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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the securities Exchange Act of 1934
(Amendment No. )*
Dynacq International, Inc.
(Name of issuer)
Common Stock
(Title of Class of Securities)
267919306
(CUSIP Number)
Philip Chan, 10304 I-10 East, Suite 369, Houston, Texas 77029
(Name, Address and Telephone Number of person Authorized to Receive Notices and
Communications)
February 26, 1998
(Date of Event which requires Filing of this Statement)
If the filing person has previously filed a statement on schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-a(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2)has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such
class.)(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 267919306 PAGE 1 OF 6 PAGES
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hi Lite Development Ltd.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
a. [ ]
b. [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
N/A
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Hong Kong
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7. SOLE VOTING POWER
NUMBER OF
SHARES 162,500 shares
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8. SHARED VOTING POWER
EACH
REPORTING
PERSON -----------------------------------------------------------------
WITH 9. SOLE DISPOSITIVE POWER
162,500 shares
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10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
162,500 shares
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.90%
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14. TYPE OF REPORTING PERSON
CO.
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Securities and Exchange Commission - SCHEDULE 13D Page 2 of 6 Pages
</TABLE>
Item 1. Securities and Issuer
Title of the class of equity securities: Common Stock, $0.001 Par Value
Name and address of the principal executive officers of the issuer:
Mr. Chiu M. Chan, President
10304 I-10 East, Suite 369, Houston, Texas 77029
Mr. Philip S. Chan, Chief Financial officer
10304 I-10 East, Suite 369, Houston, Texas 77029
Item 2. Identity and Background
Name of corporation that is filing this statement: Hi Lite Development
Ltd. ("HiLite").
Place of Organization: Hong Kong.
Principal business: Investment.
Address of principal business: First floor, Wah Sing Building, 61A Java
Road, North Point, Hong Kong.
Address of principal office: same as above.
Name and address of the sole executive officer and director and
controlling person of Hi Lite: Mr. Wing S. Mak, first floor, Wah Sing
Building, 61A Java Road, North Point, Hong Kong.
During the last five years, neither Mr. Wing S. Mak nor HiLite has been
convicted in a criminal proceeding.
During the last five years, neither Mr. Wing S. Mak nor HiLite has been
a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction which resulted in any of the actions required to
be described in item 2(e) of Schedule 13D.
Citizenship of Mr. Wing S. Mak: Hong Kong.
Item 3. Source and Amount of Funds and Other Consideration
HiLite initially acquired 608,344 shares (after adjusted for 8 to 1
reverse stock split effective March 8, 1993 and a 4 to 1 reverse stock
split effective February 10, 1998) representing 16.88% of the common
stock, $0.001 par value (the "Common Stock") of Dynacq International,
Inc., a Nevada corporation (the "Company") on July 29, 1992, in a
private placement transaction for $600,000 in cash representing a
purchase price of $0.99 per share. All share numbers referred to herein
and per share purchase prices have been adjusted to reflect the two (2)
reverse stock splits undertaken by the Company described above. HiLite
purchased the Common Stock from its working capital for investment
purposes. HiLite had no plans or proposals at the time of the
acquisition of the Common Stock with any persons regarding any of the
matters set forth in Item 4 of Schedule 13D.
Item 4. Purpose of Transaction
The disclosures contained in Item 3. above are incorporated in this Item
4. by reference. On February 26, 1998, HiLite reached an agreement to
sell 287,500 shares of Common Stock to the Company for $517,500, or
$1.80 per share, of which $62,500 was paid in cash by the Company and
the balance of $455,000 will be paid pursuant to a promissory note in
sixty (60) monthly installments of $10,006.64 each at an annual interest
rate of 11.50%. On February 27, 1998, HiLite sold 158,344 shares to an
unrelated party at a price of $1.80 per share for $285,019 cash. HiLite
decided to sell a portion of its holdings in the Company to capitalize
on the gain in the shares.
Item 5. Interest in Securities of the Issuer
As described in Item 4 above, HiLite sold 445,844 shares of Common
Stock, or approximately 12.4% of the Company's outstanding securities,
and now beneficially owns 162,500 shares of the Common Stock, or
approximately 4.90% of the Company's outstanding Common Stock. HiLite
has the sole power to vote and dispose of the shares.
Except as reported herein, no transactions have been effected by HiLite
in the Company's Common Stock within the last sixty (60) days.
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Page 3 of 6 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with respect
to Securities of the Issuer. See item 4 hereof with respect to the
Purchase Agreement and loan extended by HiLite to the Company for the
sale of 287,500 shares pursuant to the Promissory Note which contains
standard default and similar provisions.
Item 7. Materials to Be Filed as Exhibits
Promissory Note dated February 26, 1998 between HiLite and Purchaser.
Purchase Agreement dated February 26, 1998 between HiLite and
Purchaser.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
February 28, 1998 Hi Lite Development Ltd.
Date
By: /s/ Wing S. Mak
-------------------------
Wing S. Mak, President
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EXHIBIT Page 4 of 6 Pages
PROMISSORY NOTE
$455,000.00 HOUSTON, TEXAS February 23, 1998
FOR VALUE RECEIVED, the undersigned, Dynacq International, Inc.,
("Maker") promises to pay to the order of Hi Lite Development Ltd., ("Payee")
of Hong Kong, in lawful money of the United States of America, the sum of FOUR
HUNDRED FIFTY FIVE THOUSAND AND 00/100----($455,000.00) DOLLARS, together with
interest on the unpaid principal balance hereof from date hereof until maturity
at the rate of Eleven and a Half percent (11.50%) per annum; provided, however,
in no event shall interest hereon ever be charged, paid, collected or received
at a rate in excess of the maximum nonusurious rate from time to time permitted
by any applicable law, (the "Highest Lawful Rate"). If the interest rate
provided for herein at any time would exceed the Highest Lawful Rate, the
actual rate of interest accrued, charged or paid on the unpaid principal amount
of this Note shall be limited to the Highest Lawful Rate.
This Note shall be due and payable as follows:
Principal and interest shall be due and payable in sixty (60) equal
monthly installments of ten thousand six and 64/100 Dollars ($10,006.64), each
payable on the 1st day of each and every calendar month, beginning on the 1st
day of March, 1998 and continuing regularly and successively thereafter until
fully paid. Interest shall be calculated on the outstanding note principal
balance at a rate of Eleven and One Half percent (11.50%) on a 365 days basis,
and shall be paid on the 1st of each month. Each installment payment shall
first be credited to the discharge of interest accrued on the unpaid principal
balance to the date of the installment payment and the remainder if any, shall
be credited to the reduction of the principal.
All past due principal and interest on this note shall bear interest at the
Highest Lawful Rate.
It is expressly provided that time is of the essence as to the payment of
this Note and upon default in the punctual payment of this Note or any part
hereof, principal or interest, as the same shall become due and payable, the
entire indebtedness may be matured at the option of the Payee; and in the event
default is made in the prompt payment of this Note when due or declared due and
the same is placed in the hands of an attorney for collection, or suit is
brought on same, or the same Note is collected through bankruptcy or other
judicial proceedings, then Maker agrees and promises to pay the reasonable
attorney's fees of Payee incurred thereby.
If for any reason whatsoever, the interest paid on this Note shall exceed
the Highest Lawful Rate, the owner or Payee of this Note shall refund to the
Maker or, at the option of such Payee, credit on the principal hereof such
portion of said interest as may be necessary to cause the interest paid on this
Note to equal the Highest Lawful Rate. All sums paid or agreed to be paid to
the Payee hereof for the use, forebearance or detention
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Page 5 of 6 Pages
of the indebtedness evidenced hereby shall, to the extent permitted by
applicable law be amortized, prorated, allocated and spread throughout the full
term of this Note.
The Maker may at any time pay the full amount or any part of this Note
without the payment of any premium or fee.
The Maker waives notice, demand, presentment for payment, notice of intent
to accelerate, and agrees that the time of payment hereon may be extended and
reextended from time to time without notice to it. Notwithstanding anything
herein to the contrary, Payee or any owner and holder of this Note, shall give
Maker ten (10) days notice of payment default an opportunity to cure such
payment default within thirty (30) days of such notice prior to accelerating
all or any part of the indebtedness represents hereby.
Any check, draft, money order or other instrument given in payment of all
or any portion hereof may be accepted by Payee and handled in collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee.
This Note represents the balance of the purchase price payable by the Maker for
$287,500 shares of the Common Stock of Maker sold by the Payee to the Maker at
$1.80 per share, or $517,500 in the aggregate. The Maker paid Payee $62,500
cash and issues this Note for the balance of the purchase price.
Notwithstanding anything in this Note to the contrary, this Note is
non-negotiable and may not be assigned, transferred or sold without the consent
of the maker.
Executed this 26th day of February, 1998.
Dynacq International, Inc.
By: /s/ CHIU CHAN
-----------------------
Chiu Chan, President
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Page 6 of 6 Pages
PURCHASE AGREEMENT FOR THE VOTING COMMON STOCK OF DYNACQ INTERNATIONAL, INC.
LETTER OF ACCEPTANCE $517,500 purchase price offered for your
287,500 shares of voting Dynacq
International, Inc. Common Stock
Seller Purchaser
Hi Lite Development Ltd. Dynacq International, Inc.
By: /s/ Wing S. Mak By: /s/ Chiu Chan
President President
Date: February 26, 1988. Date: February 26, 1988.
CLOSING OF PURCHASE OFFER
The undersigned hereby accepts Dynacq International, Inc.'s offer to purchase
287,500 shares of voting common stock of Dynacq International, Inc. for
$517,500.
The undersigned understands that this acceptance and closing of the Purchase
Offer constitutes his acknowledgment and agreement that receipt of $62,500 cash
and the Promissory Note executed by Purchaser in the amount of $455,000 will be
full payment for 287,500 of its voting common shares of Dynacq International,
Inc. to be tendered.
Accept by: /s/ Wing S. Mak
Wing S. Mak, President of Hi Lite Development Ltd.
Date: February 26, 1988.
REPRESENTATION AND WARRANTIES
1. The undersigned represents that the shares of Dynacq International, Inc.
being sold are owned free and clear of any liens or encumbrances and have
not been pledged or optioned to any person
2. The undersigned hereby covenants and agrees to protect, indemnify and hold
Dynacq International, Inc., purchaser harmless from and against any and all
claims, demands, causes of action, judgements, orders, decrees, damages,
liabilities, court or other costs, attorneys fees, reasonable costs of
investigation and other costs and expenses whatsoever (1) arising out of or
attributable to any breach or violation of, or the falsity, inaccuracy or
failure of, any representation, warranty or covenant made by the
undersigned in this letter, and (ii) arising from or related to the
acquisition, ownership or disposition by the undersigned of any or all the
shares.
By: /s/ Wing S. Mak
Wing S. Mak, President of Hi Lite Development Ltd.
Date: February 26, 1988.
