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SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
<TABLE>
<S> <C> <C> <C>
[ ] Preliminary Information Statement [ ] Confidential, For Use of the Commission
Only (as Permitted by Rule 14c-5(d)(2))
[x] Definitive Information Statement
</TABLE>
DYNACQ INTERNATIONAL, INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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DYNACQ INTERNATIONAL, INC.
10304 INTERSTATE 10 EAST, SUITE 369
HOUSTON, TEXAS 77029
INFORMATION STATEMENT
JANUARY 22, 1998
THIS INFORMATION STATEMENT IS BEING PROVIDED TO STOCKHOLDERS
TO INFORM THEM OF SHAREHOLDER ACTIONS TAKEN BY THE WRITTEN
CONSENT OF A MAJORITY OF STOCKHOLDERS.
DYNACQ INTERNATIONAL, INC. IS NOT ASKING FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND A PROXY.
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DYNACQ INTERNATIONAL, INC.
10304 Interstate 10 East, Suite 369
Houston, TX 77029
January 22, 1998
Dear Stockholder:
This is to inform you that the Board of Directors of Dynacq
International, Inc., a Nevada corporation (the "Company") has adopted a
resolution by unanimous written consent to amend its Articles of Incorporation
(the "Amendment") to effect a 4 to 1 reverse stock split (the "Reverse Stock
Split") of the Company's outstanding common stock, $.001 par value (the "Common
Stock").
The Amendment was approved by the Board of Directors and adopted by
written consent of the holders of a majority of the outstanding shares of the
Company's Common Stock on January 15, 1998.
The Amendment will become effective on approximately February 10,
1998, the date on which the Company expects to file the Amendment with the
Nevada Secretary of State (the "Effective Date").
The Company currently has 14,415,136 shares of Common Stock issued and
outstanding. The Reverse Stock Split will reduce the number of shares of the
Company's outstanding Common Stock on the Effective Date to approximately
3,603,784 shares. The Reverse Stock Split is being adopted for the reasons
described in this Information Statement and is expected to facilitate the
continued listing of the Company's Common Stock on the Nasdaq SmallCap Market.
PLEASE NOTE THAT YOU ARE NOT BEING ASKED TO SEND A PROXY AND
YOU ARE REQUESTED NOT TO SEND ONE.
Sincerely,
/s/ PHILIP CHAN
-----------------------------
Philip Chan
Vice President
and Chief Financial Officer
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<PAGE> 4
INFORMATION STATEMENT
FOR
DYNACQ INTERNATIONAL, INC.
WE ARE NOT ASKING FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND A PROXY.
On January 15, 1998, the Board of Directors of Dynacq International,
Inc., a Nevada corporation, (the "Company") and Chiu Moon Chan and certain
family members, the majority stockholders of the Company (collectively the
"Majority Stockholder") who collectively own approximately 63.02% of the
Company's outstanding common stock, $.001 par value (the "Common Stock")
approved an amendment to the Company's Articles of Incorporation (the
"Amendment") approving a 4 to 1 reverse stock split of the Company's
outstanding Common Stock (the "Reverse Stock Split"). The Amendment will
become effective on approximately February 10, 1998 (the "Effective Date") when
the Company files a Certificate of Amendment to its Articles of Incorporation
with the Secretary of State of Nevada. This Information Statement is being
provided to all stockholders of record as of January 22, 1998.
The Amendment was approved in accordance with Nevada General
Corporation Law (the "Nevada Law") which provides that the written consent of
the holders of outstanding shares of voting capital stock, having not less than
the minimum number of votes which would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted, may be substituted for such a special meeting. Pursuant to Nevada
law, a majority of the outstanding shares of voting capital stock entitled to
vote thereon is required in order to amend the Company's Articles of
Incorporation. In order to eliminate the costs and management time involved in
holding a special meeting of stockholders and in order to effect the Amendment
as early as possible in order to accomplish the purposes of the Company as
hereinafter described, the Board of Directors of the Company voted to approve
the Amendment by written consent of the Majority Stockholder of the Company.
The Company will pay all costs associated with the distribution of
this Information Statement, including the costs of printing and mailing. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending this
Information Statement to the beneficial owners of the Company's Common Stock.
THE REVERSE STOCK SPLIT
In order to meet the standards for continued listing of its Common
Stock on the Nasdaq SmallCap Market and for the reasons hereinafter set forth,
the Board of Directors and the Majority Stockholder approved the Amendment on
January 15, 1998, which provides for a 4 to 1 Reverse Stock Split of the
presently issued and outstanding shares of the Company's Common Stock. See
"Purposes of the Reverse Stock Split" below. However, the Company cannot
provide any assurances to its stockholders that the Reverse Stock Split will
result in the continued listing of its Common Stock on the Nasdaq SmallCap
Market or achieve any of the other purposes described herein. The Reverse
Stock Split will reduce the number of shares of the Company's outstanding
Common Stock from 14,415,136 shares to approximately 3,603,784 shares.
On the Effective Date, each certificate representing a particular
number of shares of Common Stock outstanding immediately prior to the Reverse
Stock Split (the "Old Shares") will be deemed automatically, without any action
on the part of the Stockholders, to represent one-fourth (1/4) of such number
of shares of Common Stock after the Reverse Stock Split (the "New Shares");
provided, however, that no fractional New Shares will be issued as a result of
the Reverse Stock Split and each fraction of a share will be deemed to
represent one (1) New Share.
After the Effective Date, stockholders may exchange their certificates
representing the Old Shares for new certificates representing the New Shares.
Stockholders who wish to exchange their certificates may contact the
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Company for appropriate instructions. Stockholders will not be required to pay
a transfer or other fee in connection with the exchange of stock certificates.
PURPOSES OF THE REVERSE STOCK SPLIT. The Company's shares of Common Stock are
listed, and trade, on the Nasdaq SmallCap Market. On August 22, 1997, The
Nasdaq Stock Market amended its quantitative listing requirements for continued
listing to require, among other things, a minimum bid price of $1.00 per share.
Over the past two years the price of the Company's Common Stock has fluctuated
and, for protracted periods, has fallen below $1.00 per share. See "Market for
Common Stock and Related Stockholder Matters" below. Management believes that
the Reverse Stock Split will result in the Company's shares of Common Stock
having a minimum bid price in excess of $1.00 per share and will enable the
Company to maintain the listing of its Common Stock on the Nasdaq SmallCap
Market. The Nasdaq Stock Market has other quantative requirements for the
continued listing of securities on the Nasdaq SmallCap Market which the Company
believes its meets at this time.
Additionally, management believes the Reverse Stock Split will enhance
the acceptability and marketability of the Common Stock by the financial
community and investing public. The reduction in the number of issued and
outstanding shares of Common Stock caused by the Reverse Stock Split is
expected to result in a broader market for the Common Stock than that which
currently exists. Many brokerage firms and institutional investors do not
effect transactions in securities such as the Company's Common Stock because of
its relatively low trading price. In addition, the structure of trading
commissions also tends to have an adverse impact upon holders of lower priced
securities because the brokerage commission on a sale of lower priced
securities generally represents a higher percentage of the sales price than the
commissions on a relatively higher priced security. The expected increased
price level may also encourage interest and trading in the Common Stock and
promote greater liquidity for the Company's stockholders.
However, the Company cannot provide its stockholders with any
assurance that any or all of the purposes of the Reverse Stock Split will
occur, including, without limitation, that (i) the market price per share of
Common Stock after the Reverse Stock Split will be four (4) times the current
market price per share of Common Stock before the Reverse Stock Split, (ii) the
market price will either exceed or remain in excess of the current market
price, (iii) the market price will initially exceed or remain above the $1.00
minimum bid price required by The Nasdaq Stock Market, or (iv) the
acceptability, marketability or liquidity of the Company's Common Stock will
increase.
In the event the Company does not meet, or does not continue to meet,
the quantitative listing requirements of the Nasdaq SmallCap Market, the
Company believes that its Common Stock will continue to trade in the
over-the-counter market on the OTC Bulletin Board or the pink sheets. The OTC
Bulletin Board is a regulated quotation service that displays real-time quotes,
last-sales prices and volume information in over-the-counter equity securities.
Subject to the qualifications set forth in the preceding paragraph, the Company
currently expects that the Reverse Stock Split will result in a price increase
in its Common Stock which will allow continued listing on the Nasdaq SmallCap
Market.
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT. The Common Stock is currently
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, as a result, the Company is subject to the periodic reporting and
other requirements of the Exchange Act. The Reverse Stock Split will not
affect the registration of the Common Stock under the Exchange Act.
The Company currently has issued and outstanding options and/or
warrants to purchase 1,025,527 shares of its Common Stock (collectively the
"Options"). All outstanding Options provide for an adjustment in proportion to
any change in the amount of Common Stock outstanding. After the Reverse Stock
Split is effective, appropriate adjustments will be made to all outstanding
Options.
The Company is not changing the par value of its Common Stock in
connection with the Reverse Stock Split. Accordingly, on the Effective Date,
the Company's existing Common Stock par value amount reflected in its balance
sheet of approximately $14,415 will be reduced to approximately $3,604 and its
additional paid-in capital will be increased by approximately $10,676. The
Company's total stockholders' equity reflected in its balance sheet of
approximately $5,337,249 will remain the same.
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Except for the reduction in the number of shares of the Company's
outstanding Common Stock from 14,415,136 to approximately 3,603,784 following
the Reverse Stock Split, the rights and privileges of holders of the Common
Stock will remain the same, both before and after the Reverse Stock Split.
Except for the Options and the Common Stock, the Company has no other
outstanding securities.
FEDERAL INCOME TAX CONSEQUENCES. The Reverse Stock Split is intended to be
treated as a reorganization described in Section 368(a)(1)(E) of the Code;
however, the Company has not obtained a tax opinion and stockholders are
advised to consult their own tax advisors for more detailed information
relating to their individual and local tax circumstances. As a reorganization,
stockholders receiving New Shares of Common Stock in exchange for their Old
Shares of Common Stock pursuant to the Reverse Stock Split will not recognize
any gain or loss as a result of the exchange. The initial tax basis in the New
Shares of Common Stock received will be equal to such stockholder's adjusted
tax basis in the Old Shares of Common stock surrendered therefor. The holding
period for the New Shares of Common Stock received will include such
Stockholder's holding period in the Old Shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock held by directors,
executive officers and persons known to management of the Company to own more
than 5% of the outstanding Common Stock of the Company as of January ___, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES AND NATURE
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
-------------- ------------------- ------------------------------- ----------------
<S> <C> <C> <C>
Common Stock Chiu Moon Chan 9,084,877 (1) 63.02%
323 Wood Loop
Houston, Texas 77015
Common Stock Ella Chan 9,084,877 (1) 63.02%
323 Wood Loop
Houston, Texas 77015
Common Stock Philip Chan 285,106 (2) 1.97%
7930 Millbrook Drive
Houston, Texas 77095
Common Stock Hi Lite Development Ltd. 2,433,375 16.88%
First Floor, Wah Sing Building
61A Java Road
North Point, Hong Kong
Common Stock Officers and Directors 9,289,983 64.99%
as a group (6)
</TABLE>
- ------------------------------
(1) Includes (i) 6,782,188 shares of Common Stock held individually by
Chiu Moon Chan, (ii) 1,897,125 shares of Common Stock held in the name
of Mr. Chan's spouse, and (iii) 202,782 shares of Common Stock held in
the name of two of Mr. Chan's minor children. Mr. Chan disclaims any
beneficial ownership of the shares held by his spouse and minor
children. Mrs. Chan disclaims any beneficial ownership of the shares
held by her spouse and minor children.
(2) Includes (i) 157,606 shares which may be acquired by Mr. Philip Chan
pursuant to options granted to him in May 1996, which are exercisable
at $0.9375 per share and expire May 14, 2001, and (ii) 80,000 shares
which may be acquired by Mr. Philip Chan pursuant to options granted
to him on December 12, 1997, at an exercise price of $0.34375 per
share which expire December 12, 2002.
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MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
In September 1993, the Company's Common Stock began trading on
NASDAQ's SmallCap Market under the symbol DYII. Prior to obtaining the NASDAQ
listing, the Company's Common Stock had traded in the over-the-counter market
on the pink sheets and on the NASD Electronic Bulletin Board.
The following table sets forth the high and low closing bid prices for
the Company's Common Stock during each of the last nine fiscal quarters as
reported by the National Quotation Bureau, Inc.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1998 Fiscal Year - Quarter Ended:
November 30, 1997 $ 0.6875 $ 0.50
1997 Fiscal Year - Quarter Ended:
November 30, 1996 1.25 0.675
February 28, 1997 1.125 0.675
May 31, 1997 0.875 0.50
August 31, 1997 1.00 0.25
1996 Fiscal Year - Quarter Ended:
November 30, 1995 1.3125 1.00
February 29, 1996 1.375 0.9375
May 31, 1996 1.125 0.6875
August 31, 1996 1.25 1.00
</TABLE>
These quotations reflect inter-dealer prices, without retail markup,
mark-down or commission and may not represent actual transactions.
As of December 31, 1997, the Company had approximately 149 stockholders
of record. This number does not include stockholders who hold the Company's
Common Stock in nominee accounts with broker-dealer firms or depository
institutions. Including the shares held in nominee accounts or depository
institutions, the Company believes it has in excess of 300 beneficial owners of
its Common Stock.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Effective September 27, 1996, the Company terminated the accounting
firm of Bateman, Blomstrom & Co. There were no disagreements on any matter of
accounting principles or practices, financial statement presentation or
disclosure, or auditing scope or procedures with the Company's prior
accountants. The independent accountants' reports on the Company's financial
statements for the past two years did not contain an adverse opinion,
disclaimer of opinion nor was it qualified or modified as to uncertainty, audit
scope or accounting principles. The decision to change certifying accountants
was recommended and approved by the Company's Board of Directors. During the
Company's two most recent fiscal years there were no disagreements or
"reportable events" with the Company's former or current independent
accountants on any matter of accounting principles or practices, financial
statement
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disclosure, or auditing scope or procedure. Effective September 27, 1996, the
Company engaged the accounting firm of Wood, Harper & Associates, P.C. as its
new principal independent accountants.
STOCKHOLDER PROPOSALS
The Board of Directors has not yet determined the date for the annual
meeting of stockholders to be held subsequent to the Company's fiscal year
ending August 31, 1998, although the Company intends to hold the annual meeting
of stockholders by February 15, 1999. The Company did not hold an annual
meeting of stockholders following its fiscal years ended August 31, 1997 and
1996. Accordingly, any proposal by a stockholder intended to be presented at
the Company's annual meeting of stockholders following its fiscal 1998 year end
should be mailed in writing to the attention of the Company's Corporate
Secretary at the Company's principal offices by October 15, 1998, in order to
be considered for inclusion in the Company's information or proxy statement.
The Company's mailing address is 10304 Interstate 10 East, Suite 369, Houston,
Texas 77029.
FORWARD-LOOKING INFORMATION
The information in this Information Statement contains forward-looking
statements relating to the Company that are based on the beliefs of the
Company's management, as well as assumptions made by, and information currently
available to, the Company's management. When used in this Information
Statement, words such as "anticipate", "believe", "estimate", "expect",
"intend" and similar expressions, as they relate to the Company or the
Company's management, identify forward-looking statements. Such statements
reflect the current views or expectations of the Company with respect to future
events, and are subject to change based on numerous factors including, but not
limited to, regulatory changes and changes in management's intentions or
beliefs.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PHILIP CHAN
- -------------------------------------
PHILIP CHAN, Director, Vice President
and Chief Financial Officer
Houston, Texas
January 22, 1998
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