SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
[ ] 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 0-20771
DATAMARK HOLDING, INC.
(exact name of registrant as specified in its charter)
Delaware 87-0461856
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
488 E. Winchester Street, Suite 100
Salt Lake City, Utah 84107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 268-1001
Check whether the registrant (1) has filed all reports required to be
filed by Sections 13 and 15(d) of the Exchange Act during the preceding 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
The Registrant has only one class of stock issued and outstanding which
is Common Stock with $.0001 par value. As of January 29, 1997, 8,498,932 of the
Registrant's Common Shares were issued and outstanding.
<PAGE>
Page 1 of 2
DATAMARK HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 9,378,817 $ 13,159,404
Trade accounts receivable 547,204 502,996
Inventory 57,449 82,972
Note receivable from officer - 1,000
Other current assets 371,182 29,370
-------------------- --------------------
Total current assets 10,354,652 13,775,742
-------------------- --------------------
PROPERTY AND EQUIPMENT:
Computer and office equipment 3,546,408 2,752,114
Printing equipment 358,669 259,198
Furniture, fixtures and leasehold
improvements 716,153 188,099
Vehicles 40,525 40,525
-------------------- --------------------
4,661,755 3,239,936
Less accumulated depreciation and net
amortization (616,051) (476,573)
-------------------- --------------------
Total property and equipment, net 4,045,704 2,763,363
-------------------- --------------------
OTHER ASSETS 40,929 4,148
-------------------- --------------------
$ 14,441,285 $ 16,543,253
==================== ====================
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
2
<PAGE>
Page 2 of 2
DATAMARK HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 485,737 $ 737,810
Accrued liabilities 263,223 192,541
Current portion of notes payable - 43,201
Other current liabilities - 26,411
Notes payable to related parties - 1,666
-------------------- --------------------
Total current liabilities 748,960 1,001,629
-------------------- --------------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 2,500,000
shares authorized; no shares issued - -
Common stock, $.0001 par value; 20,000,000
shares authorized; 8,137,807 and 8,085,407
shares outstanding, respectively 814 808
Additional paid-in capital 20,638,720 20,585,276
Stock subscriptions receivable (1,496,137) (1,496,137)
Accumulated deficit (5,451,072) (3,548,323)
-------------------- --------------------
Total stockholders' equity 13,692,325 15,541,624
-------------------- --------------------
$ 14,441,285 $ 16,543,253
==================== ====================
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
3
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
NET SALES $ 1,236,841 $ 935,517
------------------- -------------------
COST OF SALES:
Postage 486,527 354,378
Materials and printing 391,972 283,417
------------------- -------------------
Total cost of sales 878,499 637,795
------------------- -------------------
GROSS MARGIN 358,342 297,722
------------------- -------------------
OPERATING COSTS AND EXPENSES:
Research and development 806,803 308,462
General and administrative 385,287 196,188
Selling 357,339 171,698
------------------- -------------------
Total operating costs and expenses 1,549,429 676,348
------------------- -------------------
LOSS FROM OPERATIONS (1,191,087) (378,626)
------------------- -------------------
OTHER INCOME (EXPENSE):
Interest and other income 128,839 -
Interest expense - (11,249)
------------------- -------------------
Total other income (expense), net 128,839 (11,249)
------------------- -------------------
NET LOSS $ (1,062,248) $ (389,875)
=================== ===================
NET LOSS PER COMMON SHARE $ (0.13) $ (0.07)
=================== ===================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 8,128,649 5,539,953
=================== ===================
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
4
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
NET SALES $ 2,718,012 $ 2,010,076
------------------- -------------------
COST OF SALES:
Postage 1,011,026 788,144
Materials and printing 906,238 565,855
------------------- -------------------
Total cost of sales 1,917,264 1,353,999
------------------- -------------------
GROSS MARGIN 800,748 656,077
------------------- -------------------
COSTS AND OPERATING EXPENSES:
Research and development 1,486,250 472,812
General and administrative 758,750 342,153
Selling 748,829 336,067
------------------- -------------------
Total operating costs and expenses 2,993,829 1,151,032
------------------- -------------------
LOSS FROM OPERATIONS (2,193,081) (494,955)
------------------- -------------------
OTHER INCOME (EXPENSE):
Interest and other income 291,482 -
Interest expense (1,150) (15,616)
------------------- -------------------
Total other income (expense), net 290,332 (15,616)
------------------- -------------------
NET LOSS $ (1,902,749) $ (510,571)
=================== ===================
NET LOSS PER COMMON SHARE $ (0.23) $ (0.09)
=================== ===================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 8,126,936 5,539,953
=================== ===================
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
5
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (1,902,749) $ (510,571)
Depreciation and amortization 139,478 51,239
Changes in operating assets and liabilities:
Trade accounts receivable (44,208) 90,957
Inventory 25,523 5,249
Other current assets (341,812) -
Accounts payable (252,073) 121,831
Accrued liabilities 70,682 3,525
Deferred revenue - (12,220)
Other current liabilities (26,411) -
Other assets (36,781) (41,215)
-------------------- --------------------
Net cash used in
operating activities (2,368,351) (291,205)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,421,819) (636,464)
-------------------- --------------------
Net cash used in investing activities (1,421,819) (636,464)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of common
stock and other contributed capital 53,450 719,000
Proceeds from borrowings - 650,840
Principal payments on borrowings (44,867) (62,271)
Repayment of note from officer 1,000 -
Payments for deferred offering costs - (38,791)
-------------------- --------------------
Net cash provided by financing activities 9,583 1,268,778
-------------------- --------------------
NET (DECREASE) INCREASE IN CASH (3,780,587) 341,109
CASH AT BEGINNING OF PERIOD 13,159,404 39,005
-------------------- --------------------
CASH AT END OF PERIOD $ 9,378,817 $ 380,114
==================== ====================
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
6
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying interim financial statements as of December 31, 1996,
and for the three and six months ended December 31, 1996 and 1995 have been
prepared by the Company and are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation have been included, and consist
only of normal recurring adjustments. The financial statements are condensed
and, therefore, do not include all disclosures normally required by generally
accepted accounting principles. These financial statements should be read in
conjunction with the Company's annual financial statements included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1996. The
results of operations for the three and six months ended December 31, 1996, are
not necessarily indicative of the results to be expected for the entire fiscal
year ending June 30, 1997. Certain previously reported amounts have been
reclassified to conform to the current period presentation. These
reclassifications had no effect on the previously reported net loss.
NOTE 2 - TRANSACTIONS SUBSEQUENT TO PERIOD END
During January 1997, the Company received $1,496,137 in cash, net of
commissions to be paid, for stock subscriptions that were recorded as a
reduction of stockholders' equity at December 31, 1996. In addition, the Company
received $279,969 in connection with the exercise of warrants in January 1997.
During January 1997, the Company acquired all of the outstanding stock
of Sisna, Inc. in exchange for shares of the Company's stock, in a transaction
that will be accounted for as a pooling of interests.
7
<PAGE>
NOTE 3 - SEGMENT INFORMATION
Information regarding the Company's operations for the three months
ended December 31, 1996, relating to the direct mail marketing segment and the
computer on-line marketing segment, is as follows:
<TABLE>
<CAPTION>
Computer Corporate
Direct Mail On-line Interest
Marketing Marketing Income Total
<S> <C> <C> <C> <C>
Net sales $1,236,841 $ - $ - $1,236,841
Net income (loss) 88,493 (1,279,580) 128,839 (1,062,248)
Depreciation and
amortization 23,472 50,297 - 73,769
Property and equipment
purchases 63,392 585,474 - 648,866
</TABLE>
Information regarding the Company's operations for the six months ended
December 31, 1996, relating to the direct mail marketing segment and the
computer on-line marketing segment, is as follows:
<TABLE>
<CAPTION>
Computer Corporate
Direct Mail On-line Interest
Marketing Marketing Income Total
<S> <C> <C> <C> <C>
Net sales $2,718,012 $ - $ - $2,718,012
Net income (loss) 227,132 (2,421,363) 291,482 (1,902,749)
Depreciation and
amortization 44,508 94,970 - 139,478
Property and equipment
purchases 114,454 1,307,365 - 1,421,819
Identifiable assets at
December 31, 1996 870,179 3,780,178 - 4,650,357
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company began operations in 1987 to provide highly targeted
business to consumer advertising through direct mail. Since the Company's
founding, the direct mail business has provided substantially all of its net
sales and the Company intends to continue to grow its direct mail business.
In fiscal year 1994, the Company began developing its own proprietary
advertiser and end-user funded national on-line network - WorldNow Online
(formerly named ValuOne Online). Since fiscal year 1994, the Company has devoted
significant resources towards the development of WorldNow Online and anticipates
launching the service in the first quarter of calendar year 1997. The Company
believes that in the future the net sales from WorldNow Online should surpass
those of the direct mail business.
The Company charges direct mailing fees based primarily on the number
of mailings provided to each customer. Support services which are typically
bundled with the mailing include targeting and profiling the mailing audience,
designing and printing the mailing, and analyzing the results of the mailing
campaign.
The cost of postage is a significant element of any direct mail
campaign. Although management believes that a postal rate increase will not have
a material long term effect on demand, there is no assurance that a postal rate
increase will not depress the number or reduce the profitability of mailings by
the Company. Additionally, fluctuations in the price of paper or other materials
may adversely impact the profitability of mailings by the Company in the future.
In January 1997, the Company acquired Sisna, Inc., an internet service
provider headquartered in Salt Lake City, Utah. The acquisition will be
accounted for as a pooling of interests. Since the acquisition had not occurred
at December 31, 1996, the acquisition is not reflected in the accompanying
financial statements.
9
<PAGE>
Results of Operations
The following table sets forth certain financial data as a percentage
of net sales for the three months ended December 31, 1996 and 1995.
1996 1995
----- -----
Net sales 100.0% 100.0%
------ ------
Cost of sales:
Postage 39.3 37.9
Materials and printing 31.7 30.3
----- ----
Total cost of sales 71.0 68.2
---- ----
Gross margin 29.0 31.8
----- ----
Operating expenses:
Research and development 65.2 33.0
General and administrative 31.2 21.0
Selling 28.9 18.3
------ ----
Total operating expenses 125.3 72.3
------ ----
Loss from operations (96.3) (40.5)
Total other income (expense), net 10.4 ( 1.2)
------ -------
Net loss (85.9%) (41.7%)
======= ========
The following table sets forth certain financial data as a percentage
of net sales for the six months ended December 31, 1996 and 1995.
1996 1995
----- -----
Net sales 100.0% 100.0%
------ ------
Cost of sales:
Postage 37.2 39.2
Materials and printing 33.3 28.2
----- -----
Total cost of sales 70.5 67.4
---- ----
Gross margin 29.5 32.6
----- ----
Operating expenses:
Research and development 54.7 23.5
General and administrative 27.9 17.0
Selling 27.6 16.7
----- ----
Total operating expenses 110.2 57.2
------ ----
Loss from operations (80.7) (24.6)
Total other income (expense), net 10.7 ( 0.8)
------ -------
Net loss (70.0%) (25.4%)
======= ========
10
<PAGE>
Six Months Ended December 31, 1996 Compared with Six Months Ended
December 31, 1995 and Three Months Ended December 31, 1996 Compared with
Three Months Ended December 31, 1995
Net Sales
Net sales for the three months ended December 31, 1996 increased by
32.2% to $1,236,841 from $935,517 for the three months ended December 31, 1995.
Net sales growth resulted primarily from an increase in the number of pieces
mailed during the three months ended December 31, 1996. The average price per
piece mailed increased by 5.0% to $.419 during the three months December 31,
1996 from $.399 during the three months ended December 31, 1995.
Net sales for the six months ended December 31, 1996 increased by 35.2%
to $2,718,012 from $2,010,076 for the six months ended December 31, 1995. All
net sales were derived from the direct mail marketing segment. Net sales growth
resulted primarily from an increase in the number of pieces mailed during the
six months ended December 31, 1996. The average price per piece mailed increased
by 5.0% to $.419 during the six months ended December 31, 1996 from $.399 during
the six months ended December 31, 1995.
Cost of Sales
Postage expense increased 37.3% to $486,527 during the three months
ended December 31, 1996 from $354,378 during the three months ended December 31,
1995. The increase was primarily attributable to a higher number of pieces
mailed during the three months ended December 31, 1996 than during the three
months ended December 31, 1995. Postage expense as a percentage of net sales
increased to 39.3% during the three months ended December 31, 1996, from 37.9%
during the three months ended December 31, 1995. The increase in postage expense
as a percentage of net sales was primarily attributable to using more
specialized mail patterns for seasonal direct mail marketing for customers
during the three months ended December 31, 1996 when compared to the three
months ended December 31, 1995. These specialized mailing patterns cannot
utilize the lowest bulk mail rates.
Postage expense increased 28.3% to $1,011,026 during the six months
ended December 31, 1996 from $788,144 during the six months ended December 31,
1995. The increase was primarily attributable to a higher number of pieces
mailed during the six months ended December 31, 1996 than during the six months
ended December 31, 1995. Postage expense as a percentage of net sales decreased
to 37.2% during the six months ended December 31, 1996 from 39.2% during the six
months ended December 31, 1995. The decrease in postage expense as a percentage
of net sales was primarily attributable to an increase in sales prices charged
by the Company during the current fiscal year (as reflected in postage expense
11
<PAGE>
of 35.4% of net sales during the quarter ended September 30, 1996) partially
offset by the increased postage expense in the current quarter.
Materials and printing expense increased 38.3% to $391,972 during the
three months ended December 31, 1996 from $283,417 during the three months ended
December 31, 1995. The increase was primarily attributable to a higher number of
pieces mailed during the three months ended December 31, 1996 than during the
three months ended December 31, 1995. Materials and printing expense as a
percentage of sales increased to 31.7% during the three months ended December
31, 1996 from 30.3% during the three months ended December 31, 1995. The
increase in materials and printing expense as a percentage of net sales was
attributable to higher paper costs and delivery of more material dominant direct
mail products.
Materials and printing expense increased 60.2% to $906,238 during the
six months ended December 31, 1996 from $565,855 during the six months ended
December 31, 1995. The increase was attributable to a higher number of pieces
mailed, higher paper costs and the delivery of more material dominant direct
mail products during the six months ended December 31, 1996 than during the six
months ended December 31, 1995. Materials and printing expense as a percentage
of sales increased to 33.3% during the six months ended December 31, 1996 from
28.2% during the six months ended December 31, 1995. The increase in materials
and printing expense as a percentage of net sales was attributable to higher
paper costs and delivery of more material dominant direct mail products.
Operating Expenses
Research and development costs related to WorldNow Online increased
161.6% to $806,803 during the three months ended December 31, 1996 from $308,462
during the three months ended December 31, 1995. Research and development costs
have increased due to increased levels of activity and personnel associated with
WorldNow Online.
Research and development costs related to WorldNow Online increased
214.3% to $1,486,250 during the six months ended December 31, 1996 from $472,812
during the six months ended December 31, 1995. Research and development costs
have increased due to increased levels of activity and personnel associated with
WorldNow Online. The Company anticipates launching WorldNow Online during the
first quarter of calendar year 1997.
General and administrative expense increased 96.4% to $385,287 during
the three months ended December 31, 1996 from $196,188 during the three months
ended December 31, 1995. General and administrative expense as a percentage of
net sales increased to 31.2% during the three months ended December 31, 1996
from 21.0% during the three months ended December 31, 1995. The increase in
general and administrative expense as a percentage of net sales was due to the
addition of administrative and support staff, as well as increased related
facilities costs, associated with WorldNow Online.
12
<PAGE>
General and administrative expense increased 121.8% to $758,750 during
the six months ended December 31, 1996 from $342,153 during the six months ended
December 31, 1995. General and administrative expense as a percentage of net
sales increased to 27.9% during the six months ended December 31, 1996 from
17.0% during the six months ended December 31, 1995. The increase in general and
administrative expense as percentage of net sales was due to the addition of
administrative and support staff, as well as increased related facilities costs,
associated with WorldNow Online.
Selling expense increased 108.1% to $357,339 during the three months
ended December 31, 1996 from $171,698 during the three months ended December 31,
1995. Selling expense as a percentage of net sales increased to 28.9% during the
three months ended December 31, 1996 from 18.3% during the three months ended
December 31, 1995. The increase in selling expense as a percentage of net sales
was due to marketing and promotional expenses incurred in connection with the
WorldNow Online product.
Selling expense increased 122.8% to $748,829 during the six months
ended December 31, 1996 from $336,067 during the six months ended December 31,
1995. Selling expense as a percentage of net sales increased to 27.6% during the
six months ended December 31, 1996 from 16.7% during the six months ended
December 31, 1995. The increase in selling expense as a percentage of net sales
was due to marketing and promotional expenses incurred in connection with the
WorldNow Online product.
Segment Operating Results
Direct mail marketing net sales for the three months ended December 31,
1996, increased by 32.2% to $1,236,841 from $935,517 for the three months ended
December 31, 1995. Net income for the three months ended December 31, 1996,
increased by 87.7% to $88,493 from $47,156 for the three months ended December
31, 1995, for this segment. Profits increased at a greater rate than revenue due
to a reduction of operating costs as a percent of sales during the three months
ended December 31, 1996 when compared to the three months ended December 31,
1995.
Direct mail marketing net sales for the six months ended December 31,
1996, increased by 35.2% to $2,718,012 from $2,010,076 for the six months ended
December 31, 1995. Net income for the six months ended December 31, 1996,
increased by 28.2% to $227,132 from $177,147 for the six months ended December
31, 1995, for this segment. Profits did not increase in line with the increase
in net sales due to higher paper costs that have not been immediately reflected
in higher prices charged to customers and the delivery of more material dominant
direct mail products during the six months ended December 31, 1996, when
compared to the six months ended December 31, 1995.
The net loss from the computer online marketing segment increased to
$1,279,580 for the three months ended December 31, 1996, from $425,768 for the
three months ended December 31, 1995. This increase was due to continued
13
<PAGE>
research and development efforts, the addition of administrative and support
staff, as well as related facilities costs, and marketing and promotional
expenses incurred in connection with the WorldNow Online product.
The net loss from the computer online marketing segment increased to
$2,421,363 for the six months ended December 31, 1996, from $672,102 for the six
months ended December 31, 1995. This increase was due to continued research and
development efforts, the addition of administrative and support staff, as well
as related facilities costs, and marketing and promotional expenses incurred in
connection with the WorldNow Online product.
Corporate interest income was $128,839 for the three months ended
December 31, 1996. This interest was earned on the unexpended proceeds from the
sale of common stock in March 1996. For the three months ended December 31,
1995, the Company incurred interest expense of $11,249.
Corporate interest income was $291,482 for the six months ended
December 31, 1996. This interest was earned on the unexpended proceeds from the
sale of common stock in March 1996. For the six months ended December 31, 1995,
the Company incurred interest expense of $15,616.
Liquidity and Capital Resources
The Company historically has satisfied its cash requirements through
cash flows from operating activities and borrowings from financial institutions
and related parties. However, in order to fund the expenses of developing and
launching WorldNow Online, the Company sold common stock in a private placement
to major institutions and other accredited investors (the "March 96 Placement").
The Company completed the March 96 Placement, including the exercise of
warrants, for net proceeds of $16,408,605 during fiscal year 1996.
Operating activities consumed $2,368,351 during the six months ended
December 31, 1996 compared to $291,205 during the six months ended December 31,
1995. The increase in cash flows consumed by operating activities during the six
months ended December 31, 1996 as compared to 1995 was primarily attributable to
increased research and development, selling and other related costs associated
with WorldNow Online.
Cash flows used in investing activities were $1,421,819 and $636,464
during the six months ended December 31, 1996 and 1995, respectively. This
increase in cash used for investing activities was primarily attributable to the
acquisition of computer equipment for WorldNow Online. The Company's capital
expenditures historically were for printing machinery and office equipment.
Cash flows provided by financing activities was $9,583 and $1,268,778
during the six months ended December 31, 1996 and 1995, respectively. This
decrease in cash flows provided by financing activities was due to the Company
14
<PAGE>
only raising $53,450 through the issuance of common stock during the six months
ended September 30, 1996 as compared to $719,000 during the six months ended
December 31, 1995. The Company did not receive any proceeds from borrowings
during the six months ended December 31, 1996. During the six months ended
December 31, 1995, the Company received net proceeds from borrowings of
$588,569.
It is anticipated that the Company will be required to spend an
additional $1,400,000 for costs associated with the WorldNow Online product
before its launch during the first quarter of calendar 1997. In addition, the
Company anticipates that it needs to expend approximately $4,500,000 more than
anticipated revenues during the 12 months following launch for initial marketing
of the product and additional capital expenditures.
The Company received gross proceeds of $1,942,344 during January 1997
from stock subscriptions and the exercise of warrants. The Company will pay
commissions related to this funding of $166,238.
Management believes that the Company has sufficient cash and working
capital at December 31, 1996, to meet its requirements for the following twelve
months.
Forward Looking Information
Statements regarding the Company's expectations as to future growth of
the direct mail business, future revenue from WorldNow Online, the expected
commencement date of WorldNow Online service and certain other statements
presented in the Form 10-Q constitute forward looking information within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, there can be
no assurance that actual results will not differ materially from expectations.
In addition to matters affecting the Company's industry generally, factors which
could cause actual results to differ from expectations include, but are not
limited to (i) unanticipated technical problems could delay launch of WorldNow
Online, (ii) WorldNow Online has not generated revenues, and after its launch it
may not generate the level of users or advertisers currently anticipated, (iii)
the costs to market the WorldNow Online service to advertisers and users could
be substantially higher than anticipated, (iv) the online industry is rapidly
changing, and the Company may not have the technical or financial resources to
compete against existing online services or against services which are newly
introduced or modified, and (v) the direct mail business may not grow as
anticipated due to competitive factors, including postage and material price
increases which make direct mail uneconomical with other forms of advertising,
and competition from other direct mailers over which the Company may not have a
competitive advantage.
15
<PAGE>
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith
Exhibit 27.1
(b) The Company did not file any reports on Form 8-K during the
period reported on. Subsequent to the end of the period the Company filed a Form
8-K dated January 8, 1997, reporting the acquisition of Sisna, Inc. No financial
statements were filed with the report, but the report will be amended to include
Sisna, Inc. financial statements.
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.
DATAMARK HOLDING, INC.
Date: February 10, 1997 By: /s/ Chad L. Evans
-------------------
Chad L. Evans
Chief Executive Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 9,378,817
<SECURITIES> 0
<RECEIVABLES> 547,204
<ALLOWANCES> 0
<INVENTORY> 57,449
<CURRENT-ASSETS> 10,354,652
<PP&E> 4,661,755
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