SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB/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, 1997
[ ] 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.
(Exact name of Registrant as specified in its charter)
NEVADA 87-0473323
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7373 NORTH SCOTTSDALE ROAD, SUITE B169
SCOTTSDALE, ARIZONA 85253
(Address of principal executive offices) (Zip Code)
Registrant'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-K
or any amendment to this Form 10-K. [ X ]
Revenues for 1997 were $18,002,339.
As of April 27, 1998, the estimated market value of the voting stock held by
non-affiliates of the registrant, based upon an estimate of the market price at
$.71875, was $5,950,480.
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 February 26, 1998
- ----------------------------------- -----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 14,223,929 SHARES
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PART I
ITEM 1. 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. Dynamic was previously a development stage company through
1995. Through acquisitions, Dynamic has become a holding company for a variety
of entities as detailed below. The Company operates two health care management
businesses specializing in geriatric and psychiatric care through its other
wholly owned subsidiaries, Genesis Health Management Corporation ("Genesis") and
Geriatric Care Centers of America ("GCCA").
The Company formerly owned two microwave technologies subsidiaries, P&H
Laboratories, Inc. ("P&H"), a microwave research and production company, and
Microwave Medical Corp.("MMC"), which develops microwave technology for various
medical treatments. As of March 11, 1998, the Company has spun off MMC and P&H
to a newly incorporated Nevada Corporation, MW Medical, Inc. ("MW" or "MW
Medical"). The spin-off was completed by the distribution of MW shares to all
Dynamic shareholders on record (the "Record Date") as of the close of business
on February 25, 1998. Each such holder received one share of MW Common Stock for
every one share of Dynamic common stock held on the Record Date. (See Section on
Spin Off)
The Company's executive offices are located at 7373 North Scottsdale Road, Suite
B169, Scottsdale, Arizona 85253, its telephone number at this location is (602)
483-8700 and the telefax number is (602) 443-1235. Jan Wallace is the current
President and a Director, Grace Sim is the Secretary/Treasurer, Dr. Rainer
Marquart, William H. Means, Jr., Florian Homm and Elliot Smith are Directors.
Genesis Health Management Corporation
The Company entered into an Acquisition Agreement on August 1, 1996 to
acquire 100% of Genesis Health Management Corporation, ("Genesis"), of Bossier
City Louisiana, for $15,000,000.00, and 3,000,000 common shares of stock of the
Company. The final agreement provided that the Company pay $12,000,000.00, issue
a Promissory Note for $3,000,000.00 and issue 3,000,000 shares of common stock
of the Company. The Promissory Note, (including interest) was paid in full on
March 3, 1997. Genesis is in the business of managing and operating both
in-patient and out-patient geriatric and psychiatric units in various hospitals.
Genesis manages and operates 22 geriatric and psychiatric units in various
hospitals on both an in-patient and out-patient basis.
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 $500,000 in cash and
150,000 shares of Common Stock of the Company. The
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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 December 31, 1997,
GCCA had four (4) operating units.
Narrative Description of Business
Genesis Health Management Corporation is a Louisiana Company which was
established on July 23, 1994 to provide elderly healthcare and gero-psychology
to small healthcare facilities unable to provide the service in house. Genesis
manages these geriatric psychiatric units through Genesis Health Management
Corporation and Geriatric Care Centers of America, Inc. Gero-psych treatment is
primarily geared to low-functioning patients requiring only medication
management and patients without medical complications. Elderly people 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. In addition to treating the
primary diagnosis, the Genesis 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's 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. That 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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Spin Off
The Company has completed the spin-off of MW Medical, Inc. effective
March 11, 1998. MW Medical is the owner of P&H and MMC, each of which was a
subsidiary of the Company until completion of the spin-off. MW Medical is a
Nevada corporation incorporated on December 4, 1997.
The businesses of P&H and MMC are summarized as follows:
(A) P&H Laboratories
P&H is engaged in the business of manufacturing various types
of devices utilizing microwave technology. The devices include
isolators, circulators, power monitor devices, filters,
diplexers, switching diplexers, multi-junction circulators,
microwave sub-systems and integrated packages and subsystems.
P&H also provides special engineering services to customers
with specific microwave technology requirements.
(B) Microwave Medical Corp.
MMC is in the business of developing proprietary technology
relating to the use of microwave energy for medical
applications. MMC has a patent pending entitled, "Method and
Apparatus for Treating Subcutaneous Histological Features"
which focuses on the application of microwave energy to the
treatment of spider veins and for use in hair removal. MMC has
no revenues and has not completed development
of its technology.
MW Medical acquired each of P&H and MMC pursuant to a Contribution
Agreement, Plan and Agreement of Reorganization and Distribution between Dynamic
and MW Medical, dated as of March 11, 1998 ("Contribution Agreement"). Under the
terms of the Contribution Agreement, the Company transferred to MW Medical the
following assets in consideration for the issue by MW Medical of 14,223,929
common shares of MW Medical:
(A) all of the shares of P&H;
(B) all of the shares of MMC;
(C) all shareholders loans of P&H and MMC to the Company;
and
(D) the agreement of the Company to provide initial funding in
the amount of $200,000.
The spin-off was completed by the distribution by the Company to the
shareholders of the Company of one common share of MW Medical for each common
share of the Company held by the shareholder. The distribution was completed on
March 11, 1998 to shareholders of the Company of record on February 25, 1998. No
consideration was paid by Dynamic shareholders for shares of MW Common Stock.
There is no current trading market for MW Common Stock. The Company
anticipates that
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MW Medical will make application for listing of its shares on the National
Association of Securities Dealers Automated Quotations System (NASDAQ), as a
Bulletin Board Company security.
ITEM 2. Properties
Dynamic Associates
Dynamic is headquartered in leased office premises at 7373 North Scottsdale
Road, Suite B169, Scottsdale, Arizona 85253. The lease arrangement is for an
additional two years. The Company owns no other property.
Genesis Health Management Corporation
The head office for Genesis is located at 1613 Jimmie Davis Highway,
Suite No. 1, Bossier City, Louisiana,71112. The Genesis head office is
approximately 3,000 square feet and is leased for a period of two years. Genesis
is in the business of managing and operating geriatric and psychiatric units for
various hospitals in the southern United States. The business is ongoing and
certain financial information is provided under Item 7.
Geriatric Care Centers of America
The head office for GCCA is located within the offices of Genesis at 1613 Jimmie
Davis Highway, Suite No. 1, Bossier City, Louisiana,71112. GCCA is also in the
business of managing and operating geriatric and psychiatric units, mostly in
hospitals situated in Tennessee.
ITEM 3. Legal Proceedings.
The Company and any of its subsidiaries and any of their property, are
not involved in any material pending legal proceeding. At this time, neither the
Company, nor any of its subsidiaries, have any material bankruptcy,
receivership, or similar proceeding pending.
ITEM 4. Submission of Matters to a Vote of Security Holders.
At the Annual Shareholders Meeting, the following items were voted and
approved: (1)the Directors are to serve for a one year period (2) The Articles
of Incorporation were amended to provide for indemnification of the Officers,
Directors and Agents of the Company to the fullest extent under Nevada Law (3)
The 1997 Stock Option Plan, which was cancelled in December 1997 (4) the
appointment of Smith & Company as the independent auditor of the Company (5) the
new Bylaws of the Company.
No other matter was submitted to the Company's security holders for a vote
during the fiscal year ending December 31, 1997.
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PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
The Company's common stock is listed on the NASDAQ-OTC system, under
the trading symbol "DYAS". The common stock is also listed on the Frankfurt and
Berlin Exchanges in Germany, under the trading symbol "DYA".
The following table lists the high and low sales prices for the common stock of
the company during the two most recent fiscal years:
NASDAQ-OTC
High Sales Price Low Sales Price
1997 First Quarter $ 4.38 $ 2.69
Second Quarter 3.93 2.06
Third Quarter 4.50 2.38
Fourth Quarter 2.63 1.00
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
As of December 31, 1997 there were 409 record holders of the Company's
common stock.
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 discussion covers the years 1995 through 1997, 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.
During the year the Company sold 1,022,600 shares of stock pursuant to
S-8 at $1.00 per share, issued 150,000 shares of restricted stock at $2.00 per
share in connection with the Geriatric Care Centers of America, Inc.
acquisition, issued 428,142 shares of stock pursuant to Regulation S in order to
retire debt of $1,498,500 and issued 214,287 shares of restricted stock at $3.50
per share for the remaining 50% of P&H.
The Company issued 919 Convertible Notes in Reliance on Regulation S to
non U.S. persons in its fiscal year ended December 31, 1996. Each note is for a
principal amount $18,500.00 and bears interest at 10% per annum and is
convertible into common stock of the Company at $3.50 per share. The Company has
agreed to lower the conversion from $3.50 to $2.75 to reflect the spin off of
MMC
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and P&H on February 25, 1998. The notes mature September 16, 2006. The proceeds
were used to acquire Genesis Health Management Corporation and provided the
Company with the additional capital as detailed in the attached financial
statements. The Notes may be redeemed by the Company at any time after September
15, 1997 with payment to the holder of the principal, accrued interest and a
premium of 10% reduced to 0% by the year 2005. The Company is obligated to make
interest payments to the investors, semi-annually until the Notes are either
converted or redeemed.
During 1997 the Company exercised its option to purchase the remaining
50% interest in P&H. The original option to purchase the interest for $1,000,000
was modified to $750,000 and was exercised by issuing 214,287 shares of
restricted stock at an agreed value of $3.50 per share.
During 1997 the Company accepted 507,971 shares of restricted common
stock of Claire Technologies, Inc. ("Claire") as payment in full for $409,447 in
principal and interest due from Claire. Claire has some of the same Officers and
Directors as the Company.
During 1997 the Company fully paid a loan of $3,000,000 due to the
former owners of Genesis. The final payment was made March 3, 1997. The
subsidiary of the Company also paid $150,000 to a bank in January, 1997. Also
during 1997 a subsidiary of the Company took out an additional bank loan with a
balance as of December 1997 of $347,303. This loan is payable monthly with
interest only to be paid until May 1998. As of December 31, 1997 P& H was not in
compliance under the covenants of the loan, and on March 2, 1998 the bank waived
such events of noncompliance.
The consolidated financial statements for 1997 include the accounts of
the Company; its wholly owned subsidiaries, MMC and MMC's Germany based
subsidiary Microwave Medical GmBH ("GmBH"), which was formed in late 1997,
Genesis, GCCA, which was acquired in March of 1997, and P & H. The statement of
operations for 1997 includes the operations of GCCA for the last three quarters
of 1997. The consolidated financial statements for 1996 include the accounts of
the Company; its wholly owned subsidiaries, MMC (which was incorporated
September 15, 1995 under the laws of the State of California) and Genesis (which
was incorporated on October 15, 1996 in Louisiana as Genesis Acquisition
Corporation, merged with Genesis Health Management Corporation on December 2,
1996 and changed its name to Genesis Health Management Corporation on December
5, 1996); and a 50% owned subsidiary, P & H. The Company acquired 50% of P & H
on May 6, 1996 pursuant to an option agreement dated December 12, 1995. The
Company acquired the remaining 50% of P & H in 1997.
All significant intercompany balances and transactions have been
eliminated in the consolidation.
The Gross Profit (sales and management fees less cost of sales) for the
year ended December 31, 1997 was $15,342,457 resulting in an operating loss of
$428,003 for the year. As detailed in the financial statements, additional
expenses caused the net loss before income taxes and minority interest to be
$2,738,168 for the year versus a loss of $1,577,671 for the previous year. After
factoring in the income tax expense the net loss increased to $3,545,846.
Net Sales decreased to $3,382,388 in 1997 from $3,395,098 in 1996.
Management Fees
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increased from $1,122,500 to $14,619,951 in 1997. The increase in Management
Fees resulted from the profitable acquisition of Genesis and GCCA. The Net Sales
decrease resulted from a drop in sales at P&H and a corresponding increase in
the cost of sales from $2,496,997 to $2,659,882.
Gross Profit rose to $15,342,457 in 1997, from $2,020,601 in 1996 as a
result of income generated from the health care sector of the business.
Cost of Sales. Increased costs in manufacturing and raw materials
reduced net sales and increased cost of sales from $2,496,997 in 1996 to
$2,659,882 in 1997.
RESEARCH AND DEVELOPMENT. Research and development is paid for by P&H
customers in the form of "non-recurring engineering" or "development" and are
expensed to "cost of sales". Research and development costs shown on the
statements of operations relate to costs incurred by Microwave Medical Corp. and
MMC GmBH.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES. The sales, general and
administrative expenses increased to $11,342,791 in 1997 from $2,474,457 in
1996. This increase is attributed to higher operating costs pertaining to the
new acquisitions, namely Genesis and GCCA.
OTHER INCOME/EXPENSE. The Company reported net interest/expense income,
miscellaneous income, loss on disposal of equipment and unrealized decline in
investment of $2,310,165 for 1997, compared to $204,738 for 1996. This is due
primarily to the increase in the interest expense to service the convertible
note used for the acquisition of Genesis.
LIQUIDITY AND CAPITAL RESOURCES. Working capital was $5,760,748 at
December 31, 1997 compared to $2,266,990 at December 31, 1996. The increase
arises from the profitability of Genesis and GCCA.
IMPACT OF SPIN-OFF. The financial statements for the year ending
December 31, 1997 reflect the operating results of the Company during a period
when the financial statements of each of P&H and MMC were consolidated with the
financial statements of the Company. Each of P&H and MMC is no longer a
subsidiary of the Company. The unaudited financial results of each of P&H and
MMC to March 31, 1998, the fiscal quarter end in which the distribution of MW
Medical to the shareholders of the Company occurred, will be included as pro
forma information in the financial statements of the Company for the year ended
December 31, 1998.
Management of the Company anticipates that the spin-off of P&H and MMC
will provide the Company with a healthier cash flow as it will free the Company
from carrying the financial burden of funding MMC. The Company's focus will be
directed to furthering the growth of Genesis and GCCA. This will enable the
Company to be better positioned in the healthcare market place.
ITEM 7. Financial Statements and Supplementary Data.
See Item 13.
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ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
No independent accountant previously engaged as the principal
accountant to audit the Company's financial statements, nor an independent
accountant who was previously engaged to audit a significant subsidiary and on
whom the principal accountant expressed reliance in its report, has resigned or
was dismissed. The Company has not changed accountants nor has it had any
disagreements with any accountants.
PART III
ITEM 9. Directors and Executive Officers of the Registrant.
The following table shows the positions held by the Company's officers
and directors. The directors were appointed and will serve until the next annual
meeting of the Company's stockholders, and until their successors have been
elected and have qualified. The officers were appointed to their positions, and
continue in such positions at the discretion of the directors.
Name Age Position
- ---- --- --------
Jan Wallace 42 President, Director
Grace Sim 37 Secretary-Treasurer
Florian Homm 39 Director
Dr. Rainer Marquart 42 Director
William H. Means, Jr. 42 Director
Elliot Smith 64 Director
Jan Wallace is a Director, President and Chief Operating 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 Operating
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.
William H. Means, Jr. is Executive Vice President. 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 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 1988
he was a Senior Vice President at Bank of Mid-South in Bossier City, Louisiana.
From 1988 through 1989 he was
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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.
Florian Homm 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 Bar 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 public companies, has received
several investment awards and has published extensively on a wide range of
financial topics.
Dr. Rainer Marquart is a Director of Dynamic Associates, Inc. and President of
Microwave Medical Corporation. Dr. Marquart has been employed by the Company
since October 1997. Dr. Marquart was previously Member of the Board of the
second biggest PC Retail company in Europe and was responsible for $600 million
in sales. Prior to that, he ran a consulting company with offices in Munich,
Zurich and Vienna. This company specialized in reorganization of medium-sized
companies and start up management. Dr. Marquart was also a manager with the
Boston Consulting Group for 4 years. Dr. Marquart obtained a Ph.D. in Chemical
Engineering from the Technical University in Darmstadt, Germany
Elliot Smith is a Director of the Company. Mr. Smith has held a variety of
senior management-level positions in some of the world's most prestigious
financial institutions during the past 40 years. Mr. Smith began a 29 year
career with Prudential Bache in 1954 when he was hired as a Registered
Representative in its Syracuse, New York office. By 1973, Mr. Smith was elected
to the Board of Directors of Bache & Company Inc. In 1977, he was named Senior
Officer of Commodity Division and Metal Company and in 1980, was elected
President of Bach Haley Stuart Metal Company Inc. On leaving Prudential-Bache in
1983, Mr. Smith served as Executive Vice President at R. Lewis Securities, Inc.,
located in New York City and from 1983 to 1995, was President of Whale
Securities Company, L.P., in New York. Since 1995, Mr. Smith has served as
President of the Equity Division of Rickel & Associates, Inc., an investment
company. Mr. Smith has also been elected to the Boards of The Pennington School
and Jullians Corporation. He is a former Member and Director of the Chicago
Board of Options Exchange; Governor of the American Stock Exchange(AMEX);
Governor and Chairman of the AMEX Commodities Exchange; Director and Member of
the Executive Committee of the Securities Industry Automation Corp. and a past
President of the Association of Investment Brokers. Mr. Smith is currently a
Managing Director at Oscar Gruss & Son, Inc.
Grace Sim has been the Secretary/Treasurer of Dynamic Associates, Inc. since
October 10, 1997. Ms. Sim joined Dynamic in January 1997. Prior to joining
Dynamic, Ms. Sim owned an accounting consulting company in Ottawa, Ontario,
Canada. Ms. Sim received her Bachelor of Mathematics with honors from the
University of Waterloo in Waterloo, Ontario. She is also an Officer in Claire
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Technologies, Inc., a company which files annual reports pursuant to the
Securities Exchange Act of 1934.
ITEM 10. Executive Compensation.
Annual Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Other Restricted
Annual Stock Options/* LTIP All Other
Name Title Year Salary Bonus Compensation Awarded SARs (#) payouts ($) Compensation
- ---- ----- ---- --------- ----- ------------ ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Wallace President, 1997 $ 145,000 $ 0 10,361 0 150,000 0 0
CEO,
Director
Grace Sim Secretary/ 1997 $ 87,333 $ 0 0 0 0 0 0
Treasurer
Florian Homm Director 1997 $ 0 $ 0 9,611 0 200,000(1) 0 0
Elliot Smith Director 1997 $ 0 $ 0 3,250 0 100,000 0 0
William H.
Means, Jr. Director 1997 $ 150,000 $ 0 10,361 0 0 0 0
Dr. Rainer
Marquart Director 1997 $ 70,000 $ 0 0 0 200,000 0 0
</TABLE>
There can be no assurance that the amounts of compensation actually
paid, or the persons to whom it is paid for 1998, will not differ materially
from the above 1997 amounts.
(1) Exercised in 1997.
*Options
The following options were granted to directors and officers of the
Company. Most of the options were granted when the Company did not publicly
trade and no monetary value had been attributed to the granting of the options.
The stock options are at a price of $1.00 per share.
Date Date Expiration
Granted Issued Number Date
Jan Wallace 4/9/96 4/9/96 150,000 4/9/99
Logan Anderson 4/9/96 4/9/96 150,000 4/9/99
Logan Anderson 4/9/96 10/4/96 255,000 10/4/99
Florian Homm 4/9/96 4/9/96 100,000 4/9/99
Florian Homm 4/9/96 9/16/96 100,000 9/16/99
Herb Capozzi 4/9/96 4/9/96 100,000 4/9/99
Craig Hurst 4/9/96 4/9/96 200,000 4/9/99
Harry Moll 4/9/96 4/9/96 270,000 4/9/99
Elliot Smith 8/1/97 8/1/97 100,000 8/1/2002
Rainer Marquart 1/29/98 1/29/98 100,000 1/29/2003
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1. The following options have been exercised in 1996 or 1997:
Logan Anderson 200,000
Florian Homm 200,000
Herb Capozzi 20,000
Craig Hurst 133,600
Harry Moll 120,000
Dr. Rainier Marquart has 100,000 options which were granted September 30, 1997
with an exercise price of $2.25 per share and an expiration date of September
30, 2002.
Some, if not all, of the remaining options held by Messrs. Anderson, Capozzi,
and Hurst have or will be cancelled as the parties have left the Company.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of December 31, 1997, information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the outstanding shares, by each of the directors
and by the officers and by each director and officer as a group, consisting of:
Number of Shares
Class Name and Address to be Projected
of Beneficial Owner Beneficially Owned Percent of Class
Class A Common Cede & Co. 5,767,716 40.41%
P.O. Box 222
Bowling Green Station
New York, NY 10274 - 0000
Class A Common Vickie T. Lucky 2,370,000 16.60%
1613 Jimmie Davis Hwy.
Suite #1&2
Bossier City, LA 71112
Class A Common Jan Wallace 550,000(2) 3.85%
(President & Director)
6929 East Cheney
Paradise Valley, AZ 85253
Class A Common Billy Means, Jr. (Director) 30,000 0.21%
1613 Jimmie Davis Hwy.
Suite #1&2
Bossier City, LA 71112
Class A Common Harry C. Moll 1,395,000(1) 9.77%
PO Box 836
Anderson Square Bldg.
Sheddon Road
Georgetown, Grand Cayman
Class A Common Brant Investments Limited 1,600,000 11.21%
BH Level Royal BK Plaza
200 Bay Street
Toronto, Ontario
Class A Common Grace Sim 0 0.00%
(Secretary/Treasurer)
7373 North Scottsdale Road,
Suite B169
Scottsdale, AZ 85253
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Number of Shares
Class Name and Address to be Projected
of Beneficial Owner Beneficially Owned Percent of Class
Class A Common Florian Homm 0 0.00%
(Director)
7373 North Scottsdale Road,
Suite B169
Scottsdale, AZ 85253
Class A Common Dr. Rainier Marquart 200,000(3) 1.35%
(Director)
7373 North Scottsdale Road,
Suite B169
Scottsdale, AZ 85253
Class A Common Elliot Smith 150,000(4) 1.01%
(Director)
7373 North Scottsdale Road,
Suite B169
Scottsdale, AZ 85253
Class A Common All officers and directors 930,000 6.27%
as a group (6 persons)
(1) Includes 5,000 shares owned by SSM, Ltd. which is controlled
by Mr. Moll and 150,000 options held by Mr. Moll.
(2) Includes 150,000 options held by Ms. Wallace.
(3) Includes 200,000 options held by Dr. Marquart.
(4) Includes 100,000 options held by Mr. Smith.
ITEM 12. Certain Relationships and Related Transactions.
During 1997 $145,000 was paid to the Company's President, and $87,733
was paid or accrued to the current Secretary/Treasurer. The President of MMC,
who is also a Director of the Company was paid $70,000 in 1997.
The Company is provided with office space and other management services
on a month-to-month basis by Amteck Management, Inc., an entity controlled by
the Company's former Secretary. $124,221 was paid to Amteck during 1997. $1,000
per month was paid to Amteck as rent in 1997. Other fees to Amteck will be based
on services received. Officers currently are receiving no salary but are being
paid management fees when services are provided. Various other individuals are
paid as services are performed.
For 1998, it is projected that the Company's President will receive
$15,000 monthly and the Secretary will receive $8,000 monthly. In addition, one
officer will receive $15,000 per month. Genesis has the following commitments:
the President will receive $102,667 through November, 1998. The Financial
Reimbursement Specialist will receive $71,867 through November, 1998. The Senior
Vice President for Operations will receive $184,800 through November, 1998. A
Consultant's contract was fully paid out for $210,000 in March 1998.
Future scheduled payments under these employment related commitments
are to provide $1,145,334 by December 31, 1998,
Dynamic leases vehicles under operating leases expiring through 2000.
The future minimum lease payments are as follows:
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Year Ending
December 31, 1998 $ 10,654
December 31, 1999 10,654
December 31, 2000 7,840
----------------
$ 29,148
Genesis leases equipment under operating leases expiring through 1998
with future minimum lease payments to be $68,035 for the year ending December
31, 1998.
Genesis leases its facility at $2,800 per month through September 30,
1998 and also leases an office for out of town business at $525 per month.
Genesis also pays the taxes and utilities. The future minimum lease payments are
$31,500 for the year ending December 31, 1998.
Genesis leases an aircraft from a related party on a monthly basis, but the
payment is not determined until the end of each month. Future minimum payments
are not determinable. During 1997, payments to the entity were about $323,000.
Rental expense for the year ended December 31, 1997 was $253,868 (
$203,299 in 1996 and $4,947 in 1995) which includes $7,298 paid by MMC to P & H
($7,120 in 1996).
PART IV
ITEM 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following financial statements, financial statement schedules and
supplementary date are included:
F-1 Independent Auditor's Report
Financial Statements:
F-2 Consolidated Balance Sheets - December 31, 1997 and 1996
F-3 Consolidated Statements of Operations - Years Ended
December 31, 1997, 1996, and 1995.
F-4 Consolidated Statements of Changes in Stockholders' Equity -
Years Ended December 31, 1997, 1996, and 1995.
F-5 Consolidated Statements of Cash Flows - Years Ended
December 31, 1997, 1996, and 1995.
F-6 Notes to Financial Statements
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1997.
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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: 5/29/98 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: 5/29/98 By: /s/ Jan Wallace
Jan Wallace, President and Director
Date: 5/29/98 By: /s/ Rainer Marquart
Rainer Marquart, Director
Date: 5/29/98 By: /s/ Elliot Smith
Elliot Smith, Director
Date: 5/29/98 By: /s/ William H. Means
William H. Means, Director
Date: 5/29/98 By: /s/ Florian Homm
Florian Homm, Director
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