U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended August 31, 1995.
[__] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-16250
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DYNATEM, INC.
(Exact name of small business issuer as
specified in its charter)
CALIFORNIA 95-3627099
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23455 MADERO, SUITE B, MISSION VIEJO, CALIFORNIA 92718
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (714) 855-3235
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 requirements for the past 90 days.
Yes X No _______
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On August 31, 1995, there were 1,418,400 shares of the issuer's Common
Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes_____ No X
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DYNATEM, INC.
INDEX
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets at August 31, 1995
and May 31, 1995 1
Statements of Operations for the Three
Months Ended August 31, 1995
and 1994 2
Statements of Cash Flows for the Three
Months Ended August 31, 1995
and 1994 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 5
Part II. Other Information 6
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
--------------------
DYNATEM, INC.
BALANCE SHEETS
AUGUST 31, MAY 31,
1995 1995
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ASSETS
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Current assets:
Cash $ 489,992 $ 497,611
Accounts receivable 437,577 245,283
Inventories (note 2) 258,552 258,651
Prepaid expenses 7,620 9,799
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Total current assets $1,193,741 $1,011,344
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Note Receivable 13,205 13,985
Property and equipment, net 35,670 40,253
Other assets 69,881 39,155
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$1,312,497 $1,104,737
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 314,663 $ 127,809
Accrued expenses 46,447 47,381
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Total current liabilities $ 361,110 $ 175,190
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Shareholders' equity:
Common stock, no par value authorized
50,000,000 shares; issued 1,418,400 shares
at August 31, 1995 and May 31, 1995 $2,383,385 $2,383,385
Accumulated deficit (1,431,998) (1,453,838)
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Total shareholders' equity 951,387 929,547
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$1,312,497 $1,104,737
========== ==========
See accompanying notes to financial statements.
1
DYNATEM, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1995 AND 1994
1995 1994
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Net Sales $ 787,421 $ 718,458
Cost of Sales 586,450 507,411
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Gross profit 200,971 211,047
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Operating expenses:
Selling, general and administrative 155,407 147,372
Research and development 26,600 35,123
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Total operating expenses 182,007 182,495
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Operating income 18,964 28,552
Other income, net 3,676 2,293
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Income before income taxes 22,640 30,845
Provision for income taxes 800 800
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Net income $ 21,840 $ 30,045
========== ==========
Earnings per share (note 3) $ .02 $ .02
========== ==========
Weighted average shares outstanding
(note 3) 1,418,400 1,418,400
========== ==========
See accompanying notes to financial statements
2
DYNATEM, INC.
STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED AUGUST 31, 1995 AND 1994
1995 1994
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Cash flows from operating activities:
Net income $ 21,840 $ 30,045
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,583 4,187
Change in assets and liabilities:
(Increase) in receivables ( 192,294) ( 71,178)
Decrease in inventories 99 12,275
Decrease in prepaid expenses 2,179 109
(Increase) in other assets ( 30,726) ( 25,506)
Increase in accounts payable 186,854 131,675
Increase (decrease) in
accrued expenses ( 934) 9,198
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Total adjustments ( 30,239) 60,760
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Net cash provided by (used in)
operating activities ( 8,399) 90,805
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Cash flows from investing activities:
Equipment additions ( - ) ( 3,822)
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Cash flows from financing activities:
Repayment of notes receivable 780 650
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Net increase (decrease) in cash ( 7,619) 87,633
Cash, beginning balance 497,611 298,410
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Cash, ending balance $ 489,992 $ 386,043
=========== ===========
Supplemental disclosures of
cash flow information:
Cash paid during the quarter for:
Taxes $ 800 $ 800
=========== ===========
See accompanying notes to financial statements.
3
DYNATEM, INC.
NOTES TO FINANCIAL STATEMENTS
(1) Interim Accounting Policy
-------------------------
In the opinion of the Company's management, the accompanying unaudited
statements include all adjustments including only normal recurring
adjustments necessary for a fair presentation of the financial position of
the Company and the results of operations and cash flows for the three
months ended August 31, 1995 and 1994. Although the Company believes that
the disclosures in these financial statements are adequate to make the
information presented not misleading, certain information and footnote
information normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Results of operations for interim
periods are not necessarily indicative of results of operations to be
expected for the full year.
(2) Inventories
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A summary of inventories follows:
May 31, 1995 August 31,1995
------------ --------------
Finished Goods $ 40,641 $ 43,431
Work-in-process 70,604 41,108
Raw Materials 147,406 174,013
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$ 258,651 $ 258,552
========= =========
(3) Earnings (loss) Per Share
-------------------------
Earnings per common share is computed based on the weighted average number
of common shares outstanding during the periods presented. The potential
exercise of stock options and warrants are not included in the computation
of net income per share because the effect would not impact per share
information or would be antidilutive.
(4) Foreign Currency Transactions
-----------------------------
For the three months ended August 31, 1995 and 1994, transactions gains and
losses are not material to the financial statement taken as a whole.
4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Revenue for the first quarter ended August 31, 1995, increased by 10% to
$787,421 compared to $718,458 in the first quarter of the prior fiscal year.
Cost of sales for the three months ended August 31, 1995, was $586,450 or 74% of
net sales and compares to $507,411 or 71% of net sales in the same period a year
ago. The increase in the cost of sales was due in part to the decline in the
market value of the U.S. Dollar against the DeutschMark as well as, the Company
realized lower gross margins on the sale of OR distributed products.
Operating expenses for the three-month period ended August 31, 1995, and 1994
had no significant change.
Income tax expense for the three months ended August 31, 1995, and 1994 are not
considered material due to the significant net operating loss carryforwards.
Significant deferred tax assets of the Company consist of the net operating loss
carryforwards for the federal and state tax purposes of approximately $1,647,000
and $187,000 at August 31, 1995.
Net earnings decreased for the three months ended August 31, 1995 to a net
income of $21,840 compared to $30,045 for the three-month period ended August
31, 1994. The decrease in net earnings was the result of a lower gross margin on
OR distributed products combined with a lower exchange rate of the U.S. Dollar
against the DeutschMark.
The Company continues to believe that the cash flow generated from operations
will be sufficient to meet its short-term working capital needs over the next 12
months. Additional financing is being considered to achieve increased product
development.
At August 31, 1995, the Company had a current ratio of 3.3:1 compared to 2.8:1 a
year ago. The net worth for the Company at August 31, 1995, was $951,387
compared to $851,545 at August 31, 1994.
PART II. OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) (10) Standard Industrial/Commercial Multi-Tenant Lease -Modified Net dated
August 22, 1995, between Pacific Highpark Partners, as lessor and Dynatem, Inc.,
as lessee.
5
SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DYNATEM, INC.
October 06, 1995 By: /s/ Eileen DeSwert
-----------------------------
Eileen DeSwert, President and
Chief Executive Officer
October 06, 1995 By: /s/ Belen Ramos
-----------------------------
Belen Ramos, Chief Financial
Officer
6
EXHIBIT INDEX
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EXHIBIT
NUMBER
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(10) Standard Industrial/Commercial Multi-
Tenant Lease - Modified Net
(c) Financial Data Schedule - Article 5 of Regulation S-X
Commercial and Industrial Companies