SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K/A
(Amendment No. 2)
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 29, 1999
eSynch Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26790 87-0461856
(Commission file number) (IRS employer identification no.)
4600 Campus Drive, Newport Beach, CA 92660
(Address of principal executive (Zip code)
(949) 833-1220
(Registrant's telephone number, including area code)
INNOVUS CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
Unaudited Pro Forma Condensed Consolidated Financial Statements F-2
Unaudited Condensed Pro Forma Consolidated Balance Sheet
- June 30, 1998 F-3
Unaudited Condensed Pro Forma Consolidated Statements of
Operations for the Year Ended December 31, 1997 and for
the Six Months Ended June 30, 1998 F-4
Notes to Pro Forma Financial Statements F-5
Intermark Corporation
Report of Independent Certified Public Accountants F-6
Balance Sheet - September 30, 1997 F-7
Statements of Operations and Accumulated Deficit F-8
Statements of Stockholders' Deficit F-9
Statements of Cash Flows F-10
Notes to Financial Statements F-11
Condensed Balance Sheet - June 30, 1998 (Unaudited) F-15
Condensed Statements of Operations for the Three and Six
Months Ended June 30, 1998(Unaudited) F-16
Statements of Cash Flows for the Six Months Ending June
30, 1998 and 1997 (Unaudited) F-17
<PAGE>
INNOVUS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On August 5, 1998, Innovus Corporation ("Innovus") completed a
business combination with Intermark Corporation ("Intermark"). The
following unaudited pro forma condensed consolidated balance sheet
has been prepared to present the financial position of Innovus and
subsidiaries as though the reorganization of Intermark into a
newly-formed subsidiary of Innovus was consummated on June 30, 1998.
The following unaudited pro forma condensed consolidated statements
of operations have been prepared to present the losses from
operations for the year ended December 31, 1997 and for the six
months ended June 30, 1998 of the consolidated companies assuming the
reorganization had occurred on January 1, 1997. The reorganization
was accounted for as the reorganization of Intermark and the
acquisition of Innovus using the purchase method of accounting, with
Intermark being considered as the acquiring enterprise.
The following financial information was derived from, and should be
read in conjunction with the separate historical financial statements
of Innovus included in its annual report to shareholders on Form
10-KSB and the financial statements of Intermark and the related
notes to those financial statements which are included elsewhere
herein. The unaudited pro forma condensed consolidated balance sheet
and statements of operations have been included herein for
comparative purposes only and do not purport to be indicative of the
results of operations which actually would have been obtained had the
reorganization occurred June 30, 1998 or January 1, 1997, or the
results of operations which may be obtained in the future. In
addition, future results may vary significantly from the results
reflected in these pro forma financial statements.
F-2
<PAGE>
INNOVUS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED
BALANCE SHEET
JUNE 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Innovus Intermark Adjustments Pro Forma
----------- --------- ----------- ---------
ASSETS
<S> <C> <C> <C><C> <C>
Current Assets
Advances receivable - 60,484 - 60,484
Deferred tax asset - 2,600 - 2,600
----------- ---------- ----------- ---------
Total Current Assets - 63,084 - 63,084
----------- ---------- ----------- ---------
Equipment 113,036 67,107 - 180,143
Less accumulated depreciation (66,366) (19,158) - (85,524)
----------- ---------- ----------- ---------
Other Assets, net of accumulated
amortization - 11,244 - 11,244
----------- ---------- ----------- ---------
Total Assets $ 46,670 $ 122,277 $ - $ 168,947
=========== ========== =========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Trade accounts payable $ 500,213 $ 154,685 $ - $ 654,898
Accrued expenses 2,275 10,946 - 13,221
Capital lease obligations 768 - - 768
Preferred dividends payable 32,682 - - 32,682
Employee loans payable - 177,885 - 177,185
Notes payable 128,000 293,335 - 421,335
----------- ---------- ----------- ---------
Total Current Liabilities 663,938 636,851 - 1,300,789
----------- ---------- ----------- ---------
Stockholders' Equity
Preferred stock 4 - (B) 79 79
(A) (4)
Common stock 11,939 2,960 (B) (6,887) 8,227
(A) 215
Additional paid-in capital 18,690,383 - (B) (19,312,631) (622,459)
(A) (211)
Accumulated deficit (19,319,594) (517,534) (B) 19,319,594 (517,534)
----------- --------- ----------- ---------
Total Stockholders' Deficit (617,268) (514,574) - (1,431,766)
----------- ---------- ----------- ---------
Total Liabilities and Stockholders' Deficit $ 46,670 $ 122,277 $ - $ 168,947
=========== ========== =========== =========
<FN>
Notes to the Unaudited Condensed Pro Forma Consolidated Financial
Statements are presented on page F-5.
</FN>
</TABLE>
F-3
<PAGE>
INNOVUS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Pro Forma
Innovus Intermark Adjustments Pro Forma
----------- ---------- ----------- ----------
FOR THE YEAR ENDED DECEMBER 31, 1997
<S> <C> <C> <C><C> <C>
Sales $ 317,653 $ 417,071 (C) $ (317,653) $ 417,071
Cost of sales 245,227 148,741 (C) (245,227) 148,741
Gross profit 72,426 268,330 (72,246) 268,330
General and administrative expense 2,159,872 508,953 (C) (1,687,119) 981,706
Amortization of software development costs 1,918,407 - (C) (1,918,407) -
----------- ---------- ----------- ----------
Loss from operations (4,005,853) (240,623) 3,533,280 (713,376)
Interest expense (1,275,855) (5,610)(C) 996,931 (284,534)
Loss on asset disposition (151,228) - (C) 151,228 -
Other income 38,000 - - 38,000
----------- ---------- ----------- ----------
Loss from Continuing Operations (5,394,936) (246,233) 151,228 (959,910)
Preferred dividends 367,730 - (D) (367,730) -
----------- ---------- ----------- ----------
Loss from Continuing Operations Applicable
to Common Shares $(5,762,666) $ (246,233) (216,502) $ (959,910)
=========== ========== =========== ==========
Basic and Diluted Loss from Continuing
Operations Per Common Share $ (0.92) $ (0.09) $ (0.08)
=========== ========== ==========
Weighted average number of common shares
used in per share calculation 6,272,769 3,000,000 (B) 3,914,646 13,187,415
=========== ========== =========== ==========
FOR THE SIX MONTHS ENDED JUNE 30, 1998
Sales $ 24,208 $ 11,923 (C) $ (24,208) (11,923)
Cost of sales 1,752 - (1,752) -
----------- ---------- ----------- ----------
Gross profit 22,456 11,923 (22,456) 11,923
General and administrative expense 157,584 375,019 - 532,603
----------- ---------- ----------- ----------
Loss from operations (135,128) (363,096) (22,456) (520,680)
Interest expense (3,654) (1,944) - (5,598)
Interest income - 6,653 - 6,653
Other income 1,513 - - 1,513
----------- ---------- ----------- ----------
Loss from Continuing Operations (137,269) (358,387) (22,456) (518,112)
Preferred dividends 162,887 - (D) (162,887) -
----------- ---------- ----------- ----------
Loss from Continuing Operations
Applicable to Common Shares $ (300,156) $ (358,387) $ (185,343) $ (518,112)
=========== ========== ========== ==========
Basic and diluted loss from continuing
operations per common share $ (0.03) $ (0.11) $ (0.04)
=========== ========== ==========
Weighted average number of common shares
used in per share calculation 9,060,409 3,375,000 (B) 752,006 13,187,415
=========== ========== ========== ===========
<FN>
Notes to the Unaudited Condensed Pro Forma Consolidated Financial
Statements are presented on page F-5.
</FN>
</TABLE>
F-4
<PAGE>
INNOVUS CORPORATION
NOTES TO UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
A- Innovus Corporation ("Innovus") had 4,300 preferred shares and
11,938,746 common shares outstanding at June 30, 1998. During
July 1998, preferred shareholders converted 4,300 preferred
shares into 215,000 common shares. After the conversion, no
preferred shares were outstanding and 12,153,746 common shares
were outstanding.
B- On August 5, 1998, Intermark Corporation ("Intermark") merged
into a newly-formed subsidiary of Innovus. The Intermark
security holders exchanged their equity securities for 78,706
shares of Series H preferred stock, 1,033,669 common shares and
options to purchase 6,316,524 common shares. Each share of
Series H preferred stock is entitled to 5621/2 votes and is
convertible into 5621/2 common shares. The Intermark
shareholders received 45,305,794 voting rights or 79% of the
total voting rights at meetings of the Innovus shareholders as a
result of the reorganization. Management of Intermark also
became management of the combined company. The exchange of the
Intermark equity securities for Innovus equity securities was
accounted for as a reorganization of Intermark. The historical
financial statements of Intermark have been restated for the
effects of the reorganization in a manner similar to a stock split.
Innovus had discontinued all of its operation, had only nominal
assets and had approximately $664,000 of liabilities; therefore it
was essentially a shell corporation at the date of reorganization.
Inasmuch as Innovus had no business at the date of the
reorganization, no business was acquired; instead, the common
shares held by the Innovus shareholders were considered issued at
the date of the reorganization in exchange for the net liabilities
of Innovus at their historical book value.
C- To eliminate the discontinued operations of Innovus. Innovus
operated as only one segment through June 30, 1998. The
operations of that segment are reflected on the pro forma
statements of operations as discontinued.
D- All prior series of preferred stock have been converted to
common stock and therefore no preferred dividends will be
required in the future. The Series H preferred stock does not
have a stated dividend. Dividends on the Series H preferred
stock are payable if and when declared by the Board of
Directors. Each share of Series H preferred stock will receive
dividends equal to 5621/2 times the amount of the dividends for
each common share.
F-5
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East 300 South, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors
eSynch Corporation
We have audited the accompanying sheet of Intermark Corporation as
of September 30, 1997 and the related statements of operations,
stockholders' deficit and cash flows for the year ended September
30, 1997 and for the period from October 3, 1995 (date of inception)
through September 30, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Intermark Corporation as of September 30, 1997, and the
results of its operations and its cash flows for the year ended
September 30, 1997 and for the period from October 3, 1995 (date of
inception) through September 30, 1996, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the
financial statements, the Company has incurred losses from operations
and negative cash flows from operating activities. At September 30,
1997, the Company had negative working capital and a capital
deficiency. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard
to these matters are described in Note 2 to the accompanying financial
statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
January 29, 1999
F-6
<PAGE>
INTERMARK CORPORATION
BALANCE SHEET
SEPTEMBER 30, 1997
ASSETS
Current Assets
Cash and cash equivalents $ 7,490
Accounts receivable, net 25,220
Inventory 2,481
---------
Total Current Assets 35,191
---------
Property and Equipment, net 47,284
---------
Other Assets
Organizational costs, net 1,694
---------
Total Assets $ 84,169
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Line of credit $ 22,893
Notes payable 31,107
Accounts payable - trade 97,273
Accrued payroll and payroll taxes 27,904
---------
Total Current liabilities 179,177
---------
Stockholders' Deficit
Common stock - no par value, 10,000,000 shares
authorized, 3,000,000 shares issued and
outstanding 2,960
Accumulated deficit (97,968)
---------
Total Stockholders' Deficit (95,008)
---------
Total Liabilities and Stockholders' Deficit $ 84,169
=========
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
INTERMARK CORPORATION
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND
FOR THE PERIOD FROM OCTOBER 3, 1995 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
1997 1996
---------- ----------
Sales $ 576,416 $ 473,482
Cost of sales 141,840 129,620
---------- ----------
Gross profit 434,576 343,862
Selling, general and administrative 513,158 357,317
---------- ----------
Operating loss (78,582) (13,455)
Interest expense 5,931 -
---------- ----------
Net Loss $ (84,513) $ (13,455)
========== ==========
Basic Loss Per Share $ (0.03) $ (0.01)
========== ==========
Weighted Average Shares Outstanding 3,000,000 3,000,000
========== ==========
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
INTERMARK CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND
FOR THE PERIOD FROM OCTOBER 3, 1995 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
<TABLE>
<CAPTION> Total
Common Stock Stockholders'
----------------------- Accumulated Equity
Shares Amount Deficit (Deficit)
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance - October 3, 1995 - $ - $ - $ -
Issuance for cash, October
3, 1995, $0.00 per share 3,000,000 2,960 - 2,960
Net loss from inception
through September 30, 1996 - - (13,455) (13,455)
----------- ---------- ---------- ---------
Balance - September 30, 1996 3,000,000 2,960 (13,455) (10,495)
Net loss for the year - - (84,513) (84,513)
----------- ---------- --------- ---------
Balance - September 30, 1997 3,000,000 $ 2,960 $ (97,968) $ (95,008)
=========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
INTERMARK CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND
FOR THE PERIOD FROM OCTOBER 3, 1995 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
1997 1996
---------- ----------
Cash Flows From Operating Activities
Net loss $ (84,513) $ (13,455)
Adjustments to reconcile net loss
to net cash provided (used)by
operating activities:
Depreciation and amortization 9,340 3,748
Changes in assets and liabilities:
Increase in accounts receivable - (25,220)
Increase in inventory (2,481) -
(Increase) decrease in deposits 40,000 (40,000)
Increase in accounts payable 15,683 80,677
Increase in accrued payroll and
payroll taxes 17,510 11,307
Increase in organizational costs - (2,824)
---------- ----------
Net Cash Provided (Used) by Operating
Activities (4,461) 14,233
---------- ----------
Cash Flows From Investing Activities
Acquisition of property and equipment (24,481) (34,761)
---------- ----------
Net Cash Used by Investing Activities (24,481) (34,761)
---------- ----------
Cash Flows From Financing Activities
Payment of long-term debt (8,893) -
Proceeds from line of credit 22,893 -
Proceeds from long-term debt 15,000 25,000
Proceeds from issuance of common stock - 2,960
---------- ----------
Net Cash Provided by Financing
Activities 29,000 27,960
---------- ----------
Net Increase in Cash 58 7,432
Cash at Beginning of Period 7,432 -
---------- ----------
Cash at End of Year $ 7,490 $ 7,432
========== ==========
Interest Paid $ 3,107 $ -
========== ==========
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
INTERMARK CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND
FOR THE PERIOD FROM OCTOBER 3, 1995 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - The Company was incorporated October 1995 under the
laws of California. The Company derives its revenues from two sources,
traditional retail sales, and turnkey sales and marketing services. The
Company has completed development of an Electronic Software
Distribution (ESD) solution through the internet; consequently, the
Company's ability to collect amounts due from customers is affected by
economic fluctuations in the computer industry.
Inventory - Inventory is stated at lower of cost (first-in, first-out
method) or market. Inventory consists of raw materials of $2,481 at
September 30, 1997.
Property and Equipment - Property and equipment are recorded at cost.
Expenditures for maintenance and repairs are charged against
operations. Renewals and betterments that materially extend the life of
the assets are capitalized. Gains or losses on dispositions of assets
are included in operations in year of disposal.
Depreciation is computed on the straight-line method over the estimated
useful lives of the assets.
Intangible Assets - Intangible assets subject to amortization consist
of organization costs which are being amortized on a straight-line
basis over a sixty month period.
Revenue Recognition - The Company sells software products at fixed
prices for which the right to return is granted to the buyer.
Accordingly, revenue is recognized when the buyer has paid for the
products and the amount of future returns can be reasonably estimated.
Cost of products sold is recognized at the date the sale is recognized
less an estimate for sales returns. Until the sale is recognized,
consigned products from publishers are not reflected in the financial
statements.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts in these
financial statements and accompanying notes. Accordingly, actual
results could differ from those estimates.
NOTE 2-BUSINESS CONDITION
The financial statements have been prepared on the basis of the Company
Company continuing as a going concern. The Company has incurred losses
from operations and negative cash flows from operating activities and
has accumulated a deficit at September 30, 1997 in the amount of $95,008.
These conditions raise substantial doubt regarding the Company's ability
to continue as a going concern. The financial statements do not include
any adjustments relating to the revoverability and classification of
recorded assets or amounts and classifications of liabilities that might
be necessary should the Company be unable to continue. On August 5, 1998,
as discussed in Note 9, the Company entered into an Agreement and Plan of
Share Exchange with Innovus Corporation (now eSynch Corporation). There
is no assurance the reorganization with Innovus will result in profitable
operations, obtaining sufficient financing, or the ability to continue
as a going concern.
NOTE 3-PROPERTY AND EQUIPMENT
Property and equipment are summarized below:
Estimated
Useful Life Amounts
---------- --------
Furniture and fixtures 7 years $ 3,933
Computer equipment 5 years 44,237
Office equipment 5 - 7 years 11,072
59,242
--------
Less: Accumulated amortization (11,958)
--------
$ 47,284
========
Depreciation expense was $8,775 and $3,183 for the year ended September
30, 1997 and the period ending September 30, 1996, respectively.
NOTE 4-ORGANIZATIONAL COSTS
Organizational costs $ 2,824
Less accumulated amortization (1,130)
--------
$ 1,694
========
Amortization expense was $565 and $565 for the year ended September 30,
1997 and the period ended September 30, 1996, respectively.
NOTE 5-SHORT TERM - LINE OF CREDIT
In September 1997, the Company established a line of credit payable
with a bank. It is due September 8, 1998, with a limit of $25,000.
The loan is secured by all assets of the Company, and bears interest
at 3% over prime rate (12% at September 30, 1997). The balance
outstanding, including accrued interest, at September 30, 1997 was
$22,893.
NOTE 6-NOTES PAYABLE - INDIVIDUALS
1997
---------
Note payable, due March 1998, including
interest at 10%, secured by the rights to games
and license. $ 17,630
Note payable, due January 1998, including
interest at 10%, secured by equipment. 13,477
---------
$ 31,107
=========
NOTE 7-OPERATING LEASES
Facilities - The Company maintains its office space under a two-year
noncancellable operating lease which expired May 31, 1998. In July
1998, the Company exercised their option to renew the lease through May
31, 2000 at $4,700 per month.
The following is a schedule of future minimum lease payments required
under the lease as of September 30, 1997:
Year Ending
September 30, Amounts
------------- ---------
1998 $ 37,600
---------
$ 37,600
=========
Rent expense was $46,880 and $20,960 for the year ended September 30,
1997 and the period ended September 30, 1996, respectively.
NOTE 8-CONTINGENCIES
The Company is a defendant in various lawsuits, all in the ordinary
course of business. Outside counsel for the Company has advised that at
this stage they cannot offer an opinion as to their probable outcome.
In the opinion of management, the ultimate liabilities, if any,
resulting from these claims will not have a material adverse effect on
the business or financial position of the Company.
NOTE 9-SUBSEQUENT EVENTS
Reorganization - Intermark Corporation entered into an Agreement and
Plan of Share Exchange (the "Agreement") with Innovus Corporation (now
eSynch Corporation) which was consummated on August 5, 1998. Under
terms of the Agreement, the shareholders of Intermark exchanged all of
their common stock of Intermark for 103,367 shares of common stock and
78,706 shares of Series H preferred stock and Intermark was reorganized
into a newly-formed subsidiary of Innovus.
SoftKat Acquisition - On November 17, 1998, eSynch Corporation acquired
SoftKat, Inc. in exchange for the issuance of 720,000 common shares,
and 600,000 redeemable, convertible preferred shares.
F-14
<PAGE>
INTERMARK CORPORATION
CONDENSED BALANCE SHEET
(Unaudited)
June 30,
1998
---------
ASSETS
Current Assets
Advances receivable $ 60,484
Deferred tax asset 2,600
---------
Total Current Assets 63,084
---------
Property and Equipment, Net 47,949
Other Assets, Net of Accumulated Amortization 11,244
---------
Total Assets $ 122,277
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 154,685
Accrued liabilities 10,946
Employee loans payable 177,855
Notes payable 293,335
---------
Total Current Liabilities 576,851
---------
Stockholders' deficit
Common stock - 10,000,000 shares authorized;
3,000,000 shares issued and outstanding 2,960
Accumulated deficit (517,534)
---------
Total Stockholders' Deficit (514,574)
---------
Total Liabilities and Stockholders' Deficit $ 122,277
=========
F-15
<PAGE>
INTERMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 7,419 $ 156,741 $ 11,923 $ 191,155
---------- ---------- ---------- ----------
Costs and Operating Expenses
Costs of products and services
sold - 76,870 - 74,578
General and administrative 213,274 100,884 375,019 207,698
---------- ---------- ---------- ----------
Total Costs and Operating
Expenses 213,274 177,754 375,019 282,276
---------- ---------- ---------- ----------
Operating Income (Loss) (205,855) (21,013) (363,096) (91,121)
---------- ---------- ---------- ----------
Other Income (Expense)
Interest income 884 401 6,653 801
Interest expense (3,566) - (1,944) -
---------- ---------- ---------- ----------
Other Income (Expense), Net (2,682) 401 4,709 801
---------- ---------- ---------- ----------
Net Income (Loss) (208,537) (20,612) (358,387) (90,320)
---------- ---------- ---------- ----------
Basic and Diluted Earnings
(Loss) Per Share $ (0.07) $ $ (0.11) $
========== ========== ========== ==========
Weighted number of shares of
common stock used in per share
calculation 3,375,000 3,375,000
========== ========== ========== ==========
</TABLE>
F-16
<PAGE>
INTERMARK CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
Ended June 30,
---------------------
1998 1997
---------- ---------
Cash Flows From Operating Activities
Net income (loss) $ (358,387) $ (90,370)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 5,100 5,502
Changes in assets and liabilities:
Accounts receivable 54,767 107,263
Employee advances (54,984) 26,495
Other assets (10,000) 1,629
Accounts payable 23,152 51,580
Accrued expenses (967) 89
Income taxes payable - 800
---------- ---------
Net Cash Provided by (Used in) Operating
Activities (341,319) (122)
---------- ---------
Cash Flows From Investing Activities
Acquisition of property and equipment (365) (14,826)
---------- ---------
Net Cash Used in Investing Activities (365) (14,826)
---------- ---------
Cash Flows From Financing Activities
Proceeds from long-term debt 227,444 10,174
Proceeds from loans from employees 114,240 3,171
---------- ---------
Net Cash Provided by Financing Activities 341,684 13,345
---------- ---------
Net Decrease in Cash - (1,603)
Cash at Beginning of Period - 1,603
---------- ---------
Cash and at End of Period $ - $ -
========== =========
F-17
