UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended 8/30/99
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number _______________________________________
OPTIMARK DATA SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
BRITISH COLUMBIA 13-3583255
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
6800 NORTH DALE MABRY HWY., SUITE 100 TAMPA FL 33614
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(Address of principal executive offices)
(813) 882-6567
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
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:
27,772,664 as of August 31,1999
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X ]
OPTIMARK DATA SYSTEMS INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED AUGUST 31, 1999
(WITH COMPARATIVE FIGURES FOR THE NINE MONTHS ENDED AUGUST 31, 1998)
STATEMENT "A" - CONSOLIDATED BALANCE SHEET
STATEMENT "B" - CONSOLIDATED STATEMENT OF DEFICIT
STATEMENT "C" - CONSOLIDATED STATEMENT OF LOSS
STATEMENT "D" - CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
SCHEDULE "1" - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT "A"
OPTIMARK DATA SYSTEMS INC.
CONSOLIDATED BALANCE SHEET
AUGUST 31, 1999(CANADIAN FUNDS)
ASSETS
1999 1998
---- ----
CURRENT ASSETS
Cash $ 24,953 $ 3,298
Accounts receivable 90,556 178,827
Inventory (note 3) 11,325 7,797
Prepaid expenses -- 18,712
Loan receivable (note 6) 350,975 --
TOTAL CURRENT ASSETS $477,809 $208,634
LIABILITIES AND SHAREHOLDERS' EQUITY
1999 1998
---- ----
CURRENT LIABILITIES
Accounts payable $ 115,726 $ 1,012,928
Foreign taxes payable 1,140 1,191
Loan payable (note 7) 328,931 --
TOTAL CURRENT LIABILITIES 445,797 1,014,119
SHAREHOLDERS' EQUITY (DEFICIT)
Share capital (note 4) 8,821,258 8,026,836
Deficit - Per Statement "B" (8,789,246) (8,832,321)
TOTAL SHAREHOLDERS EQUITY (DEFICIT)
32,012 (805,485)
GOING CONCERN ASSUMPTIONS (note 1) $ 477,809 $ 208,634
SEE NOTICE TO READER
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
STATEMENT "B"
OPTIMARK DATA SYSTEMS INC.
CONSOLIDATED STATEMENT OF DEFICIT
FOR THE NINE MONTHS ENDED AUGUST 31, 1999
(CANADIAN FUNDS)
1999 1998
---- ----
DEFICIT, beginning of period $(8,168,822) $(8,873,600)
NET INCOME (LOSS) FOR THE PERIOD
- Per Statement "C" (121,815) 580,104
(8,290,637) 8,293,496
DEFERRED LOSS ON FOREIGN EXCHANGE
ON CONSOLIDATION (498,609) (538,825)
DEFICIT, end of period - To Statement "A" $(8,789,246) $(8,832,321)
SEE NOTICE TO READER
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
STATEMENT "C"
OPTIMARK DATA SYSTEMS INC.
CONSOLIDATED STATEMENT OF LOSS
FOR THE NINE MONTHS ENDED AUGUST 31, 1999
(CANADIAN FUNDS)
1999 1998
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SALES $ 164,342 $ 218,349
COST OF SALES 80,398 55,626
GROSS INCOME (LOSS) 83,944 162,723
SELLING EXPENSES -- --
GENERAL AND ADMINISTRATIVE
EXPENSES 71,183 66,821
NET INCOME (LOSS) BEFORE OTHER
ITEM 12,761 95,902
OTHER ITEM
Gain (loss) on foreign exchange (134,576) 484,202
NET INCOME (LOSS) FOR THE PERIOD
To Statement "B" $(121,815) $ 580,104
NET INCOME (LOSS) PER SHARE $ (0.004) $ 0.024
SEE NOTICE TO READER
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
STATEMENT "D"
OPTIMARK DATA SYSTEMS INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE NINE MONTHS ENDED AUGUST 31, 1999
(CANADIAN FUNDS)
1999 1998
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CASH RESOURCES PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Income (Loss) for the period - Per Statement "C" $(121,815) $ 580,104
Items not affecting cash:
Changes in non-cash working capital (781,756) (385,599)
(903,571) 194,505
FINANCING ACTIVITIES
Sale of capital stock:
Cash consideration 109,477 281,312
For services and debt settlement 665,904 --
Loan receivable (350,975) --
Loan payable 328,931 --
753,337 281,312
DEFERRED LOSS ON FOREIGN EXCHANGE 152,719 (538,825)
NET INCREASE (DECREASE) IN CASH 2,485 (63,008)
CASH POSITION, beginning of period 22,468 66,306
CASH POSITION, end of period $ 24,953 $ 3,298
SEE NOTICE TO READER
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SCHEDULE "1"
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
1. GOING CONCERN ASSUMPTIONS
The financial statements have been prepared assuming the Company will continue
as a going concern. The Florida operation is not generating sufficient cash flow
to sustain operations and is dependent upon the Parent Company's ability to
raise further financing during the coming year. Uncertainty exists as to the
Parent Company's ability to raise further finance to sustain operations.
However, management has been and is currently active in raising funds for
marketing programs and operations. The Company has converted 665,904 dollars of
debt into common shares (see note 4(iv)) in the first quarter.
2. ACCOUNTING POLICIES
a) Consolidation
The Consolidated Financial Statements include the accounts of Optimark
Corporation, its 100% controlled subsidiary. All significant
inter-company transactions were eliminated after the April 23, 1992
acquisition date. The business combination has been considered as an
acquisition rather than a merger.
The excess of the consideration paid for the shares of the subsidiary
over the underlying net book value at the date of acquisition was
treated as consolidated goodwill. Goodwill has been written off in the
year of acquisition.
b) Inventories
Inventories are stated at the lower of cost or market value.
c) Deferred Development Expenditures
The cost of purchased or previously developed computer software that is
to be sold or marketed was capitalized and is amortized using the
straight-line method over the estimated economic life, generally five
years.
SEE NOTICE TO READER
SCHEDULE "1"
PAGE 2
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
2. ACCOUNTING POLICIES (CONTINUED)
a) Loss Per Share
The loss per share calculations are based on the weighted average
number of shares outstanding throughout the year. The number of shares
calculated are as follows:
Nine months ended August 31, 1999 27,282,710
Nine months ended August 31, 1998 24,268,680
b) Foreign Currency Translation
The Company's operations are of a self-sustaining nature. The accounts
are translated to Canadian dollars on the following basis:
(i) Assets and liabilities at the rate in effect at the
balance sheet date (ii) Revenue and expense at the average
exchange rate for the year.
3. INVENTORY
1999 1998
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Customized print forms $ 11,325 $ 7,797
SEE NOTICE TO READER
SCHEDULE "1"
PAGE 3
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
4. SHARE CAPITAL
(i) Authorized:
100,000,000 shares, no par value
Issued:
Common: 1999 SHARES 1998 SHARES 1999 AMOUNT 1998 AMOUNT
----------- ----------- ----------- -----------
Balance, beginning of period 25,039,314 23,397,996 $8,030,148 $7,745,524
During the period:
Cash offerings 715,460 1,626,757 125,206 281,312
Non-cash consideration 2,017,890 -- 665,904 --
2,733,350 1,626,757 791,110 281,312
Balance, end of period 27,772,664 25,024,753 $8,821,258 $8,026,836
(ii) Shares issued on exercise of warrants to Frank and Sally Greggo on October
19, 1998, in exchange for services have been reversed on the financial
statements and services will be presented as accounts payable. The Company will
obtain regulatory approval for the share issue for services. In the prior year,
amounts were presented as accounts payable for reversal of share issues. Part of
these payables has been forgiven and the remaining represents debt to be
converted to equity in 1999.
(iii) 715,460 Warrants were exercised during the period for gross proceeds of
125,206 dollars Canadian.
(iv) The Company obtained regulatory approval to convert debt of 665,904 dollars
Canadian into 2,017,890 common shares at $0.33 per share. The conversion took
place on January 25, 1999.
SEE NOTICE TO READER
SCHEDULE "1"
PAGE 4
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
4. SHARE CAPITAL (CONTINUED)
(v) The following treasury shares are reserved for issuance:
TREASURY
RESERVED
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FOR ISSUANCE:
Incentive Options
Opening balance 1,000,000
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Total Incentive Options 1,000,000
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Private Place Warrants:
Opening balance 2,234,343
Less: Warrants exercised (715,460)
Warrants expired (1,518,883)
Total Incentive Options --
TOTAL TREASURY RESERVE FOR ISSUANCE 1,000,000
(vi) Shares Held In Escrow 3,069,375
5. RELATED PARTY TRANSACTIONS
On February 19, 1997, an agreement was ratified with TMR Corp. with an effective
date of November 21, 1996. The agreement provides for TMR to provide
consultation to the Company on future strategic concepts. The agreement is for
thirty-six months at a monthly fee of $10,000 US, plus overhead and
administrative expenses, which was further reduced to $5,000 per month in June
of 1998. TMR Corp. will receive, as a sign-up bonus, a five (5) year option to
purchase 1,000,000shares of Optimark stock at $0.19 per share.
SEE NOTICE TO READER
SCHEDULE "1"
PAGE 5
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
6. LOAN RECEIVABLE
The Company's subsidiary, Optimark Corporation, advanced funds totaling
265,000 U.S. Dollars to an associated company, American Enterprise Solutions
Inc. In the event of payment default, the balance shall bear interest at 9% per
annum.45,000 U.S. Dollars is due no later than March 26, 2000, and the remainder
on August 16, 2000.
7. LOAN PAYABLE
The Company's subsidiary, Optimark Corporation, received funds totaling 220,389
U.S. Dollars at an interest rate of 7% per annum and payable on or before July
1, 2000.
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems recognize the year
2000 as 1900 or some other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may arise in some systems
that use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or after January
1, 2000, and if not addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity, including
those related to the efforts of customers, suppliers, or other third parties,
will be fully resolved.
SEE NOTICE TO READER
SCHEDULE "1"
PAGE 6
OPTIMARK DATA SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
(CANADIAN FUNDS)
9. SIGNIFICANT EVENT
A stock conversion offer was made through a press release on July 6, 1999, to
Optimark Data Systems' (ODS) U.S. resident shareholders by American Enterprise
Solutions, Inc. (AESI). This resulted in AESI acquiring over 50% of the
outstanding shares of ODS. The offer has expired. Canadian and other residents
will receive from AESI (after it is publicly listed) a Tender Offer to acquire
their shares of ODS at the same price as the U.S. residents converted their
shares in this private transaction.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DATE:_____________________________
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CHARLES BROES, CEO FRANK GREGGO, SECRETARY