FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ________
Commission file number _______________
D.H. MARKETING & CONSULTING, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0330263
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
HC 77 Box 394 B, Routes 6 & 209, Milford, PA 18337 (717) 296-8515
(Address of principal executive offices) (Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of November 5, 1996 the
issuer had 1,152,960 shares of common stock outstanding, 899,960 shares of
which are restricted and 253,000 shares are free trading. As of November 5,
1996 the issuer had 183 shareholders.
Transitional Small Business Disclosure Format (Check one);
Yes [ ] No [X]
<PAGE>
PART I- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
See attached Financial Statements for the quarter ending
September 30, 1996.
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
SEPTEMBER 30, 1996
(Unaudited)
<PAGE>
Niessen, Dunlap & Pritchard, P.C.
Certified Public Accountants & Business Consultants
590 Bethlehem Pike
P.O. Box 606
Colmar, PA 18915-0606
Phone (215) 997-7200
Fax (215) 997-7295
INDEPENDENT ACCOUNTANT'S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To the Board of Directors
D.H. Marketing & Consulting, Inc.
Milford, Pennsylvania
The accompanying consolidated balance sheet of D.H. Marketing & Consulting,
Inc., and Subsidiary as of September 30, 1996, and the related consolidated
statement of income for the three months ended September 30, 1996, and nine
months ended September 30, 1996 and 1995; and consolidated statements of
stockholders' equity and cash flows for the nine months ended September 30,
1996 and 1995, were not audited by us and, accordingly, we do not express an
opinion on them.
The consolidated balance sheet as of December 31, 1995, was audited by us and
we expressed an unqualified opinion on it in our report dated February 26,
1996, but we have not performed any auditing procedures since that date.
/s/ NIESSEN, DUNLAP & PRITCHARD, P.C.
NIESSEN, DUNLAP & PRITCHARD, P.C.
Colmar, Pa.
October 3, 1996
<PAGE>
D.H. MARKETING & CONSULTING, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996 & DECEMBER 31, 1995
1996 1995
(Unaudited) (Audited)
___________ __________
ASSETS
Current Assets
Cash and Cash Equivalents $ 361,849 $ 171,096
Accounts Receivable, Net of Allowance
1996 $2,900; 1995 $2,900 292,466 47,449
Other Receivables 48,916 20,920
Inventory 249,095 142,268
Prepaid Expenses 3,814 1,201
_________ _________
Total Current Assets 956,140 382,934
_________ _________
Investments 482,090 12,400
_________ _________
Property & Equipment
Office Furniture & Equipment 28,086 3,919
Accumulated Depreciation ( 4,464) ( 1,020)
_________ __________
Net Property & Equipment 23,622 2,899
_________ __________
Other Assets
Organization Costs 71,030 71,030
Client Lists 10,000 10,000
__________ _________
81,030 81,030
Less Accumulated Amortization ( 42,543) ( 30,389)
__________ _________
38,487 50,641
Deposits 3,488 675
__________ _________
Net Other Assets 41,975 51,316
__________ _________
TOTAL ASSETS $ 1,503,827 $ 449,549
============== ===========
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
D. H. MARKETING & CONSULTING, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996 & DECEMBER 31, 1995
1996 1995
(Unaudited) (Audited)
___________ ___________
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Current Obligations Under Capital Lease $ 1,092 $ 0
Note Payable - Officer 14,000 0
Accounts Payable 150,000 1,268
Sales Tax Payable 417 0
Accrued Wages 5,381 7,167
Accrued & Withheld Payroll Taxes 0 883
Accrued Expenses 775 375
Accrued Income Taxes 59,400 0
__________ __________
Total Current Liabilities 231,065 9,693
__________ __________
Long-Term Debt
Obligation Under Capital Lease 5,707 0
Note Payable - Officer 0 74,371
__________ __________
Total Long-Term Debt 5,707 74,371
__________ __________
Total Liabilities 236,772 84,064
__________ __________
Stockholders' Equity
Common Stock, $.001 Par Value, Authorized
25,000,000 Shares; 1996 - Issued & Outstanding
1,152,960 Shares (937,960 Shares Restricted,
215,000 Shares Free Trading) 1995 - Issued &
Outstanding 1,119,000 Shares (1,000,000 Shares
Restricted, 119,000 Shares Free Trading) 1,153 1,119
Additional Paid-In Capital 1,230,886 734,090
Accumulated Earnings (Deficit) 35,016 ( 369,724)
__________ __________
Total Stockholders' Equity 1,267,055 365,485
__________ __________
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,503,827 $ 449,549
=========== ==========
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
D. H. MARKETING & CONSULTING, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 &
NINE MONTHS ENDED SEPTEMBER 30, 1996 & 1995
(Unaudited)
1996 1996 1995
3rd Year To Year To
Quarter Date Date
__________ ___________ __________
Sales $ 411,128 $ 1,027,860 $ 114,441
Discounts Taken 14,000 40,983 2
___________ ___________ __________
Net Sales 397,128 986,877 114,439
___________ ___________ __________
Cost of Goods Sold
Purchases 109,067 298,733 18,951
Commissions 0 0 875
Freight-Out 2,954 6,803 3,392
Transportation In 1,302 2,724 701
___________ __________ __________
Total Cost of Goods Sold 113,323 308,260 23,919
___________ __________ __________
Gross Profit 283,805 678,617 90,520
___________ __________ __________
General & Administrative Expenses
Advertising 7,304 16,639 2,547
Amortization 4,052 12,155 12,064
Bank Charges 75 609 1,061
Bad Debt 0 1,377 0
Depreciation 1,181 3,444 498
Dues & Subscriptions ( 77) 972 595
Employee Benefits 475 1,224 0
Insurance 599 1,279 12,797
Licenses & Permits 0 350 5,455
Miscellaneous 7,778 30,101 940
Office 4,306 10,386 2,689
Outside Services 1,938 8,250 20,850
Postage & Printing 4,412 14,241 8,141
Professional Fees 4,633 19,830 10,191
Regulatory Consulting 0 0 1,750
Rent 8,436 25,072 11,696
Repairs & Maintenance 321 606 154
Salaries & Wages 33,709 104,363 35,200
Consulting Fees 7,450 18,875 30,514
Taxes - Franchise 448 1,097 999
Taxes - Payroll 2,620 9,815 3,277
Taxes - Other 1,020 1,020 0
Telephone 13,933 33,580 18,389
Travel & Auto 4,116 8,370 16,900
__________ _________ _________
Total General &
Administrative Expenses 108,729 323,655 196,707
__________ _________ _________
Operating Income (Loss) (Forwarded) $ 175,076 $ 354,962 $( 106,187)
__________ _________ ___________
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
D. H. MARKETING & CONSULTING, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 &
NINE MONTHS ENDED SEPTEMBER 30, 1996 & 1995
(Unaudited)
1996 1996 1995
3rd Year To Year To
Quarter Date Date
___________ ___________ __________
Operating Income (Loss) (Forwarded) $ 175,076 $ 354,962 $( 106,187)
___________ ___________ ___________
Other Income (Expense)
Other Income/Consultation Fees 100,000 103,942 5,825
Recovery of Commission Advance 0 0 13,100
Interest Income 3,112 5,766 17
Interest Expense (222) (530) (828)
____________ ____________ ___________
Total Other Income (Expense) 102,890 109,178 18,114
____________ ____________ ___________
Net Income (Loss) Before Income Taxes 277,966 464,140 (88,073)
____________ ____________ ___________
Income Taxes
Federal 13,000 13,000 0
State 46,400 46,400 0
------------ ------------ -----------
Total Income Taxes 59,400 59,400 0
------------ ------------ -----------
NET INCOME (LOSS) $ 218,566 $ 404,740 $ (88,073)
============ ============ ===========
NET INCOME (LOSS) PER SHARE $.19 $.36 $(.10)
============ ============ ===========
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996 & 1995
(Unaudited)
Accumu-
Additional lated
Common Stock Paid-In Earnings
Shares Amount Capital (Deficit) Total
_________________ __________ __________ __________
Balance,
December 31, 1995 1,119,000 $1,119 $ 734,090 $(369,724) $ 365,485
Issuance of Common Stock 33,960 34 496,796 0 496,830
Net Income 0 0 0 404,740 404,740
_________ ______ __________ _________ __________
Balance,
September 30, 1996 1,152,960 $1,153 $1,230,886 35,016 $1,267,055
========= ====== ========== ========= ==========
Balance,
December 31, 1994 1,000,000 $1,000 $ 196,100 $(183,642) $ 13,458
Issuances of
Common Stock 30,000 30 26,870 0 26,900
Stock Issuance Costs 0 0 0 (22,591) (22,591)
Net Loss 0 0 0 (88,073) (88,073)
_________ ______ __________ __________ ___________
Balance,
September 30, 1995 1,030,000 $1,030 $ 222,970 $(294,306) $ (70,306)
========= ====== ========== ========== ===========
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, l996 & 1995
(Unaudited)
1996 1995
_________ _________
Cash Flows from Operating Activities
Net Income (Loss) $ 404,740 $ (88,073)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in) Operating Activities:
Depreciation 3,444 498
Amortization 12,155 12,064
Change in Assets & Liabilities
(Increase) Decrease in:
Accounts Receivable (245,017) (291)
Other Receivables (27,996) (2,479)
Inventory (106,827) 1,474
Commission Advance 0 1,500
Prepaid Expenses (2,613) 3,500
Deposits (2,813) 0
Increase (Decrease) in:
Accounts Payable 148,732 25,920
Accrued Expenses (1,852) 0
Accrued Income Taxes 59,400 (1,083)
_________ ________
Net Cash Provided by (Used in) Operating Activities 241,353 (46,970)
_________ _________
Cash Flows from Investing Activities
Purchase of Investments (291,610) (6,400)
Purchase of Property & Equipment (16,792) 0
_________ _________
Net Cash Used in Investing Activities (308,402) (6,400)
_________ _________
Cash Flows from Financing Activities
Cash Overdraft 0 (2,664)
Proceeds from Note Payable - Officer 0 83,007
Net Proceeds from Issuance of Common Stock 318,750 4,309
Principal Payments on Note Payable - Officer (60,371) 0
Principal Payments on Capital Lease Obligations (577) 0
_________ _________
Net Cash Provided by Financing Activities 257,802 84,652
_________ _________
Net Increase in Cash & Cash Equivalents 190,753 31,282
Cash & Cash Equivalents
Beginning 171,096 0
_________ _________
Ending $361,849 $ 31,282
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 & 1995
(UNAUDITED)
1996 1995
_________ _________
Supplemental Disclosures of Cash Flow Information
Cash Payments for Interest $ 530 $ 828
========= =========
Supplemental Schedule of Noncash Investing &
Financing Activities
Capital Lease Obligations Incurred for
Use of Equipment $ 7,375 $ 0
========= =========
Purchase of Investment Through
Issuance of Company Stock $ 178,080 $ 0
========= =========
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. Significant Accounting Policies
In the opinion of management, all normal recurring adjustments have been
reflected which are necessary for a fair statement of results for the
interim periods presented.
Nature of Business
D. H. Marketing & Consulting, Inc., a New York corporation, was organized
on January 4, 1994, and was actively engaged in business operations through
September 29, 1994. On September 29, 1994, the Company merged with D. H.
Marketing & Consulting, Inc., a Nevada corporation, incorporated under the
laws of the State of Nevada on September 8, 1994, for the purpose of
acquiring D. H. Marketing & Consulting, Inc., the New York corporation. The
Company is engaged in three main areas of business: marketing and
distributing of chemical burn cleansing solutions (the solutions have been
in use in Europe for five years); the purchase and sale of valuable and
rare stamps, coins, fine art, and other tangible asset collectibles; and
in a multi-level network marketing structure. The Company markets its
products throughout the continental United States and Canada.
Business Combination
In December 1994, the Company acquired for cash all of the outstanding
shares of Financial Communication Services, Inc. (F.C.S.) The total
acquisition cost was $10,000. F.C.S.'s only asset, a client and lead list,
is being amortized on a straight-line basis over five years.
The acquisition has been accounted for as a purchase and results of
operations of Financial Communication Services, Inc., since date of
acquisition are included in the consolidated financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Cash & Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
10
<PAGE>
D. H. MARKETING & CONSULTING, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
1. Significant Accounting Policies (Continued)
Inventory
The total inventory balance is comprised of collectibles and is valued at
the lower of cost or market on the specific identification basis.
Property & Equipment
Property and equipment are stated at cost. Major replacements and
betterments are capitalized while maintenance and repairs are expensed as
incurred.
Depreciation is provided generally on a straight-line basis over the
estimated service lives of the respective classes of property.
Other Assets
Organization expenses are recorded at cost and are being amortized on a
straight-line basis over five years. The expenses represent pre-
incorporation cost to establish the entity and develop various sales
venues.
Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number
of common shares outstanding during the respective periods. Outstanding
shares of common stock were 1,152,960 and 1,030,000 shares, respectively,
as of September 30, 1996, and September 30, 1995.
2. Related Party Transactions
Note Payable - Officer
The Company has an unsecured, non-interest bearing note payable to an
officer and shareholder of the Company in the amount of $14,000 at
September 30, 1996. The terms of this note provide for repayment of the
note at the discretion of the Company.
Purchases
During the nine months ended September 30, 1996, the Company purchased
$49,075 of collectibles from certain shareholders of the Company.
11
<PAGE>
D. H. MARKETING & CONSULTING. INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
3. Major Customer
During the nine months ended September 30, 1996 and 1995, no customer
accounted for a sales volume in excess of 10% of total sales.
4. Building Lease
On February 1, 1996, the Company entered into an agreement to lease a
building for two years. The future minimum lease payments required are as
follows:
Year Ending
September 30, Amount
_______________ __________
1997 $ 33,750
1998 13,125
_________
$ 46,875
=========
The Company is also responsible for maintenance and capital improvements,
and must carry property, fire, and casualty insurance.
5. Investments
On September 2, 1996, the Company purchased 42% of the outstanding stock of
a company involved in the manufacturing of electronic and electro-
mechanical assemblies. The Company paid $285,815 in cash and issued 8,960
shares of stock for a total investment of $463,895.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND
PLAN OF OPERATION.
Management's Discussion and Analysis
Overview
The Company's Initial Public Offering became effective with the Securities
Exchange Commission on August 11, 1995. The Company completed its Initial
Public Offering October 11, 1995, having sold 119,000 shares and received net
proceeds of $537,990.
The proceeds of the Initial Public Offering significantly increased the
Company's working capital, cash availability, inventory and general business
capabilities. Shares first traded on the NASD Bulletin Board on January 4,
1996 at $5 per share under the symbol "DHMK." At the close of business,
September 30, 1996, ending the third quarter of 1996, shares were traded at the
closing price of $24.
The Company is segmented into three distinct operations, consisting of the
network marketing division, the collectible division and the burn cleansing
solution division. At December 31, 1995, the Company's headquarters were
located in Tarrytown, New York, with regional offices in Vancouver, British
Columbia, Canada and Hawley, Pennsylvania. As of February 1, 1996, the Company
relocated its headquarters from Tarrytown, New York, to Milford, Pennsylvania.
Selected Financial Data
Sales 1995 1994
___________ ___________
Network Marketing $ 135,425 $ 0
Collectibles 58,500 0
Burn Cleansing Solution 50,541 44,200
Total Operating Revenue 245,466 44,200
Net Loss (186,082) (183,642)
Net Loss Per Share (.18) (.23)
1/1/96- 1/1/95-
Sales 6/30/96 6/30/95
__________ __________
Network Marketing $ 221,934 $ 8,200
Collectibles 376,996 0
Burn Cleansing Solution 20,813 28,728
Total Operating Revenue 589,749 36,926
Net Income (Loss) 186,174 (104,606)
Net Income (Loss) Per Share .16 (.14)
Liquidity
During 1995 and 1994, the first two years of operation, the Company invested
significant amounts of capital in formulating its business plan, establishing
market penetration and presence and preparing and completing its Initial Public
Offering. During this two-year period, the Company experienced insufficient
levels of sales to meet operating needs. This resulted in operating losses
for 1994 and 1995 of $183,657 and $192,852, respectively. The Company
supplemented cash availability by issuing stock in 1994 through a private
placement and in 1995 through the Initial Public Offering. Management believes
that as a result of the Initial Public Offering and increased revenues, the
Company now has adequate cash availability and income to satisfy present
operating needs. The Company posted operating income of $41,519, $140,095 and
$218,566 in the first, second and third quarters of 1996, respectively, which
would indicate management's expectations were correct.
Capital Resources
On September 30, 1996, the Company had $1,503,287 in total current assets, of
which $361,849 was held in cash and cash equivalents and $249,095 was held in
inventory at cost. Approximate total current assets at September 30, 1995 was
$61,870 of which $31,281 was held in cash and cash equivalents.
Cash Expenditures
Total general and administrative expenses increased from September 30, 1995 to
September 30, 1996 from $196,707 to $323,655. The most significant increases
were due to increased employment, advertising and general office activity.
During the third quarter of 1995, the Company's primary focus was on
establishing the appropriate structure of the Company, including work on the
Company's Initial Public Offering. Current priorities are concerned directly
with generating revenues through the sale of product and creating
profitability.
Long Term Debt/Current Liabilities
The Company has an unsecured, non-interest bearing note, payable to an officer
and shareholder of the Company in the amount of $14,000 at September 30, 1996.
The Company is currently satisfying the note in monthly installments of $2,000,
of which 7 payments remain. The Company has also leased office equipment, of
which $5,707 is included as long-term debt and $1,092 as current
liabilities.
Revenue
Total revenue increased from September 30, 1995 to September 30 ,1996 from
$114,439 to $986,877 most significantly, as a result of the Company's
collectible and fine art division, representing $645,186 of total revenue.
Total revenue from the Company's network marketing division also increased
dramatically from $72,856 at September 30, 1995 to $354,179 at September
30, 1996. In the network marketing division, representatives qualify Retail
Sales Centers with items of intrinsic value, and earn commissions or products
as the system is being built around them.
Items that can be purchased include jewelry, authentic leafs from the First
Edition Noah Webster's American Dictionary of the English Language; authentic
leafs from the original issue of the King James Bible and collectible
numismatic Morgan Silver Dollars. Representatives then earn commissions
corresponding to the sales volume generated at their portion of the network.
The network marketing division was in operation approximately 60% of the 1995
fiscal year. Therefore, principles expect significantly increased revenues in
1996 from this division.
Total sales of the Company's burn cleansing solution remained moderate during
the third quarter. The Company stresses sales to Fortune 500 industrial
giants, which is an exhausting task, and sales are expected to increase as name
recognition and familiarity increase.
Extraordinary expenses relating to the initial formation of the company,
purchase of inventory, and Initial Public Offering, caused significant 1st and
2nd Quarter losses in 1995 in excess of $110,000 combined. Through the
incorporation of additional products and an increased focus on sales, the loss
for the 3rd Quarter substantially decreased to just over $7,000.
Now, having completed the Initial Public Offering, the Company's principles are
singularly focused on generating profitability by increasing revenues while
maintaining relative expenses. The Company currently maintains in excess of
$535,000 in retail inventory and over $360,000 in cash and cash equivalents.
The Company maintains a strong position to expand its current market share
and reap significant rewards for its investors, principals, employees and
shareholders.
Plan of Operation
D. H. Marketing & Consulting, Inc. (the "Company") was incorporated under the
laws of the State of Nevada on September 8, 1994 for the purpose of acquiring
D. H. Marketing & Consulting, Inc., a New York corporation (D. H. Marketing-New
York). D. H. Marketing-New York was organized on January 6, 1994 and has been
actively engaged in business operations since that time. On September 29,
1994, the Company entered into a merger agreement with D. H. Marketing-New York
in a transaction in which the Company was the surviving entity. The Company is
segmented into three distinct operations, consisting of the burn-cleansing
solution division, network marketing division and the collectible division.
Burn-Cleansing Solution Division
In 1986, the PREVOR Laboratory of Valmondois, France, developed a revolutionary
chemical burn-cleansing solution. Unlike current rinsing solutions that dilute
chemicals while they continue to burn the skin and eyes, diphoterine absorbs
the burning molecules on contact, preventing additional exposure to the skin.
Diphoterine is effective on the skin and eyes for burns resulting from caustic
acids, bases and solvent. Testimonies from European Fortune 500 Companies
credit diphoterine for improving productivity, decreasing absence, preventing
permanent injury and improving employee safety.
Diphoterine is effective on the skin and eyes for burns caused by all acids,
bases and caustic solvents except white phosphor and hydrofluoric acid.
Hexafluorine was developed specifically for use against burns caused by hydro-
fluoric acid. Both cleansing solutions have been in use in Europe for five
years. European users include Rohm and Haas, IBM, Proctor and Gamble, BASF and
DuPont. A Rhone Poulenc five year study showed use of diphoterine decreased
both the number of chemical spatters reported and the number of employees
requiring emergency treatment due to chemical burns.
Any employee exposed to acids, bases and caustic solvents is at risk of being
injured as a result of a chemical spatter. Current good manufacturing
practices require cleansing solutions be in close proximity to these employees.
But current solutions dilute and wash away only some of the chemical while the
remaining chemical continues to attack the body, causing permanent injury and
scarring. Diphoterine and hexafluorine are chemical burn-cleansing solutions
that will absorb all the caustic chemical, normalizing pH levels and stop the
burning within seconds.
There were 60,000 individuals in 1993 requiring emergency treatment due to
chemical burns at an average cost of over $50,000. The Company believes that
use of diphoterine and hexafluorine in the work place will decrease the number
of individuals permanently injured from chemical spatters.
Network Marketing Division
During the second quarter of 1995, The Company became a Representative within
Universal Network, Inc,'s Network Marketing system. In the system,
representatives sell products and qualify retail sales centers with items of
intrinsic and/or collectible value. In addition, by purchasing these items,
representatives are also eligible to earn commission and/or sell products.
At the close of 1995, The Company had earned over $136,00 in commissions and
was the third largest dollar earner within the entire system. Due to the
number of representatives placed by the Company in 1995, sales and earnings are
expected to increase dramatically in 1996. Also, the Company will have a full
calendar year to earn commissions with this division, instead of approximately
60% in 1995. As expected, revenue from the network marketing division for the
third quarter of 1996 alone was over $132,245, totalling $354,179 for 1996
year-to-date. As a result, the Company is now the largest dollar earner
within Universal's Network Marketing System.
The network marketing system was developed and is governed by Universal
Network, Inc., which is unrelated to the Company, other than the representative
relationship described above.
Collectible Division
The Company's collectible and fine arts division is involved with the purchase
and sale of valuable and rare stamps, coins, fine art and other tangible asset
collectibles. Principals of the Company are experts at locating and
negotiating transactions to acquire investment-grade collectibles. Clients are
then able to purchase these items directly from the Company. By selecting only
the most valuable, highest quality, and collectible pieces, both the Company
and its clients profit from the transaction.
Total revenue for this division totaled just over $58,000 in 1995. The
division also commenced operations late in the second quarter of 1995. The
full calendar year will allow for increased revenue in 1996. In addition, the
capital currently held by the Company, allows D.H. Marketing to participate in
higher dollar value, equally profitable opportunities. Again, as expected,
revenue from the collectible division for the third quarter of 1996 alone was
over $268,190, totalling $645,186 for 1996 year-to-date.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and, to
the best of its knowledge, no such action by or against the Company has been
threatened.
ITEM 2. CHANGES IN SECURITIES
On August 30, 1996, the Company purchased 42% of the issued and outstanding
stock of Qualtronics Corporation, Inc., whereby it issued, in reliance upon
Section 4(2) of the Securities Act of 1933, to 28 shareholders of Qualtronics
Corporation, Inc. 8,960 shares of restricted common stock, valued at $19.875
per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits and Reports on Form 8-K (including related comments thereto) filed as
part of this report are listed below:
(a) Exhibits. The following exhibits are filed with or incorporated by
reference in this report.
The Exhibits required by Item 6 are incorporated by reference in the
Registration Statement File No. 33-91240 filed with the SEC on April 14, 1995
and Amendments No. 1 through 4 filed in connection therewith.
Exhibit Description and Method of Filing
No.
2.0 The Merger Agreement entered into by and between D.H. Marketing &
Consulting, Inc. a New York Corporation, and the Registrant, dated
September 29, 1994, filed with the Nevada Secretary of State,
November 10, 1994. (Filed with SEC on April 14, 1995, in
Registration Statement.)
3.0 Certificate of Incorporation of the Registrant, consisting of
Articles of Incorporation filed with the Secretary of State of the
State of Nevada on September 8, 1994. (Filed with SEC on April 14,
1995, in Registration Statement.)
3.1 By-Laws of the Registrant, dated September 8, 1994. (Filed with
SEC on April 14, 1995, in Registration Statement.)
3.2 Articles of Incorporation for FCS Financial Communication Services
Inc., filed in the Province of British Columbia, dated October 12,
1994. (Filed with SEC on April 14, 1995, in Registration
Statement.)
10.0 Engagement Letter between D.H. Marketing & Consulting, Inc., a
Nevada Corporation, and Max C. Tanner, Esquire, dated July 18,
1994. (Filed with SEC on April 14, 1995, in Registration
Statement.)
10.1 Stock Redemption Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and David D. Hagen, dated October 24,
1994. (Filed with SEC on April 14, 1995, in Registration
Statement.)
10.2 Distribution Agent Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and All Safety and Supply, dated August
17, 1994. (Filed with SEC on April 14, 1995, in Registration
Statement.)
10.3 Sales Agent Agreement between D.H. Marketing & Consulting, Inc., a
Nevada Corporation, and Jack Yee, dated July 6, 1994. (Filed with
SEC on April 14, 1995, in Registration Statement.)
10.4 Regional Sales Manager Agreement for the Western Territory between
D.H. Marketing & Consulting, Inc., a Nevada Corporation, and Billy
J. Richardson, dated June 24, 1994. (Filed with SEC on April 14,
1995, in Registration Statement.)
10.5 Regional Sales Manager Agreement for the Northwest Territory
between D.H. Marketing & Consulting, Inc., a Nevada Corporation,
and David J. Miller, dated August 8, 1994. (Filed with SEC on April
14, 1995, in Registration Statement.)
10.6 Marketing Agent Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and Leon Barnett & Associates. (Filed
with SEC on April 14, 1995, in Registration Statement.)
10.7 Distribution Agent Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and Demoore Products & Services.
(Filed with SEC on April 14, 1995, in Registration Statement.)
10.8 Promissory Note for the amount of $87,500.00 between D.H. Marketing
& Consulting, Inc., a Nevada Corporation, and David D. Hagen, dated
February 9, 1995. (Filed with SEC on April 14, 1995, in
Registration Statement.)
10.9 Distribution Agent Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and Hazmat Medical Associates, LTD.,
dated July 26, 1994. (Filed with SEC on April 14, 1995, in
Registration Statement.)
10.10 Regional Sales Manager Agreement for the Northeast Territory
between D.H. Marketing & Consulting, Inc., a Nevada Corporation and
David J. Miller, dated August 8, 1994. (Filed with SEC on April 14,
1995, in Registration Statement.)
10.11 Employment Contract Agreement between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and Steven Olivieri. (Filed with SEC
on April 14, 1995, in Registration Statement.)
10.12 Independent Contractor Agreement between D.H. Marketing & Consult-
ing, Inc., a Nevada Corporation and Stevie Holland. (Filed with
SEC on April 14, 1995, in Registration Statement.)
10.13 Installation and Support of Accounting System Contract and
Managerial Support Contract between D.H. Marketing & Consulting,
Inc., a Nevada Corporation, and Runes Corporation, a Pennsylvania
Corporation, dated December 8, 1994. (Filed with SEC on April 14,
1995, in Registration Statement.)
10.14 Amended Regional Sales Manager Agreement for the Western Territory
between D.H. Marketing & Consulting, Inc., a Nevada Corporation,
and Billy J. Richardson, dated February 21, 1995. (Filed with SEC
on April 14, 1995, in Registration Statement.)
10.15 Fund Escrow Agreement between Brighton Bank, and D.H. Marketing &
Consulting, Inc., a Nevada Corporation, dated May 1995. (Filed in
Amendment No. 1 to Registration Statement.)
10.16 Selected Dealer Agreement. (Filed in Amendment No. 1 to
Registration Statement.)
10.17 Selected Dealer Agreement - Revised. (Filed in Amendment No. 2 to
Registration Statement.)
23.1 Consent of Accountants, Niessen, Dunlap & Pritchard, P.C., dated
May 19, 1995, to the publication of their report, dated May 19,
1995. (Filed in Amendment No. 1 to Registration Statement.)
23.2 Consent of Accountants, Niessen, Dunlap & Pritchard, P.C., dated
May 19, 1995 to the publication of their report, dated May 19,
1995. (Filed in Amendment No. 1 to Registration Statement.)
23.3 Consent of Accountants, Niessen, Dunlap & Pritchard, P.C., dated
June 30, 1995, to the publication of their report, dated December
31, 1994. (Filed in Amendment No. 2 to the Registration
Statement.)
23.4 Consent of Accountants, Niessen, Dunlap & Pritchard, P.C., dated
August 3, 1995, to the publication of their report, dated December
31, 1994, and March 31, 1995 and 1994. (Filed with Amendment No. 3
to the Registration Statement.)
23.5 Consent of the Accountants, Niessen, Dunlap & Pritchard, P.C.,
dated August 8, 1995, to the publications of their report, dated
December 31, 1994, and March 31, 1995 & 1994. (Filed with Amendment
No. 4 to the Registration Statement.)
23.6 Consent of the Accountants, Niessen, Dunlap & Pritchard, P.C.,
dated March 15, 1996 to the publications of their report, dated
February 26, 1996 and December 31, 1995 & 1994. (Filed with SEC on
April 1, 1996 Form 10-KSB.)
23.7 Consent, dated April 26, 1996, of the Accountants, Niessen, Dunlap
& Pritchard, P.C., to the publication of their report, dated April
4, 1996. (Filed with SEC on May 1, 1996 Form 10-QSB.)
23.8 Consent, dated July 30, 1996, of the Accountants, Niessen, Dunlap &
Pritchard, P.C., to the publication of their report, dated July 8,
1996. (Filed with SEC on August 7, 1996 Form 10-QSB and on October
16, 1996 Form 10-QSB/A.)
23.9 Consent, dated October 21, 1996, of the Accountants, Niessen,
Dunlap & Pritchard, P.C., to the publication of their report, dated
October 3, 1996, in this Form 10-QSB.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K have been filed during the quarter ending 9/30/96.
SIGNATURES
In Accordance to the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
D.H. Marketing & Consulting, Inc.
A Nevada Corporation
November 5, 1996 By:/s/ DAVID D. HAGEN
Date David D. Hagen
President, Treasurer and Chief Financial Officer
Niessen, Dunlap & Pritchard, P.C.
Certified Public Accountants & Business Consultants
590 Bethlehem Pike, P.O. Box 606, Colmar, PA 18915-0606
(215) 997-7200, Fax (215) 997-7295
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report, dated October 3, 1996, in this
quarterly report on Form 10-QSB for D.H. Marketing & Consulting, Inc.
/s/ NIESSEN, DUNLAP & PRITCHARD, P.C.
NIESSEN, DUNLAP & PRITCHARD, P.C.
Colmar, Pa.
October 21, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL REPORT DATED SEPTEMBER 30, 1996 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 362
<SECURITIES> 0
<RECEIVABLES> 344
<ALLOWANCES> 3
<INVENTORY> 249
<CURRENT-ASSETS> 956
<PP&E> 28
<DEPRECIATION> 4
<TOTAL-ASSETS> 1504
<CURRENT-LIABILITIES> 231
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1504
<SALES> 411
<TOTAL-REVENUES> 397
<CGS> 113
<TOTAL-COSTS> 113
<OTHER-EXPENSES> 109
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 175
<INCOME-TAX> 59
<INCOME-CONTINUING> 175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
