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 June 30, 1997
[ ] 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 Small Business Issuer as specified in its charter)
Nevada 87-0473323
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
7373 North Scottsdale Road, Suite B-169
Scottsdale, Arizona 85253
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (602) 483-8700
Indicate by a check mark whether the issuer (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.
Class Outstanding as of June 30, 1997
- ------------------------------------ --------------------------------------
$.001 par value Class A Common Stock 12,855,400 shares
1
<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 six
months ended June 30, 1997, are not necessarily indicative of the results that
can be expected for the year ending December 31, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company is engaged in (i) the development and acquisition of microwave
technologies for medical purposes through MMC, a wholly owned subsidiary, (ii)
managing the operations of psychiatric/geriatric units for various hospitals
through Genesis and GCCA, wholly owned subsidiaries, and (iii) the manufacturing
of highly technologically advanced microwave components and subsystems for the
communications and aerospace industries through P&H, a 50% owned subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had $3,435,823 in cash and cash equivalents.
The Company, for the six months ended June 30, 1997 incurred a loss of $.06 per
share after deducting $1,424,995 for amortization of goodwill and debt costs and
depreciation. The cost of depreciation and goodwill and debt cost amortization
is approximately $.11 per share for the six months ended June 30, 1997. Also,
for the six months ended June 30, 1997, cash flow generated from operations was
approximately $.05 per share.
The Company through its 50% owned subsidiary, P&H Laboratories, operates in the
industry of manufacturing highly technologically advanced microwave components
and subsystems for the communications and aerospace industries. P&H expects to
generate sufficient funds for working capital for the next quarter. The Company
also is engaged in the acquisition and development of microwave technologies for
medical purposes through its subsidiary Microwave Medical Corporation. This
subsidiary has not yet had any sales and for the next quarter will be dependent
on the Company for operating expenses.
2
<PAGE>
Genesis, a Louisiana corporation, is a 100% owned subsidiary of the Company. It
provides elderly healthcare and gero-psychology services to small healthcare
facilities unable to provide these services in house. The Genesis treatment
program conforms to the guidelines of the JCAHO Accreditation Manual for
Hospitals and Medical Standards. The program is reimbursed at cost by Medicare
when established as a distinct part unit of a hospital which qualifies for an
exemption from the Medicare Prospective Payment System("PPS"). The PPS exemption
provides for a cost plus reimbursement system for the unit, which allows the
hospital to receive full reimbursement of the direct operating expenses, plus an
allocation to the unit of a substantial portion of the hospital's overall
overhead and capital costs. Genesis , together with GCCA, expects to generate a
profit.
Item 5. Other Information.
Microwave Medical Corporation (MMC)
The Company's wholly owned subsidiary Microwave Medical Corporation ("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 is
also researching and developing its own various microwave medical technologies
for the treatment of certain medical conditions.
P&H Laboratories (P&H)
On April 23,1996, the Company acquired 50% of the outstanding common stock of
P&H, a California corporation, for $1,000,000, together with an exclusive two
year option expiring on April 23, 1998 to acquire the remaining 50% of P&H for
an additional $1,000,000. P&H is a modern microwave component designer and
manufacturer. Devices produced at P&H are currently being used on most NASA and
military satellites, as well as communications satellites throughout the world.
Genesis Health Management Corporation (Genesis)
In December 1996, the Company purchased 100% of the outstanding common stock of
Genesis for $25,373,000. Of the purchase price, $15,050,000 was paid in cash or
notes and accounts payable and $10,323,000 was paid by issuing 3,100,000 shares
of the Common Stock of the Company at a value of $3.33 per share. The note
issued in connection with the acquisition of Genesis was paid in full on March
3, 1997. Genesis had been operating in Louisiana for 3 years prior to the
purchase by the Company. Genesis is in the business of managing and operating
psychiatric/geriatric units in various hospitals (both in-patient and
out-patient). At June 30, 1997, Genesis had 27 contracted units with billings
out to 24 of them. Genesis has contracts with hospitals in the states of
Louisiana, Arkansas, Mississippi and Tennessee.
Geriatric Care Centers of America, Inc. (GCCA)
On March 13, 1997, Geriatric Care Centers of America ("Geriatric"), a
corporation organized pursuant to the laws of the state of Tennessee, merged
with Geriatric Care Centers Acquisition Corporation, for
3
<PAGE>
$500,000 in cash and 150,000 shares of Common Stock of the Company. The
surviving corporation is Geriatric Care Centers of America, Inc. ("GCCA"), with
its registered office at 1613 Jimmie Davis Highway, Bossier City, Louisiana,
71112. The Company owns 100% of GCCA. GCCA is also in the business of managing
and operating psychiatric/geriatric units in hospitals. At June 30, 1997, GCCA
had 4 billable units. The financial statements at June 30, 1997 do not include
any income or expenses for GCCA for the first quarter of 1997, as it was
acquired late in the quarter. See page F-5 for a Statement of Operations that
includes GCCA for all of 1997.
RESULTS OF OPERATIONS
The financial statements present the combined activities of the Company,
Genesis, Geriatric, MMC and P&H.
For The Six Months Ended June 30, 1997
Income from management fees was $7,109,400 compared to $0 for the same period in
1996. This was due to the acquisitions of Genesis in 1996 and Geriatric in early
1997. Net sales were $1,767,803 compared to $1,449,651 for the same period in
1996. The increase is due to P & H.
$64,821 was paid or accrued to an entity controlled by the Company's Secretary
for rent and other administrative services compared to $33,000 for the same
period in 1996.
Net loss was $767,128 compared to a loss of $669,859 for the same period in
1996. The net loss is $.06 per share for the six months. A charge for
amortization of goodwill and debt cost and depreciation of $1,424,995 was
incurred in the period which represents $.11 per share. The Company generated
from operations a positive cash flow of $.05 per share.
Cost of sales was $1,313,464 compared to $1,026,245 for the same period in 1996.
Cost of sales relate to P & H.
Selling and general and administrative expenses were $5,399,845 compared to
$845,169 for the same period in 1996. The large increase corresponds with the
increase in sales from the acquisitions made in 1996.
Research and development expenses incurred by MMC were $433,105 compared to
$242,216 for the same period in 1996.
Depreciation and amortization expenses were $1,328,576 compared to $5,276 for
the same period in 1996. This increase is mainly due to the amortization of
goodwill.
Interest expense was $1,002,934 compared with $34,805 for the same period in
1996. The substantial increase is mainly associated with the convertible notes
and also includes $96,419 of amortized debt issue costs.
Management fees of $190,000 were paid compared to $214,625 for the same period
in 1996. The Company's President received $60,000 and the Company's
Secretary/Treasurer received $60,000 and other consultants received $70,000.
4
<PAGE>
For The Three Months Ended June 30, 1997
Income from management fees was $3,656,400 compared to $0 for the same period in
1996. Net sales were $867,570 compared to $735,823 for the same period in 1996.
The increase is due to P & H.
Net loss was $431,290 compared to a loss of $359,493 for the same period in
1996. The net loss is $.03 per share for the quarter. A charge for amortization
of goodwill and debt cost and depreciation of $722,265 was incurred in the
period which represents $.06 per share. The Company generated from operations a
positive cash flow of $.03 per share.
Cost of sales was $655,317 compared to $525,420 for the same period in 1996.
Cost of sales relate to P & H.
Selling and general and administrative expenses were $2,807,866 compared to
$469,494 for the same period in 1996. The large increase corresponds with the
increase in sales from the acquisitions made in 1996.
Research and development expenses incurred by MMC were $229,485 compared to
$134,678 for the same period in 1996.
Depreciation and amortization expenses were $674,055 compared to $4,617 for the
same period in 1996. This increase is mainly due to the amortization of
goodwill.
Interest expense was $513,657 compared with $20,040 for the same period in 1996.
The substantial increase is mainly associated with the convertible notes and
also includes $48,210 of amortized debt issue costs.
Pro Forma For The Six Months Ended June 30, 1997 (see pages F-5 and F-6)
When the activity of Geriatric for all of 1997 is included, loss per share is
$.04 compared with $.06 when Geriatric's first quarter activity is not included.
Net loss for the six months ended June 30, 1997 was $562,795 compared to income
of $719,171 for the same period in 1996. The net loss is $.04 per share for the
six months. A charge for amortization of goodwill and debt cost and depreciation
of $1,424,995 was incurred in the period which represents $.11 per share. The
Company generated from operations a positive cash flow of $.07 per share.
Management fee income earned by Genesis and Geriatric was $7,353,525 for the six
months ended June 30, 1997 compared to $3,879,645 for the same period in 1996.
Net sales for the six months ended June 30, 1997 were $1,767,803 compared to
$1,449,651 for the same period in 1996. The increase is due to P & H.
Cost of sales for the six months ended June 30, 1997 was $1,313,464 compared to
$1,026,245 for the same period in 1996. Cost of sales relate to P & H.
5
<PAGE>
Selling and general and administrative expenses for the six months ended June
30, 1997 were $5,426,637 compared to $3,299,545 for the same period in 1996. The
large increase corresponds with the increase in sales from the acquisitions made
in 1996.
Research and development expenses incurred by MMC were $433,105 for the six
months ended June 30, 1997 compared to $242,216 for the same period in 1996.
Depreciation and amortization expenses for the six months ended June 30, 1997
were $1,328,576 compared to $29,763 for the same period in 1996. This increase
is mainly due to the amortization of goodwill.
Interest expense for the six months ended June 30, 1997 was $1,002,934 compared
with $43,949 for the same period in 1996. The substantial increase is mainly
associated with the convertible notes and also includes $96,419 of amortized
debt issue costs.
6
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
99-1 Financial Statements as of June 30, 1997
Financial Data Schedule
(b) Reports on Form 8-K
None.
7
<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: August 11, 1997 /S/ Logan B. Anderson
Logan B. Anderson, Secretary/Treasurer
8
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30,
1997
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 3,328,770
Short-term commercial paper 107,053
Accounts receivable (less allowance for doubtful accounts of $759,925) 3,031,876
Loans receivable - related parties 430,570
Other receivables 119,234
Accrued interest 40,752
Inventories 745,172
Prepaid expense and other current assets 129,979
Deferred Tax Benefit 394,000
----------------------
TOTAL CURRENT ASSETS 8,327,406
PROPERTY, PLANT & EQUIPMENT 595,246
OTHER ASSETS
Deferred debt issue costs 1,767,649
Investment - restricted stock 5,625
Deferred Tax Benefit 463,000
Goodwill 23,412,695
Deposits 103,635
Organization Costs 760
----------------------
25,753,364
----------------------
$ 34,676,016
======================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 485,706
Accrued expenses 393,249
Current portion of long-term debt 61,906
Income taxes payable 160,723
Accrued interest payable 791,276
----------------------
TOTAL CURRENT LIABILITIES 1,892,860
LONG-TERM DEBT 80,781
CONVERTIBLE NOTES 18,500,000
DEPOSITS 20,000
DEFERRED INCOME TAX 56,000
----------------------
18,656,781
----------------------
TOTAL LIABILITIES 20,549,641
Minority interest in subsidiary 863,221
STOCKHOLDERS' EQUITY
Common stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 12,855,400 shares 12,855
Additional paid-in capital 15,594,715
Retained deficit (2,344,416)
----------------------
TOTAL STOCKHOLDERS' EQUITY 13,263,154
----------------------
$ 34,676,016
======================
</TABLE>
F-1
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 867,570 $ 735,823 $ 1,767,803 $ 1,449,651
Management fees 3,656,400 0 7,109,400 0
Cost of sales 655,317 525,420 1,313,464 1,026,245
------------- ------------- ------------- -------------
GROSS PROFIT 3,868,653 210,403 7,563,739 423,406
Selling and General and Administrative expenses 2,807,866 469,494 5,399,845 845,169
Depreciation and amortization 674,055 4,617 1,328,576 5,276
Research and development 229,485 134,678 433,105 242,216
------------- ------------- ------------- -------------
3,711,406 608,789 7,161,526 1,092,661
------------- ------------- ------------- -------------
NET OPERATING INCOME (LOSS) 157,247 (398,386) 402,213 (669,255)
OTHER INCOME (EXPENSE)
Interest income 51,486 62,265 75,073 77,363
Interest expense (513,657) (20,040) (1,002,934) (34,805)
Miscellaneous income 974 2,510 4,046 2,510
Unrealized decline in investment (49,375) 0 (17,975) 0
Loss on disposition (2,138) 0 (2,138) 0
------------- ------------- ------------- -------------
(512,710) 44,735 (943,928) 45,068
------------- ------------- ------------- -------------
NET INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST (355,463) (353,651) (541,715) (624,187)
INCOME TAX EXPENSE (BENEFIT) 64,001 (2,600) 201,786 17,800
------------- ------------- ------------- -------------
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (419,464) (351,051) (743,501) (641,987)
MINORITY INTEREST 11,826 8,442 23,627 27,872
------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (431,290) $ (359,493) $ (767,128) $ (669,859)
============= ============= ============= =============
Net income (loss) per weighted
average share $ (.03) $ (.04) $ (.06) $ (.09)
============= ============= ============= =============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 12,747,312 8,026,768 12,551,444 7,513,384
============= ============= ============= =============
</TABLE>
F-2
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
Par Value $.001 Paid-In Retained
Shares Amount Capital Deficit
----------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Balances at 12/31/96 12,158,900 $ 12,159 $ 14,765,238 $ (1,577,288)
Sale of common stock (S-8)
at $1.00 per share 546,500 546 545,954
Issuance of common stock
(restricted) at $2.00 per
share for subsidiary 150,000 150 299,850
Capital raising and
subsidiary costs (16,327)
Net loss for period (767,128)
----------------- ------------------ ------------------ -----------------
Balances at 6/30/97 12,855,400 $ 12,855 $ 15,594,715 $ (2,344,416)
================= ================== ================== =================
</TABLE>
F-3
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
6/30/97 6/30/96
----------------- -----------------
OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (767,128) $ (669,859)
Adjustments to reconcile net (loss) to cash (used) by operating activities:
Depreciation & amortization 1,424,995 26,395
Net book value of assets sold` 2,138 0
Adjustment for investment received as interest income (35,000) (50,000)
Unrealized decrease in investment 37,975 0
Minority interest 23,627 27,872
Deferred income tax (500) 0
Changes in assets and liabilities:
Accounts receivable (725,562) 323,216
Inventories (27,345) (252,455)
Prepaid expenses (4,869) (17,262)
Accounts payable and accrued expenses (252,093) 161,090
Income taxes payable 70,863 (129,805)
Deposits 20,000 0
----------------- -----------------
NET CASH (USED) BY OPERATING ACTIVITIES (232,899) (580,808)
INVESTING ACTIVITIES
Loans to related party and accrued interest 60,980 94,249
Loan - other 0 (92,953)
Purchase of equipment (236,437) (120,531)
Deposits (80,598) 0
Goodwill (500,000) 0
Deferred debt issue costs (340,356) 0
Refund of option 0 30,000
Purchase of subsidiary 0 (1,000,000)
----------------- -----------------
NET CASH (USED) BY INVESTING ACTIVITIES (1,096,411) (1,089,235)
FINANCING ACTIVITIES
Cash from subsidiary 41,518 0
Principal payments on debt (3,262,904) (259,058)
Capital raising costs (3,000) 0
Convertible note proceeds 3,996,000 0
Proceeds from sale of common stock 546,500 1,662,637
----------------- -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,318,114 1,403,579
----------------- -----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (11,196) (266,464)
Cash and cash equivalents at beginning of year 3,447,019 1,289,000
----------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,435,823 $ 1,022,536
================= =================
SUPPLEMENTAL INFORMATION Cash paid for:
Interest $ 302,735 $ 36,271
Income taxes 131,452 168,590
</TABLE>
During 1997, the Company issued 150,000 shares of its restricted common stock as
part of the acquisition of GCCA. The transaction has been recorded at $300,000.
F-4
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
Six months ended June 30, 1997
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Geriatric (1) Adjustments Pro Forma
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Sales $ 1,767,803 $ 0 $ $ 1,767,803
Management fee income 7,109,400 244,125 7,353,525
Cost of sales 1,313,464 0 1,313,464
--------------- --------------- --------------- ---------------
GROSS PROFIT 7,563,739 244,125 7,807,864
Selling and general and administrative expenses 5,399,845 26,792 5,426,637
Depreciation and amortization 1,328,576 0 1,328,576
Research and development 433,105 0 433,105
--------------- --------------- --------------- ---------------
7,161,526 26,792 7,188,318
--------------- --------------- ---------------
NET OPERATING INCOME 402,213 217,333 619,546
OTHER INCOME (EXPENSE)
Interest income 75,073 0 75,073
Interest expense (1,002,934) 0 (1,002,934)
Miscellaneous income 4,046 0 4,046
Unrealized decline in investment (17,975) 0 (17,975)
Loss on disposition (2,138) 0 (2,138)
--------------- --------------- --------------- ---------------
(943,928) 0 (943,928)
--------------- --------------- ---------------
NET INCOME (LOSS) BEFORE INCOME
TAXES AND MINORITY INTEREST (541,715) 217,333 (324,382)
INCOME TAX EXPENSE 201,786 13,000 214,786
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (743,501) 204,333 (539,168)
MINORITY INTEREST 23,627 0 23,627
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (767,128) $ 204,333 $ $ (562,795)
=============== =============== =============== ===============
Net income (loss) per weighted average share $ (.06) $ (.04)
=============== ===============
Weighted average number of common shares
used to compute net income (loss) per weighted
average share 12,551,444 12,551,444
=============== ===============
</TABLE>
(1) First quarter activity
F-5
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
Six months ended June 30, 1996
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic (1) Genesis Adjustments Pro Forma
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 1,449,651 $ 0 $ $ 1,449,651
Management fees 0 3,879,645 3,879,645
Cost of sales 1,026,245 0 1,026,245
--------------- --------------- --------------- ---------------
GROSS PROFIT 423,406 3,879,645 4,303,051
Selling and general and administrative
expenses 845,169 2,454,376 3,299,545
Depreciation and amortization 5,276 24,487 29,763
Research and development 242,216 0 242,216
--------------- --------------- --------------- ---------------
1,092,661 2,478,863 3,571,524
--------------- --------------- ---------------
NET OPERATING INCOME (LOSS) (669,255) 1,400,782 731,527
OTHER INCOME (EXPENSE)
Interest income 77,363 0 77,363
Interest expense (34,805) (9,144) (43,949)
Loss on disposition 0 (1,750) (1,750)
Miscellaneous income 2,510 426 2,936
--------------- --------------- --------------- ---------------
45,068 (10,468) 34,600
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) BEFORE
INCOME TAXES AND
MINORITY INTEREST (624,187) 1,390,314 766,127
INCOME TAX EXPENSE 17,800 1,284 19,084
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (641,987) 1,389,030 747,043
MINORITY INTEREST 27,872 0 27,872
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (669,859) $ 1,389,030 $ $ 719,171
=============== =============== =============== ===============
Net income (loss) per weighted
average share $ (.09) $ .07
=============== ===============
Weighted average number of
common shares used to
compute net income (loss)
per weighted average share 7,513,384 10,763,384
=============== ===============
</TABLE>
(1) Includes the activities of Microwave Medical and P & H
F-6
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
Quarter ended June 30, 1996
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic (1) Genesis Adjustments Pro Forma
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 735,823 $ 0 $ $ 735,823
Management fees 0 2,077,000 2,077,000
Cost of sales 525,420 0 525,420
--------------- --------------- --------------- ---------------
GROSS PROFIT 210,403 2,077,000 2,287,403
Selling and general and administrative
expenses 469,494 1,327,305 1,796,799
Depreciation and amortization 4,617 12,244 16,861
Research and development 134,678 0 134,678
--------------- --------------- --------------- ---------------
608,789 1,339,549 1,948,338
--------------- --------------- ---------------
NET OPERATING INCOME (LOSS) (398,386) 737,451 339,065
OTHER INCOME (EXPENSE)
Interest income 62,265 0 62,265
Interest expense (20,040) (3,178) (23,218)
Miscellaneous 2,510 6 2,516
--------------- --------------- --------------- ---------------
44,735 (3,172) 41,563
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) BEFORE
INCOME TAXES AND
MINORITY INTEREST (353,651) 734,279 380,628
INCOME TAX EXPENSE
(BENEFIT) (2,600) 0 (2,600)
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (351,051) 734,279 383,228
MINORITY INTEREST 8,442 0 8,442
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (359,493) $ 734,279 $ $ 374,786
=============== =============== =============== ===============
Net income (loss) per weighted
average share $ (.04) $ .03
=============== ===============
Weighted average number of
common shares used to
compute net income (loss)
per weighted average share 8,026,768 11,276,768
=============== ===============
</TABLE>
(1) Includes the activities of Microwave Medical and P & H
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Dynamic
Associates, Inc. and Subsidiaries June 30, 1997 financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000878146
<NAME> Dynamic Associates, Inc.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,435,823
<SECURITIES> 0
<RECEIVABLES> 3,791,801
<ALLOWANCES> (759,925)
<INVENTORY> 745,172
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<PP&E> 2,170,837
<DEPRECIATION> (1,575,591)
<TOTAL-ASSETS> 34,676,016
<CURRENT-LIABILITIES> 1,892,860
<BONDS> 18,500,000
0
0
<COMMON> 12,855
<OTHER-SE> 13,250,299
<TOTAL-LIABILITY-AND-EQUITY> 34,676,016
<SALES> 1,767,803
<TOTAL-REVENUES> 8,877,203
<CGS> 1,313,464
<TOTAL-COSTS> 1,313,464
<OTHER-EXPENSES> 7,161,526
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,002,934
<INCOME-PRETAX> (541,715)
<INCOME-TAX> 201,786
<INCOME-CONTINUING> 402,213
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (767,128)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
