SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File No. 33-55254-03
DYNAMIC ASSOCIATES, INC.
(Name of Small Business Issuer in its charter)
NEVADA 87-0473323
- --------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
7373 NORTH SCOTTSDALE ROAD, SUITE B150, SCOTTSDALE, ARIZONA 85253
- ------------------------------------------------------------ -----------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (602) 483-8700
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: NONE
Indicate by check mark whether the registrant (l) 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of 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-KSB. / /
Issuer's revenues for its most recent fiscal year $4,517,598.
As of March 13, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $24,578,953.
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 DECEMBER 31, 1996
- ------------------------------------ --------------------------------------
$.001 Par Value Class A Common Stock 12,158,900 Shares
Transitional Small Business Disclosure Format: Yes / / No / X /
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
OVERVIEW
Dynamic Associates, Inc., a Nevada corporation (the "Company" or
"Dynamic") was incorporated on July 20, 1989 for the purpose of developing
venture businesses and was a development stage company through 1995. Through
acquisitions Dynamic has become a holding company for a variety of businesses.
The Company is now engaged in (i) the development and acquisition of microwave
technologies for medical purposes through Microwave Medical Corp. ("Micro"),
(ii) managing the operation of geriatric/psychiatric units for various hospitals
through Genesis Health Management Corporation ("Genesis") and (iii) the
manufacturing of highly technologically advanced components and subsystems for
the communications and aerospace industries through P&H Laboratories, Inc.
("P&H").
The Company's executive offices are presently located at 7373 North
Scottsdale Road, Suite B150, Scottsdale, Arizona 82553. Its telephone number at
this location is (602) 483-8700 and the telefax number is (602) 443-1235.
MICROWAVE MEDICAL CORP.
Micro, a wholly-owned subsidiary of the Company, was established to
exploit medical applications for microwaves. Micro has entered into a ten year
licensing agreement with Microthermia Technology, Inc. ("MTI"), pursuant to
which the Company has the exclusive use of MTI's microwave technology for the
treatment of telangiectasia or spider veins. The Company has prepaid the
licensing fee for the initial two year term of the licensing agreement which
expires on January 16, 1998. The license agreement is renewable for eight
additional years at no additional cost to the Company. Under the terms of the
licensing agreement, the Company, in addition to the licensing fee, will pay a
royalty fee equal to two percent of the net sales of products and services
utilizing MTI's microwave technology.
Currently, surgery, sclerotherapy (injection) and laser or pulsed light
treatments are the primary therapies for telangiectasia and are provided through
dermatologists, plastic surgeons or vascular surgeons. To date the U.S. Federal
Drug Administration ("FDA") has not approved MTI's microwave technology for the
treatment of telangiectasia. Micro intends to complete animal tests, obtain an
investigative device exemption and start clinical trials, leading to a
submission of data to the FDA, and an application for approval of the microwave
technology treatment with the FDA in 1997. Micro is also currently developing
its own treatment technology for telangiectasia outside of the license agreement
with MTI.
In addition, Micro is currently researching and developing microwave
technologies for the treatment of certain human vascular problems. The Company
plans to commence development
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of a treatment for benign prostate hyperplasia, the non-cancerous enlargement of
the prostate gland ("BPH").
BPH is an enlargement of the prostate gland leading to various
difficulties. Surgical alternatives, mechanical devices and certain
pharmaceutical treatments are the competitive treatments. Micro plans to use
microwaves, together with a specialized delivery system to shrink the prostate
gland. Micro will be undertaking the necessary steps for the application of
patents and FDA approval as we lead into product readiness only. One other
company in Massachusetts has obtained FDA approval for use of its machine
applying microwave technology to the treatment of BPH. Micro does not have a
patent on this technology.
P&H LABORATORIES
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.
P&H also provides special engineering services to customers with
specific needs. P&H will be able to provide the Company with this capability to
produce and develop manufacturing processes for its medical systems. P&H has
experience with the engineering and manufacturing of microwave components, super
components and subsystems and also supports major programs and operating
platforms. P&H manufacturing operations include thin film processing, top
assembly, production testing and tuning and subsystems integration, wire bonding
environmental test and packaging.
P&H has been engaged since its inception in Mil-Standard and
Hi-Reliability Aerospace programs for various types of devices. The products of
P&H are highly technical and sold to various government and industrial users.
The products and the development expertise of P&H will enable Dynamic to reduce
its research and development costs for all new products and to provide state of
the art engineering for microwave systems.
The executive offices of P&H are located at 4496 Runway Street, Simi
Valley, California and include manufacturing and engineering space of
approximately 18,000 square feet. P&H has approximately 60 employees.
GENESIS HEALTH MANAGEMENT CORPORATION
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
notes issued in connection with the acquisition
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<PAGE>
of Genesis were paid in full on March 3, 1997. Genesis is in the business of
managing and operating psychiatric/geriatric units in various hospitals (both
in-patient and out-patient).
Genesis, a Louisiana corporation, provides elderly healthcare and
gero-psychology services to small healthcare facilities unable to provide these
service in house. Gero-psych, while a relatively new field, has historically
neglected access to treatment for a large number of elderly people in serious
need of this treatment. Gero-psych treatment, as administered today, is
primarily geared to low-functioning patients requiring only medication
management and patients without medical complications. Elderly people, however,
frequently have medical and psychiatric problems, including severe depression,
due to the natural aging process, traumatic losses, strokes and various other
causes. Psychiatric problems are being treated on gero-psych units and medical
problems are being treated on acute care units, many times exceeding authorized
lengths of stay, and have become a burden for the hospital's financial
resources.
In order to resolve these problems, Genesis has developed a program
which it has operated in various hospitals. Aggressive management has treated
the psychiatric diagnosis and at the same time treated the secondary medical
problems, allowing for higher medical acuity. This approach has proven
beneficial in many respects. In addition to treating the primary diagnosis, the
Genesis Senior Care Program assists the host hospital in lowering lengths of
stays on the acute care side of the hospital. Furthermore, the acute care
physician is able to resolve many medical problems, as opposed to just
stabilizing them. This method of treatment results in an overall reduction in
the frequency of a patient's returns to the hospital and increases the patient's
quality of life.
Genesis' Senior Care Program provides comprehensive care for elderly
patients experiencing acute psychiatric disorders, cognitive impairment and
age-related psychological difficulties while concurrently encouraging resolution
of medical problems contributing to or inhibiting the resolution of acute care
emotional or psychiatric problems. This program targets higher-functioning
patients with acute emotional problems, allowing the therapeutic milieu to be
effective, as opposed to focusing on lower-functioning patients (who only
require medication management). This method achieves maximum therapeutic results
after 10-18 days of treatment. Senior care units are allowed to treat patients
with higher medical acuity than regular geriatric- psychiatric programs, thus
producing higher ancillary costs while providing a higher standard of care for
the patients.
The Genesis treatment program conforms to the guidelines of the JCAHO
Accreditation Manual for Hospitals and Medicare 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.
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FINANCIAL INFORMATION RELATING TO INDUSTRY
SEGMENTS AND CLASS OF PRODUCTS OR SERVICES
<TABLE>
<CAPTION>
1996 1995 1994
---------------- -------------------- ---------------------
Sales to unaffiliated customers:
<S> <C> <C> <C>
Microwave Medical Corp. $ 0 $ 0 $ 0
P&H Laboratories 3,395,098 3,723,013 3,448,251
Genesis Health Management
Corporation* 1,122,500 3,382,188 65,000
Intersegment sales or transfers 0 0 0
Operating profit or (loss):
Microwave (604,856) (87,184) 0
P&H 171,969 507,591 92,799
Genesis* 440,487 241,470 (62,681)
Identifiable assets:
Microwave 79,322 0 0
P&H 1,415,795 1,570,335 1,641,754
Genesis 1,451,361 837,321 109,220
</TABLE>
* Includes December 1996 only.
ITEM 2. DESCRIPTION OF PROPERTY
Dynamic Associates, Inc.
The Company is headquartered in leased office premises at 7373 North
Scottsdale Road, Suite B150, Scottsdale, Arizona 85253. The Company is provided
with approximately 1,100 square feet of office space at a cost of $600 per month
on a month-to-month basis. See "Certain Relationships and Related Transactions."
Microwave Medical Corp.
Micro utilizes the facilities of P&H for its research and development
program and currently has 600 square feet set aside for its sole use.
Genesis Health Management Corporation
Genesis is headquartered in leased office premises at 1613 Jimmie Davis
Highway, Suite No. 1, Bossier City, Louisiana 71112. The office is approximately
3,000 square feet and is leased for a period of two years, expiring September
30, 1998 at an annual rental of $ 33,600.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On October 28, 1996, an annual shareholders meeting was held. The
following Directors were elected: Jan Wallace, Herb Capozzi, and Logan Anderson.
The three individuals were also Directors before the election. Each Director
received votes as follows:
JAN WALLACE HERB CAPOZZI LOGAN ANDERSON
----------- ------------ --------------
Votes For: 2,470,000 2,470,000 2,470,000
None of the Directors received votes against or withheld, neither were
there any abstention votes or Broker non votes.
The following items were approved with 2,470,000 votes For, 0 against
or withheld, 0 abstentions and 0 broker non votes:
1. To increase the size of the Board of Directors from no less than
three or more than seven members.
2. To increase the number of authorized shares from 25,000,000 shares
to 100,000,000 shares.
3. To change the requirement that the annual meeting be held on a
specific day each year.
4. To approve the acts and actions of the Board to the date of the
meeting and to ratify and adopt the acts of the Corporation.
5. To remove the designated Class "A" voting common stock, and to
classify all shares of the Company as "Common Shares".
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<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS.
The Common Stock has traded on the Electronic Bulletin Board (Nasdaq)
since April 11, 1996 under the symbol "DYAS". The Common Stock also trades on
the Frankfurt and Berlin Exchanges in Germany (trading symbol "DYA"). The
following table sets forth, for the periods indicated, the highest and lowest
bid quotations for the Common Stock, as reported by Nasdaq. The prices reported
reflect inter-dealer prices, without retial mark-up, mark-down or commission,
and may not reflect actual transactions.
High Low
---------- --------
1996 First Quarter $ 0.00 $ 0.00
Second Quarter 4.25 2.00
Third Quarter 3.75 2.00
Fourth Quarter 4.25 2.87
On December 31, 1996, the last reported sale price of the Common Stock
on Nasdaq was $3.50.
As of December 31, 1996 there were approximately 419 record holders of
the Company's Common Stock. This number does not include an indeterminate number
of shareholders whose shares are held by brokers in "street name."
Since the commencement of trading on the Electronic Bulletin Board, the
average monthly volume of trading of the Company's Common Stock has been
approximately 430,000 shares. The volume of trading on the Electronic Bulletin
Board traditionally has been limited and there can be no assurance that the
Electronic Bulletin Board will provide an effective market for a shareholder to
sell his or her Common Stock of the Company.
The Company has not previously declared or paid any dividends on its
common stock and does not anticipate declaring any dividends in the foreseeable
future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE, BUT
ARE NOT LIMITED TO, COMPETITION, TECHNOLOGICAL ADVANCES AND THE AVAILABILITY OF
MANAGERIAL PERSONNEL.
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<PAGE>
OVERVIEW
General
The Company is engaged in (i) the development and acquisition of
microwave technologies for medical purposes through Micro, (ii) managing the
operation of geriatric/psychiatric units for various hospitals through Genesis
and (iii) the manufacturing of highly technologically advanced components and
subsystems for the communications and aerospace industries through P&H.
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
notes issued in connection with the acquisition were paid in full on March 3,
1997. Genesis is in the business of managing and operating psychiatric/geriatric
units in various hospitals (both in-patient and out-patient). At December 31,
1996, Genesis had 19 operating units. The gross revenue from the date of the
acquisition to the year ended December 31, 1996 was $1,122,500. The operating
expenses accounted for 61% of revenues totaling $682,013. Genesis has contracts
with hospitals in the states of Louisiana, Arkansas, Mississippi and Tennessee.
The contracts range from three to five years. In January 1997, another contract
was added to increase monthly billings to $1,151,000. Nine of the contracts
began in 1996, nine began in 1995 and one began in 1994.
The acquisition of Genesis was funded, in part, by the sale of
convertible notes of the Company. The Company issued 784 convertible notes in
reliance on Regulation S to non- U.S. persons. Each note is for $18,500
principal amount, bears interest at 10% per annum and is convertible into Common
Stock of the Company at $3.50 per share. The notes mature September 16, 2006.
The notes may be redeemed by the Company at any time after September 15, 1997
with payment to the holder of the principal amount, accrued interest and a
premium (10% reduced to 0% by the year 2005). The proceeds were used to acquire
Genesis and also provide the Company with additional working capital.
The licensing agreement between Micro and MTI is renewable by the
Company and will provide the Company access to medical treatments using the
microwave technology without incurring the cost of acquiring the underlying
company. As the treatments are approved by the FDA, it is expected that Micro
will contribute to the revenues to the Company.
Results of Operations
This discussion covers the years 1995 and 1996, the years in which the
Company had operations and was doing business. Prior to that time the Company
was a development stage company and was not engaged in any substantial business.
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<PAGE>
The pro forma information assumes that Genesis was part of the Company
for all of 1995 and 1996 and that P&H was part of the Company for all of 1995.
Net Sales and Management Fees. Actual: Sales and management fees
increased from $0 in 1995 to $4,517,598 with the acquisition of P&H and Genesis.
Pro Forma: Sales and management fees increased from $7,555,201 in 1995 to
$13,073,458 in 1996, mainly due to the new contracts obtained by Genesis.
Gross Profit. Actual: Gross profit increased from $0 in 1995 to
$2,020,601 in 1996. The increase resulted from the gross profit provided by
Genesis and P&H. Pro Forma: Gross profit increased from $5,185,033 in 1995 to
$10,576,461 in 1996, due to the profitability of Genesis and P&H.
Cost of Sales. Actual: Cost of sales increased from $0 in 1995 to
$2,496,997 in 1996 and related to P&H. Pro Forma: Cost of sales increased from
$2,370,168 in 1995 to $2,496,997 in 1996. The 5% increase relates to higher
costs of P&H.
Selling and General and Administrative Expense. Actual: These expenses
increased from $562,273 in 1995 to $2,785,635 in 1996. The major reason for the
increase relates to Genesis and P&H and higher management fees incurred by the
Company. Pro Forma: These expenses increased from $4,950,820 in 1995 to
$8,884,355 in 1996, mainly due to Genesis and P&H.
Net Interest Income/Expense. Actual: The Company had net interest
expense of $171,500 for 1996 compared with net interest income of $2,786 in
1995. The substantial increase in interest expense relates mainly to the
interest expense associated with the convertible notes. Pro Forma: Net interest
expense for 1996 was $186,635 compared with net interest expense of $13,089 in
1995. The increase relates mainly to interest expense related to the convertible
notes.
Net Loss. Actual: Net loss increased from $619,467 in 1995 to $956,821
in 1996. The increase was due to the large amount of research and development
incurred by Micro ($605,599) and large amounts of general and administrative
expenses incurred by the Company. The main items of expense incurred by the
Company were management fees of approximately $428,000, legal fees of
approximately $233,000, amortization of goodwill of approximately $202,000 and
travel expense of approximately $225,000 relating to looking for potential
investors for the Company and purchasers of the convertible notes. Pro Forma:
Net income increased from a loss of $300,474 in 1995 to income of $1,487,484 in
1996. Approximately $685,000 of the increase results from expected tax benefits
in the future and the balance of the increase is due to the increased
profitability of Genesis and P&H.
Liquidity and Capital Resources. Actual: Working capital was $2,266,990
at December 31, 1996 compared to $688,363 at December 31, 1995. The increase
arises from the profitability of Genesis and P&H and the sale of the convertible
notes. Pro Forma: Working capital at December 31, 1996 was $2,266,990 compared
to $2,711,339 for 1995. The 1995 figures do not include the Genesis pro forma
transaction which distorts working capital by adding $3,050,000
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to current liabilities without reflecting cash from convertible notes that would
have resulted if the transaction had taken place in 1995 rather than in 1996.
The Company's growth in the future is expected to be financed by
working capital provided by equity and debt offerings and excess cash generated
by Genesis. Genesis expects to be able to meet cash requirements from
operations. Micro will need assistance from the Company to fund operations. P&H
expects to meet cash requirements from operations. Several California banks have
expressed interest in providing lines of credit to P&H.
During the year the Company completed a Regulation S stock offering to
Non-US Residents of 1,822,400 shares of Common Stock at $1.75 per share, 12,500
shares of Common Stock at $2.00 per share and sold 184,000 shares to employees
and consultants at $1.00 per share pursuant to the Company's 1995 Incentive
Stock Option Plan.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Item 13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
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<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table shows the positions held by the Company's officers
and directors. Directors serve until the next annual meeting of the Company's
stockholders, and until their successors have been elected and have qualified.
Name Age Position
- ---- --- --------
Jan Wallace 41 President, Director
Logan Anderson 42 Secretary-Treasurer, Director
Florian Homm 37 Director
Herb Capozzi 71 Director
Billy Means, Jr. 42 Director
JAN WALLACE (age 41) is a Director, President and Chief Executive Officer of the
Company. Ms. Wallace has been employed by the Company since April 1995, when she
was elected to the Board of Directors and accepted the position of Chief
Executive Officer. Ms. Wallace was previously Vice President of Active Systems,
Inc., a Canadian Company specializing in SGML Software, an ISO standard in
Ottawa, Ontario. Prior to that she was President and owner of Mailhouse Plus,
Ltd., an office equipment distribution company which was sold to Ascom
Corporation. She has also been in management with Pitney Bowes-Canada and Bell
Canada where she received its highest award in Sales and Marketing. Ms. Wallace
was educated at Queens University in Kingston, Ontario and Carleton University,
Ottawa, Ontario in Political Science with a minor in Economics. Ms. Wallace is
also an officer and director of Claire Technologies, Inc.
LOGAN ANDERSON (age 42) is Secretary-Treasurer of the Company. Mr. Anderson has
been Secretary-Treasurer of the Company since April 1995. Since 1993 Mr.
Anderson has been principal and president of Amteck Financial Services Corp., a
financial consulting company in Vancouver, B.C. During 1992 and 1993 Mr.
Anderson was an officer and director of Centrepoint Equities Inc., in Vancouver,
B.C. From 1982 to 1992 Mr. Anderson was Controller of Cohart Management Group,
which was responsible for management of private and public corporations. Mr.
Anderson received his Bachelors of Commerce degree in Accounting and Economics
from Otago University, New Zealand in 1977. Mr. Anderson is an Associated
Chartered Accountant (New Zealand). Mr. Anderson is also an officer, and was a
director (from April 1996 to March 1997) of Claire Technologies, Inc.
WILLIAM H. MEANS, JR. (age 42) is President of Genesis. Mr. Means received his
B.S. in Business Administration from Louisiana Tech University in 1976 and his
M.B.A. in Personnel Management from Louisiana Tech in 1978. From 1978 to 1980,
Mr. Means worked as an
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Assistant Credit Manager, Salary Administrator and Commercial Loan Review
Analyst at Commercial National Bank in Shreveport, Louisiana. From 1980 through
1984 he was the Vice President of Commercial Loan Administration at Bossier Bank
and Trust in Bossier City, Louisiana . From 1984 through 1986 he was a Senior
Vice President at National Bank of Bossier and from 1986 through 1989 he was a
co-owner and Account Executive at United Advertising Network and from 1989
through 1991 he was an Office and Site supervisor at McNeely Construction
Company. Mr. Means owned and operated Space Center Painting and Construction
Company, Space Center Mini Storage and Terrace Acres Apartments from 1991
through 1994, when he joined Genesis as an Executive Vice President and later
became President of Genesis.
FLORIAN HOMM (age 37) has been in the investment management and banking
businesses for over fifteen years, much of it in senior management positions
with firms such as Merrill Lynch, Fidelity Management and Research, Bank Julius
Baer and Tweedy, Browne in London, New York, Boston and Frankfurt. Mr. Homm is
Managing Partner of Value Management and Research GmbH in Germany, a firm
specializing in investment management and corporate financial services. VMR
includes amongst its fund management clients highly regarded institutional
investors as well as European blue chip companies and fast growing corporations
in North America and Europe. Mr. Homm is an honors graduate in Economics from
Harvard College. He received his Master of Business Administration degree from
Harvard Business School. Mr. Homm is a Board Member of the European Association
of Securities Dealers (EASD), on the board of a number of European public
companies, has received several investment awards and has published extensively
on a wide range of financial topics.
HERB CAPOZZI (age 71) is a Director of the Company. Mr. Capozzi is currently a
Director and the Co-founder of PLC Systems, Inc., a cardiac revascularization
company developing medical systems and technology which trades on the American
Stock Exchange. He was President and Director of International Potter
Distillers, and a Director and Co-founder of the Keg Restaurant chain in Canada.
Mr. Capozzi was a partner in bringing McDonald's restaurants to Canada. From
1981 to 1986, Mr. Capozzi was one of three original Directors of EXPO '86, the
1986 World's Fair in Vancouver, Canada. Mr. Capozzi was an elected member of
Legislative Assembly, Province of British Columbia, for two terms and Chairman
of the Insurance Committee and the Procedure Committee. He also had a football
career with the New York Giants (NFL), the Calgary Stampeders (CFL), and the
Montreal Alouttes (CFL), and the B.C. Lions as General Manager for 10 years. Mr.
Capozzi was a principal owner of the soccer organization, the Vancouver White
Caps. Mr. Capozzi received his Bachelor's Degree of Arts for Chemistry and a
Bachelor's Degree of Commerce from the University of British Columbia. He also
received a Bachelor's Degree of Education from the University of Italy.
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ITEM 10. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") of the Company (Ms. Jan Wallace, the President and Chief Executive
Officer of the Company) and the one other executive officer of the Company other
than the CEO whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
Long-Term Compensation
Annual Compensation ------------
Compensation Award ($)
------------ ----- ---
YEAR SALARY($) OPTIONS
---- --------- -------
<S> <C> <C> <C> <C>
Jan Wallace 1996 120,000 150,000 --
President and Chief 1995 25,000 -- 400(1)
Executive Officer 1994 -- -- --
Logan Anderson 1996 120,000 405,000 --
Secretary, Treasurer 1995 4,000 -- 400(2)
1994 -- -- --
</TABLE>
- ------------------------
(1) For services rendered to the Company, Ms. Wallace received 400,000
shares of Common Stock valued at $.001 per share.
(2) For services rendered to the Company, Mr. Anderson received 400,000
shares of Common stock valued at $.001 per share.
The following table sets forth certain information regarding stock
option grants made to each of the Executive Officers named in the Summary
Compensation Table during the fiscal year ended December 31, 1996.
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------------------------
% of Total
Options
Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/sh) Date
- ----- ---------------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Jan Wallace 150,000 7.50% $1.00 04/09/99
Logan Anderson 150,000 7.50% $1.00 04/09/99
255,000 12.75% $1.00 10/04/99
</TABLE>
LONG-TERM INCENTIVE AND PENSION PLANS.
The Company does not have any long-term incentive or defined benefit
pension plans.
1995 INCENTIVE STOCK OPTION PLAN.
The Company has established the 1995 Incentive Stock Option Plan (the
"Plan) for employees and directors of the Company. 2,000,000 shares of Common
Stock are reserved for issuance under the Plan. At December 31, 1996, options to
purchase all 2,000,000 shares had been granted. The Company also can grant
non-qualified stock options under the Plan.
EMPLOYMENT AND CONSULTING AGREEMENTS.
The Company has an employment agreement with Jan Wallace expiring on
December 31, 1998 providing for, among other things, Ms. Wallace to be paid
$120,000 for the year ending December 31, 1997 and $132,000 for the year ending
December 31, 1998. The employment agreement is subject to automatic one year
renewals at the end of the then current term unless either the Company or Ms.
Wallace provides notice that it or she does not wish to extend the term of the
agreement. For each year that the employment agreement is extended, Ms.
Wallace's salary will increase by 10% over the previous year.
The Company has a consulting agreement with Logan Anderson expiring on
December 31, 1998 providing for, among other things, Mr. Anderson to be paid
$120,000 per annum. The consulting agreement is subject to automatic one year
renewals at the end of the then current term unless either the Company or Mr.
Anderson provides notice that it or he does not wish to extend the term of the
agreement.
BOARD OF DIRECTOR COMPENSATION
Effective February 1997, each director of the Company will receive
$10,000 per annum for services rendered to the Company and, in addition, will
receive $750 for each meeting
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<PAGE>
attended ($250 for a telephonic meeting). Each Director will also receive $500
per day when on Company business. Each director is reimbursed for the reasonable
expenses of attending meetings.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge, no
officer, director or greater than 10% shareholder has filed any of the required
reports.
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<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of December 31, 1996, information
regarding the beneficial ownership of the Company's Common Stock by each person
known by the Company to own five percent or more of the outstanding shares, by
each of the directors and officers, and by the directors and officers as a
group. As of December 31, 1996, there were outstanding 12,158,900 shares of the
Common Stock of the Company.
<TABLE>
<CAPTION>
Amount of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
- ---------------------------------------- ------------- -------------
<S> <C> <C>
Vickie T. Lucky 2,370,000 19.5%
1613 Jimmie Davis Highway, Suite 1 & 2
Bossier City, LA 71112
Brant Investments, Ltd. 1,631,480 13.4%
Global Securities Service
BH Level Royal Bank Plaza
200 Bay Street
Toronto, Canada M5J255
Harry Moll 1,770,000(1) 14.2%
Box 836
Georgetown
Grand Cayman, BWI
Jan Wallace 550,000(2) 4.5%
6929 East Cheney
Paradise Valley, AZ 85253
Herb Capozzi 100,000(3) 0.8%
308-595 Howe Street
Vancouver, BC Canada
Logan Anderson 940,000(4) 7.5%
7373 North Scottsdale Road, #B-150
Scottsdale, AZ 85253
Florian Homm 200,000 1.6%
Amselweg 7b
61462 Koningstein
Germany
Billy Means, Jr. 30,000 0.2%
1613 Jimmie Davis Highway, Suite 1 & 2
Bossier City, LA 71112
All Officers and Directors as a Group (5 1,820,000 15.0%
persons)
</TABLE>
(1) Includes 300,000 shares owned by SSM, Ltd., which is controlled by Mr.
Moll and 270,000 options held by Mr. Moll.
(2) Includes 150,000 options held by Ms. Wallace.
(3) Includes 100,000 options held by Mr. Capozzi.
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<PAGE>
(4) Includes 100,000 shares owned by Amteck Management, Inc., which is
controlled by Mr. Anderson and 405,000 options held by Mr. Anderson.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Harry Moll was paid $120,000 by the Company for consulting services
rendered to the Company during 1996. The Company currently has a consulting
agreement with Mr. Moll effective as of January 1, 1997 and expiring on December
31, 1998 providing for, among other things, Mr. Moll to be paid $120,000 per
annum. The consulting agreement is subject to automatic one year renewals at the
end of the then current term unless either the Company or Mr. Moll provides
notice that it or he does not wish to extend the term of the agreement.
In order for the Company to fund its day to day operations, it was
necessary to obtain a loan of $220,000 from a Canadian company. This loan was
arranged through Mr. Moll and it was his collateral that was pledged to secure
the loan. Of this $220,000 amount $20,000 is a fee and the remaining $200,000
represented cash advanced to the Company. The loan was repaid during the year
ended December 31, 1996, and a total of 40,000 shares of Common Stock were
issued in connection with the repayment of the loan.
Florian Homm, Director, is Managing Partner of Value Management and
Research GmbH in Germany ("VMR"). VMR owns $92,500 of convertible debt issued by
the Company in 1996.
Amteck Management, Inc. ("Amteck"), controlled by Logan Anderson,
received $92,000 in 1996 for rent and administrative services. The Company is
provided with office space and other management services on a month-to-month
basis by Amteck. The Company paid $600 per month to Amteck for rent beginning in
March 1996. Other fees are paid to Amteck based on services received.
Due From Amount Interest Rate Due Date
-------- ------ ------------- --------
Officer of P&H $30,000 0% June, 1997
Officers of Micro 105,000 0% December 31, 1997
Claire Technologies, Inc.(1) 375,000 10% November 1, 1997
(1) Also convertible to Claire Technologies, Inc. common stock at $.20 per
share. Claire will also issue 100,000 shares of its restricted common
stock. Beginning February 28, 1997 and every three months thereafter,
Claire will issue an additional 100,000 shares if the loan is still
outstanding. The loan is payable November 1, 1997 and if not paid by
that date Claire will pay an additional 500,000 common (restricted)
shares. Claire will have 30 days grace to remedy the payment, and the
loan will be payable on demand thereafter. Claire has some of the same
officers and directors as the Company.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DYNAMIC ASSOCIATES, INC.
Date: April 28, 1997 By: /S/ JAN WALLACE
---------------
Jan Wallace,
President and Director
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 dates indicated.
Date: April 28, 1997 /s/ Jan Wallace
-----------------------------------
Jan Wallace, President and Director
Date: April 28, 1997 /s/ Logan Anderson
-----------------------------------
Logan Anderson, Secretary/Treasurer
and Director
Date: April 28, 1997 /s/ Herb Capozzi
-----------------------------------
Herb Capozzi, Director
Date: April 28, 1997 /s/ Billy Means
-----------------------------------
Billy Means, Director
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