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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT 1
TO
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ___________________
Commission file number 0-20554
DYNACQ INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 76-0375477
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10304 INTERSTATE 10 EAST, SUITE 369, HOUSTON, TEXAS 77029
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(address of principal executive offices) Zip Code
Registrants telephone number, including area code (713)673-6432
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issurer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirement for the past 90
days. Yes X . No .
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable dates.
Title of Each Class Outstanding at January 17, 1997
Common Stock, $0.001 par value 14,235,136 shares
Transitional Small Business Disclosure Format (check one)
Yes No X
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PART I. - FINANCIAL INFORMATION
ITEM I. - FINANCIAL STATEMENTS
DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
ASSETS
NOVEMBER 30, AUGUST 31
1996 1996
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<S> <C> <C>
CURRENT ASSETS:
Cash 901,477 1,134,579
Restricted short-term investments 180,000 180,000
Receivable (Net of Allowance for 2,146,282 2,413,372
Doubtful Accounts)
Inventory 31,500 29,347
Other Current Assets 12,570 31,120
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Total Current Assets 3,271,829 3 ,788,418
FIXED ASSETS - NET 5,223,200 5,197,107
OTHER ASSETS 1,329,802 1,333,084
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TOTAL ASSETS 9,824,831 10,318,609
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable 532,798 199,452
Accrued Liabilities 97,385 797,021
Income Taxes Payable 138,797 252,110
Current Portion of Notes Payable 277,833 277,833
Federal Income Taxes Payable 355,892 436,000
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TOTAL CURRENT LIABILITIES 1,402,705 1,962,416
LONG-TERM DEBT 941,076 969,392
DEFERRED FEDERAL INCOME TAX PAYABLE 134,000 134,000
MINORITY INTERESTS IN SUBSIDIARY 877,260 856,357
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.01 Par Value,
5,000,000 Shares Authorized,
None Issued or Outstanding
Common Stock, $0.001 Par Value,
300,000,000 Shares Authorized
After 8 to 1 reverse Stock Split,
14,235,136 Shares Issued and
Outstanding 14,235 14,235
Additional Paid In Capital 3,452,130 3,452,130
Retained Earnings 3,060,747 2,987,401
LESS TREASURY STOCK; 71,335 shares at cost (57,322) (57,322)
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TOTAL STOCKHOLDERS' EQUITY 6,469,790 6,396,444
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 9,824,831 10,318,609
============================================================================================
</TABLE>
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DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30
1996 1995
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<S> <C> <C>
INCOME 2,182,493 1,545,007
COST OF SALE 52,534 106,737
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GROSS PROFIT 2,129,959 1,438,270
LESS EXPENSES :
Contract Services 760,874 200,115
Salaries 486,681 208,537
Medical Supplies 151,452 167,333
Maintenance & Repairs 20,772 32,153
Administrative 130,745 62,046
Utilities 19,838 23,469
Insurance 26,665 311
Depreciation and Amortization 109,846 131,272
Auto Expenses 14,916 8,204
Taxes, Licences and Professional Fees 154,118 51,350
Leasing 3,434 4,105
Rent 57,656 3,858
Interest 29,600 37,057
Advertising & Promotion 56,171 0
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Total Expenses 2,022,767 929,810
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NET INCOME (LOSS) FROM OPERATIONS 107,192 508,460
MINORITY INTERESTS IN (PROFITS)/LOSS (20,903) (60,646)
OF SUBSIDIARY
LESS PROVISION FOR FEDERAL INCOME TAXES
Current 12,943 65,000
Deferred 0 96,779
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Total Income Taxes 12,943 161,779
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NET INCOME (LOSS) 73,346 286,035
====================================================================================
NET INCOME (LOSS) PER SHARE:
INCOME BEFORE PROVISION FOR
FEDERAL INCOME TAX 0.006 0.031
PROVISION FOR FEDERAL INCOME TAX 0.001 0.011
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NET INCOME 0.005 0.020
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 14,235,136 14,235,136
</TABLE>
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DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
USED BY OPERATING ACTIVITIES:
Net Income (Loss) 73,346 286,035
ADD: ITEMS NOT REQUIRING CASH:
DEPRECIATION 109,846 131,272
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
(Increase) Decrease in Accounts Receivable 267,090 337,370
(Increase) Decrease in Inventory (2,153) 4,758
(Increase) Decrease in Other Current Assets 18,550 64,260
(Increase) Decrease in Due from Affiliates 0 80,666
(Increase) Decrease in Other Assets 3,282 86,560
Increase (Decrease) in Accounts Payable 333,346 (35,624)
Increase (Decrease) in Accrued Liabilities (699,636) 1,954
Increase (Decrease) in Current Notes Payable 0 (70,724)
Increase (Decrease) in Current Income Taxes (193,421) (35,000)
Increase (Decrease) in Deferred Income Taxes 0 96,779
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Net Cash Used by Operating Activities (89,750) 948,306
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets (135,249) (143,269)
(Decrease) Increase of Minority Interests 20,903 60,646
in subsidiary
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Net Cash Used by Investing Activities (114,346) (82,623)
CASH FLOW FROM FINANCING ACTIVITIES:
Retirement of Long -Term Debt 28,316 0
Acquisition of treasury stock (57,322) 0
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Net Cash Provided by Financing Activities (29,006) 0
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Net Increase/(Decrease) in Cash (233,102) 856,683
CASH BALANCE AT BEGINNING OF YEAR 1,134,579 649,572
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CASH BALANCE AT END OF THE QUARTER 901,477 1,515,255
==================================================================================
</TABLE>
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DYNACQ INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996
(UNAUDITED)
NOTE 1. - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by Dynacq
International, Inc. without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted as
allowed by by such rules and regulations, and management believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements include all of the adjustments which, in the opinion
of management, are necessary for a fair presentation of financial position and
results of operations. All such adjustments are of a normal and recurring
nature. These unaudited financial statements should be read in conjunction with
the audited financial statements at August 31, 1996. Operating results for the
three months period ended November 30,1996 are not necessarily indicative of
the results that may be expected for the year ending August 31, 1997.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 1995
TO THE THREE MONTHS ENDED NOVEMBER 30, 1996
Consolidated revenues for the three months ended November 30, 1996 increased
$637,486 or 41% from that for the corresponding previous quarter ended November
30, 1995. Notwithstanding this significant increase in consolidated revenues,
there were a number of significant increases and decreases in the component
revenue categories. For instance, while Doctor's Practice Management, Inc.
("DPMI") generated $1,059,500 revenues in the current quarter, did not
generated any revenue in the corresponding quarter of 1995. Revenue
attributable to home infusion therapy operations decrease $119,669 or 21% in
the current quarter due to lower patient load as a result of fewer referrals
and lower reimbursable insurance charges per patient compared to the
corresponding quarter of the previous fiscal year. Revenue attributable to
Vista operations decreased $302,343 or 39% from that of the prior year due to
fewer patient referrals, primarily as a result of the relocation of a physician
group which was located on the premises.
Consolidated costs of sale for the three months ended November 30, 1996
decreased $54,203 or 50% from that for the corresponding previous quarter ended
November 30, 1995, was primarily attributable to both the home infusion therapy
operations and Vista due to lower revenues.
Consolidated operating expenses for the three months ended November 30, 1996
increased $1,092,957 or 117% from that for the corresponding previous quarter
ended November 30, 1995 primarily due to increase in activities of DPMI. The
significant increases and decreases in the component expense categories of the
consolidated operating expenses are explained as follows:
(1) The increase in contract services of $560,759 or 280% was primarily
attributable to DPMI, which had no activities in the corresponding
previous quarter.
(2) The increase in salaries expenses of $278,144 or 133% was primarily
attributable to DPMI, which had no activities in the corresponding
previous quarter.
(3) The increase in insurance expense of $26,354 or 847% was primarily
attributable to DPMI, which had no activities in the corresponding
previous quarter.
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(4) The increase in auto expenses of $6,712 or 82% was primarily due to DPMI,
which had no activities in the corresponding previous quarter.
(5) The increase in taxes, licences and professional fees of $102,760 or 200%
was primarily due to DPMI, which had no activities in the corresponding
previous quarter.
(6) The increase in rent expense of $53,798 or 139% was primarily due to DPMI,
which had no activities in the corresponding previous quarter.
(7) The increase in advertising and promotion expense of $56,171 was primarily
incurred by Vista to increase public awareness of the facilities.
FINANCIAL CONDITION
COMPARISON OF THE BALANCE SHEETS AT THREE MONTHS ENDED NOVEMBER 30, 1996 TO THE
AUDITED BALANCE SHEET AT FISCAL YEAR ENDED AUGUST 31, 1996.
Consolidated cash for the three months ended November 30, 1996 decreased
$233,102 or 21% from that of the previous audited balance sheet ending August
31, 1996 was due to $89,750 used by operating activities, $114,346 used by
investing activities and $29,006 used by financing activities. Consolidated
accounts payable and accrued liabilities for the three months ended November
30, 1996 decreased $366,290 or 36% from that of the previous audited balance
sheet ended August 31, 1996 due to the payment of trade payable.
Liquidity and Capital Resources
Working Capital of $1,869,124 at November 30, 1996 increased $43,122 or 2% from
working capital at August 31, 1996 primarily due to decrease in accounts
payable and accrued liabilities. At November 30, 1996, the Company maintained a
liquid position evidenced by a current ratio of 1.33 to 1 and total debt to
equity of 0.37 to 1.
PART II.
ITEM 1. - LEGAL PROCEEDINGS
None
ITEM 2. - CHANGES IN SECURITIES
None
ITEM 3. - DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. - OTHER INFORMATION
None
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*27 -- Financial Data Schedule
(b) Reports on Form 8-K
None
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* Filed Previously
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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.
DYNACQ INTERNATIONAL, INC.
DATE JANUARY 19, 1997 BY: /s/ PHILIP CHAN
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Philip Chan
VP-Finance/Treasurer &
Chief Financial Officer
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EXHIBIT INDEX
*27 -- Financial Data Schedule
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* Filed Previously
