-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N8hDgbcrz27lcEZMja/ovlWHPcE2SrLDVO2c0G78a1UEWD+m7rHrbcHoVx/VDK+Z eHQTPILU9Hja4SYXuC/W0g== 0000890566-96-000913.txt : 19960723 0000890566-96-000913.hdr.sgml : 19960723 ACCESSION NUMBER: 0000890566-96-000913 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960719 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNACQ INTERNATIONAL INC CENTRAL INDEX KEY: 0000890908 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 760375477 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21574 FILM NUMBER: 96596762 BUSINESS ADDRESS: STREET 1: 10304 INTERSTATE 10 EAST STREET 2: SUITE 369 CITY: HOUSTON STATE: TX ZIP: 77029 BUSINESS PHONE: 7136736639 MAIL ADDRESS: STREET 1: 10304 I-10 EAST STREET 2: SUITE 369 CITY: HOUSTON STATE: TX ZIP: 77029 10QSB 1 FORM 10-QSB 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, 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. (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 77029 HOUSTON, TEXAS Zip Code (address of principal executive offices) Registrants telephone number, including area code (713) 673-6639 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 Total number of pages in Form 10-QSB 9 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer (1) filed all reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes _______________________ 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 lastest practicable date. Title of Each Class Outstanding at July 15, 1996 - ------------------------------------- ---------------------------------- Common Stock, $0.001 par value 14,235,136 shares Transitional Small Business Disclosure Format (check one) Yes [ ] No [X] PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AUDITED) ASSETS MAY 31, AUGUST 31, 1996 1995 -------------- ---------- CURRENT ASSETS: Cash............................... $ 1,580,072 $ 649,572 Receivable (Net of Allowance for Doubtful Accounts)................ 1,675,488 2,090,114 Inventory.......................... 27,537 29,924 Prepaid Expenses................... 29,266 64,260 -------------- ---------- Total Current Assets............... 3,312,363 2,833,870 FIXED ASSETS -- NET..................... 5,193,881 5,433,117 DUE FROM AFFILIATE...................... 900,135 525,827 OTHER ASSETS............................ 632,062 694,256 -------------- ---------- TOTAL ASSETS.................. $ 10,038,441 $9,487,070 ============== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES..................... $ 274,141 $ 146,248 Account Payable.................... 84,072 76,635 Current Portion of Notes Payable... 267,872 297,095 Feeral Income Taxes Payable........ 917,784 935,849 -------------- ---------- TOTAL CURRENT LIABILITIES..... 1,543,869 1,455,827 DEFERRED FEDERAL INCOME TAX PAYABLE..... 140,400 104,400 LONG-TERM DEBT.......................... 1,055,713 1,244,143 MINORITY INTERESTS IN SUBSIDIARY........ 874,143 908,511 STOCKHOLDERS' EQUITY: Preferred Stock, $.01 Par Value, 5,000,000 Shares Authorized, None Issued or Outstanding............. -- -- Common Stock, $.001 Par Value, 300,000,000 Shares Authorized, 14,235,135 Shares Issued and Outstanding....................... 14,235 14,235 Additional Paid In Capital......... 3,332,026 3,332,026 Retained Earnings.................. 3,078,055 2,427,928 -------------- ---------- TOTAL STOCKHOLDERS' EQUITY.... 6,424,316 5,774,189 -------------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $ 10,038,441 $9,487,070 ============== ========== DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED MAY 31, MAY 31, -------------------------- -------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ INCOME.................................. $ 2,451,385 $ 1,592,510 $ 5,960,078 $ 4,961,593 COST OF SALE............................ $ 79,523 $ 103,173 $ 260,445 $ 309,056 ------------ ------------ ------------ ------------ GROSS PROFIT.......................... $ 2,371,862 $ 1,489,337 $ 5,699,633 $ 4,652,537 ------------ ------------ ------------ ------------ LESS EXPENSES: Contract Services..................... $ 913,954 $ 299,578 $ 1,709,167 $ 941,877 Salaries.............................. $ 341,725 $ 256,049 $ 807,119 $ 905,593 Medical Supplies...................... $ 180,934 $ 202,987 $ 460,591 $ 551,424 Administrative........................ $ 89,168 $ 72,127 $ 207,517 $ 195,784 Depreciation and Amortization......... $ 130,151 $ 116,141 $ 388,690 $ 268,179 Auto Expenses......................... $ 10,195 $ 14,434 $ 28,954 $ 43,127 Taxes, Licences and Professional Fees............................... $ 338,405 $ 48,724 $ 625,472 $ 189,794 Leasing............................... $ 4,105 $ 37,966 $ 9,928 $ 58,487 Rent.................................. $ 29,514 $ 9,867 $ 37,230 $ 43,479 Marketing & Promotion................. $ 6,727 $ 1,876 $ 25,438 $ 5,076 Maintenance & Repairs................. $ 36,427 $ 34,155 $ 96,607 $ 75,150 Utilities............................. $ 29,563 $ 21,518 $ 75,134 $ 57,896 Insurance............................. $ 42,973 $ 54,812 $ 51,953 $ 84,839 Interest.............................. $ 33,285 $ 45,316 $ 105,690 $ 135,462 ------------ ------------ ------------ ------------ Total Expenses..................... $ 2,187,126 $ 1,215,550 $ 4,629,490 $ 3,556,167 ------------ ------------ ------------ ------------ NET INCOME FROM OPERATIONS.............. $ 184,736 $ 273,787 $ 1,070,143 $ 1,096,370 MINORITY INTERESTS IN (PROFITS)/LOSS OF SUBSIDIARY............................ $ 15,703 $ (40,822) $ (69,948) $ (61,582) LESS PROVISION FOR FEDERAL INCOME TAXES................................. Current............................... $ 130,932 $ 112,640 $ 314,068 $ 328,568 Deferred.............................. $ (60,779) (13,837) $ 36,000 $ 51,161 ------------ ------------ ------------ ------------ Total Income Taxes................. $ 70,153 $ 98,803 $ 350,068 $ 379,729 ------------ ------------ ------------ ------------ NET INCOME BEFORE EXTRAORDINARY ITEM.... $ 130,286 $ 134,162 $ 650,127 $ 655,059 EXTRAORDINARY ITEM...................... $ 0 $ 0 $ 1,459 ------------ ------------ ------------ ------------ NET INCOME.............................. $ 130,286 $ 134,162 $ 650,127 $ 656,518 ============ ============ ============ ============ EARNINGS PER SHARE...................... $ 0.009 $ 0.009 $ 0.046 $ 0.046 ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING........................ 14,235,136 14,235,136 14,235,136 14,235,136
DYNACQ INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31 (UNAUDITED) 1996 1995 ------------ -------------- RECONCILIATION OF NET INCOME TO NET CASH USED BY OPERATING ACTIVITIES: Net Income (Loss).................... $ 650,127 $ 656,518 ADD: ITEMS NOT REQUIRING CASH: Depreciation.................... $ 388,690 $ 268,179 Adjustments to reconcile net income (loss) to net cash provided by operating activities: (Increase) Decrease in Accounts Receivable..................... $ 414,626 $ 66,780 (Increase) Decrease in Inventory...................... $ 2,387 $ 6,428 (Increase) Decrease in Prepaid Expenses....................... $ 34,994 $ 121,150 (Increase) Decrease in Notes Receivable..................... $ (374,308) $ (51,083) (Increase) Decrease in Other Assets......................... $ 62,194 Increase (Decrease) in Accounts Payable........................ $ 127,893 $ (81,821) Increase (Decrease) in Accrued Expenses....................... $ 7,437 $ 0 Increase (Decrease) in Current Notes Payable.................. $ (29,223) $ (198,251) Increase (Decrease) in Current Income Taxes................... $ (18,065) $ (159,486) Increase (Decrease) in Deferred Income Taxes................... $ 36,000 $ 414,037 ------------ -------------- Net Cash Used by Operating Activities........................... $ 1,302,752 $ 1,042,451 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets........ $ (149,454) $ (2,185,091) Decrease of Minority Interests in subsidiary.................. $ (34,368) $ (141,583) ------------ -------------- Net Cash Used by Investing Activities.............. $ (183,822) $ (2,043,508) ------------ -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of Long-Term Debt.... $ (188,430) $ (118,022) ------------ -------------- Net Cash Provided by Financing Activities.... $ (188,430) $ (118,022) ------------ -------------- Net Increase (Decrease) in Cash.................... $ 930,500 $ (1,119,079) CASH BALANCE AT BEGINNING OF YEAR.... $ 649,572 $ 2,073,071 ------------ -------------- CASH BALANCE AT END OF QUARTER....... $ 1,580,072 $ 953,992 ============ ============== DYNACQ INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 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 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 to 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, 1995. Operating results for the nine month period ended May 31, 1996 are not necessarily indicative of the results that may be expected for the year ending August 31, 1996. ITEM 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED MAY 31, 1996 TO THE THREE MONTHS ENDED MAY 31, 1995 Consolidated revenues for the three months ended May 31, 1996 increased $858,875 or 54% from that for the corresponding previous quarter ended May 31, 1995. Notwithstanding this significant increase in consolidated revenues, there was a number of significant increases and decreases in the component revenue categories. For instance, revenue attributable to the home infusion therapy operations decreased $114,021 in the current quarter due to lower patient load as compared to the corresponding quarter of the previous fiscal year. Revenue attributable to service fee from Vista Healthcare, Inc. ("Vista"), the Company's 61% owned subsidiary, decreased $68,520 due to changing the service fee as management fee to Doctors Practice Management, Inc. ("DPMI"'), the Company's 100% owned subsidiary, which had a $1,201,075 increase in revenue, of which $589,148 was management fee from Vista. These combined revenues increase of $1,018,534 was offset by a revenue decrease of $159,659 attributable to Vista due to fewer cases. Consolidated Cost of Sale for the three months ended May 31, 1996 decreased $23,650 or 23% from that for the corresponding previous quarter ended May 31, 1995 primarily due to lower infusion patient load and fewer cases performed at Vista. Consolidated operating expenses for the three months ended May 31, 1996 increased $971,576 or 80% from that for the corresponding previous quarter ended May 31, 1995. The significant increases and decreases in the component expense categories of the consolidated operating expenses are explained as follows: (1) The increase in consolidated contract services expenses of $614,376 or 205% was primarily attributable to DPMI because of increases in its activities. (2) The increase in consolidated salaries expenses of $85,676 or 33% was primarily attributable to DPMI because of increases in its activities. (3) The increase in consolidated medical supplies expenses of $22,053 or 10.8% was primarily attributable to DPMI because of increases in its activities. (4) The increase in consolidated administrative expenses of $17,041 or 24% was primarily attributable to DPMI because of increases in its activities. (5) The increase in consolidated depreciation and amortization expenses of $14,010 or 12% was primarily due to the completion of the new professional building and the purchase of furnitures and equipments for the new building. (6) The increase in consolidated taxes, licences and professional fees expenses of $289,681 or 595% included a $53,017 increase in property taxes for the new professional building, a $201,817 management fee paid by Vista to DPMI, and a $34,847 corporate franchise tax accrued for DPMI. (7) The decrease in consolidated leasing expenses of $33,861 or 825% included a $19,096 and a $14,765 decrease attributable to Vista and DPMI, respectively due to termination of their respective leases. (8) The increase in consolidated rent expenses of $19,647 or 199% was primarily incurred by physicians managed by DPMI. (9) The increase in consolidated marketing and promotion expense of $4,851 or 258% was primarily incurred by the Company for public relations effort. (10) The increase in consolidated utilities expenses of $8,045 or 38% included a $6,697 increase incurred by the new professional building and a $1,348 increase incurred by Vista. (11) The increase in consolidated insurance expenses of $11,839 or 27% was primarily incurred by Vista. (12) The decrease in consolidated interest expenses of $12,031 or 27% was primarily attributable to Vista due to loan amortization. COMPARISON OF THE NINE MONTHS ENDED MAY 31, 1996 TO THE NINE MONTHS ENDED MAY 31, 1995 Consolidated revenues for the nine months ended May 31, 1996 increased $998,485 or 20% form that for the corresponding period ended May 31 of the previous fiscal year. Notwithstanding this significant increase in consolidated revenues, there were a number of significant increases and decreases in the component revenue categories. For instance, revenue attributable to home infusion therapy operations decreased $485,132 or 27% in the nine months period ended May 31, 1996 due to lower patient load as compared to the corresponding nine months of the previous fiscal year. Revenue attributable to service fee from Vista decreased $69,100 due to changing the service fee as management fee to DPMI, which had a $1,175,949 increase in revenue, of which $380,273 was management fee from Vista. Revenue attributable to Vista increased $229,140 and rental revenue increased $146,628 in the nine months period ended May 31, 1996 when compared to the corresponding nine months of the previous fiscal year. Consolidated costs of sale for the nine months ended May 31, 1996 decreased $48,611 or 16% from that for the corresponding period ended May 31 of the previous fiscal year primarily attributable to home infusion therapy operations due to lower patient load. Consolidated operating expenses for the nine months ended May 31, 1996 increased $1,073,323 or 30% from that for the corresponding period ended May 31 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 consolidated contract services expenses of $767,290 or 81% included a $904,643 increase incurred by DPMI due to increases in its activities offset by a decrease of $124,430 attributable to Vista due to fewer cases and a decrease of $12,923 attributable to home infusion operations due to lower patient load. (2) The decrease in consolidated salaries expenses of $98,474 or 11% primarily due to a $75,513 decrease attributable to DPMI, and a $21,235 incurred by Dynacq (Asia) Ltd. during the corresponding nine months period in the previous fiscal year but was dormant prior to the start of the nine months period in the current fiscal year. (3) The decrease in consolidated medical supplies expenses of $90,833 or 16% was primarily attributable to DPMI. (4) The increase in consolidated depreciation and amortization expenses of $120,511 or 45% was primarily due to the completion of the new professional building and the purchase of furniture and equipment for the new building. (5) The increase in consolidated taxes, licences and professional fees of $435,678 or 230% including a $53,636 increase in property taxes for the new building, a $354,806 management paid by Vista to DPMI, and a $30,517 corporate franchise tax accrued for DPMI. This combined increase of $438,959 was offset by a professional fee of $3,281 incurred by Dynacq (Asia) Ltd. during the nine months period in the corresponding previous fiscal year but was dormant prior to the start of the nine months period of the current fiscal year. (6) The decrease in consolidated leasing expenses of $48,559 or 83% included a $28,236 and $20,323 decrease for DPMI and Vista, respectively for termination of their respective leases. (7) The increase in consolidated marketing and promotion expense of $20,362 or 400% primarily incurred by the Company for public relations effort. (8) The increase in maintenance and repairs expense of $21,457 or 28% primarily due to the maintenance of the new building. (9) The increase in utilities expense of $17,238 or 30% was primarily incurred by the new professional building. (10) The decrease in insurance expense of $32,886 or 39% primarily attributable to Vista and DPMI for savings in professional liability insurance. (11) The decrease in interest expenses of $29,772 or 22% included a $11,696 decrease attributable to Vista due to loan amortization, and a $18,076 incurred by Dynacq (Asia) Ltd. during the nine months period in the corresponding previous fiscal year but was dormant prior to the start of the nine months period in the current fiscal year. FINANCIAL CONDITION COMPARISON OF THE BALANCE SHEETS AT NINE MONTHS ENDED MAY 31, 1996 TO THE AUDITED BALANCE SHEET AT FISCAL YEAR ENDED AUGUST 31, 1995. Consolidated cash for the nine months ended May 31, 1996 increased $930,500 from that of the previous audited balance sheet ending August 31, 1995 primarily due to cash generated from operations. Consolidated Prepaid Expenses for the nine months ended May 31, 1996 decreased $34,994 from that of the previous audited balance sheet ending August 31, 1995 primarily due to refund of deposits. Consolidated Fixed Assets for the nine months ended May 31, 1996 decreased $239,236 from that of the previous audited balance sheet ending August 31, 1995 primarily due to reduction from fixed assets of depreciation expense of $388,690 offset by an increase of $149,454 in equipment purchase. Consolidated Amounts Due from Affiliates for the nine months ended May 31, 1996 increased $374,308 from that of the previous audited balance sheet ended August 31, 1995 primarily due to loan advance of $666,922 to affiliated physicians offset by loan repayment of $292,614 from affiliated physicians. Consolidated Other Assets for the nine months ended May 31, 1996 decreased $62,194 from that of the previous audited balance sheet ended August 31, 1995 primarily due to receipt of reimbursement for an advance. Consolidated Accounts Payable for the nine months ended May 31, 1996 increased $127,893 from that of the previous audited balance sheets ended August 31, 1995 primarily due to the accrual of trade payable. Consolidated Long Term Debt decreased $188,430 from that of the previous audited balance sheet ended August 31, 1995 due to the repayment of loan principal by Vista. Consolidated Minority Interests in Subsidiary decreased $34,368 from that of the previous audited sheet ended August 31, 1995 primarily due to purchase of treasury shares by Vista. LIQUIDITY AND CAPITAL RESOURCES Working capital of $1,768,494 at May 31, 1996 increased $390,451 from working capital at August 31, 1995 primarily due to the increase in cash of $930,500 resulting from operations, a decrease in accounts receivable of $414,626, a decrease of prepaid expenses of $34,994, offset by a $29,223 net repayment of the current portion of its long term notes, an increase in accounts payable of $127,893 and a decrease in current federal corporate income taxes payable of $18,065. At May 31, 1996, the Company maintained a liquid position evidenced by a current ratio of 2.15 to 1 and total debt to equity of 0.56 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 On May 28, 1996, Vista purchased 6,490 shares or 3% of its outstanding common shares from three physician shareholders for $69,345.18 as treasury stock and purchased 47,416 common shares of Dynacq International, Inc. from two physician shareholders for $37,934.40 or $0.80 per share. ITEM 6. -- EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES Pursuant to the requirements 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. DYNACQ INTERNATIONAL, INC. DATE July 18, 1996 BY: /s/ PHILIP CHAN Philip Chan VP - Finance/Treasurer & Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----