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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
April 30, 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 April 30, 1997:
18,000,000, par value .0001 per share.
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
QUARTERLY REPORT FORM 10-Q FOR
THREE AND NINE MONTHS ENDED APRIL 30, 1997
AND 1996 AND FOR THE PERIOD
FROM INCEPTION (AUGUST 1, 1986)
THROUGH APRIL 30, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Page
----
Balance Sheets at April 30,
1997 and July 31, 1996 I-1
Statements of Operations for the Three and Nine Months Ended
April 30, 1997 and 1996 and for the Period From Inception
(August 1, 1986) Through April 30, 1997 I-2
Statements of Cash Flows for the Three and Nine Months Ended
April 30, 1997 and 1996 and for the Period From Inception
(August 1, 1986) through April 30, 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
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
APRIL 30, 1997 (UNAUDITED) AND JULY 31, 1996
ASSETS
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 101,373 $ 61,702
Prepaid income taxes 395 42
--------- ---------
Total current assets 101,768 61,744
Computer equipment - at cost, less accumulated
depreciation of $13,556 at April 30, 1997
and July 31, 1996 -- --
--------- ---------
$ 101,768 $ 61,744
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Accrued liabilities and total current liabilities $ 15,189 $ 18,527
--------- ---------
Due to officer 158,461 153,961
--------- ---------
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 April 30, 1997 and July 31, 1996 1,800 1,800
Additional paid-in capital 556,751 556,751
Deficit accumulated during the development stage (630,433) (669,295)
--------- ---------
(71,882) (110,744)
--------- ---------
$ 101,768 $ 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
April 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenue:
Interest income $ 479 $ 690
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 479 690
------------ ------------
Expenses:
Salaries:
Officer -- --
Other -- --
Automobile rental and expenses -- --
Professional fees 2,967 2,134
Other, including rent expense incurred to officer and director of $1,500 for
the three months ended April 30, 1997 and 1996, $4,500 for the nine months
ended April 30, 1997 and 1996 and $64,500 for the period from inception to
April 30, 1997 2,153 3,109
Licensing agreement:
Costs -- --
Loss on termination -- --
------------ ------------
Total expenses 5,120 5,243
------------ ------------
Net income (loss) during the development stage
$ (4,641) $ (4,553)
============ ============
Income (loss) per common share $ -- $ --
============ ============
Weighted average number of shares outstanding 18,000,000 18,000,000
============ ============
</TABLE>
<TABLE>
<CAPTION>
Nine months ended Period from
April 30, inception (August
---------------------------- 1, 1986) through
1997 1996 April 30, 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Interest income $ 57,161 $ 2,502 $ 191,568
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 57,161 2,489 68,649
------------ ------------ ------------
Expenses:
Salaries:
Officer -- -- 282,980
Other -- -- 29,820
Automobile rental and expenses -- -- 28,618
Professional fees 10,117 8,999 170,268
Other, including rent expense incurred to officer and director of $1,500 for
the three months ended April 30, 1997 and 1996, $4,500 for the nine months
ended April 30, 1997 and 1996 and $64,500 for the period from inception to
April 30, 1997 8,182 7,187 174,689
Licensing agreement:
Costs -- -- 11,238
Loss on termination -- -- 1,469
------------ ------------ ------------
Total expenses 18,299 16,186 699,082
------------ ------------ ------------
Net income (loss) during the development stage
$ 38,862 $ (13,697) $ (630,433)
============ ============ ============
Income (loss) per common share $ -- $ -- $ (.04)
============ ============ ============
Weighted average number of shares outstanding 18,000,000 18,000,000 17,677,214
============ ============ ============
</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
April 30,
---------------------
1997 1996
--------- --------
<S> <C> <C>
Operating activities:
Net income (loss) $ (4,641) $ (4,553)
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) decrease in prepaid income taxes (353) --
Increase (decrease) in accrued liabilities (283) 3,415
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 (3,777) 362
--------- --------
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 (3,777) 362
Cash - beginning 105,150 60,704
--------- --------
Cash - end $ 101,373 $ 61,066
========= ========
Cash paid (received) during the periods for:
Income taxes $ 353 $ --
========= ========
Interest $ (479) $ (690)
========= ========
</TABLE>
<TABLE>
<CAPTION>
Nine months ended Period from
April 30, inception (August
--------------------- 1, 1986) through
1997 1996 April 30, 1997
--------- -------- ---------
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 38,862 $(13,697) $(630,433)
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) decrease in prepaid income taxes (353) 20 (395)
Increase (decrease) in accrued liabilities (3,338) 295 15,189
Increase in due to officer 4,500 4,500 158,461
Other business taxes paid by affiliate on behalf of the Company -- -- 549
--------- -------- ---------
Net cash provided (required) by operating activities 39,671 (8,869) (341,661)
--------- -------- ---------
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 39,671 (8,869) 101,373
Cash - beginning 61,702 69,935 --
--------- -------- ---------
Cash - end $ 101,373 $ 61,066 $ 101,373
========= ======== =========
Cash paid (received) during the periods for:
Income taxes $ 353 $ 384 $ 6,246
========= ======== =========
Interest $ (57,161) $ (2,502) $(167,193)
========= ======== =========
</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 MONTHS AND NINE MONTHS ENDED APRIL 30,
1997 AND 1996 AND FOR THE PERIOD FROM
INCEPTION (AUGUST 1, 1986) TO APRIL 30, 1997
(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.
I-4
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 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 position
of the Company as of April 30, 1997, and its results of
operations and cash flows for the three and nine month periods
ended April 30, 1997 and 1996 and from inception (August 1,
1986) through April 30, 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 April 30, 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 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
I-5
<PAGE>
DYNAMARK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 AND 1996
(UNAUDITED)
Note D: Employment of
consultant: (continued)
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 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, 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, as discussed in Note C.
Note F: Recovery of loss on
writedown for impairment
of investments:
During the nine months ended April 30, 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 investment. 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
APRIL 30, 1997 AND 1996
(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 $4,641 for the
three months ended April 30, 1997 compared to $4,553
for the three months ended April 30, 1996, principally
due to more professional fees being incurred during the
current period.
o Financial condition:
The Company had shareholders' deficiency of
$71,882 at April 30, 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 nine months ended
April 30, 1997 of $38,862.
The Company's principal asset at April 30,
1997 and at its prior year ended July 31, 1996
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, 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
June 15, 1997 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-31-1997
<PERIOD-END> APR-30-1997
<CASH> 101,373
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 101,768
<PP&E> 13,556
<DEPRECIATION> 13,556
<TOTAL-ASSETS> 101,768
<CURRENT-LIABILITIES> 15,189
<BONDS> 0
<COMMON> 1,800
0
0
<OTHER-SE> (73,682)
<TOTAL-LIABILITY-AND-EQUITY> 101,768
<SALES> 0
<TOTAL-REVENUES> 57,161
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,299
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,862
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,862
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
|
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