UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
[ ] Transition Report pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 33-55254-03
DYNAMIC ASSOCIATES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Nevada 87-0473323
- - ------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
7373 North Scottsdale Road, Suite B-150
Scottsdale, Arizona 85253
- - --------------------------------------- ----------
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (602) 483-8700
Indicate by a 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
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Outstanding as of
Class April 15, 1996
- - --------------------------------------- ------------------
$.001 par value Class A Common Stock 7,712,500 shares
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF PRESENTATION
General
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended March 31, 1996, are not necessarily indicative of the results that can be
expected for the year ending December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had $417,219 cash in the bank. There is
no certainty that the Company can meet its current financial commitments.
The Company is a development stage Company engaged in the acquisition and
development of microwave technologies for medical purposes.
Item 5. Other Information.
MICROWAVE
During the period the Company's wholly owned subsidiary Microwave Medical
Corp. ("MMC"), formerly Microthermia Acquisition Corporation, entered into a
license agreement with Microthermia Technology, Inc. (of California), whereby
MMC obtained an exclusive license to develop and manufacture medical device
products related to the treatment of spider veins (telangiectasia). The license
is for an initial period of two years with automatic one year renewals for the
next eight years, at no cost, (total license period of 10 years). The license is
prepaid for the first two years, and, after January 16, 1998, MMC will pay a
royalty of two percent (2%) of the Net Sales Revenues on all licensed products
sold. MMC expended $107,538 on development of the license product during the
period.
<PAGE>
P & H LABORATORIES, INC. ("P & H")
The agreement (dated December 18, 1995) with P & H which provides for the
acquisition of P & H by the Company was extended to April 23, 1996. The
agreement provides for the Company to acquire up to 100% of P & H in two stages.
The first stage is the acquisition of 50% of P & H for $1,000,000. The second
stage (which is optional) provides for the Company to acquire the additional 50%
for up to two years after the first 50% is acquired. On April 23, 1996, $300,000
was paid and a check dated May 4, 1996 in the amount of $700,000 was given to
finalize the P & H acquisition. Regulation S stock was sold to raise the money
to complete the transaction.
MICROTHERMIA TECHNOLOGY, INC. ("MTI")
The agreement with MTI, (as previously reported), which has been approved
by the majority of MTI shareholders, requires the approval of the California
Department of Corporations which to date has not been forthcoming. Minority
shareholders of MTI have complained to the California Department of Corporations
as they do not want the transaction to proceed, and it remains uncertain as to
whether this agreement can or will be completed or not. Only $1,000 was advanced
to MTI during the period, and the Company's subsidiary entered into a license
agreement with MTI, (see above).
RESULTS OF OPERATIONS
The Company has not had operations that have generated income since its
inception. The only source of funds has been from the sale of its common stock
which has been used to pay expenses and make advances to its subsidiary (MMC)
for development of its technology and to P & H as part of the acquisition
agreement.
During the quarter ended March 31, 1996, management fees of $89,625 were
paid or accrued to various individuals ($48,000 is accrued at March 31, 1996).
The Company's President received $30,000, and the Secretary/Treasurer received
$15,000.
Also during the quarter $22,500 was paid to an entity controlled by the
Company's Secretary for rent and other administrative services.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
99-1 Financial Statements as of March 31, 1996
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
DYNAMIC ASSOCIATES, INC.
DATED: May 14, 1996 /S/ Logan B. Anderson
---------------------
Logan B. Anderson, Secretary/Treasurer
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31,
1996
------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 417,219
Loan receivable - related party 207,000
Accrued interest 11,743
Option 30,000
------------
TOTAL CURRENT ASSETS 665,962
EQUIPMENT 88,546
OTHER ASSETS
Note receivable 92,953
Organization Costs 1,060
------------
$ 848,521
============
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 195,246
Bridge loan 220,000
Income taxes payable 800
Accrued expenses 40,738
------------
TOTAL CURRENT LIABILITIES 456,784
STOCKHOLDERS' EQUITY Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding
7,012,500 shares 7,013
Additional paid-in capital 1,334,987
Deficit accumulated during the
development stage (950,263)
------------
TOTAL STOCKHOLDERS' EQUITY 391,737
------------
$ 848,521
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
7/20/89
Three months ended (Date of
March 31, inception)
1996 1995 to 3/31/96
------------ --------- ----------
<S> <C> <C> <C>
Net Sales $ - 0 - $ - 0 - $ - 0 -
Cost of sales - 0 - - 0 - - 0 -
------------ --------- ----------
GROSS PROFIT - 0 - - 0 - - 0 -
General and Administrative
expenses 221,050 - 0 - 784,072
Research and development 107,538 - 0 - 107,538
Depreciation and amortization 659 - 0 - 910
Interest expense 9,670 - 0 - 11,117
Bad debts - 0 - - 0 - 58,380
------------ --------- ----------
338,917 - 0 - 962,017
------------ --------- ----------
NET LOSS BEFORE OTHER (338,917) - 0 - (962,017)
OTHER INCOME
Interest 9,121 - 0 - 13,354
------------ --------- ----------
NET LOSS BEFORE INCOME TAXES (329,796) - 0 - (948,663)
INCOME TAXES - 0 - - 0 - 1,600
------------ --------- ----------
NET LOSS $ (329,796) $ - 0 - $ (950,263)
============ ========= ==========
Net income (loss) per weighted
average share $ (.05) $ .00
============ =========
Weighted average number of
common shares used to
compute net income (loss)
per weighted average share 7,000,687 1,000,000
============ =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Deficit
Accumulated
Common Stock Additional
Stock During
Par Value $.001 Paid-in
Subscription Development
Shares Amount Capital
Receivable Stage
------------ ---------- -------------
- - -------------- ------------
<S> <C> <C> <C> <C>
<C>
Balances at 7/20/89
(Date of inception) - 0 - $ - 0 - $ - 0 - $
- 0 - $ - 0 -
Issuance of common
stock (restricted)
at $.001 per share
at 7/20/89 1,000,000 1,000
(1,000)
Net income for period
- 0 -
------------ ---------- -------------
- - -------------- ------------
Balances at 12/31/89 1,000,000 1,000 - 0 -
(1,000) - 0 -
Net income for year
- 0 -
------------ ---------- -------------
- - -------------- ------------
Balances at 12/31/90 1,000,000 1,000 - 0 -
(1,000) - 0 -
Cash received for
stock subscription
1,000
Net loss for year
(1,000)
------------ ---------- -------------
- - -------------- ------------
Balances at 12/31/91 1,000,000 1,000 - 0 -
- 0 - (1,000)
Net income for year
- 0 -
Balances at 12/31/92 1,000,000 1,000 - 0 -
- 0 - (1,000)
Net income for year
- 0 -
------------ ---------- -------------
- - -------------- ------------
Balances at 12/31/93 1,000,000 1,000 - 0 -
- 0 - (1,000)
Net income for year
- 0 -
------------ ---------- -------------
- - -------------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
(Unaudited)
Deficit
Accumulated
Common Stock Additional
Stock During
Par Value $.001 Paid-in
Subscription Development
Shares Amount Capital
Receivable Stage
------------ ---------- -------------
- - -------------- ------------
<S> <C> <C> <C>
<C> <C>
Balances at 12/31/94 1,000,000 1,000 - 0 -
- 0 - (1,000)
Issuance of common
stock (restricted)
for services at
$.001 per share
at 9/30/95 3,500,000 3,500
Sale of common stock
(restricted) at $.05
per share at 9/30/95 505,000 505 24,745
Sale of common stock
(restricted) at $1.00
per share at 9/30/95 511,000 511 510,489
Sale of common stock
(restricted) at $.05
per share at 12/27/95 745,000 745 36,505
Sale of common stock
(restricted) at $1.00
per share at 12/29/95 739,000 739 738,261
Net loss for year
(619,467)
------------ ---------- -------------
- - -------------- ------------
Balances at 12/31/95 7,000,000 7,000 1,310,000
- 0 - (620,467)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
(Unaudited)
Deficit
Accumulated
Common Stock Additional
Stock During
Par Value $.001 Paid-in
Subscription Development
Shares Amount Capital
Receivable Stage
------------ ---------- -------------
- - -------------- ------------
<S> <C> <C> <C> <C>
<C>
Sale of common stock
(Regulation S) at
$2.00 per share
at 3/25/96 $ 12,500 $ 13 $ 24,987 $
$
Net loss for period
(329,796)
----------- ----------- -------------
- - -------------- ------------
Balances at 3/31/96 7,012,500 $ 7,013 $ 1,334,987 $
- 0 - $ (950,263)
=========== =========== =============
============== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
7/20/89
Three months ended (Date of
March 31, inception)
1996 1995 to 3/31/96
------------ ---------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) $ (329,796) $ - 0 - $ (950,263)
Adjustments to reconcile net
(loss) to cash used by
operating activities:
Depreciation & amortization 659 - 0 - 910
Bad debt - 0 - - 0 - 56,080
Stock issued for services - 0 - - 0 - 3,500
Fee added to loan - 0 - - 0 - 20,000
Changes in assets and
liabilities:
Accounts payable 79,253 - 0 - 195,246
Income taxes payable (800) - 0 - 800
Accrued expenses 39,516 - 0 - 40,738
------------ ---------- -----------
NET CASH USED BY
OPERATING ACTIVITIES (211,168) - 0 - (632,989)
INVESTING ACTIVITIES
Loans to related party and
accrued interest (2,541) - 0 - (218,743)
Loan - other (92,953) - 0 - (149,033)
Purchase of equipment (82,095) - 0 - (89,316)
Purchase of option - 0 - - 0 - (30,000)
Organization costs - 0 - - 0 - (1,200)
------------ ---------- -----------
NET CASH USED BY
INVESTING ACTIVITIES (177,589) - 0 - (488,292)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
7/20/89
Three months ended (Date of
March 31, inception)
1996 1995 to 3/31/96
------------ ---------- -----------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Proceeds from sale of common
stock $ 25,000 $ - 0 - $ 1,338,500
Loan proceeds - 0 - - 0 - 200,000
------------ ---------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 25,000 - 0 - 1,538,500
INCREASE (DECREASE)IN CASH
AND CASH EQUIVALENTS (363,757) - 0 - 417,219
Cash and cash equivalents at
beginning of year 780,976 - 0 - - 0 -
------------ ---------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 417,219 $ - 0 - $ 417,219
============ ========== ===========
SUPPLEMENTAL INFORMATION Cash paid for:
Interest $ 78 - 0 - $ 1,525
Income taxes 800 - 0 - 800
=========== ========= ===========
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Dynamic
Associates, Inc. March 31, 1996 financial statements and it qualified in its
entirely by reference to such financial statements.
</LEGEND>
<CIK> 0000878146
<NAME> Dynamic Associates, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 417,219
<SECURITIES> 0
<RECEIVABLES> 218,743
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 665,962
<PP&E> 88,975
<DEPRECIATION> (429)
<TOTAL-ASSETS> 848,521
<CURRENT-LIABILITIES> 456,784
<BONDS> 0
7,013
0
<COMMON> 0
<OTHER-SE> 384,724
<TOTAL-LIABILITY-AND-EQUITY> 848,521
<SALES> 0
<TOTAL-REVENUES> 9,121
<CGS> 0
<TOTAL-COSTS> 329,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,670
<INCOME-PRETAX> (329,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (329,796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (329,796)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
