<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For Quarter ended Commission file number
October 31, 1996 33-18218-NY
- ----------------- ----------------------
DYNAMARK CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3376786
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
56 Dune Road, Atlantic Beach, New York 11509
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 889-3630
--------------
N/A
- ------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 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
---
Common Stock outstanding as of October 31, 1996:
18,000,000, par value .0001 per share.
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
QUARTERLY REPORT FORM 10-Q FOR
THREE MONTHS ENDED OCTOBER 31, 1996 AND
FOR THE PERIOD FROM INCEPTION (AUGUST 1, 1986)
THROUGH OCTOBER 31, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Page
----
Balance Sheets at October 31,
1996 and July 31, 1996 I-1
Statements of Operations for the Three Months
Ended October 31, 1996 and 1995 and for the
Period From Inception (August 1, 1986) through
October 31, 1996 I-2
Statements of Cash Flows for the Three Months
Ended October 31, 1996 and 1995 and for the
Period From Inception (August 1, 1986) through
October 31, 1996 I-3 - 5
Notes to Financial Statements I-6 - 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations I-8
PART II. OTHER INFORMATION
Signatures II-1
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
OCTOBER 31, 1996 (UNAUDITED) AND JULY 31, 1996
ASSETS
<TABLE>
<CAPTION>
October 31, July 31,
1996 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 59,686 $ 61,702
Prepaid income taxes 42 42
--------- ---------
Total current assets 59,728 61,744
Computer equipment - at cost, less
accumulated depreciation of $13,556
at October 31 and July 31, 1996 -- --
--------- ---------
$ 59,728 $ 61,744
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Accrued liabilities and total
current liabilities $ 20,477 $ 18,527
--------- ---------
Due to officer 155,461 153,961
--------- ---------
Shareholders' deficiency:
Preferred stock - par value $.0001:
Authorized - 5,000,000 shares
Issued and outstanding - none
Common stock - par value $.0001:
Authorized - 50,000,000 shares
Issued and outstanding - 18,000,000 shares
at October 31 and July 31, 1996 1,800 1,800
Additional paid-in capital 556,751 556,751
Deficit accumulated during
the development stage (674,761) (669,295)
--------- ---------
(116,210) (110,744)
--------- ---------
$ 59,728 $ 61,744
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-1
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Period
from
inception
(August 1,
1986)
Three months ended through
October 31, October
1996 1995 31, 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Interest income $ 685 $ 909 $ 135,092
Licensing revenue -- -- 1,469
Amortization of excess of fair
value of investment over its
book value at acquisition -- -- (17,500)
Equity in operating
losses of investee -- -- (14,894)
Loss on write-downs for
impairment of investments -- (13) (91,994)
------------ ------------ ------------
Total revenue 685 896 12,173
------------ ------------ ------------
Expenses:
Salaries:
Officer -- -- 282,980
Other -- -- 29,820
Automobile rental and expenses -- -- 28,618
Professional fees 3,150 6,865 163,301
Other, including rent expense
incurred to officer and director
of $1,500 in 1996 and 1995 and
$61,500 for the period from
inception to October 31, 1996 3,001 2,585 169,508
Licensing agreement:
Costs -- -- 11,238
Loss on termination -- -- 1,469
------------ ------------ ------------
Total expenses 6,151 9,450 686,934
------------ ------------ ------------
Net loss during the
development stage $ (5,466) $ (8,554) $ (674,761)
============ ============ ============
Loss per common share $ -- $ -- $ (.04)
============ ============ ============
Weighted average number 18,000,000 18,000,000 17,661,468
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-2
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Period
from
inception
(August 1,
Three months ended 1986)
October 31 through
----------------------- October
1996 1995 31, 1996
--------- --------- ---------
<S> <C> <C> <C>
Operating activities:
Net loss $ (5,466) $ (8,554) $(674,761)
Adjustments to reconcile net
loss to net cash required by
operating activities:
Amortization of excess of fair
value of investment over its
book value at acquisition -- -- 17,500
Equity in operating
losses of investee -- -- 14,894
Loss on write-downs for
impairment of investments -- 13 91,994
Depreciation and amortization -- -- 22,155
Payment of deferred lease costs -- -- (7,200)
Payment of deposits -- -- (797)
Reduction in deposits -- -- 797
Changes in operating
assets and liabilities:
Increase in accrued
interest receivable -- -- (24,375)
(Increase) decrease in
prepaid income taxes -- 20 (42)
Increase in accrued liabilities 1,950 6,665 20,477
Increase in due to officer 1,500 1,500 155,461
Other business taxes paid
by affiliate on behalf
of the Company -- -- 549
--------- --------- ---------
Net cash required by
operating activities (2,016) (356) (383,348)
--------- --------- ---------
Investing activities:
Purchase of investments
and related advances -- -- (225,013)
Proceeds of repayment of advances
related to investments -- -- 125,000
Acquisition of computer equipment -- -- (13,556)
--------- --------- ---------
Net cash required by
investing activities -- -- (113,569)
--------- --------- ---------
Subtotal (carried forward) (2,016) (356) (496,917)
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-3
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Period
from
inception
(August 1,
1986)
Three months ended through
October 31, October
1996 1995 31, 1996
--------- --------- ---------
<S> <C> <C> <C>
Subtotal (brought forward) $ (2,016) $ (356) $(496,917)
--------- --------- ---------
Financing activities:
Proceeds of sale of common stock
pursuant to public offering -- -- 576,030
Payments of notes payable - affiliate -- -- (19,427)
--------- --------- ---------
Net cash provided by
financing activities -- -- 556,603
--------- --------- ---------
Net increase (decrease) in cash
and cash equivalents (2,016) (356) 59,686
Cash - beginning 61,702 69,935 --
--------- --------- ---------
Cash - end $ 59,686 $ 69,579 $ 59,686
========= ========= =========
Cash paid (received) during the periods for:
Income taxes $ -- $ 384 $ 5,893
========= ========= =========
Interest $ (685) $ (909) $(110,717)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-4
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
AND FOR THE PERIOD FROM INCEPTION
(AUGUST 1, 1986) TO OCTOBER 31, 1996
(UNAUDITED)
Supplementary disclosures of noncash
investing and financing activities:
. Deferred registration costs,
organization costs, notes
payable - affiliate and
shareholders' equity:
During the period from inception (August 1, 1986) to July 31,
1987, the Company incurred deferred registration costs of $10,000 in
connection with its then anticipated initial public offering. These
costs were paid for by the Company's affiliate on behalf of the
Company. During the aforementioned period, the affiliate also paid $90
of the other business taxes on behalf of the Company. In consideration
for the above described disburse ments of $10,090, the Company issued
its noninterest bearing note payable of $9,990 to this affiliate, plus
1,000,000 shares of its $.0001 common stock for $100.
During the year ended July 31, 1988, the Company's affiliate
paid an additional $9,437 on behalf of the Company, consisting of $459
of other business taxes and $8,978 of stock registration costs, for
which the Company issued an interest bearing note payable to this
affiliate.
During the period from inception (August 1, 1986) to July 31,
1987, the Company issued 14,000,000 shares of its $.0001 common stock
for $1,400, representing organization costs paid by the person to whom
the shares were issued.
The accompanying notes are an integral part of these financial statements.
I-5
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
(UNAUDITED)
Note A: General:
The financial statements contained within are
unaudited but reflect all adjustments which, in the opinion of
the Company, are necessary to fairly present the financial posi
tion of the Company as of October 31, 1996, and its results of
operations and cash flows for the three month periods ended
October 31, 1996 and 1995 and from inception (August 1, 1986)
through October 31, 1996.
Note B: Loss per share:
Loss per common share is computed as if all shares
issued during a year had been outstanding as of the beginning
of that year. Stock options and warrants have not been included
in the calculation since inclusion of such shares would be
anti-dilutive.
Note C: Results of operations:
The Company has been in the development stage since
its inception on August 1, 1986. The Company has not generated
operating revenues as of October 31, 1996 and no assurance can
be given that it will generate revenues and earnings in the
future.
Note D: Employment of consultant:
During the month of October 1991, the Company entered
into an agreement with an entity to render consulting services
to the Company in identifying equity or debt financing and/or
potential merger candidates. Under the agreement, the Company
paid a $5,000 nonrefundable fee to that entity, which has been
included within professional fees during the three months ended
October 31, 1991. Pursuant to the agreement terms, the Company
will be obligated to pay an additional $5,000 upon
identification of a potential source of financing or a
merger/acquisition candidate for the Company. The Company is
also obligated to make an additional $15,000 payment upon the
successful closing (signed letter of intent) of either a
financing agreement or merger/acquisition for the Company. In
addition, the agreement also provides that the consulting
entity will receive shares of Dynamark Corporation, which will
be restricted pursuant to Rule 144 of the Securities and
Exchange Commission. The agreement
I-6
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
(UNAUDITED)
Note D: Employment of
consultant: (continued)
specifies that it will terminate upon successful identifica
tion of financing or a merger/acquisition or at such time as it
is terminated by one of the parties.
As of October 31, 1996, there are no currently pending
financings or merger/acquisitions subject to this agreement.
Note E: Liquidity and
capital resources:
There have been no material changes in the Company's
financial position, liquidity or capital resources since July
31, 1996 other than the effect of incurring normal company
operating expenses discussed in Note C.
I-7
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND 1995
(UNAUDITED)
Item 2. Management's discussion and
analysis of financial conditions
and results of operations:
. Results of operations:
The Company had a net loss of $5,466 for the
three months ended October 31, 1996 compared to $8,554
for the three months ended October 31, 1995,
principally due to less professional fees being
incurred during the current period.
. Financial condition:
The Company had a shareholders' deficiency of
$116,210 at October 31, 1996 compared to $110,744 at
July 31, 1996, its most recent year-end. The increase
in shareholders' deficiency is due to the net loss
sustained from operations during the three months
ended October 31, 1996 of $5,466.
The Company's principal asset at October 31,
1996 and its prior year ended July 31, 1996 continues
to be cash. Changes in the Company's cash balance are
prin cipally related to payment of operating expenses,
primarily professional fees.
The Company is expected to remain in the
develop ment stage for the foreseeable future. As
such, the Company is likely to only incur professional
fees and miscellaneous expenses in the future.
I-8
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
QUARTER ENDED OCTOBER 31, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATE: DYNAMARK CORPORATION
December 11, 1996 By: /s/ Allan Rothstein
- ----------------------- ------------------------
ALLAN ROTHSTEIN
President and Director
II-1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> OCT-31-1996
<CASH> 59,686
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,728
<PP&E> 13,556
<DEPRECIATION> 13,556
<TOTAL-ASSETS> 59,728
<CURRENT-LIABILITIES> 20,477
<BONDS> 0
<COMMON> 1,800
0
0
<OTHER-SE> (116,010)
<TOTAL-LIABILITY-AND-EQUITY> 59,728
<SALES> 0
<TOTAL-REVENUES> 685
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,151
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,466)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,466)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
