows for the years  then ended, in conformity
        with generally accepted accounting principles.



        Certified Public Accountants
        March 7, 2000
        San Antonio, Texas
<PAGE>
<TABLE>
               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS
                        DECEMBER 31, 1999 AND 1998

                      ASSETS                           1999         1998
                                                    ----------    ----------
  <S>                                              <C>           <C>
  Current assets:
    Cash                                           $   10,496    $   12,481
    Receivables:
    Trade - net of allowance for doubtful
      accounts of $102,000 in 1999 and 1998         1,619,976     1,249,333
    Sale of joint venture                              83,064             -
    Inventories                                     2,398,037     2,311,124
    Prepaid expenses and other                        265,525       207,389
    Deferred income taxes                             120,084       138,340
                                                    ----------    ----------
           Total current assets                     4,497,182     3,918,667

  Property and equipment - net                        446,361       408,093
  Investment in joint venture                               -        83,064
  Cash surrender value of life insurance              103,234       103,074
                                                    ----------    ----------
           Total assets                            $5,046,777    $4,512,898
                                                    ==========    =========

       LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Cash overdraft                                 $  146,110    $        -
    Revolving line of credit                          769,219       771,339
    Current maturities of long-term debt               15,689         4,779
    Note payable to related party                     483,292       512,304
    Accounts payable                                  183,653       284,247
    Accrued expenses                                  162,510       131,460
    Due to joint venture                              284,040        32,774
                                                    ---------     ---------
           Total current liabilities                2,044,513     1,736,903

  Deferred income taxes                                 3,285        18,608
  Long-term debt - less current maturities             17,626         8,130
                                                    ---------     ---------
           Total liabilities                        2,065,424     1,763,641

  Stockholders' equity:
    Common stock, $0.001 par value,
      100,000,000 shares authorized;
      8,179,704 shares issued; 7,480,925
      shares outstanding (7,497,925
      shares in 1998)                                   8,180         8,180
    Additional paid-in capital                        974,313       974,313
    Retained earnings                               2,143,747     1,912,555
    Unearned compensation                              (2,315)      (10,030)
                                                    ---------     ---------
                                                    3,123,925     2,885,018

  Treasury stock - 698,779 and 681,779
    shares at cost for 1999 and 1998,
    respectively                                     (142,572)     (135,761)
                                                    ---------     ---------
           Total stockholders equity                2,981,353     2,749,257
                                                    ---------     ---------
           Total liabilities and stockholders'
             equity                               $ 5,046,777   $ 4,512,898
                                                    =========     =========

  The accompanying notes are an integral part of the consolidated
  financial statements.

                                    F-3
</TABLE>
<PAGE>
<TABLE>
               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                        1999         1998
                                                     ---------     ---------
<S>                                                <C>           <C>
Net sales                                          $ 9,293,363   $ 8,315,008
Cost of sales                                        5,239,259     4,645,475
                                                     ---------     ---------
Gross profit                                         4,054,104     3,669,533

Selling, general, and administrative expenses        3,594,365     3,139,440
                                                     ---------     ---------
Operating income                                       459,739       530,093
                                                     ---------     ---------
Other income (expense):
Interest and other income                               38,427        33,575
Interest expense                                      (135,704)     (246,142)
Gain on sale of assets                                   7,910       244,579
                                                     ---------     ---------
Total other income (expense)                           (89,367)       32,012
                                                     ---------     ---------
Income before provision for income taxes               370,372       562,105

Provision for income taxes                             139,180        38,256
                                                     ---------     ---------
Net income                                         $   231,192   $   523,849
                                                     =========     =========
Earnings per common share-basic and
  assuming dilution                                $      0.03   $      0.07
                                                     =========     =========
Weighted-average common shares outstanding           7,497,687     7,493,295
                                                     =========     =========

  The accompanying notes are an integral part of the consolidated
  financial statements.

                                    F-4
</TABLE>
<PAGE>
<TABLE>
               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1999 AND 1998

                                              Additional
                                      Common   Paid-In   Retained   Treasury    Unearned
                                      Stock    Capital   Earnings    Stock    Compensation      Total
                                     -------  --------   --------  ---------   ----------     ---------
  <S>                               <C>      <C>       <C>        <C>         <C>            <C>
  Balance at December 31, 1997      $  8,180 $ 974,313 $1,388,706 $ (131,084) $   (10,800)   $2,229,315

    Purchase of treasury stock            --        --         --    (11,622)          --       (11,622)
    Issuance of treasury stock            --        --         --      6,945       (6,945)            -
    Amortization                          --        --         --         --        7,715         7,715
    Net income                            --        --    523,849         --           --       523,849
                                     -------  --------   --------  ---------   ----------     ---------
  Balance at December 31, 1998         8,180   974,313  1,912,555   (135,761)     (10,030)    2,749,257

    Purchase of treasury stock            --        --         --     (6,811)          --        (6,811)
    Amortization                          --        --         --         --        7,715         7,715
    Net income                            --        --    231,192         --           --       231,192
                                     -------  --------   --------  ---------   ----------     ---------
  Balance at December 31, 1999      $  8,180 $ 974,313 $2,143,747 $ (142,572) $    (2,315)   $2,981,353
                                     =======  ========  =========  ==========  ==========     =========


                                                     Common Stock
                                           -----------------------------
  Share Amounts                                 Issued         Treasury
  -------------                               ----------     -----------
  <S>                                          <C>              <C>
  Balance at December 31, 1997                 8,179,704        681,779

    Purchase of treasury stock                        --          27,778
    Shares issued as compensation                     --         (27,778)
                                               ---------       ---------
  Balance at December 31, 1998                 8,179,704         681,779

    Purchase of treasury stock                        --          17,000
                                               ---------       ---------
  Balance at December 31, 1999                 8,179,704         698,779
                                               =========       =========

  The accompanying notes are an integral part of the consolidated
  financial statements.

                                    F-5
</TABLE>
<PAGE>
<TABLE>

               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1999 AND 1998
<CAPTION>
                                                      1999        1998
                                                   ---------    ---------
  <S>                                             <C>          <C>
  Cash flows from operating activities:
  Net income                                      $  231,192   $  523,849
  Adjustments to reconcile net income to
    net cash provided by operating activities:
  Depreciation and amortization                      235,730      272,696
  Amortization of unearned compensation                7,715        7,715
  Deferred income taxes                                2,933     (119,732)
  Gain on sale of assets                              (7,910)    (244,579)
  Noncash interest                                    10,000       88,959
  Changes in assets and liabilities:
  Trade accounts receivables                        (370,643)     794,552
  Inventories                                        (86,913)     402,315
  Prepaid expenses and other                         (56,067)     (58,797)
  Refundable income taxes and income taxes payable   (14,923)     369,023
  Accounts payable                                  (100,594)     (99,713)
  Accrued expenses                                    43,744     (253,777)
  Due to joint venture                               251,266      329,646
                                                   ---------    ---------
       Net cash provided by operating activities     145,530    2,012,157

  Cash flows from investing activities:
  Proceeds from sale of property                       7,910      855,680
  Capital expenditures                              (246,721)    (232,864)
  Distributions from unconsolidated affiliate-net         --       11,842
  Increase in other assets                                --      (57,329)
                                                   ---------    ---------
      Net cash provided by (used in) investing
          activities                                (238,811)     577,329
                                                   ---------    ---------
  Cash flows from financing activities:
  Cash overdraft                                     146,110           --
  Payments on long-term debt                          (6,871)    (693,688)
  Proceeds from notes payable                             --       79,936
  Payments on note payable                           (39,012)  (2,940,828)
  Proceeds from revolving line of credit           9,061,915   10,213,612
  Repayment of  revolving line of credit          (9,064,035)  (9,442,273)
  Purchase of treasury stock                          (6,811)     (11,622)
                                                   ---------    ---------
     Net cash provided by (used in) financing
       activities                                     91,296   (2,794,863)
                                                   ---------    ---------
     Net decrease in cash                             (1,985)    (205,377)

  Cash at beginning of year                           12,481      217,858
                                                   ---------    ---------
  Cash at end of year                             $   10,496   $   12,481
                                                   =========    =========
<PAGE>
  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

  Cash paid during the period for:
  Interest                                        $  106,600   $  224,284
  Income taxes                                       138,500   $  148,710

  NONCASH INVESTING AND FINANCING ACTIVITIES:

See Notes 14 and 17


  The accompanying notes are an integral part of the consolidated
  financial statements.

                                    F-6
</TABLE>
<PAGE>
               DYNA GROUP INTERNATIONAL, INC. AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  1.  Background and Basis of Presentation

  Dyna Group International, Inc. (the  "Parent") is a Nevada  corporation
  and conducts  all its  business  through its  wholly-owned  subsidiary,
  Great American Products, Ltd. (collectively, the "Company").

  The Company  designs,  manufactures,  and  markets  lines  of  consumer
  products,  as  well  as  products  for  industry  used  as  advertising
  specialties and  premiums,  utilizing  pewter and  white  metal  alloys
  centrifugally cast  in  rubber  molds.   These  products  include  belt
  buckles, model  miniatures,  key  chains, picture  frames,  and  pewter
  decorated products.   A substantial portion  of the Company's  products
  are manufactured by a Mexican company, in which the Company was a joint
  venture partner until December 1999.

  Effective September  15, 1999,  the Parent's  wholly-owned  subsidiary,
  Great American Products, was converted to a Texas Limited  Partnership,
  now named Great American Products, Ltd. (the "Ltd."), and Dyna Group of
  Texas L.L.C (the "L.L.C.") was created using capital contributions from
  the Parent.  In connection with this, the Parent contributed 1% of  its
  stock in the Ltd. to the L.L.C.   The conversion allows the Ltd. to  be
  taxed in the state  of Texas as a  partnership.  Accordingly, no  Texas
  franchise tax will be incurred after September 15, 1999.

  Principles of Consolidation

  The consolidated  financial  statements  include the  accounts  of  the
  Company  and  its   wholly-owned  subsidiary,   after  elimination   of
  intercompany accounts and transactions.

  Inventories

  Inventories are  valued  at  the lower  of  cost  (first-in,  first-out
  method) or market.

  Property and Equipment

  Property and equipment are stated at cost.  Depreciation is  calculated
  on the straight-line  and accelerated  methods based  on the  following
  estimated useful lives:  Building  improvements - 40 years;  machinery,
  equipment, and furnishings  - 5  to 7 years; and  molds and  dies  -  3
  years.

  Investment in Joint Venture

  The Company's investment in  the joint venture  is being accounted  for
  using the equity method of accounting  for the year ended December  31,
  1998.  During December 1999, the Company sold its interest in the joint
  venture.  For  the years ended  December 31, 1999  and 1998, the  joint
  venture  produced  exclusively  for  the  Company.    Accordingly,  the
  Company's pro  rata share  of  the 1998  profits  is reflected  in  the
  accompanying  consolidated  financial  statements  as  a  reduction  of
  inventory and cost of sales for the year ended December 31, 1998.
<PAGE>

  2.  Summary of Significant Accounting Policies

  Earnings Per Common Share

  Statement of  Financial Accounting  Standards  No. 128,  "Earnings  Per
  Share" ("SFAS  No.  128"),  provides for  calculation  of  "Basic"  and
  "Diluted" earnings per  share.  Basic  earnings per  share includes  no
  dilution and  is  computed  by  dividing  income  available  to  common
  shareholders  by  the   weighted  average  number   of  common   shares
  outstanding for the period.   Diluted earnings  per share reflects  the
  potential dilution of securities that could share in the earnings of an
  entity similar to fully diluted earnings per share.

   2.  Summary of Significant Accounting Policies (continued)

  Earnings Per Common Share (continued)

  Following is a  summary of  the basic  and diluted  earnings per  share
  calculations:

<TABLE>
                                                       Years Ended
                                                       December 31,
                                                     1999        1998
                                                  ----------------------
  <S>                                              <C>         <C>
  Basic and Diluted
  Net income as reported                           $  231,192  $   523,849
  Weighted-average common shares outstanding        7,497,687    7,493,295
  Basic and diluted earnings per share                   0.03         0.07
</TABLE>
<PAGE>

  Concentration of Credit Risk

  Financial  instruments,  which  potentially  subject  the  Company   to
  concentration of credit risk, consist principally of cash and  accounts
  receivable.   The  Company places  its  cash with  high-credit  quality
  financial institutions.

  Fair Value of Financial Instruments

  Statement of Financial Accounting Standards No. 107, "Disclosure  About
  Fair  Value  of  Financial  Instruments"  ("SFAS  No. 107"),   requires
  disclosure of  fair  value  information  about  financial  instruments,
  whether or not recognized in the consolidated balance sheet, for  which
  it is practicable to estimate that value.  In cases where quoted market
  prices are  not available,  fair values  are based  on estimates  using
  present value  or other  valuation techniques.   Those  techniques  are
  significantly affected by the  assumption used, including the  discount
  rate and estimates of future cash  flows.  In that regard, the  derived
  fair  value  estimates  cannot   be  substantiated  by  comparison   to
  independent markets  and,  in many  cases,  could not  be  realized  in
  immediate settlement of the instrument.  SFAS No. 107 excludes  certain
  financial instruments from its  disclosure requirements.   Accordingly,
  the aggregate  fair  value  amounts  presented  do  not  represent  the
  underlying value of the Company.

  Fair values  of financial  instruments were  estimated by  the  Company
  using the following methods and assumptions:


  * Carrying   amounts  approximate   fair   values  of   the   following
    instruments because of  the short maturity and/or frequent  repricing
    of these instruments:

    -     Cash
    -     Accounts receivable, including trade and employee receivables
    -     Accounts payable
    -     Notes payable

  * The carrying  value of the Company's  long-term debt is estimated  to
    approximate fair  value based  on the  quoted market  prices for  the
    same  or similar  issues or  on the  current rates  available to  the
    Company  for debt  of  the  same remaining  maturities  with  similar
    collateral requirements.

  Business Segments

  The Company  presently  operates  in one  business  segment,  "Consumer
  Goods."

<PAGE>
   2.  Summary of Significant Accounting Policies (continued)

  Recent Accounting Pronouncements

  Statement of Financial  Accounting Standards No.  133, "Accounting  for
  Derivative  Instruments  and  Hedging  Activities"  ("SFAS  No.  133"),
  requires companies  to recognize  all  derivative contracts  as  either
  assets or liabilities in the balance sheet and to measure them at  fair
  value.  If certain conditions are met, a derivative may be specifically
  designated as a hedge, the objective of which is to match the timing of
  gain or loss recognition on the hedging derivative with the recognition
  of (i) the changes in the fair  value of the hedged asset or  liability
  that are attributable to the hedge risk or (ii) the earnings effect  of
  the hedged forecasted transaction.  For a derivative not designated  as
  a hedging instrument, the gain or  loss is recognized in income in  the
  period of change.  SFAS No. 133 is effective for all fiscal quarters of
  fiscal years beginning after June 15, 1999.

  Historically, the  Company has  not entered  into derivative  contracts
  either  to   hedge  existing   risks  or   for  speculative   purposes.
  Accordingly, the Company does not expect  adoption of the new  standard
  to have a material effect on its consolidated financial statements.

  Statement of  Financial Accounting  Standards No.  135, "Rescission  of
  Financial Accounting  Standards  Board  No.  97  ("SFAS  No.  75")  and
  Technical Corrections"  ("SFAS  No. 135"),  rescinds  SFAS No.  75  and
  amends Statement of Financial Accounting Standards Board No. 35.   SFAS
  No. 135 also  amends other  existing authoritative  literature to  make
  various  technical   corrections,   clarify   meanings,   or   describe
  applicability under changed conditions.  SFAS No. 135 is effective  for
  financial statements issued for fiscal years ending after February  15,
  1999.  The adoption of SFAS No. 135  did not have a material effect  on
  the consolidated financial statements.

  Use of Estimates

  The preparation of  financial statements in  conformity with  generally
  accepted accounting principles  requires management  to make  estimates
  and  assumptions  that  affect  the  reported  amounts  of  assets  and
  liabilities and disclosure of contingent assets and liabilities at  the
  date of the financial statements and  the reported amounts or  revenues
  and expenses during the reporting periods.  Actual results could differ
  from those estimates.

  Income Taxes

  The Company accounts for income taxes  in accordance with Statement  of
  Financial Accounting Standards No. 109, "Accounting for Income  Taxes,"
  which requires recognition of deferred  tax liabilities and assets  for
  the expected future tax consequences of events that have been  included
  in the  financial  statements  or tax  returns.    Under  this  method,
  deferred tax  liabilities  and  assets  are  determined  based  on  the
  difference between the financial statement and tax basis of assets  and
  liabilities using enacted tax rates in effect for the year in which the
  differences are expected to reverse.
<PAGE>
  Reclassifications

  Certain amounts  have been  reclassified  from prior  presentations  at
  December 31, 1998 to conform to  classifications at December 31,  1999.
  There is  no  effect on  previously  reported net  income  or  retained
  earnings.


   3.  Inventories
<TABLE>
  The major components of inventories are as follows:


                                                     December 31,
                                                  1999          1998
                                                -----------------------
  <S>                                            <C>         <C>
  Raw materials                                  $  516,308  $  557,914
  Work in progress                                   55,079      64,723
  Finished goods                                  1,815,764   1,678,062
  Retail store                                       10,886      10,425
                                                  ---------    ---------
                                                 $2,398,037  $2,311,124
</TABLE>


   4.  Property and Equipment
<TABLE>
  Property and equipment consist of the following:


                                                     December 31,
                                                   1999          1998
                                                ----------------------
  <S>                                            <C>        <C>
  Building improvements                          $   49,210 $   40,938
  Machinery, equipment, and furnishings             402,234    329,040
  Molds and dies                                  2,640,808  2,448,276
                                                  ---------  ---------
                                                  3,092,252  2,818,254
  Less accumulated depreciation and amortization  2,645,891  2,410,161
                                                  ---------  ---------
                                                 $  446,361 $  408,093

</TABLE>
<PAGE>
   5.  Revolving Line of Credit

  During 1998, the  Company secured  a revolving  line of  credit with  a
  banking facility with  a maximum borrowing  limit of  $4,000,000.   The
  line of credit  carries a  floating interest  rate of  prime plus  1.5%
  (8.50%  and  7.75%   base  rate  at   December  31,   1999  and   1998,
  respectively).    The   line  of  credit   is  secured  by   equipment,
  intangibles, inventories,  receivables,  investment property,  and  the
  lockbox bank account.  The Company  is required to deposit any and  all
  collections of accounts receivable and all other proceeds of collateral
  into the lockbox account.   The funds in  the lockbox account are  then
  applied as a paydown on the line of credit.  The remaining balance,  if
  any, in the lockbox account is  transferred to the Company's  operating
  account.  The line of credit is guaranteed by the majority stockholder.
  The agreement  contains certain  restrictive covenants  concerning  the
  maintenance of certain  financial statement ratios  and limitations  on
  capital expenditures, and it limits the  amount of cash dividends  that
  may be paid on the  Company's stock to $50,000  per year.  At  December
  31, 1999  and  1998,  the  Company was  in  compliance  with  all  debt
  covenants or  had obtained  a  waiver.   The  note requires  a  minimum
  monthly interest charge of $5,000 and  matures on March 31, 2001.   The
  line of credit is subject to certain prepayment penalties.


   6.  Note Payable to Related Party

  The  8.50%  unsecured  promissory  note  to  the major stockholder was
  extended to December 31, 2000 and is subordinate to the revolving line
  of credit discussed in note 5.

  Interest expense relating to this note for the years ended December 31,
  1999 and 1998 was $44,905 and  $33,345, respectively, of which  $26,466
  and $8,229 remained unpaid at December 31, 1999 and 1998, respectively.


   7.  Long-Term Debt
<TABLE>
  Long-term debt consists of the following:



                              Monthly   Interest Payable     December 31,
     Collateral             Installment   Rate   Through    1999      1998
                            ----------- -------- --------  ----------------
  <S>                           <C>       <C>       <C>   <C>       <C>
  Bank installment loan-car     $1,243    8.75%     2001  $ 25,181  $     --
  Finance company-equipment        438    8.75%     2001     8,134    12,909
                                                           -------   ------
                                                            33,315    12,909
  Less current maturities                                   15,689     4,779
                                                           -------   -------
                                                          $ 17,626  $  8,130
                                                           =======   =======
</TABLE>
<PAGE>
   8.  Income Tax and Deferred Income Tax
<TABLE>
  The provision for taxes on income consists of and represents the tax
  effect of the following:

                                      Years Ended
                                      December 31,
                                   1999         1998
                                 ------------------------
  <S>                           <C>           <C>
  Current:
  Federal                       $  128,271    $   140,247
  State                              7,976         17,741
  Deferred                           2,933       (119,732)
                                 ---------     ----------
                                $  139,180    $    38,256

</TABLE>
   8.  Income Tax and Deferred Income Tax (continued)
<TABLE>
  Income tax expense from continuing operations differs from the amount
  which would be provided by applying the statutory federal income tax
  rates because of the following:
                                                   Years Ended
                                                   December 31,
                                                 1999        1998

                                              ---------------------
  <S>                                         <C>        <C>
  Computed at the expected statutory rate     $ 125,926  $ 191,116
  State income taxes                              5,264     11,709
  Permanent differences                           6,710      6,000
  Reduction in valuation allowance                   --   (182,000)
  Other                                           1,280     11,431
                                               --------   --------
                                              $ 139,180  $  38,256
                                               ========   ========

  The temporary differences that result in deferred tax assets are as
  follows:
                                                  December 31,
                                               1999         1998
                                             ----------------------
  <S>                                        <C>          <C>
  Deferred tax assets:
    Allowance for doubtful accounts          $   34,680   $   37,740
    Accruals                                     12,227        6,237
    Inventories                                  22,630       23,763
    Contributions carryforward                   50,547       70,600
                                              ---------    ---------
      Gross deferred tax assets                 120,084      138,340
  Valuation allowance                                --           --
                                              ---------    ---------
      Total deferred tax assets                 120,084      138,340

  Deferred tax liabilities-depreciation          (3,285)     (18,608)
                                              ---------    ---------
      Net deferred tax asset                 $  116,799   $  119,732
                                              =========    =========
</TABLE>
<PAGE>
   9.  Accrued Expenses
<TABLE>
  Accrued expenses consist of the following:

                                                  December 31,
                                              1999           1998
                                            -----------------------
  <S>                                       <C>          <C>
  Salary, payroll taxes, and other          $   33,722   $   22,389
  Interest                                      35,962       16,858
  Accrued commissions and royalties             91,978       79,050
  Sales taxes                                      848          469
  Income taxes payable                              --       12,694
                                             ---------    ---------
                                            $  162,510   $  131,460
                                             =========    =========
</TABLE>

  10.  Employee Benefit Plan

  The Company has a qualified profit sharing plan for eligible employees.
  Contributions to the plan  are determined on  a discretionary basis  by
  the Board of Directors.  The Company made a $36,800 contribution during
  1999 (no contribution made in 1998).


  11.  Commitments

  Operating Leases

  The Company leases its facility under an operating lease agreement with
  the majority  stockholder which  expires in  2010.   The  Company  also
  leases its computer equipment from the majority stockholder on a month-
  to-month basis.    The  Company leases  other  equipment  from  outside
  sources in the normal course of business with various expiration dates.
  Total rent  expense  was $162,899  and  $135,416 for  the  years  ended
  December 31,  1999  and  1998,  respectively,  of  which  $149,903  and
  $123,600, respectively, was to the related party.

  Future minimum  rental commitments  as of  December  31, 1999  were  as
  follows:

<TABLE>
                                            Related
                                             Party     Other      Total
                                           --------  --------   --------
      <S>                               <C>          <C>        <C>
      Year ending December 31,
            2000                        $   174,694  $  14,280  $  188,974
            2001                            185,135      6,684     191,819
            2002                            195,575        354     195,929
            2003                            205,356                205,356
            2004                            215,628                215,628
            Thereafter                    1,539,967              1,539,967
                                        -----------   ---------  ---------
                                        $ 2,516,355  $  21,318   $2,537,673
                                         ==========   ========    =========
</TABLE>
<PAGE>
  11.  Commitments (continued)

  Future Royalty Guarantees

  At December  31, 1999,  commitments for  royalty guarantees  to  sports
  organizations and other commercial entities were as follows:



     Year ending December 31,
          2000                                          $    59,000
          2001                                               50,500
          2003                                               65,500
                                                         ----------
                                                        $   175,000


  The Company  has  entered  into  employment  agreements  with  two  key
  employees.    Additionally,  the  Company  has  entered  into  a  stock
  repurchase agreement with the majority stockholder of the Company.

  Under these agreements, the Company and  two employees are required  to
  purchase  all  or  a  portion  of  the  shares  held  by  the  majority
  stockholder upon his death.  The agreements establish a purchase  price
  which is  the average  daily "asked  price" over  the six-month  period
  ending on the date of death.  Any proceeds from existing life insurance
  policies, owned by the Company for  the benefit of the Company and  the
  two employees, on the  life of the majority  stockholder would be  paid
  toward the purchase  price.  At  December 31, 1999,  the Company  owned
  life insurance policies on  the life of  the majority stockholder  with
  face amounts totaling $1,250,000.  Premiums  paid on behalf of the  two
  employees will be repaid from the  proceeds of the life insurance  upon
  death of the majority stockholder.


  12.  Foreign Operations and Export Sales

  The Company markets its  product both domestically and  internationally
  from its  facility in  New  Braunfels, Texas.    Export sales  were  as
  follows:

  <TABLE>

                                       Years Ended
                                       December 31,
                                    1999            1998
                                  ------------------------
  <S>                             <C>          <C>
  Europe                          $    86,427  $   207,614
  Australia                            23,976       44,502
  Other                                20,262       27,046
                                   ----------   ----------
                                  $   130,665  $   279,162

  </TABLE>
<PAGE>

  12.  Foreign Operations and Export Sales (continued)

  In August 1994, the Company entered into a joint venture agreement with
  Mexican individuals for the manufacturing and painting of its products.
  In December 1999, the Company sold its ownership interest in the  joint
  venture to the joint  venture partners for  its carrying amount,  which
  approximated fair value.  The Company's ownership interest in the joint
  venture through the  date of  sale was 40%,  with 60%  held by  Mexican
  individuals.  The investment was accounted for using the equity  method
  of accounting.  The Company's portion of the income generated from this
  joint venture through the date of sale is reflected in the accompanying
  consolidated financial statements as a reduction of inventory and  cost
  of sales  because  the  joint  venture  produced  exclusively  for  the
  Company.  Financial information  for this joint venture  as of and  for
  the year ended December 31, 1998 follows:


  Current assets                           $ 275,928
  Noncurrent assets                           54,376
  Current liabilities                        107,410
  Stockholders' equity                       222,895
  Net sales                                2,541,742
  Gross margin                               527,990
  Net income                                 458,028

  For the years ended December 31,  1999 and 1998, the Company  purchased
  products  from  the  joint   venture  of  $2,292,601  and   $2,541,742,
  respectively.


  13.  Major Customers

  The Company sells to over 5,000 customers and one accounted for 18%  of
  sales  for  the   year  ended  December   31,  1999   (20%  in   1998).
  Additionally, this customer accounted for 6% and 3% of the  outstanding
  accounts receivable at December 31, 1999 and 1998, respectively.


  14.  Sale of Land and Building

  On May 1, 1998, the Company sold land and a building in Illinois.   The
  proceeds of the  sale were used  to payoff related  mortgage and  sales
  expenses.  The Company received approximately $110,000 in cash from the
  sale.  The transaction  resulted in a gain  of $288,819 which has  been
  included in the consolidated statement of income.


  15.  Stockholders' Equity

  In 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.
<PAGE>
  In the  third quarter  of 1998,  the Company  issued 27,778  shares  of
  treasury stock  to employees  as  a bonus.    In connection  with  this
  transaction, the Company has  recorded $6,945 in unearned  compensation
  which is being amortized over three years.

  In December 1999, the Company announced that they would purchase up  to
  a 1,000,000 shares  of outstanding common  stock.  As  of December  31,
  1999, the Company purchased 17,000 shares of stock for $6,811.

  16.  Litigation

  The Company  is a  plaintiff in  a  lawsuit filed  against one  of  its
  vendors  for  alleged  sales  of   defective  glue  products  used   in
  manufacturing.   The  Company has  incurred  legal fees  in  excess  of
  $100,000 related to this lawsuit, which have been expensed as incurred.
  The case is expected to go to trial in May 2000 and management believes
  a favorable outcome is likely.


  17.  Noncash Investing and Financing Activities

  The consolidated statements of cash flows do not reflect the  following
  noncash investing and financing activities:

  -     Equipment was purchased in the year ended December 31, 1999  with
  direct financing of $27,277.

  -     Accrued interest of $10,000 on  the unsecured promissory note  to
    the majority stockholder  was rolled over into the principal  balance
    of the note for the year ended December 31, 1999.

  -     The Company sold its investment in joint venture for a short-term
  receivable.


<TABLE> <S> <C>

<ARTICLE> 5

<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               DEC-31-1998
<CASH>                                          10,496
<SECURITIES>                                         0
<RECEIVABLES>                                1,721,976
<ALLOWANCES>                                   102,000
<INVENTORY>                                  2,398,037
<CURRENT-ASSETS>                             4,497,182
<PP&E>                                         446,361
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                               5,046,777
<CURRENT-LIABILITIES>                        2,044,513
<BONDS>                                              0
                                0
                                          0
<COMMON>                                         8,180
<OTHER-SE>                                   3,115,745
<TOTAL-LIABILITY-AND-EQUITY>                 5,046,777
<SALES>                                      9,293,363
<TOTAL-REVENUES>                             9,293,363
<CGS>                                        5,239,259
<TOTAL-COSTS>                                5,239,259
<OTHER-EXPENSES>                             3,139,440
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             135,704
<INCOME-PRETAX>                                370,372
<INCOME-TAX>                                   139,180
<INCOME-CONTINUING>                            231,192
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   231,192
<EPS-BASIC>                                      .03
<EPS-DILUTED>                                      .03


</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission