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<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
January 31, 1997 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 January 31, 1997:
18,000,000, par value .0001 per share.
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
QUARTERLY REPORT FORM 10-Q FOR
THREE AND SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
AND FOR THE PERIOD FROM INCEPTION (AUGUST 1, 1986)
THROUGH JANUARY 31, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements:
Page
<S> <C>
Balance Sheets at January 31,
1997 and July 31, 1996 I-1
Statements of Operations for the Three and Six Months Ended
January 31, 1997 and 1996 and for the Period From Inception
(August 1, 1986) Through January 31, 1997 I-2
Statements of Cash Flows for the Three and Six Months Ended
January 31, 1997 and 1996 and for the Period From Inception
(August 1, 1986) Through January 31, 1997 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
</TABLE>
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JANUARY 31, 1997 (UNAUDITED) AND JULY 31, 1996
<TABLE>
<CAPTION>
ASSETS
January 31, July 31,
1997 1996
-------- ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $105,150 $ 61,702
Prepaid income taxes 42 42
-------- ---------
Total current assets 105,192 61,744
Computer equipment - at cost, less
accumulated depreciation of $13,556
at January 31, 1997 and July 31, 1996 - -
-------- ---------
$105,192 $ 61,744
======== =========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
<S> <C> <C>
Current liabilities:
Accrued liabilities and total
current liabilities $ 15,472 $ 18,527
-------- ---------
Due to officer 156,961 153,961
-------- ---------
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 January 31, 1997 and July 31, 1996 1,800 1,800
Additional paid-in capital 556,751 556,751
Deficit accumulated during
the development stage (625,792) (669,295)
-------- ---------
(67,241) (110,744)
-------- ---------
$105,192 $ 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>
Three months ended
January 31,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
Interest income $ 55,997 $ 903
Licensing revenue - -
Amortization of excess of fair value of investment
over its book value at acquisition - -
Equity in operating losses of investee - -
Loss on write-down for impairment of investment - -
---------- -----------
Total revenue 55,997 903
---------- -----------
Expenses:
Salaries:
Officer - -
Other - -
Automobile rental and expenses - -
Professional fees 4,000 -
Other, including rent expense incurred to officer and director of $1,500 for
the three months ended January 31, 1997 and 1996, $3,000 for the six months
ended January 31, 1997 and 1996 and $63,000 for the period from inception
to January 31, 1997 3,028 1,493
---------- -----------
Licensing agreement:
Costs - -
Loss on termination - -
---------- -----------
Total expenses 7,028 1,493
---------- -----------
Net income (loss) during the development stage $ 48,969 $ (590)
========== ===========
Income (loss) per common share $ - $ -
========== ===========
Weighted average number of shares 18,000,000 18,000,000
========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six months ended Period from
January 31, inception (August
------------------------------- 1, 1986) through
1997 1996 January 31, 1997
---- ---- ----------------
<S> <C> <C> <C>
Revenue:
Interest income $ 56,682 $ 1,812 $ 191,089
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 56,682 1,799 68,170
---------- ----------- ----------
Expenses:
Salaries:
Officer - - 282,980
Other - - 29,820
Automobile rental and expenses - - 28,618
Professional fees 7,150 6,865 167,301
Other, including rent expense incurred to officer and director of $1,500 for
the three months ended January 31, 1997 and 1996, $3,000 for the six months
ended January 31, 1997 and 1996 and $63,000 for the period from inception
to January 31, 1997 6,029 4,078 172,536
---------- ----------- ----------
Licensing agreement:
Costs - - 11,238
Loss on termination - - 1,469
---------- ----------- ----------
Total expenses 13,179 10,943 693,962
---------- ----------- ----------
Net income (loss) during the development stage $ 43,503 $ (9,144) $ (625,792)
========== =========== ==========
Income (loss) per common share $ - $ - $ (.04)
========== =========== ==========
Weighted average number of shares 18,000,000 18,000,000 17,669,529
========== =========== ==========
</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>
Three months ended
January 31,
--------------------------
1997 1996
-------- -------
<S> <C> <C>
Operating activities:
Net income (loss) $ 48,969 $ (590)
Adjustments to reconcile net income (loss) to net
cash provided (required) by operating activities:
Amortization of excess of fair value of investment
over its book value at acquisition - -
Equity in operating losses of investee - -
Loss on write-down for impairment of investment - -
Depreciation and amortization - -
Payment of deferred lease costs - -
Payment of deposits - -
Reduction in deposits - -
Changes in operating assets and liabilities:
Increase in accrued interest receivable - -
Increase in prepaid income taxes - -
Increase (decrease) in accrued liabilities (5,005) (9,785)
Increase in due to officer 1,500 1,500
Other business taxes paid by affiliate on behalf of the Company - -
-------- -------
Net cash provided (required) by operating activities 45,464 (8,875)
-------- -------
Investing activities:
Purchase of investments and related advances - -
Proceeds of repayment of advances related to investments - -
Acquisition of computer equipment - -
-------- -------
Net cash required by investing activities - -
-------- -------
Financing activities:
Proceeds of sale of common stock pursuant to public offering - -
Payments of notes payable - affiliate - -
-------- -------
Net cash provided by financing activities - -
-------- -------
Net increase (decrease) in cash and cash equivalents 45,464 (8,875)
Cash - beginning 59,686 69,579
-------- -------
Cash - end $105,150 $60,704
======== =======
Cash paid (received) during the periods for:
Income taxes $ - $ -
======== =======
Interest $ 55,997 $ (903)
======== =======
</TABLE>
<TABLE>
<CAPTION>
Six months ended Period from
January 31, inception (August
---------------------------- 1, 1986) through
1997 1996 January 31, 1997
--------- -------- ----------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 43,503 $ (9,144) $ (625,792)
Adjustments to reconcile net income (loss) to net
cash provided (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 - 13 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 in prepaid income taxes - 20 (42)
Increase (decrease) in accrued liabilities (3,055) (3,120) 15,472
Increase in due to officer 3,000 3,000 156,961
Other business taxes paid by affiliate on behalf of the Company - - 549
--------- -------- ---------
Net cash provided (required) by operating activities 43,448 (9,231) (337,884)
--------- -------- ---------
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 43,448 (9,231) 105,150
Cash - beginning 61,702 69,935 -
--------- -------- ---------
Cash - end $ 105,150 $ 60,704 $ 105,150
========= ======== =========
Cash paid (received) during the periods for:
Income taxes $ - $ 384 $ 5,893
========= ======== =========
Interest $ 56,682 $ (1,812) $(166,714)
========= ======== =========
</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
THREE AND SIX MONTHS ENDED JANUARY 31,
1997 AND 1996 AND FOR THE PERIOD FROM
INCEPTION (AUGUST 1, 1986) TO JANUARY 31, 1997
(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 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
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 AND 1996
(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 January 31, 1997, and its results of
operations and cash flows for the three and six month periods
ended January 31, 1997 and 1996 and from inception (August 1,
1986) through January 31, 1997.
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 January 31, 1997 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 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-5
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 AND 1996
(UNAUDITED)
Note D: Employment of
consultant: (continued)
specifies that it will 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 January 31, 1997, 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.
Note F: Recovery of loss on
writedown for impair-
ment of investment:
During the three months ended January 31, 1997, the
Company received a payment against interest owed to the Company
of $55,361 on a note receivable of $97,500 previously written
off as a loss on writedown for impairment of invest ment. The
due date of the note receivable has been extended to August 31,
1997.
I-6
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 AND 1996
(UNAUDITED)
Item 2. Management's discussion and
analysis of financial condition
and results of operations:
. Results of operations:
The Company had net income of $48,969 for the
three months ended January 31, 1997 compared to a net
loss of $590 for the three months ended January 31,
1996, prin cipally due to receipt of interest income on
a note receivable previously written off as impaired,
as discussed in Note G to the financial statements.
. Financial condition:
The Company had a shareholders' deficiency of
$67,241 at January 31, 1997 compared to $110,744 at
July 31, 1996, its most recent year-end. The decrease
in shareholders' deficiency is due to the net income
sustained from operations during the six months ended
January 31, 1997 of $43,503.
I-7
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
QUARTER ENDED JANUARY 31, 1997
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
By: /s/ Allan Rothstein
- --------------------------- ------------------------
ALLAN ROTHSTEIN
President and Director
II-1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 105,150
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 105,192
<PP&E> 13,556
<DEPRECIATION> 13,556
<TOTAL-ASSETS> 105,192
<CURRENT-LIABILITIES> 15,472
<BONDS> 0
0
0
<COMMON> 1,800
<OTHER-SE> (69,041)
<TOTAL-LIABILITY-AND-EQUITY> 105,192
<SALES> 0
<TOTAL-REVENUES> 56,682
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,179
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,503
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,503
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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