<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 May 31, 2000
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.
(Exact name of registrant as specified in its charter)
NEVADA 76-0375477
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10304 INTERSTATE 10 EAST, SUITE 369, HOUSTON, TEXAS 77029
(address of principal executive offices) Zip Code
Registrants telephone number, including area code (713)673-6432
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (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 [ ].
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 June 23, 2000
Common Stock, $0.001 par value 6,874,722 shares
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
Page 1 of 11
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PART I. - FINANCIAL INFORMATION
ITEM I. - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
ASSETS
MAY 31 AUGUST 31
2000 1999
----------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,276,430.00 $ 1,163,535.00
Receivable (Net of Allowance for $ 6,533,337.00 $ 4,405,494.00
Doubtful Accounts)
Inventory $ -- $ 31,869.00
Due from Related Party $ 37,240.00 $ 32,625.00
Notes receivable $ 328,629.00 $ 75,000.00
-------------- --------------
Total Current Assets $10,175,636.00 $ 5,708,523.00
FIXED ASSETS - NET $ 9,538,040.00 $ 9,579,207.00
OTHER ASSETS $ 209,084.00 $ 224,782.00
-------------- --------------
TOTAL ASSETS $19,922,760.00 $15,512,512.00
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 785,203.00 $ 1,432,114.00
Accrued Liabilities $ 1,339,375.00 $ 1,146,745.00
Notes Payable $ -- $ 250,000.00
Current Portion of Notes Payable $ 155,102.00 $ 268,657.00
Income Taxes Payable $ 1,024,519.00 $ 1,037,306.00
Deferred Income Taxes Payable $ 312,555.00 $ 585,000.00
-------------- --------------
TOTAL CURRENT LIABILITIES $ 3,616,754.00 $ 4,719,822.00
LONG-TERM DEBT $ 600,140.00 $ 685,487.00
DEFERRED FEDERAL INCOME TAX PAYABLE $ 1,424,803.00 $ 244,000.00
MINORITY INTERESTS IN SUBSIDIARY $ 1,711,407.00 $ 1,498,801.00
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, 4 to 1 Reverse Stock Split & 100% Stock Dividend
7,552,588 Shares Issued and
6,874,722 Shares Outstanding $ 7,492.00 $ 3,607.00
Additional Paid In Capital $ 4,079,487.00 $ 3,552,761.00
Retained Earnings $ 9,614,245.00 $ 5,537,881.00
LESS TREASURY STOCK: 677,866 shares at cost $(1,131,568.00) $ (729,847.00)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY $12,569,656.00 $ 8,364,402.00
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $19,922,760.00 $15,512,512.00
============== ==============
</TABLE>
Page 2 of 11
<PAGE>
<TABLE>
<CAPTION>
DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
05/31/2000 05/31/1999 05/31/2000 05/31/1999
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
NET REVENUES (net of reserve for uncollectibles) $ 7,492,959.00 $ 4,346,327.00 $ 18,524,488.00 $ 9,999,105.00
COST OF SALE $ 185,200.00 $ 133,749.00 $ 534,680.00 $ 332,512.00
-------------- -------------- --------------- --------------
GROSS PROFIT $ 7,307,759.00 $ 4,212,578.00 $ 17,989,808.00 $ 9,666,593.00
-------------- -------------- --------------- --------------
LESS EXPENSES :
Contract payments to physicians $ 385,549.00 $ 105,316.00 $ 1,118,113.00 $ 1,064,384.00
Compensation and benefits $ 990,821.00 $ 815,781.00 $ 2,788,273.00 $ 1,799,262.00
Medical supplies $ 1,140,974.00 $ 558,079.00 $ 2,686,596.00 $ 1,147,658.00
Other general & administrative exp $ 1,405,013.00 $ 1,551,558.00 $ 3,291,396.00 $ 2,633,185.00
Depreciation & amortization $ 206,058.00 $ 152,257.00 $ 658,521.00 $ 437,557.00
Rent and occupancy $ 264,159.00 $ 114,158.00 $ 557,604.00 $ 275,338.00
Interest $ 20,620.00 $ 43,026.00 $ 107,637.00 $ 105,924.00
-------------- -------------- --------------- --------------
Total Expenses $ 4,413,194.00 $ 3,340,175.00 $ 11,208,140.00 $ 7,463,308.00
-------------- -------------- --------------- --------------
NET INCOME FROM OPERATIONS $ 2,894,565.00 $ 872,403.00 $ 6,781,668.00 $ 2,203,285.00
MINORITY INTERESTS IN
(PROFIT)/LOSS OF SUBSIDIARY $ (226,847.00 )$ 1,358.00 $ (490,338.00 )$ (108,323.00)
LESS PROVISION FOR FEDERAL
INCOME TAXES
Current $ 1,265,147.00 $ -- $ 1,265,147.00 $ --
Deferred $ (407,374.00 )$ 320,449.00 $ 946,212.00 $ 734,644.00
-------------- -------------- --------------- --------------
Total Income Taxes $ 857,773.00 $ 320,449.00 $ 2,211,359.00 $ 734,644.00
-------------- -------------- --------------- --------------
INCOME/(LOSS) $ 1,809,945.00 $ 553,312.00 $ 4,079,971.00 $ 1,360,318.00
============== ============== =============== ==============
NET INCOME (LOSS) PER COMMON SHARE:
BASIC EARNINGS (LOSS) PER SHARE $ 0.26 $ 0.08 $ 0.59 $ 0.21
DILUTED EARNINGS (LOSS) PER SHARE $ 0.26 $ 0.08 $ 0.59 $ 0.20
WEIGHTED AVERAGE SHARE-BASIC 6,870,944 6,578,090 6,870,944 6,578,090
WEIGHTED AVERAGE SHARE-DILUTED 6,900,804 6,928,354 6,900,804 6,928,354
(1) (2) (1) (2)
</TABLE>
(1) AS ADJUSTED FOR 4 TO 1 REVERSE STOCK SPLIT EFFECTIVE 2/10/98 AND 100% STOCK
DIVIDEND EFFECTIVE 1/10/2000.
(2) COMMON SHARES PRESENTED IN THE CORRESPONDING QUARTER OF THE PREVIOUS YEAR IN
COMPUTING THE EARNINGS ARE RESTATED AS IF THE 2 FOR 1 STOCK SPLIT EFFECTED
IN THE FORM OF A 100% STOCK DIVIDEND HAS BEEN RETROACTIVELY APPLIED FOR
COMPARISON PURPOSES.
Page 3 of 11
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<TABLE>
<CAPTION>
DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31
(UNAUDITED)
2000 1999
--------------------- --------------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
USED BY OPERATING ACTIVITIES:
Net Income (Loss) $ 4,079,971.00 $ 1,360,318.00
ADD: ITEMS NOT REQUIRING CASH:
DEPRECIATION $ 658,521.00 $ 437,557.00
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
(Increase) Decrease in Accounts Receivable $(2,127,843.00) $ 62,597.00
(Increase) Decrease in Inventory $ 31,869.00 $ (5,002.00)
(Increase) Decrease in Due from Related Party $ (4,615.00) $ 30.00
Increase (Decrease) in Accounts Payable $ (646,911.00) $ 861,117.00
Increase (Decrease) in Accrued Liabilities $ 192,630.00 $ (33,955.00)
Increase (Decrease) in Current Notes Payable $ -- $ (92,277.00)
Increase (Decrease) in Current Income Taxes $ (12,787.00) $ 59,200.00
Increase (Decrease) in Deferred Income Taxes $ 908,358.00 $ 495,471.00
-------------- --------------
Net Cash Provided/ (Used by) Operating Activities $ 3,079,193.00 $ 3,145,056.00
-------------- --------------
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase)/Decrease in Notes Receivable $ (253,629.00)
(Purchase)/ Disposal of Fixed Assets $ (617,354.00) $(3,607,132.00)
(Purchase)/ Amortization of Other Assets $ 15,698.00 $ 59,258.00
(Decrease)/ Increase of Minority Interests in subsidiary $ 212,606.00 $ 108,323.00
-------------- --------------
Net Cash Provided/ (Used )by Investing Activities $ (642,679.00) $(3,439,551.00)
-------------- --------------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowing/(Retirement) of Notes Payable $ (250,000.00)
Borrowing/ (Retirement) of Long -Term Debt $ (198,902.00) $ (87,342.00)
Issuance of Common Stock out of Treasury Stock $ -- $ --
Issuance of Paid In Capital $ 526,726.00 $ --
Acquisition of Treasury Stock $ (401,721.00) $ (43,797.00)
Increase in Common Stock Par Value due to 100% Stock Dividend $ 3,885.00 $ --
Decrease in Retained Earnings due to 100% Stock Dividend $ (3,607.00) $ --
-------------- --------------
Net Cash Provided/ (Used) by Financing Activities $ (323,619.00) $ (131,139.00)
-------------- --------------
Net Increase/(Decrease) in Cash $ 2,112,895.00 $ (425,634.00)
CASH BALANCE AT BEGINNING OF YEAR $ 1,163,535.00 $ 2,413,257.00
-------------- --------------
CASH BALANCE AT END OF THE QUARTER $ 3,276,430.00 $ 1,987,623.00
============== ==============
</TABLE>
Page 4 of 11
<PAGE>
DYNACQ INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000
(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 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, 1999. Operating results for the nine months
period ended May 31, 2000 are not necessarily indicative of the results that may
be expected for the year ending August 31, 2000.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MAY 31, 2000
TO THE THREE MONTHS ENDED MAY 31, 1999
Consolidated net revenues after deducting reserve for uncollectible bad debt
expense for the three months ended May 31, 2000 increased $3,146,632 or 72% from
that for the corresponding previous period ended May 31, 1999. Notwithstanding
this significant increase in consolidated net revenues, there were a number of
significant increases and decreases in the component net revenue categories. For
instance, while Doctor's Practice Management, Inc. ("DPMI") generated $622,514
net revenues in the corresponding period of the previous fiscal year, it
generated $731,777 net revenues in the current period, an increase of $109,263
or 18%, which included $22,842 bad debt recovery from a physician that has been
previously written off, and the balance of the increase of $86,358 was primarily
attributable to more patient load treated by the physicians under management.
Net revenue attributable to home infusion therapy operations in the current
period increased $66,000 or 24% compared to the corresponding period of the
previous fiscal year due to collection of the portion of receivable that was
previously reserved as uncollectible. Net revenue attributable to Vista
operations increased $340,842 or 10% from that of the prior fiscal year due to
more patient referrals. The hospital which started operation in the last month
of the corresponding period of the previous fiscal year increased $2,627,600 net
revenue or 798% in the current period. Vista Land and Equipment L.L.C., the
company's wholly owned subsidiary that did not exit until January of 2000
generated rental revenue of $10,000 offset by a decrease in interest revenue of
$7,070 in the current period.
Consolidated costs of sale for the three months ended May 31, 2000 increased
$51,451 or 38% from that for the corresponding previous period ended May 31,
1999, was primarily attributable to the hospital, which started operation in the
last month of the corresponding period of the previous year.
Consolidated operating expenses for the three months ended May 31, 2000
increased $1,073,019 or 32% from that for the corresponding previous period
ended May 31, 1999 primarily due to increase in the activities of Vista and the
hospital, which started operation in the last month of the corresponding period
of the previous fiscal year. The significant increases and decreases in the
component expense categories of the consolidated operating expenses are
explained as follows:
(1) The increase in contract payments to physicians of $280,233 or 266% was
primarily incurred by the hospital, which started operation in the last month of
the corresponding period of the previous year.
(2) The increase in compensation and benefits expenses of $175,040 or 21%, of
which $100,100 was primarily attributable to the hospital, which started
operation in the last month of the corresponding period of the previous fiscal
year, $118,000 of the increase was attributable to DPMI, which has employed
personnel for accounting, billings and collections, $37,500 of the increase was
incurred by Vista due to increase in activities offset by a decrease in $80,600
by the home infusion operations.
Page 5 of 11
<PAGE>
2
(3) The increase in medical supplies expense of $582,895 or 104%, was primarily
attributable to the hospital, which started operation in the last month of the
corresponding period of the previous fiscal year.
(4) The increase in depreciation and amortization expense of $53,801 or 35% was
primarily attributable to the purchase of fixed assets for the hospital, which
started operation in the last month of the corresponding period of the previous
fiscal year.
(5) The increase in rent and occupancy expenses of $150,001 or 131% was
primarily incurred by the hospital, which started operation in the last month of
the corresponding period of the previous fiscal year.
Net Income increased $1,256,633 or 227% from $553,312 in the corresponding
period of the previous fiscal year to $1,809,945 in the current period. Basic
and Diluted Earnings per share increased $0.18 per share or 225% from $0.08 per
share in the corresponding period of the previous fiscal year to $0.26 per share
in the current period.
COMPARISON OF THE NINE MONTHS ENDED MAY 31, 2000
TO THE NINE MONTHS ENDED MAY 31, 1999.
Consolidated net revenues after deducting reserve for uncollectible bad debt
expense for the nine months ended May 31, 2000 increased $8,525,383 or 85% from
that for the corresponding period ended May 31 of the previous fiscal year.
Notwithstanding this significant increase in consolidated net revenues, there
were a number of significant increases and decreases in the component net
revenue categories. For instance, while DPMI generated $1,291,317 net revenues
in the corresponding previous period of fiscal 1999, it generated $1,560,749 net
revenues in the current period, an increase of $269,432 or 16%, which included
$68,500 bad debt recovery from a physician that has been previously written off,
and the balance of the increase of $200,900 was primarily attributable to more
patients load treated by the physicians under management. Net revenue
attributable to home infusion therapy operations increased $319,500 or 46% in
the current period compared to the corresponding period of the previous fiscal
year, $32,000 of the increase was attributable to increase in rental revenue and
the balance of the increase of $287,500 was due to higher patient load. Net
revenues attributable to Vista operations increased $2,988,500 or 38% from that
of the prior year due to more patient referrals. The hospital which started
operation in the last month of the corresponding period of the previous fiscal
year increased net revenue of $4,929,500 or 150% in the current period. Vista
Land and Equipment, L.L.C., the Company's wholly owned subsidiary that did not
exist until January of 2000 generated $25,000 rental revenue offset by a
decrease in interest income of $6,500 in the current period.
Consolidated costs of sale for the nine months ended May 31, 2000 increased
$202,168 or 61% from that for the corresponding period ended May 31 of the
previous fiscal year, $139,000 of the increase was incurred by the hospital
which started operation in the last month of the corresponding period of the
previous fiscal year, $44,000 of the increase was incurred by the home infusion
operations due to higher patient load, $19,000 of the increase was incurred by
Vista due to increased activities in the current period.
Consolidated operating expenses for the nine months ended May 31, 2000 increased
$3,744,832 or 50% from that for the corresponding period of the previous fiscal
year. The significant increases and decreases in the component expense
categories of the consolidated operating expenses are explained as follows:
(1) The increase in contract payments to physicians of $53,729 or 5%, was
primarily attributable to the hospital which started operation in the last month
of the corresponding period of the previous fiscal year.
(2) The increase in compensation and benefits expense of $989,011 or 55%, of
which $113,700 was attributable to Vista due to increase in activities, $188,500
was attributable to DPMI, which has employed additional personnel for
accounting, billings and collections, and the remaining balance of the increase
of $686,000 was attributable to the hospital, which started operation in the
last month of the corresponding period of the previous fiscal year.
(3) The increase in medical supplies of $1,538,938 or 134%, of which $1,409,300
was attributable to the hospital, which started operation in the last month of
the corresponding period of the previous fiscal year, $309,900 of the increase
was attributable to Vista due to increase in activities offset by a $180,000
decrease attributable to DPMI due to fewer physicians under management.
(4) The increase in other general and administrative expense of $658,211 or 25%
was primarily attributable to the increase in management and consulting fee paid
to outside management company for overall operation improvement and enhancement
in the current period.
(5) The increase in depreciation and amortization expense of $220,964 or 50% was
primarily attributable to the purchase of fixed assets for the hospital, which
started operation in the last month of the corresponding period of the previous
fiscal year.
Page 6 of 11
<PAGE>
3
(6) The increase in rent and occupancy expense of $282,226 or 103% was primarily
incurred by the hospital, which started operation in the last month of the
corresponding period of the previous fiscal year.
Net Income increased $2,719,653 or 200% from $1,360,318 in the corresponding
period of the previous fiscal year to $4,079,971 in the current period.
Basic Earnings per share increased $0.38 per share or 181% from $0.21 per share
in the corresponding period of the previous fiscal year to $0.59 per share in
the current period.
Diluted Earnings per share increased $0.39 per share or 195% from $0.20 per
share in the corresponding period of the previous fiscal year to $0.59 per share
in the current period.
FINANCIAL CONDITION
COMPARISON OF THE BALANCE SHEETS AT NINE MONTHS ENDED MAY 31, 2000 TO THE
AUDITED BALANCE SHEET AT FISCAL YEAR ENDED AUGUST 31, 1999.
Consolidated cash for the nine months ended May 31, 2000 increased $2,112,895 or
182% from that of the previous audited balance sheet ending August 31, 1999 due
to $3,079,193 provided by operating activities, $642,679 used by investing
activities and $323,619 used by financing activities. Consolidated accounts
receivable net of allowance for doubtful accounts for the nine months ended May
31, 2000 increased $2,127,843 or 48% from that of the previous audited balance
sheet ended August 31, 1999. Consolidated notes receivable increased $253,629 or
338% from that of the previous audited balance sheet ended August 31, 1999.
Consolidated accounts payable and accrued liabilities for the nine months ended
May 31, 2000 decreased $454,281 or 20 % from that of the previous audited
balance sheet ended August 31, 1999 due to repayment of payable.
Liquidity and Capital Resources
The Company maintained sufficient liquidity in fiscal 2000 and 1999 to meet its
business needs. The Company had working capital of $6,558,882 at May 31, 2000
which increased $5,570,181 or 563% from working capital at August 31, 1999
primarily due to increase in cash, accounts receivable, and reduction in
accounts payable. At May 31, 2000, the Company maintained a liquid position
evidenced by a current ratio of 2.81 to 1 and total debt to equity of 0.23 to 1.
The Company expects to have positive cash flow from operations for fiscal 2000.
The Company is actively targeting opportunities to expand in the outpatient
surgical clinic markets by acquisition of existing facilities or the
construction of new facilities. The Company believes it has the ability to
borrow funds if necessary to meet its capital needs. However, there can be no
assurance that the Company will have sufficient funds available to meet all of
its capital needs.
The Company expects the operations of the hospital to have a material effect on
the Company's consolidated operating results. While the Company believes the
operating results of the hospital will be successful in the long-term, it can
provide no such assurance at this time to its shareholders. In the short-term,
expected operating results from the hospital could be negatively impacted by
unforeseen problems including staffing and equipment, low patient utilization
(particularly in the first year), licensing or regulatory changes or other
problems, which could have a material adverse effect on the Company's liquidity
and capital resources. In the long-term, the skill and experience of the
hospital's management team and competition will play critical roles.
Segment and Related Information
The Company adopted Statement of Financial Accounting Standards No.131 in fiscal
year ended August 31, 1999. The Company has five reportable segments: infusion
therapy, physician practice management, assets holding, emergency and inpatient
surgical center, and clinic and outpatient surgical center. The infusion therapy
segment's business principally involves the administration of physician-
prescribed nutrients, antibiotics or other medicines to cancer patients in their
homes. The physician practice management segment provides office space and fee-
based management services to physicians. The emergency and inpatient surgical
center segment is comprised of a forty-two beds hospital which provides a wide
range of medical services including major surgical cases which require
hospitalization. The clinic and outpatient surgical center segment provides
outpatient surgical facilities, X-ray diagnostics services and full service
laboratory testing. The assets holding segment has acquired all the assets of
the emergency and inpatient surgical center segment and the clinic and
outpatient surgical center segment and lease back to its respective segments.
Page 7 of 11
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4
The Company evaluates performance based on profit or loss from operations before
income taxes not including nonrecurring gains and losses.
The Company accounts for intersegment sales and expenses as if the sales or
transfers were to third parties, that is, at current market prices.
The Company's reportable segments are business units that offer different
services. They are managed separately because each business requires different
technology and marketing strategies.
Summarized financial information concerning the Company's reportable segments is
shown in the following table.
<TABLE>
<CAPTION>
Infusion Physician Emergency Clinic and Assets Totals
Therapy Practice & Inpatient Outpatient Holding
Mgmt Surgical Surgical
Center Center
-------------- -------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Three months ended May 31, 2000
Net revenues-external $ 337,214 731,777 2,660,523 3,722,548 10,000 7,462,062
Intersegment revenues 0 4,243,837 0 0 307,500 4,551,337
Interest revenue-external 4,220 18,888 5,277 2,512 0 30,897
Intersegment interest revenue 0 0 0 29,545 0 29,545
Segment profit/(loss) 192,689 932,340 684,209 293,991 (66,437) 2,036,792
Nine months ended May 31, 2000
Net revenues-external $ 1,009,586 1,560,749 4,962,435 10,912,380 25,000 18,470,150
Intersegment revenues 435,000 10,283,570 0 0 512,500 11,231,070
Interest revenue-external 4,221 29,031 14,308 6,778 0 54,338
Intersegment interest revenue 0 0 0 91,745 0 91,745
Segment profit (loss) 59,666 2,223,859 801,858 1,602,260 (117,334) 4,570,309
*Restated
Three months ended May 31, 1999
Net revenues-external 271,200 622,514 32,940 3,381,706 0 4,308,360
Intersegment revenues 135,000 3,565,977 0 0 192,500 3,893,477
Interest revenue-external 19,073 9,695 4,917 4,282 0 37,967
Intersegment interest revenue 0 0 0 0 0 0
Segment profit/(loss) (3,815) 564,137 (269,825) 246,955 14,502 551,954
*Restated
Nine months ended May 31, 1999
Net revenues-external 690,105 1,291,317 32,940 7,923,936 0 9,938,298
Intersegment revenues 605,000 7,807,920 0 0 462,500 8,875,420
Interest revenue-external 21,459 23,516 4,917 10,915 0 60,807
Intersegment interest revenue 0 0 0 0 0 0
Segment profit (loss) (48,946) 1,151,338 (269,825) 653,045 (16,971) 1,468,641
</TABLE>
The following table provides a reconciliation of the reportable segments'
revenues, profit/(loss), and other significant items to the consolidated totals.
Three months ended Nine months ended
May 31, 2000 May 31, 2000
------------------ -----------------
Net revenues:
Total net revenues from external customers $ 7,462,062 $ 18,470,150
Interest revenue from external sources 30,897 54,338
------------ ------------
Consolidated total net revenues 7,492,959 18,524,488
============ ============
Profit/(Loss):
Total profit/(loss) for reportable segments $ 2,036,792 $ 4,570,309
Elimination of minority interests (226,847) (490,338)
------------ ------------
Consolidated net income 1,809,945 4,079,971
============ ============
Page 8 of 11
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5
<TABLE>
<CAPTION>
Three months ended Nine months ended
May 31, 1999 May 31,1999
------------------ -----------------
<S> <C> <C>
Net revenues:
Total net revenues from external customers $ 4,308,360 $ 9,938,298
Interest revenue from external sources 37,967 60,807
----------- -----------
Consolidated total net revenues 4,346,327 9,999,105
=========== ===========
Profit/(Loss):
Total profit/(loss) for reportable segments $ 551,954 $ 1,468,641
Elimination of minority interests 1,358 (108,323)
----------- -----------
Consolidated net income 553,312 1,360,318
=========== ===========
</TABLE>
* Interim selected financial data of each reportable segment for the
corresponding periods of prior fiscal year were restated as if the new segment,
Assets Holding was in existence, although it did not exist until January of
2000 for comparison purposes.
The company's revenues and long-lived assets are derived and domiciled from a
customer base located solely in the United States.
PART II.
ITEM 1. - LEGAL PROCEEDINGS
The Company is not a party to any material litigation.
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
On February 1, 2000 one consultant exercised 25,000 option common shares at
an exercise price of $3.00 per share for a total of $75,000.
On April 5, 2000, one consultant exercised 10,000 of his granted 50,000
option common shares at an exercise price of $4.00 per share for a total of
$40,000. The expiration date for the remaining 40,000 option common shares will
be September 27, 2004.
In April and May of 2000, the Company purchased back 42,700 shares of its
common stock as treasury shares in the open market at a purchase price varied
from $7 to $9.
In January of 2000, the Company formed a wholly owned subsidiary, Vista
Land and Equipment L.L.C. to acquire all the assets owned by the Company and its
subsidiary, Vista Healthcare, Inc. The Company also spun off its home infusion
operations to Ambulatory Infusion Therapy Specialist, Inc., a corporation that
the Company acquired with a nominal fee as a wholly owned subsidiary.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
27 Financial Data Schedule
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<PAGE>
6
FORWARD-LOOKING INFORMATION
The information in this Form 10-QSB 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 Form 10-QSB, words such as
"opinion", "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.
Year 2000 Compliance Issues. The Company is currently evaluating its entire
operation as a result of potential problems associated with Year 2000. The
Company's personnel are evaluating all areas for compliance issues and are
developing correction plans if necessary. Some internal areas and processes
being evaluated include initial charge entry through billing and collections;
accounts payable invoice receipt through processing and payment; bank processing
of receipts and disbursements; computer hardware and software functionality; and
time and/or date-sensitive office and medical equipment functionality. At
present, the Company does not anticipate any material disruption in its
operations or significant costs to be incurred to attain compliance. There can
be no assurance, however, that the Company will identify or adequately assess
all aspects of its business that may be effected. Due to this uncertainty, a
contingency plan will be developed as each area is evaluated to minimize any
negative impact to the Company. The Company is in the process of soliciting
information concerning the Year 2000 compliance status of its payers (including
the Medicare and Medicaid government programs), suppliers, and customers. In the
event that any of the Company's significant payers, suppliers, or customers do
not successfully and timely achieve Year 2000 compliance, the Company's business
and/or operations could be adversely affected.
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: July 17, 2000 BY: /s/ Philip Chan
Philip Chan
VP-Finance/Treasurer &
Chief Financial Officer
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