-----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, LBVZqu6h+UAj2jExpUk+kbQMNp5uFFEbMMmK0v7IB9MJxStUmHBIvPz5kTWywGHy n5Lpo8a5AE0mGFGZ675yDg== 0000950129-99-000152.txt : 19990115 0000950129-99-000152.hdr.sgml : 19990115 ACCESSION NUMBER: 0000950129-99-000152 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990114 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: SEC FILE NUMBER: 000-21574 FILM NUMBER: 99506462 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 DYNACQ INTERNATIONAL, INC. - DATED 11/30/98 1 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 November 30, 1998 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 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 [ ]. 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 13, 1998 Common Stock, $0.001 par value 3,280,589 shares Transitional Small Business Disclosure Format (check one) Yes [ ] No [X] 2 PART I. - FINANCIAL INFORMATION ITEM I. - FINANCIAL STATEMENTS DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited) ASSETS NOVEMBER 30, AUGUST 31 1998 1998 - ------------------------------------------------------------------------------------------------------------------------------------ CURRENT ASSETS: Cash 2,719,923 2,413,257 Restricted short-term investments 30,000 30,000 Receivable (Net of Allowance for Doubtful Accounts) 1,392,309 1,665,349 Inventory 28,608 29,608 Due from related party 15,826 15,856 - ------------------------------------------------------------------------------------------------------------------------------------ Total Current Assets 4,186,666 4,154,070 FIXED ASSETS - NET 5,493,240 5,212,841 OTHER ASSETS 240,706 245,145 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL ASSETS 9,920,612 9,612,056 ==================================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable 181,422 187,817 Accrued Liabilities 273,862 311,354 Notes Payable 250,000 250,000 Current Maturity of Notes Payable 202,716 242,612 Income Taxes Payable 401,306 465,306 Deferred Income Taxes Payable 186,000 186,000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL CURRENT LIABILITIES 1,495,306 1,643,089 LONG-TERM DEBT, NET OF CURRENT MATURITY 954,144 954,144 DEFERRED FEDERAL INCOME TAX PAYABLE 290,690 133,000 MINORITY INTERESTS IN SUBSIDIARY 1,096,088 1,077,305 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, 3,606,628 Shares Issued and Outstanding 3,607 3,607 Additional Paid In Capital 3,552,761 3,552,761 Retained Earnings 3,165,261 2,874,049 LESS TREASURY STOCK; 326,039 shares at cost (637,245) (625,899) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL STOCKHOLDERS' EQUITY 6,084,384 5,804,518 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 9,920,612 9,612,056 ====================================================================================================================================
3 DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME 2,417,625 2,270,561 COST OF SALE 98,090 129,108 - ------------------------------------------------------------------------------------------------------------------------------------ GROSS PROFIT 2,319,535 2,141,453 LESS EXPENSES: Contract payments to physicians 393,258 423,353 Compensation and benefits 492,483 553,373 Medical Supplies 296,187 150,906 Other general and administrative expense 385,660 399,786 Depreciation and Amortization 124,402 121,565 Rent and occupancy 111,555 38,355 Interest 33,390 31,791 - ------------------------------------------------------------------------------------------------------------------------------------ Total Expenses 1,836,935 1,719,129 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) FROM OPERATIONS 482,600 422,324 MINORITY INTERESTS IN (PROFITS)/LOSS OF SUBSIDIARY (33,698) (77,122) LESS PROVISION FOR FEDERAL INCOME TAXES Current 0 0 Deferred 157,690 117,363 - ------------------------------------------------------------------------------------------------------------------------------------ Total Income Taxes 157,690 117,363 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME (LOSS) 291,212 227,839 ==================================================================================================================================== NET INCOME (LOSS) PER SHARE: INCOME BEFORE PROVISION FOR FEDERAL INCOME TAX 0.129 0.100 PROVISION FOR FEDERAL INCOME TAX 0.045 0.034 - ------------------------------------------------------------------------------------------------------------------------------------ NET INCOME 0.084 0.066 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,467,542 3,467,542
4 DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED NOVEMBER 30 (UNAUDITED)
1998 1997 - ------------------------------------------------------------------------------------------------------------------------------------ RECONCILIATION OF NET INCOME TO NET CASH USED BY OPERATING ACTIVITIES: Net Income (Loss) 291,212 227,839 ADD: ITEMS NOT REQUIRING CASH: DEPRECIATION 124,402 121,565 Adjustments to reconcile net income (loss) to net cash provided by operating activities: (Increase) Decrease in Accounts Receivable 273,040 533,814 (Increase) Decrease in Inventory 1,000 1,053 (Increase) Decrease in Other Current Assets 0 0 (Increase) Decrease in Due from related party 30 15,400 (Increase) Decrease in Other Assets 4,439 (167,914) Increase (Decrease) in Accounts Payable (6,395) 158,275 Increase (Decrease) in Accrued Liabilities (37,492) (550,251) Increase (Decrease) in Current Notes Payable (39,896) (36,241) Increase (Decrease) in Current Income Taxes (64,000) 0 Increase (Decrease) in Deferred Income Taxes 157,690 117,282 - ------------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided (Used) by Operating Activities 704,030 420,822 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (404,801) (7,814) (Decrease) Increase of Minority Interests in subsidiary 18,783 77,122 - ------------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided (Used) by Investing Activities (386,018) 69,308 CASH FLOW FROM FINANCING ACTIVITIES: Retirement of Long-Term Debt 0 0 Acquisition of treasury stock (11,346) 0 - ------------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided (Used) by Financing Activities (11,346) 0 - ------------------------------------------------------------------------------------------------------------------------------------ Net Increase/(Decrease) in Cash 306,666 490,130 CASH BALANCE AT BEGINNING OF YEAR 2,413,257 1,031,981 - ------------------------------------------------------------------------------------------------------------------------------------ CASH BALANCE AT END OF THE QUARTER 2,719,923 1,522,111 ====================================================================================================================================
5 DYNACQ INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 1998 (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, 1998. Operating results for the three months period ended November 30,1998 are not necessarily indicative of the results that may be expected for the year ending August 31, 1999. 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, 1998 TO THE THREE MONTHS ENDED NOVEMBER 30, 1997 Consolidated revenues for the three months ended November 30, 1998 increased $147,000 or 6% from that for the corresponding previous quarter ended November 30, 1997. Notwithstanding this insignificant increase in consolidated revenues, there were a number of significant increases and decreases in the component revenue categories. For instance, revenue attributable to Doctors Practice Management, Inc. ("DPMI") decreased $680,000 or 80% from the corresponding previous quarter due to fewer physicians under management. Revenue attributable to home infusion therapy operations decrease $202,770 or 68% 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 significantly increased by $1,029,000 or 92% from the corresponding previous quarter due to increased in patient referrals, primarily as a result of the marketing effort. Consolidated costs of sale for the three months ended November 30, 1998 decreased $31,018 or 24% from that for the corresponding previous quarter ended November 30, 1997, was primarily attributable to the decreased home infusion operations. Consolidated operating expenses for the three months ended November 30, 1998 increased $117,806 or 7% from that for the corresponding previous quarter ended November 30, 1997 primarily due to increase in activities of Vista. The significant increases and decreases in the component expense categories of the consolidated operating expenses are explained as follows: (1) The decrease in contract services of $30,095 or 7% was primarily attributable to DPMI, which has fewer physicians under management in the current quarter. (2) The decrease in salaries expenses of $60,890 or 11% was primarily attributable to DPMI, which has fewer activities in the current quarter. (3) The increase in medical supplies expense of $145,281 or 96% was primarily due to Vista, which has 6 more activities in the current quarter. (4) The increase in rent and occupancy expense of $77,819 or 245% was primarily due to including the property maintenance expense of $21,740, property insurance of $8,300 and property taxes of $41,000, which were included in the Other General & Administrative Expense category in the corresponding previous quarter. FINANCIAL CONDITION COMPARISON OF THE BALANCE SHEETS AT THREE MONTHS ENDED NOVEMBER 30, 1998 TO THE AUDITED BALANCE SHEET AT FISCAL YEAR ENDED AUGUST 31, 1998. Consolidated cash for the three months ended November 30, 1998 increased $306,666 or 13% from that of the previous audited balance sheet ending August 31, 1998 was due to $704,030 provided by operating activities, $386,018 used by investing activities and $11,346 used by financing activities. Consolidated accounts receivable for the three months ended November 30, 1998 decreased $273,040 or 16% from that of the previous audited balance sheet ended August 31, 1998 due to the collection of accounts receivable. Liquidity and Capital Resources Working Capital of $2,691,360 at November 30, 1998 increased $180,379 or 7% from working capital at August 31, 1998 primarily due to decrease in accounts receivable and increase in cash. At November 30, 1998, the Company maintained a liquid position evidenced by a current ratio of 2.80 to 1 and total debt to equity of 0.63 to 1. Management believes that available cash funds and funds generated from operations will be sufficient for the Company to finance working capital requirements for the foreseeable future and to meet its payment obligations on its long-term indebtedness. Inflation. Inflation has not significantly impacted the Company's financial position or operations. Forward-Looking Information. Information in this Form 10-QSB contains forward-looking statements and information 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 "anticipate", "believe", "estimate", "expect", "intend", "will", "will be" and similar expressions, as they related to the Company or the Company's management, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, and are subject to certain risks, uncertainties, and assumptions relating to the operations and results of operations of the Company, competitive factors and pricing pressures, costs of products and services, general economic conditions, and the acts of third parties, as well as other factors described in this Form 10-QSB, and, from time to time, in the Company's periodic earnings releases and other reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, intended, or will be or the like. 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 7 ITEM 5. - OTHER INFORMATION The Company bought back 2,000 shares of its own stock in the open market at a price of $2.375 on October 1, 1998. The Company bought back 2,694 shares of its own stock in the open market at a price of $2.4375 on October 2, 1998. The Company bought back 4,900 shares of its own stock in the open market at a price of $2.4375 on October 6, 1998. The Company bought back 1,500 shares of its own stock in the open market at a price of $2.4375 on October 8, 1998. The Company sold 20,000 shares of its own stock in the open market at a price of $2.4375 on October 16, 1998. The Company bought back 534 shares of its own stock in the open market at a price of $2.4375 on October 16, 1998. The Company bought back 1,700 shares of its own stock in the open market at a price of $2.43 on October 19, 1998. The Company bought back 1,250 shares of its own stock in the open market at a price of $2.375 on December 9, 1998. The Company bought back 2,000 shares of its own stock in the open market at a price of $2.4375 on December 10, 1998. Pursuant to the Company's Incentive Stock Option Plan, options to purchase 88,000 shares were granted on January 4, 1999, which number includes 24,000 options granted to Philip Chan, chief financial officer and 30,000 options granted to Glenn Rodriguez, President of Vista Healthcare, Inc. The remaining options were granted to approximately 5 employees of the Company and its subsidiaries. These options are exercisable at $2.375 and expire on January 3, 2004. ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K None 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 14, 1999 BY: /s/ Philip Chan Philip Chan VP-Finance/Treasurer & Chief Financial Officer 8 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS AUG-31-1999 NOV-30-1998 2,749,923 0 1,392,309 0 28,608 4,186,666 5,493,240 0 9,920,612 1,495,306 954,144 0 0 3,607 6,080,777 9,920,612 0 2,417,625 98,090 1,803,545 0 0 33,390 482,600 157,690 324,910 0 0 0 291,212 0.084 0.084
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