<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
April 30, 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 April 30, 1996:
18,000,000, par value .0001 per share.
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
QUARTERLY REPORT FORM 10-Q FOR
THREE AND NINE MONTHS ENDED APRIL 30, 1996
AND 1995 AND FOR THE PERIOD
FROM INCEPTION (AUGUST 1, 1986)
THROUGH APRIL 30, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Page
----
Balance Sheet at April 30,
1996 and July 31, 1995 I-1
Statement of Operations for the Three
and Nine Months Ended April 30, 1996
and 1995 and for the Period From
Inception (August 1, 1986) Through
April 30, 1996 I-2
Statement of Cash flows for the Three
and Nine Months Ended April 30, 1996
and 1995 and for the Period From
Inception (August 1, 1986) through
April 30, 1996 I-3 - 4
Notes to Financial Statements I-5 - 6
Item 2. Management's Discussion and analysis
of Financial Condition and Results
of Operations I-7
PART II. OTHER INFORMATION
Signatures II-1
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 (UNAUDITED) AND JULY 31, 1995
ASSETS
April 30, July 31,
1996 1995
---- ----
(Unaudited)
Current assets:
Cash $ 61,066 $ 69,935
Prepaid income taxes 430 450
-------- --------
Total current assets 61,496 70,385
Marketable equity securities available for sale - 3,125
Computer equipment - at cost, less
accumulated depreciation of $13,556
at April 30, 1996 and July 31, 1995 - -
-------- --------
$ 61,496 $ 73,510
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Accrued liabilities and total
current liabilities $ 17,177 $ 16,882
-------- --------
Due to officer 152,461 147,961
-------- --------
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 April 30, 1996 and July 31, 1995 1,800 1,800
Additional paid-in capital 556,751 556,751
Deficit accumulated during
the development stage (666,693) (652,996)
-------- --------
(108,142) (94,445)
Unrealized gain to reflect marketable equity
securities available for sale at market - 3,112
-------- --------
(108,142) (91,333)
-------- --------
$ 61,496 $ 73,510
======== ========
The accompanying notes are an integral part of these financial statements.
I-1
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
Period from
Three months ended Nine months ended inception (August
April 30, April 30, 1, 1986) through
1996 1995 1996 1995 April 30, 1996
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Revenue:
Interest income $ 690 $ 908 $ 2,502 $ 2,856 $ 133,740
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 down for impairment of investment - - (13) - (91,994)
---------- ---------- ---------- ---------- ----------
Total revenue 690 908 2,489 2,856 10,821
---------- ---------- ---------- ---------- ----------
Expenses:
Salaries:
Officer - - - - 282,980
Other - - - - 29,820
Automobile rental and expenses - - - - 28,618
Professional fees 2,134 5,389 8,999 21,839 159,401
Other, including rent expense incurred to officer and
director of $1,500 for the three months ended April 30,
1996 and 1995 , $4,500 for the nine months
ended April 30, 1996 and 1995 and $57,000
for the period from inception to April 30, 1995 3,109 2,691 7,187 7,099 163,988
Licensing agreement:
Costs - - - - 11,238
Loss on termination - - - - 1,469
---------- ---------- ---------- ---------- ----------
Total expenses 5,243 8,080 16,186 28,938 677,514
---------- ---------- ---------- ---------- ----------
Net loss during the development stage $ (4,553) $ (7,172) $ (13,697) $ (26,082) $ (666,693)
========== ========== ========== ========== ==========
Loss per common share $ - $ - $ - $ - $ (.04)
========== ========== ========== ========== ==========
Weighted average number of shares outstanding 18,000,000 18,000,000 18,000,000 18,000,000 17,644,108
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-2
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from
Three months ended Nine months ended inception (August
April 30, April 30, 1, 1986) through
1996 1995 1996 1995 April 30, 1996
---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Operating activities:
Net loss $ (4,553) $(7,172) $(13,697) $(26,082) $(666,693)
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 down for impairment of investment - - - - 91,994
Depreciation and amortization - 43 13 129 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 - 10 20 10 (430)
Increase (decrease) in accrued liabilities 3,415 3,766 295 (3,283) 17,177
Increase in due to officer 1,500 1,500 4,500 4,500 152,461
Other business taxes paid by affiliate on behalf
of the Company - - - - 549
Net cash required by operating activities 362 (1,853) (8,869) (24,726) (381,968)
------- ------- -------- -------- ---------
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)
------- ------- -------- -------- ---------
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 362 (1,853) (8,869) (24,726) 61,066
Cash - beginning 60,704 75,856 69,935 98,729 -
------- ------- -------- -------- ---------
Cash - end $61,066 $74,003 $ 61,066 $ 74,003 $ 61,066
======= ======= ======== ======== =========
Cash paid (received) during the periods for:
Income taxes $ - $ 411 $ 384 $ 411 $ 5,893
======= ======= ======== ======== =========
Interest $ (690) $ (908) $ (2,502) $ (2,856) $ 109,365
======= ======= ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
I-3
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS AND NINE MONTHS ENDED APRIL 30,
1996 AND 1995 AND FOR THE PERIOD FROM
INCEPTION (AUGUST 1, 1986) TO APRIL 30, 1996
(UNAUDITED)
Supplementary disclosures of noncash
investing and financing activities:
o 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 other business taxes on behalf of the Company. In
consideration for the above described disbursements 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-4
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 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 position of the
Company as of April 30, 1996, and its results of operations and
cash flows for the three and nine month
periods ended April 30, 1996 and 1995 and from inception
(August 1, 1986) through April 30, 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 and its subsidiaries
have not generated operating revenues as of April 30, 1996 and
no assurance can be given that they 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 who is to assist 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 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 entity will receive shares of Dynamark Corporation, which
will be
restricted pursuant to Rule 144 of the Securities and
Exchange Commission. The agreement specifies that it will
I-5
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
(UNAUDITED)
Note D: Employment of
consultant: (continued)
terminate upon successful identification of financing or a
merger/acquisition or at such time as it is terminated by one
of the parties.
As of April 30, 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, 1995, other than the effect of incurring normal Company
operating expenses, as discussed in Note C.
Note F: Impairment of investment in
marketable equity securities -
available for sale:
Due to the filing of bankruptcy of the investee, a loss on
write down for impairment of the Company's investment in
marketable equity securities has been recorded in the amount of
$13. Coincident to the aforementioned write-off, the Company
has also reflected a reversal of an unrealized gain previously
recorded to reflect those marketable equity securities
available for sale at market of $3,112, as follows:
Unrealized gain to reflect marketable
equity securities available for sale
at market at July 31, 1995 $3,112
Less: Reversal of the aforementioned
unrealized gain during the
quarter ended October 31, 1995
resulting from impairment of
the investment 3,112
------
Unrealized gain to reflect marketable
equity securities available for sale
at market at April 30, 1996 $ -
======
I-6
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996 AND 1995
(UNAUDITED)
Item 2. Management's discussion
and analysis of financial
conditions and results
of operations:
o Results of operations:
The Company had a net loss of $4,553 for the three
months ended April 30, 1996 compared to $7,172 for the
three months ended April 30, 1995, principally due to less
professional fees being incurred during the current period.
o Financial condition:
The Company had shareholders' deficiency of $108,142 at
April 30, 1996 compared to $91,333 at July 31, 1995, its
most recent year-end. The increase in shareholders'
deficiency is due to the net loss sustained from
operations during the nine months ended April 30, 1996 of
$13,697 and the reversal of an unrealized gain to reflect
available for sale marketable equity securities at market
of $3,112.
The Company's principal asset at April 30, 1996 and at
its prior year ended July 31, 1995 continues to be cash.
Changes in the Company's cash balance are principally
related to payment of operating expenses, primarily
professional fees.
The Company is expected to remain in the development
stage for the foreseeable future. As such, the Company is
likely to only incur professional fees and miscellaneous
expenses in the future.
I-7
<PAGE>
DYNAMARK CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
QUARTER ENDED APRIL 30, 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
June 14, 1996 By: /s/ Allan Rothstein
- -------------------------- ------------------------------
ALLAN ROTHSTEIN
President and Director
II-1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> APR-30-1996
<CASH> 61,066
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 61,496
<PP&E> 13,556
<DEPRECIATION> 13,556
<TOTAL-ASSETS> 61,496
<CURRENT-LIABILITIES> 17,177
<BONDS> 0
<COMMON> 1,800
0
0
<OTHER-SE> (108,142)
<TOTAL-LIABILITY-AND-EQUITY> 61,496
<SALES> 0
<TOTAL-REVENUES> 2,489
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,186
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,697)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,697)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
