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 March 31, 1998
[ ] 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.)
300 Keystone Street, Hawley, PA 18428 (717) 226-8515
(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 March 31, 1998 the issuer had 6,005,464 shares of common stock outstanding, 3,923,989 shares of which are restricted and 2,081,475 shares are free trading. As of March 31, 1998 the issuer had 715 shareholders.
Transitional Small Business Disclosure Format (Check one); Yes [ ] No [X]
PART I- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
See attached Financial Statements for the quarter ending March 31, 1998.
D H Marketing & Consulting, Inc. And Subsidiaries
Consolidated Financial Statements
March 31, 1998 (unaudited)
and
December 31, 1997
CROUCH, BIERWOLF & CHISHOLM
Certified Public Accountants
50 West Broadway, Suite 1130
Salt Lake City, Utah 84101
Office (801) 363-1175
Fax (801) 363-0615
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
D H Marketing and Consulting, Inc.
Hawley, Pennsylvania
The accompanying balance sheets as of March 31, 1998 and the related statements of operations, and cash flows for the three months ended March 31, 1998 and 1997 were not audited by us and, accordingly, we do not express an opinion on them.
The accompanying balance sheet as of December 31, 1997 was audited by us and we expressed an unqualified opinion on it in our report dated February 13, 1998.
/s/ CROUCH, BIERWOLF & CHISHOLM May 19, 1998 |
D H Marketing & Consulting, Inc. Consolidated Balance Sheets
March 31 December 31
1998 1997
____________ _____________
CURRENT ASSETS (unaudited)
Cash and Cash Equivalents $ 289,678 $ 706,609
Accounts receivable, Net of Allowance
1997 $29,859; 1998 $29,859 255,710 245,877
Other Receivables - 140,620
Tax Refunds 307,144 307,144
Inventory 5,373,340 5,559,132
Prepaid Expenses 3,806 17,584
____________ ___________
Total Current Assets 6,229,678 6,976,966
____________ ___________
INVESTMENTS
Investments - Other 48,903 48,903
____________ ___________
Total Investments 48,903 48,903
____________ ___________
PROPERTY & EQUIPMENT
Office Furniture and Fixtures 17,784 78,069
Automobiles - 19,601
Equipment 177,809 801,882
Leasehold Improvements 17,668 37,664
Accumulated Depreciation (87,440) (515,354)
____________ ___________
Net Property & Equipment 125,821 421,862
____________ ___________
OTHER ASSETS
Organization Costs 72,030 71,429
Client Lists 10,000 10,000
____________ ___________
82,030 81,429
Less Accumulated Amortization (67,292) (63,271)
____________ ___________
14,738 18,158
Deferred Tax Assets - 4,053
Deposits and Other Assets 46,430 49,363
Goodwill - 153,177
____________ ___________
Net Other Assets 61,168 224,751
____________ ___________
TOTAL ASSETS $ 6,465,570 $ 7,672,482
============ ===========
|
The accompanying notes are an integral part of these financial statements
D H Marketing & Consulting, Inc. Consolidated Balance Sheets continued
March 31 December 31
CURRENT LIABILITIES 1998 1997
____________ ____________
(unaudited)
Accounts payable $ 110,000 $ 101,753
Sales Tax Payable 312,509 319,283
Accrued Wages 10,180 132,240
Accrued and Withheld Payroll Taxes 2,256 22,323
Accrued expenses 44,901 46,443
Current Obligations Under Capital Lease 2,700 28,309
Current portion of Notes Payable - 190,476
____________ _____________
Total Current Liabilities 482,546 840,827
____________ _____________
LONG-TERM DEBT
Deferred tax liability 10,812 -
Obligation Under Capital Lease 8,229 42,149
____________ ____________
Total Long-Term Debt 19,041 42,149
____________ ____________
Total Liabilities 501,587 882,976
____________ ____________
STOCKHOLDERS' EQUITY
Common stock, $.001 Par Value,
Authorized 75,000,000 Shares;
issued and outstanding 6,005,464
and 6,005,464 shares, respectively 6,005 6,005
Additional Paid-In Capital 6,768,822 6,768,822
Treasury Stock (1,352,656) (530,000)
Minority Interest - 13,282
Retained earnings 541,812 531,397
___________ ___________
Total Stockholders' Equity 5,963,983 6,789,506
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,465,570 $ 7,672,482
=========== ===========
|
The accompanying notes are an integral part of these financial statements
D H Marketing & Consulting, Inc. Consolidated Statements of Operations
For the three For the three
months ended months ended
March 31 March 31
1998 1997
_______________ ______________
SALES $ 950,339 $ 1,864,142
COST OF GOODS SOLD 505,259 793,281
_______________ ______________
GROSS PROFIT 445,080 1,070,861
_______________ ______________
OPERATING EXPENSES
General And Administrative Expenses 557,293 382,183
_______________ ______________
TOTAL OPERATING EXPENSES 557,293 382,183
_______________ ______________
OPERATING INCOME (LOSS) (112,213) 688,678
_______________ ______________
OTHER INCOME AND (EXPENSES)
Consulting Fees - 400,000
Other Income 18,563 (9,368)
Gain on Sale of Investments 108,625 -
_______________ ______________
Total Other Income and (Expenses) 127,188 390,632
_______________ ______________
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 14,975 1,079,310
_______________ ______________
PROVISION FOR INCOME TAXES
Federal 3,600 330,000
State 960 65,000
_______________ ______________
Total Income Taxes 4,560 395,000
_______________ ______________
INCOME BEFORE MINORITY INTEREST 10,415 684,310
Minority Interest in Net Loss of
Subsidiary - (615)
_______________ ______________
NET INCOME $ 10,415 $ 683,695
=============== ==============
NET INCOME PER SHARE $ .002 $ .18
=============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 6,005,464 3,819,874
=============== ==============
|
The accompanying notes are an integral part of these financial statements
D H Marketing & Consulting, Inc.
Consolidated Statements of Cash Flows
For the three For the three
months ended months ended
March 31 March 31
1998 1997
_______________ ______________
Cash Flows From Operating Activities
Net income (loss) $ 10,415 $ 683,695
Adjustments to Reconcile Net Income
(Loss) to Net Cash Used in Operating
Activities:
Depreciation 1,214 14,232
Amortization 4,021 10,885
Minority interest in subsidiary - 615
Receivables satisfied with return of
treasury stock (316,406) -
Gain on Sale of Investments (108,625) -
Change in Assets and Liabilities (Net
of effects of sale of QCI)
(Increase) Decrease in:
Accounts Receivable (106,345) (208,785)
Other Receivables (36,006) -
Inventory 126,767 (4,963)
Prepaid Expenses 27 (31,574)
Deposits (4,000) -
Increase/(decrease) in:
Accounts Payable 2,093 313,456
Accrued Expenses 228 26,745
Accrued Income Taxes - 203,500
_______________ ______________
Net Cash Provided (Used) by
Operating Activities (426,617) 1,007,806
_______________ ______________
Cash Flows from Investing Activities
Cash from short-term CD - 253,902
Purchase of short-term Investments
Certificates of Deposit - (250,000)
Purchase of Investments - (900,708)
Purchase of Property and Equipment - (5,849)
Cash from sale of investments 185,000 -
Cash acquired/(spun out) in subsidiaries (174,641) (26,496)
Net Cash Provided (Used) by
Investing Activities 10,359 (929,151)
_______________ ______________
Cash Flows from Financing Activities
Proceeds from debt financing - 99,731
Net Proceeds from Issuance of
Common Stock - -
Principal payments on debt financing - (16,371)
Principal Payments on Capital Lease
Obligation (673) -
_______________ ______________
Net Cash Provided (Used) by
Financing Activities (673) 83,360
_______________ ______________
Net Increase (Decrease) in Cash and
Cash Equivalents (Forwarded) (416,931) 162,015
_______________ ______________
|
The accompanying notes are an integral part of these financial statements
D H Marketing & Consulting, Inc. Consolidated Statements of Cash Flows
(Continued)
For the three For the three
months ended months ended
March 31 March 31
1998 1997
_______________ ______________
Net Increase (Decrease) in Cash and
Cash Equivalents (Forwarded) (416,931) 162,015
_______________ ______________
Cash and Cash Equivalents
Beginning 706,609 147,572
_______________ ______________
Ending $ 289,678 $ 309,587
=============== =============
Supplemental Disclosures of Cash
Flow Information:
Cash payments for interest $ 2,338 $ 13,906
=============== =============
Cash payments for income taxes $ 7,525 $ -
=============== =============
Supplemental Schedule of Noncash
Investing and Financing Activities
Purchase of Inventory through Issuance
of Company Stock $ - $ 4,425,000
=============== =============
Satisfaction of Receivables through
return of Treasury Stock $ 316,406 $ -
=============== =============
|
The accompanying notes are an integral part of these financial statements
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 1 - Summary of Significant Accounting Policies
a. 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, when 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, New York. The Company's operations consist of distribution of chemical burn cleansing solutions; the purchase and sale of valuable and rare stamps, coins, fine art, and other tangible collectibles; network marketing; and general consultation to and possible acquisition of small growth oriented companies. The Company markets its products throughout the United States, Canada and Europe.
Qualtronics Corporation, Inc.(QCI), a 97%-owned subsidiary, is a contract manufacturer, specializing in prototype and low volume electronic and electro-mechanical assemblies, utilizing surface mount and hybrid microcircuit technologies. Qualtronics' customers are predominately in northeastern U. S.
On December 30, 1997 the Company completed a share exchange with Universal Network, Inc. (UNI), wherein the Company issued 1,900,123 shares of common stock for the remaining 76% interest in UNI, thus making UNI a wholly owned subsidiary of the Company. UNI is engaged in the sale and distribution of fine art, jewelry, bank notes and other collectables. UNI distributes its products to distributors of the Company on a binary multi level marketing system.
Effective January 1, 1998 the Company sold it's 97% interest in QCI. No assets or operations of QCI for the first quarter 1998 have been reflected in these financial statements.
b. Principles of Consolidation
The consolidated financial statements include the accounts of DH Marketing and Consulting, its wholly-owned subsidiaries Acquisition and Sales, Inc. (ASI) and Financial Communication Services, Inc. (FCS), Qualtronics Corporation, Inc.(QCI), a 97%-owned subsidiary (at December 31, 1997 only) and Universal Network, Inc (UNI) a wholly owned subsidiary at December 30, 1997. All significant intercompany accounts and transactions have been eliminated in consolidation.
Before the acquisition of UNI at December 30, 1997 the Company accounted for its investment in Universal Network of America, Inc. by the equity method of accounting under which the Company's share of the net loss of the affiliate (24%) is recognized as an expense in the Company's statement of income.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 1 - Summary of Significant Accounting Policies (Continued)
c. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. Uninsured cash balances total $255,072 at December 31, 1997.
d. Property and 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.
e. Organization Costs
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. At December 31, 1997 and March 31, 1998, the gross unamortized balance was $72,030.
f. Client Lists
The Company acquired a client list for $10,000. These costs are being amortized on a striaght-line basis over five years.
g. The Company recorded goodwill in the acquisition of QCI, due to the excess cost over the net book value of QCI. Goodwill is being amortized over 10 years on the straight-line method. At March 31, 1998 goodwill was written off along with all other assets and liabilities of QCI.
h. Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets and liabilities which represent financial instruments (none of which are held for trading purposes) approximate the carrying values of such amounts.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
i. Provision for Income taxes
Deferred income taxes arise from timing differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or noncurrent, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from timing differences that are not related to an asset or liability are classified as current or noncurrent, depending on the periods in which the timing differences are expected to reverse.
The principal sources of timing differences are different depreciation methods used for financial accounting and tax purposes.
The deferred tax liability and the provision for income taxes is calculated as follows at December 31, 1997 and March 31, 1998:
December 31 March 31
1997 1998
___________ ____________
Current provision for income taxes:
Federal $ 113,056 $ 3,600
State 52,061 960
Deferred - -
___________ ____________
Total provision for income taxes $ 165,117 $ 4,560
=========== ============
Deferred tax liability arising from:
Acquisition of subsidiaries:
QCI-depreciation differences 32,458 -
UNI-depreciation differences 10,812 10,812
___________ ____________
Deferred tax liability 43,270 10,812
___________ ____________
Deferred tax assets-current:
Net operating loss carryforward (47,323) -
___________ ____________
Net deferred tax asset $ (4,053) $ 10,812
=========== ============
|
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
j. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. In these financial statements, assets, liabilities and earnings involve extensive reliance on managements estimates. Actual results could differ from those estimates.
k. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.
NOTE 2 - Inventory
Inventories consisted of the following:
December 31 March 31
1997 1998
____________ ___________
Artwork and Collectible $ 5,500,107 $ 5,373,340
Work in Process and Raw Materials -
Qualtronics Corporation, Inc. 59,025 -
____________ ___________
$ 5,559,132 $ 5,373,340
============ ===========
|
Artwork and collectibles are valued on a specific identified cost basis, while other inventory is valued on a first-in, first-out basis at the lower of cost or market.
Inventory with a value of $2,662,000 was acquired by the issuance of Company common stock during the period January 1, 1997, to December 31, 1997. Due to the acquisition of UNI by the Company, UNI's inventory held at December 30, 1997 which was purchased from the Company was valued at the Company's cost (predecessor cost).
NOTE 3 - Qualtronics Corporation, Inc.
On January 9, 1997, the Company acquired an additional 55% of the outstanding common stock of Qualtronics Corporation, Inc. The Company currently owns 97% of the stock of Qualtronics Corporation, Inc. The full year results of operation of QCI have been included in these consolidated financial statements since there is minimal difference from January 9, 1997. Effective January 1, 1998 the Company sold all interest in QCI for $185,000 and the return of 50,000 shares of D H Marketing stock. All assets, liabilities and operations of QCI have been excluded in these consolidated statements at March 31, 1998.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 4 - Lines of Credit
On March 20, 1997, the Company entered into two line of credit agreements with a bank, due on demand, which permited borrowing up to 250,000 on each line. At December 31, 1997, the outstanding balance of both lines are $0, and the lines of credit have been closed.
NOTE 5 - Investment in Universal Network of America, Inc.
The following pro forma information combines the results of the Company and Universal Network of America, Inc. as if the acquisition had occurred at the beginning of the periods presented.
December 31,
_________________________
1997 1996
_____________ _____________
(unaudited)
Sales $ 8,948,363 $ 11,480,589
Cost of Goods Sold 3,336,793 3,497,613
_____________ _____________
Gross Profit 5,611,570 7,982,976
Selling Expenses 2,984,684 5,766,394
General and Administrative Expenses 3,632,510 1,840,487
Other Income (Expenses) 537,095 261,799
_____________ _____________
Income Before Income Taxes and Minority
Interest in Net Income of Subsidiary (468,529) 637,894
Income Tax - 233,000
_____________ _____________
Income Before Minority Interest in Net
Income of Subsidiary (468,529) 404,894
Minority Interest in Net Income of
Subsidiary (2,196) (1,152)
_____________ _____________
Net Income $ (470,725) $ 403,742
============= =============
Net Income Per Share $ (.08) $ 0.08
============= =============
Weighted Average Number of Common Shares 5,857,111 5,306,005
============= =============
|
Universal Network of America, Inc., has suffered cumulative losses through December 31, 1997, of $(1,798,909).
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 6 - Related Party Transaction
During the period January 1, 1997 to December 31, 1997, the Company had various transactions with UNI which included: receipt of consulting income of $600,000, sales of collectibles of $4,986,554, and receipt of other payments of income of $231,400. Because these revenue were generated prior to the acquisition of UNI they have not been eliminated in the consolidation. The sales of the Company and the inventory of UNI on hand at December 30, 1997 was adjusted at the acquisition date. (See Note 2).
The Company sold collectibles in the amount of $1,631,550 to Frama, Inc., a shareholder during the twelve-month period ended December 31, 1997. The shareholder paid for this transaction with the surrender of shares of D. H. Marketing & Consulting, Inc., common stock and the surrender of other investments. The Company also sold this shareholder a mortgage option which was paid for with shares of D. H. Marketing & Consulting common stock, shares of common stock in UNI, and $200,000 in cash.
The Company paid $38,500 to Runes Corporation for management fees. Runes is owned by a shareholder of the Company.
During the year the Company sold merchandise to additional companies that are shareholders of the Company in the amount of $2,198,500. These companies are in the art and collectibles industry and invested in the Company's stock prior to the sale of merchandise. Approximately 88% of the Company's revenue was generated from either UNI or other shareholders of the Company. The shareholders and amounts are as follows:
David Hagen $ 11,000 Ildico, LTD 350,000 Fode Diope 1,631,250 Phillippe Hababou 206,250 |
NOTE 7 - Common Stock Split
On February 24, 1997, the Company recorded a three-for-one stock split of the Company's common stock to shareholders of record on that date. All per share information has been retroactively restated for the stock split. Authorized shares have been increased to 75,000,000 shares.
NOTE 8 - Stock Options
On September 6, 1996, the Company made available to key employees a plan for granting options on the Company's stock. The options are for a three-year period from September 6, 1996. Such options are fully vested when exercised. The options will exist for restricted securities which typically require the shareholder to hold for a period of two years before they may be sold, in whole or in part. Options numbering 165,000 have been granted, exercisable into an equal number of shares of common restricted stock at an exercise price of $6 7/8 per share, the closing price of the publicly-traded shares as of September 6, 1996.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 8 - Stock Options (continued)
On January 7, 1997, 1,200,000 options were granted to certain key employees of the Company. The options are for a three-year period from January 7, 1997. These options are for restricted securities, are fully vested to the employee, and are exercisable into shares of common restricted stock at $8.92 per share.
On January 13, 1997, 750,000 options were granted to a certain individual for a five year period from January 13, 1997. These options are for restricted securities, are fully vested to the individual, and are exercisable into shares of common restricted at $9 per share.
On June 13, 1997, the Board of Directors authorized a transfer of an employees options to purchase 45,000 shares of stock at $8.917 per share. In addition a transfer of 750,000 option to purchase stock at $9 was authorized.
On October 6, 1997 the board authorized the transfer of the afore mention 165,000 options and the 1,200,000 options. These options were all canceled subsequently on January 19, 1998.
September 6, 1996 165,000
January 7, 1997 1,200,000
January 13, 1997 750,000
_____________
2,115,000
=============
|
No options were exercised, forfeited, or expired during the period January 1, 1997, to December 31, 1997. The weighted- average price for the above-noted options is $8.95 and $6.88 for 1997 and 1996, respectively.
At December 31, 1997, the Company's stock option plan was accounted for based upon APB Opinion No. 25 and related interpretations. Accordingly, no compensation cost has been recognized for options under these plans. Had compensation cost for the plan been determined based on the grant date and fair values of options, and estimated options to be exercised, reported net income and earnings per share would have been reduced. Management does not believe any of the current options will be exercised.
The fair value of the stock options granted during 1996 and
1997 were determined using the Black-Scholes option pricing
model and the following assumptions for 1996 and 1997:
risk-free interest rates of 6.02% and 6.55%; expected
options life of 3 years and 4 years; and volatility of 35%
and 25% with no dividend yield in either year.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 9 - Commitments and Contingencies
Qualtronics Corporation, Inc., leases its facility under a lease that expires on November 30, 2002. The lease provides that, in addition to the monthly rent, the lessee pay 16.64% of the cost of real estate taxes, all risk insurance, and common area charges. These costs will be considered as additional rent. The Company will also pay the cost of utilities.
DHMC is committed to a lease for office space through January 31, 1999, with monthly lease payments of $400.
UNI is committed to two spaces for office and warehouse facilities through November 30, 1998 on the office and April 30, 1999 on the warehouse. Monthly rent on these facilities total $5,596.
The total future minimum rental commitment at December 31, 1997, under these leases is $538,032, which is due as follows:
Year Ending
December 31, Amount
____________ _____________
1998 $ 162,174
1999 102,368
2000 93,768
2001 93,768
2002 85,954
____________
$ 538,032
============
|
Rent expense for the year ended December 31, 1997 is $97,121.
With the acquisition of UNI, the company received a sales tax liability of approximately $319,000. These sales taxes are delinquent, and the sales tax reports have yet to be filed. Additional penalties may be assessed by the taxing authorities, for this delinquency. Any punitive action by the taxing authorities have not been reflected in these financial statements.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 10 - Segment Data
For the year ended December 31, 1997 and 1996, the Company had four reportable industry segments: (i) network marketing, (ii) collectibles, (iii) chemical burn cleansing solutions, and (iv) acquisitions and consulting.
Year Year
Ended Ended
December 31, December 31,
1997 1996
______________ _____________
Sales (Net of Discounts)
Multi-Level Network Marketing $ 483,000 $ 556,393
Collectibles 2,035,611 1,172,698
Burn Cleansing Solution 38,547 38,265
Mechanical Assemblies 2,503,684 -
______________ _____________
5,060,842 1,767,356
Acquisitions and Consulting 448,200 250,000
______________ _____________
Consolidated $ 5,509,042 $ 2,017,356
============== =============
Operating Income (Loss)
Multi-level Network Marketing $ 410,787 $ 501,039
Collectibles 719,591 613,598
Burn Cleansing Solution 19,290 12,124
Acquisitions and Consulting 448,200 252,825
Mechanical Assemblies 110,682 -
______________ _____________
Consolidated 1,708,550 1,379,586
Other Income 100,612 13,221
General Corporate Expenses (1,378,799) (474,093)
Interest Expense (45,784) (744)
______________ _____________
Net Income (Loss) Before Income
Taxes $ 384,579 $ 917,970
============== =============
Accounts and Other Receivables
Multi-Level Network Marketing $ 140,621 467,506
Collectibles 2,598 39,825
Burn Cleansing Solution - -
Acquisitions and Consulting - 100,000
Mechanical Assemblies 273,138 -
______________ _____________
Consolidated 416,357 607,331
Corporate - 2,069
______________ _____________
Total Accounts and Other
Receivables $ 416,357 $ 609,400
============== =============
Identifiable Assets
Multi-Level Network Marketing $ 3,954,607 $ 487,947
|
NOTE 10 - Segment Data (continued)
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
Year Year
Ended Ended
December 31, December 31,
1997 1996
______________ _____________
Collectibles 2,164,821 536,601
Burn Cleansing Solution - 2,871
Acquisitions and Consulting 48,903 466,720
Mechanical Assemblies 836,579 -
______________ _____________
Consolidated 7,004,910 1,494,139
Corporate Assets 667,574 557,688
______________ _____________
Total Assets at Period End $ 7,672,484 $ 2,051,827
============== =============
NOTE 11 - Note Payable
Long Term Liabilities are detailed in the following
schedules as of December 31, 1997 and 1998.
Note payable is detailed as follows: 1997 1998
Note payable to a Bank, principle payments of _________ ________
$2,976 plus interest through April 2003, bears
interest at 10.5%, secured by equipment and
inventory. $ 190,476 $ -
========= ========
During 1996, the ownership of the Company changed without
prior approval from the bank. This transaction resulted in
the loan being in default. As of February 13, 1998, the
bank has made no demand for repayment.
If no demand is made, future minimum principal payments on
this note are as follows:
Year Ending
December 31, Amount
____________ _____________
1998 $ 35,714
1999 35,714
2000 35,714
2001 35,714
2002 and thereafter 47,620
_____________
$ 190,476
=============
|
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 12 - Obligations Under Capital Lease
Capital lease obligations are detailed in the following schedule as of December 31, 1997 and March 31, 1998:
December 31, March 31,
1997 1998
_____________ _____________
Capital lease obligation to a corporation
for equipment, lease payments due
monthly of $2,116 through March 2000,
bears interest at 10.5%, secured by
equipment. $ 49,549 $ -
Capital lease obligation to a corporation
for copying equipment, lease payments due
monthly of $177 through September 1999,
bears interest at 20.58%, secured by
equipment. 2,975 -
Capital lease obligation to a corporation
for equipment, lease payments due
monthly of $264 through March 2000,
bears interest at 10.5%, secured by
equipment. 6,333 -
Capital lease obligation to a corporation
for office equipment, lease payments due
monthly of $158 through February 2001,
bears interest at 12.7%, secured by office
equipment. 5,412 5,108
Capital lease obligation to a corporation
for a copier, lease payments due
monthly of $210 through March 2001, bears
interest at 17.6%, secured by copier
equipment. 6,189 5,821
____________ _____________
Total Lease Obligations 70,458 10,929
____________ _____________
Less current portion 28,309 2,700
____________ _____________
Net Long Term Lease Obligation $ 42,149 $ 8,229
============ =============
|
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 12 - Obligations Under Capital Lease (continued)
Future minimum lease payments are as follows:
December 31, March 31,
1997 1998
____________ ____________
1998 $ 35,100 $ 4,416
1999 34,569 4,416
2000 11,556 4,258
2001 946 -
____________ _____________
82,171 13,090
Less portion representing interest (11,713) (2,161)
____________ _____________
Total $ 70,458 $ 10,929
============ =============
Leased assets are as follows:
December 31, March 31,
1997 1998
____________ _____________
Leased Equipment 129,229 16,696
Accumulated Depreciation (48,610) (6,678)
____________ _____________
Total Net Leased Equipment $ 80,619 $ 10,018
============ =============
|
NOTE 13 - Retirement Plan (401K)
The Company sponsors a 401(k) deferred salary savings plan which is a qualified defined contribution plan. All employees of the Company are eligible to participate in the plan on January 1 and July 1 following their completion of one year of service and attaining age 21. Pursuant to this plan, employees can contribute up to 15% of their compensation to the plan. The Company, at the discretion of the Board of Directors, can match the employee's contributions. For the years 1997 and 1996, the Company matched 50% of the employee's contributions up to 5% each year. The Company's Board of Directors has the discretion to contribute up to a maximum of 20% of employee compensation, which includes employee deferrals and Company contributions. The retirement plan was sponsored by QCI, therefore at March 31, 1998 no plan exists for the Company.
D H MARKETING & CONSULTING, INC.
Notes to the Financial Statements
December 31, 1997 and March 31, 1998
NOTE 14 - Major Customers and Suppliers
During the years ended December 31, 1997 and 1996, QCI had the following major customers from which the earned revenues were in excess of 10% of total sales as follows:
Amount of Net Sales
Year Ended December 31,
_______________________________
Customer 1997 1996
__________ ______________ ____________
A 906,069 267,412
B 522,268 366,160
C 375,916 344,964
|
A part of the Company's business is dependent upon the availability of burn cleansing solution available from a sole provider. At the present time, the Company does not have a signed exclusive sales agreement with this supplier. It is anticipated that an exclusive sales agreement will be signed by the Company and the supplier in the near future. The Company has been the only marketing agent for the supplier in the United States, For the years ended December 31, 1997 and 1996, all purchases of burn cleansing solution sold were from this supplier. At December 31, 1997 and 1996, there was no payable due the supplier.
NOTE 15 - Subsequent Events
On February 5, 1998, the Company signed an agreement to transfer all of its interest in the stock of QCI to Runes, Corporation, a shareholder. In consideration of the transfer, the Company is to receive $185,000 and 60,000 shares of DH Marketing common stock. Summary data of QCI at December 31, 1997 is as follows:
Current Assets $ 520,555
Property & Equipment 294,226
Other Assets 21,798
Total Assets 836,578
Current Liabilities 180,230
Long Term Debt 213,618
Stockholders Equity 442,730
Total Liabilities & Stockholders'
Equity 836,578
Net Sales 2,504,095
Gross Profit 1,245,728
General and Administrative Expenses 1,118,806
Other Income (expenses) (29,178)
___________
Net Income $ 110,383
===========
|
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
Management's Discussion and Analysis
Overview
D. H. Marketing & Consulting, Inc.'s (the "Company") 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 OTC Bulletin Board on January 4, 1996 at $5 per share under the symbol "DHMK."
On February 25, 1997, the Company undertook a three for one forward split of its common stock and, as a result of the stock split, is now traded under the symbol "DHMG." At the close of business, March 31, 1998, ending the first quarter of 1998, shares were traded at the closing price of 4 3/16.
The Company, in the past, was segmented into four distinct operations,
consisting of the
Network Marketing Division, the Collectible Division, the Burn Cleansing
Solution Division and the Acquisitions & Consulting Division. The Company has
since, in this quarter now ended, divested itself of all business activities
that do not relate to the Company's primary business, the sale of tangible
asset collectibles, especially as to how that business focus relates to the
Company's wholly owned subsidiary Universal Network of America, Inc. and that
company's operating subsidiary Universal Network, Inc.
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. During the fourth quarter
of 1996, the Company opened a West Coast Relations Office in Las Vegas,
Nevada and, in the early part of the second quarter of 1997,
reopened its regional office in Vancouver, British Columbia. The Company
closed its West Coast Relations Office in Las Vegas, Nevada in December, 1997
and relocated the headquarters from Milford, Pennsylvania to Hawley,
Pennsylvania on February 1, 1998.
The Company was, until February 5, 1998, a 97% equity owner of Qualtronics
Corporation, Inc. ("QCI"), a contract manufacturer of electronic and
electromechanical assemblies based in
Allentown, Pennsylvania.
The Company is also a 100% equity owner of Universal Network of America, Inc. ("UNAI"), a direct sales organization distributing various tangible asset collectibles through Independent Distributors. UNAI is based in Sarasota, Florida and operates through its subsidiary Universal Network, Inc.
Selected Financial Data
1/1/98- 1/1/97-
Sales 3/31/98 3/31/97
(unaudited) (unaudited)
___________ ___________
Sales $ 950,339 $ 1,864,142
Cost of Goods Sold 505,259 793,281
Net Income 10,415 683,695
Net Income Per Share $ .002 $ .18
Weighted Average Number of Common Shares 6,005,464 3,819,874
|
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 continuing business operations, the Company now has adequate cash availability and income to satisfy present operating needs. The Company posted net income of $684,970 in 1996 and $216,151 in 1997.
The Company has recently posted net income of $10,415 in the first quarter of 1998 and has recorded Total Current Assets of $6,229,678 for the same period. In addition, Total Stockholders' Equity at March 31, 1998 was $5,963,983.
Capital Resources
On March 31, 1998, the Company had recorded Total Current Assets of $6,229,678, of which $289,678 was held in cash and cash equivalents and $5,373,340 was held in inventory at cost. Approximate Total Current Assets at March 31, 1997 was $6,778,860 of which $559,587 was held in cash and cash equivalents.
Cash Expenditures
Total general and administrative expenses increased from $382,183 on March 31, 1997 to $557,293 on March 31, 1998. The most significant increases were due to the increased activities of management as it related to the Company's divestiture of unrelated businesses and assimilation of its subsidiary, Universal Network of America, Inc., acquired in December 1997. In addition, legal and professional expenses increased so the Company may reply to a formal order of investigation being conducted by the United States Securities and Exchange Commission, with which the Company's management is co-operating.
Long-Term Debt/Current Liabilities
The Company has satisfactorily retired all Long-Term Debt with the exception of two(2) Capital Leases for Office Equipment that totaled approximately $10,929 in current and long-term debt.
Revenue
Total revenue, less sales discounts, decreased from March 31, 1997 to March 31, 1998 from $1,864,142 to $950,339. Management of the Company points to key restructuring projects and corresponding decreased sales activity related to the Company's assimilation of its subsidiary Universal Network of America, Inc. for reasons of the reduced sales activity. Furthermore, current sales data does not include the sales of the Company's previously owned subsidiary, Qualtronics Corporation, Inc., which had approximately $400,000 of revenue in the quarter ending March 31, 1996 (exact segment data is unavailable at the time of this filing).
In the network marketing division, operated and governed by the Company's subsidiary Universal Network, Inc., representatives qualify Retail Sales Centers with items of intrinsic value, and earn commissions or products.
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.
Universal Network, Inc. has also introduced in this past quarter a new consumable line of health and beauty products for both men and women. The "Universal Collection" contains 24k gold flakes within the aloe vera based products.
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 has been segmented into four distinct operations, consisting of the Burn Cleansing Solution Division, Network Marketing Division, the Collectible Division and the Acquisitions & Consulting Division. The Company has since, in this quarter now ended, divested itself of all business activities that do not relate to the Company's primary business, the sale of tangible asset collectibles, especially as to how that business focus relates to the Company's wholly owned subsidiary Universal Network of America, Inc. and that company's operating subsidiary Universal Network, Inc.
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, diphoterine absorbs the burning molecules on contact, preventing additional exposure to the skin. Diphoterine is effective on the skin 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 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 hydrofluoric acid. Both cleansing solutions have been in use in Europe for seven 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.
This division was divested in the first quarter of 1998 to Safe-Stride of Washington located in Puyallup, Washington in exchange for 10% of the gross revenue generated by the sale of Diphoterine and Hexafluorine ad infinitum.
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. At the close of 1996, the Company had earned commissions in excess of $500,000 and was the largest dollar earner within the entire system.
The network marketing system was developed and is governed by Universal Network, Inc., also known as Universal Network of America, Inc., a subsidiary of the Company as of December 1997.
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 and over $1,172,698 in 1996. The substantial increase in sales was partially attributable to time. This division commenced activity already one half way through 1995. However, this increase in sales is more attributable to the Company's increased ability to participate in more sizable and profitable activities as a result of its increased asset base and cash position.
The December 1997 acquisition of Universal Network of America, Inc. will reduce activities of this division in current and future years. Sales activity of large packages of tangible asset collectibles will be entertained on an infrequent basis.
Acquisitions and Consulting Division
The Acquisitions and Consulting Division commenced activities late in the third quarter of 1996, acquiring 42% of Qualtronics Corporation, Inc., a contract manufacturer of electromechanical and electronic devices, and provided general consultation services.
This division was successful in acquiring an additional 55% of Qualtronics Corporation, Inc. in the first quarter of 1997, increasing its total holdings to 97%.
This division was also successful in acquiring 24% of Universal Network of America, Inc. throughout 1997 and the remaining 76% of the company in December 1997. The Company has since, on February 5, 1998, divested itself of its interest in Qualtronics Corporation, Inc.
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.
On October 4, 1996, the Company purchased items to be held in inventory, whereby it issued, in reliance upon Section 4(2) of the Securities Act of 1933, 13,487 shares of restricted common stock to nine individuals, valued at $27 per share.
On January 8, 1997, the Company purchased 55% 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 one shareholder of Qualtronics
Corporation, Inc. 2,000 shares of restricted common stock, valued at $27
per share.
On January 13, 1997, the Company purchased items to be held in inventory, whereby it issued, in reliance upon Section 4(2) of the Securities Act of 1933, 100,000 shares of restricted common stock, valued at $27 per share.
On March 6, 1997, the Company purchased items to be held in inventory, whereby it issued, in reliance upon Section 4(2) of the Securities Act of 1933, 150,000 shares of restricted common stock, valued at $11.50 per share.
On May 5, 1997, the Company purchased 450,000 common shares of Frama, Inc., whereby it issued, in reliance upon Section 4(2) of the Securities Act of 1933, 50,000 shares of restricted common stock, valued at $9 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to the security holders to be voted upon during the quarter ended March 31, 1998.
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 &
Consulting, 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.)
21. Subsidiaries of the Registrant: Financial Communication Services
Inc. (FCS) a corporation organized in the Province of British
Columbia, Canada. (Filed with the SEC on March 27, 1997 in Form
10-KSB.)
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. (Filed with the SEC on November 6, 1996 in
Form 10-QSB.)
23.10 Consent, dated March 12, 1997, of the Accountants, Niessen,
Dunlap & Pritchard, P.C., to the publication of their report,
dated January 29, 1997. (Filed with the SEC on March 27, 1997 in
Form 10-KSB.)
23.11 Consent, dated April 30, 1997, of the Accountants, Niessen,
Dunlap & Pritchard, P.C., to the publication of their report,
dated April 9, 1997. (Filed with the SEC on May 27, 1997 in Form
10-QSB/A.)
23.12 Consent, dated July 28, 1997, of the Accountants, Niessen, Dunlap
& Pritchard, P.C., to the publication of their report, dated
July 7, 1997. (Filed with the SEC on August 7, 1997 in Form
10-QSB.)
23.13 Consent, dated December 1, 1997, of the Accountants, Niessen,
Dunlap & Pritchard, P.C., to the publication of their report,
dated November 3, 1997. (Filed with the SEC in this Form 10-QSB.)
23.14 Consent, dated April 14, 1998, of the Accountants, Crouch,
Bierwolf & Chisholm, to the publication of their report, dated
February 13, 1998. (Filed with the SEC on April 15, 1998 in
Form 10-KSB.)
23.15 Consent, dated May 28, 1998, of the Accountants, Crouch, Bierwolf
& Chisholm, to the publication of their report, dated May 19,
1998. (Filed with the SEC in this Form 10-QSB.)
27.1 Financial Data Schedule for the 6-month period ending June 30,
1996. (Filed with the SEC on October 16, 1996 in Form 10-QSB/A.)
27.2 Financial Data Schedule for the 9-month period ending September
30, 1996. (Filed with the SEC on November 6, 1996 in Form
10-QSB.)
27.3 Financial Data Schedule for the 3-month period ending March 31,
1997. (Filed with the SEC on May 27, 1997 in Form 10-QSB/A.)
27.4 Financial Data Schedule for the 6-month period ending June 30,
1997. (Filed with the SEC on August 7, 1997 in Form 10-QSB.)
27.5 Financial Data Schedule for the 9-month period ending September
30, 1997. (Filed with the SEC on September 30, 1997 in Form
10-QSB.)
27.6 Financial Data Schedule for the year-ending December 31, 1997.
(Filed with the SEC on April 15, 1998 in Form 10-KSB.)
27.7 Financial Data Schedule for the 3-month period ending March 31,
1998. (Filed with the SEC in this Form 10-QSB.)
|
(b) REPORTS ON FORM 8-K.
The following reports were filed on Form 8-K during the quarter ending 3/31/98.
Date of Report Item Reported
____________________ _______________________________________________
12-15-97 The Company reported the engagement of a new
certifying accountant, Crouch, Bierwolf &
Chisholm.
12-30-97 The Company reported the acquisition of Universal
Network of America, Inc., a Nevada corporation.
1-28-98 The Company reported the election of two
additional directors, Ronald W. Meredith and
William Bartley.
2-5-98 The Company reported the disposition of its
ownership of Qualtronics Corporation.
|
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
5/28/98 By: /s/ DAVID D. HAGEN
Date David D. Hagen
President, Treasurer and Chief Financial Officer
|
Crouch, Bierwolf & Chisholm Certified Public Accountants 50 West Broadway, Suite 1130 Salt Lake City, Utah 84101 Office (801) 363-1175 Fax (801) 363-0615
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report, dated May 19, 1998, in this quarterly report on Form 10-QSB for D.H. Marketing & Consulting, Inc.
/s/ CROUCH, BIERWOLF & CHISHOLM
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
May 28, 1998
|
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS DATED MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997 (AUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| CIK: 0000933954 |
| NAME: D H MARKETING & CONSULTING INC |
| MULTIPLIER: 1000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1998 |
| PERIOD START | JAN 01 1998 |
| PERIOD END | MAR 31 1998 |
| CASH | 290 |
| SECURITIES | 0 |
| RECEIVABLES | 286 |
| ALLOWANCES | 30 |
| INVENTORY | 5373 |
| CURRENT ASSETS | 6230 |
| PP&E | 213 |
| DEPRECIATION | 87 |
| TOTAL ASSETS | 6466 |
| CURRENT LIABILITIES | 483 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 6 |
| OTHER SE | 5958 |
| TOTAL LIABILITY AND EQUITY | 6466 |
| SALES | 950 |
| TOTAL REVENUES | 950 |
| CGS | 505 |
| TOTAL COSTS | 505 |
| OTHER EXPENSES | 557 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 15 |
| INCOME TAX | 5 |
| INCOME CONTINUING | 10 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 10 |
| EPS PRIMARY | .002 |
| EPS DILUTED | .002 |