<PAGE>


SECURITIES AND EXCHANGE COMMISSION PRIVATE
WASHINGTON, D.C.  20549

-----------------------

FORM 10-K

(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
          Act of 1934

For the fiscal year ended July 31, 1998 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
          Act of 1934

For the transition period from        to

Commission File Number 33-18218-NY

DYNAMARK CORPORATION

(Exact name of registrant as specified in its charter)


Delaware                                               13-3376786
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

56 Dune Road, Atlantic Beach, New York             11509
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (516) 889-3690

Securities registered pursuant to Section 12(b) of the Act:

                                                         Name of each exchange
Title of each class                                      on which registered

None                                                     Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

     None
(Title of Class)

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.  Yes  X   No

         The voting stock of Dynamark Corporation (consisting of Common
Stock, $.0001 par value) is traded in the over-the-counter market. However,
no trades have been reported by the National Quotation Bureau, Inc. and any
limited trading may not be reflective of the market value for the Company's
voting stock held by non-affiliates. There were 18,000,000 shares of Common
Stock of the Registrant outstanding on October 29, 1998, of which
approximately 3,500,000 were held by non-affiliates.

         Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]


<PAGE>


         Certain exhibits listed in Item 14 of Part IV have been
incorporated by reference. The index to exhibits appears on page 14.



         PART I

Item 1.  Business

         General

         Dynamark Corporation (hereinafter referred to as "the Company") was
organized under the laws of the State of Delaware on August 1, 1986, under
the name of Crack Rehabilitation, Inc. for the purpose of owning and
operating drug rehabilitation centers. In August 1987 the Company changed
its name to Dynamark Corporation after management elected to shift its
business purpose to that of offering product, marketing, business and real
estate development, and financial consulting services, as well as to that of
acquiring an operating business or businesses.

         The Company completed a public offering of its securities in August
1988, receiving net proceeds of approximately $557,000. Since that time, the
business purpose of the Company has evolved to that of developing or
acquiring an operating business. To date, the Company has not succeeded in
accomplishing any of its goals. In fact, during this period, only two
incidental business transactions have taken place, both related to
participating in other companies' private placements for bridge loans. In
both cases the Company received some stock from those companies as well as
notes evidencing the loans, and in both cases the participation was not in
excess of 10% of the total private placement. Both of these loans have been
repaid.

         Competition

         Management is of the opinion that it will be very difficult, but
not impossible, to accomplish its present goal of acquiring an operating
business. The Company's resources are extremely limited. The funds resulting
from its public offering have been depleted by operating expenses and by
business commitments. The time management can devote to the Company's
operations has been drastically reduced. Additionally, there are numerous
persons and firms, who have greater financial resources, more experienced
personnel and a lot more available time that they can devote to a project,
then the Company has or can.

         Employees

         The Company presently employs one person who is the Company
President and who can devote only a minimum amount of time to the Company's
activities.

Item 2. Properties

         The Company currently maintains its principal offices at 56 Dune
Road, Atlantic Beach, New York, New York 11509, on a month to month basis
with a monthly rent of $500. The premises are owned by Allan P. Rothstein,
President of the Company. (See "Certain Transactions"). The Company may
consider establishing other permanent offices. However, the present
facilities are adequate for the Company's present operation.

Item 3. Legal Proceedings

         There are no material legal proceedings pending to which the
Company is a party or by which any of its property may be subject.

Item 4. Submission of Matters to a Vote of Security Holders

         Not applicable.

<PAGE>

         PART II

Item 5. Market for Registrant's Common Equity
        and Related Stockholder Matters

         The Company's Common Stock is traded in the "pink sheet"
over-the-counter market. The Company's Warrants Series A and Series B
Warrants expired on March 10, 1992 and are void. The Company's Common Stock
is not actively trading and there are no available bid prices. There is no
assurance that any trading market for the Company's securities will develop.

Dividends

         The Company has never paid a dividend on its Common Stock, and it
presently intends to retain any earnings for use in its business.
Accordingly, it is anticipated that dividends will not be paid to the
holders of Common Stock in the foreseeable future.

         Approximate Number of Equity Security Holders

         As of October 29, 1998, there were 24 holders of record of the
Company's Common Stock. Such number of record owners was determined from the
Company's stockholders' records and does not include beneficial owners of
the Company's Common Stock, which shares are held in the names of various
security holders, dealers and clearing agencies.

Item 6. Selected Financial Data.

         The following selected data for the period indicated has been
derived from the financial statements of the Company, a development stage
entity. This information should be read in conjunction with the related
financial statements and notes thereto included elsewhere in this report.

         AS OF JULY 31, AND FOR THE PERIODS THEN ENDED

                                                     Cumulative

<TABLE>
<CAPTION>
                                                                                                         August  1, 1986
                                                                                                       (Date of Inception)
                                      1998          1997          1996           1995           1994     to July 31, 1998
                                      ----          ----          ----           ----           ----     ----------------

<S>                                <C>           <C>           <C>            <C>            <C>       <C>      
Revenues (loss)                    $   9,584     $ 163,495     $   3,156      $   3,787      $ (47,741)     $ 209,981

Net Income(loss)                       8,803       140,573       (16,299)       (32,636)      (120,954)      (537,525)

Income (loss) Per Common Share          --             .01          --             --              .01           (.03)

Total Assets                         201,865       205,222        61,744         73,510         99,374        201,865

Long-term debt                       168,961       159,961       153,961        147,961        141,961        201,865
</TABLE>


<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

         Income reflected in revenues for the fiscal year ended July 31,
1998 decreased from that reported for the year ended July 31, 1997 by
$153,911. Income reported during the years ended July 31, 1994 through 1998
consisted primarily of interest received on Company cash balances and the
subsequent recovery of a promissory note, and related accrued interest,
which is reflected in income for the fiscal year ended July 31, 1997. The
note and accrued interest had been written off prior to 1995.

         Revenues for fiscal years ended July 31, 1994 and 1993 reflect
amortization of goodwill and equity in losses of an investment aggregating
$11,062 and $9,467, respectively. In addition, $39,760 was reflected during
the year ended July 31, 1994 for a write-down of an impaired loan in
default. There were no additional write-downs for loan impairment subsequent
to the year ended July 31, 1994 since the loan had been fully written-down
as of July 31, 1994.

         During the year ended July 31, 1997, revenue includes recognition
of the recovery of the principal amount of a note previously written off,
together with accrued interest thereon. Shareholders' equity during the year
ended July 31, 1997 increased by $140,573, resulting primarily from the
recovery of principal and accrued and unpaid interest on a note previously
written off.

         Management expects losses to continue however, unless the Company
is successful in acquiring or merging with a profitable business operation.
In an attempt to reduce losses, the president has agreed to render his
services to the Company without further compensation until there has been a
turnaround. The amount of future losses will depend upon administrative
expenses, which management believes should not exceed $30,000 per year.

         Cash and cash equivalents utilized declined from $19,840 in fiscal
year ended July 31, 1993 to $18,747 in fiscal year ended July 31, 1994, but
increased in fiscal year ended July 31, 1995 to $28,794, declined to $8,233
in the fiscal year ended July 31, 1996, and increased to $37,891 in the
fiscal year ended July 31, 1997. The increase in negative cash flow during
the year ended July 31, 1995 from the year ended July 31, 1994 amounted to
$10,047 and resulted from increased professional fees. The decrease in
negative cash flow during the year ended July 31, 1996 from the year ended
July 31, 1995 amounted to $20,561 and resulted principally from decreased
professional fees. The change from a negative cash flow for the year ended
July 31, 1996 of $8,233 to a positive cash flow of $37,891 for the year
ended July 31, 1997 amounted to $46,124 and resulted principally from the
recovery of a promissory note and accrued interest previously written off.
The increase in positive cash flow during the year ended July 31, 1998 from
the fiscal year ended July 31, 1997 amounted to $64,366 and resulted from
recovery of a promissory note previously written off.

         Management anticipates that negative cash flows in the immediate
future will not exceed approximately $30,000. Based upon this anticipated
negative cash flow, Management is of the opinion that it has sufficient
liquidity to operate for not less than the next twelve months.

Item 8.  Financial Statements.

         Reference is made to the Financial Statements which are annexed
hereto immediately following the signature page to this Report.

Item 9.  Changes in and Disagreement with Accountants
         on Accounting and Financial Disclosure


<PAGE>


         Not applicable.

Item 10. Directors and Executive Officers.
         The directors and executive officers of the Company are as follows:

Name                       Age              Position

Allan P. Rothstein         40               President, Treasurer and Director





         All Directors serve for a term of one year and until their
successors are duly elected and qualified. All officers serve at the
discretion of the Board of Directors.

         Allan P. Rothstein has been President and a director of the Company
since its inception in August, 1986. From December, 1985 to the present, Mr.
Rothstein has served as President and Chairman of the Board of Directors of
Brown Wharton & Co., Inc., a financial services firm. From July 1990 to
present Mr. Rothstein has been a securities trader for Fahnestock & Co. From
November 1984 to May 1985, Mr. Rothstein was employed at Nash Weiss & Co., a
registered broker-dealer. From May 1982 to December 1985, Mr. Rothstein was
a Floor Trader, Floor Broker and Member of the New York Futures Exchange.
Mr. Rothstein received a B.A. degree from the University of Pennsylvania in
May of 1980. The portion of business time of Mr. Rothstein devoted to the
affairs of the Company varies. However, as a general matter, the amount of
time is generally less than 10% of his business time.

Item 11. Executive Compensation

         Allan P. Rothstein, President of the Company, was employed by the
Company under an Employment Agreement ending August 1, 1998. Mr. Rothstein
currently serves as President of the Company under an employment agreement
and receives no compensation. During the fiscal year ended July 31, 1998,
Mr. Rothstein was entitled to a salary of $50,000, which has been waived.
Mr. Rothstein is also entitled, during the term of his employment agreement,
to health insurance benefits, life insurance with premiums not to exceed
$2,500 per annum with his wife and children as beneficiaries, the use of a
Company owned or leased vehicle, and reimbursement for expenses which he may
incur on behalf of the Company. Furthermore, if Mr. Rothstein dies at any
time during the term of his employment agreement, the Company is obligated
to pay to Mr. Rothstein's estate or wife, if married, a death benefit of
$15,000. Mr. Rothstein's employment contract has been extended for another
year until August 1, 1999 and he has advised the Company orally that he will
continue to serve the Company without payment of salary.

         In the past, the Company's policy was to compensate directors who
were not employees of the Company in the amount of $150 per meeting and
reimburse them for the reasonable expenses incurred by them in connection
with the Company's business. At present, there are no directors who are not
employees of the Company.

Employee Incentive Stock Option Plan

         In April 1987, the Company adopted an Employee Incentive Stock
Option Plan (the "Plan") intended to qualify under the provisions of the
Internal Revenue Code of 1986. Pursuant to the Plan, the Company was
authorized to grant stock options to purchase up to 2,500,000 shares of the
Company's Common Stock to key personnel, including eligible officers,
directors, employees and independent consultants of the Company. No options
were ever granted under the Plan and, in accordance with its terms the Plan
terminated on April 7, 1997.

<PAGE>

Item 12. Security Ownership of Certain Beneficial
                  Owners and Management

         The following table sets forth certain information as of October
27, 1998 with respect to the ownership of the Company's Common Stock by each
person known by the Company to own beneficially more than 5% of such Common
Stock, by each officer and director of the Company and by officers and
directors as a group.

                                         Amount and Percent-
                                         age of Beneficial
                                           Ownership  (1)

Directors, Officers                Number of
and 5% Shareholders                  Shares        Percent


Allan P. Rothstein (2)              1,000,000        5.5%
56 Dune Road
Atlantic Beach, New York 11909

Cynthia Rothstein (2)              11,375,000       63.2
311 Links Drive West
Oceanside, New York 11572

Brown Wharton & Co., Inc. (2)       1,000,000        5.5
56 Dune Road
Atlantic Beach, New York 11909

All Directors and Officers
as a Group (1 in number)            1,000,000        5.5





(1) Each officer, director and each 5% shareholder has sole voting and sole
investment power with respect to all shares that he or she beneficially
owns.

(2) Cynthia Rothstein is the mother of Allan P. Rothstein, President of the
Company. Such beneficial ownership does not include shares of the Company's
Common Stock owned by Brown Wharton & Co., Inc., a company in which Allan P.
Rothstein is the President and a principal shareholder. Mr. Rothstein may be
deemed the beneficial owner of all but a nominal portion of the shares owned
by Brown Wharton & Co., Inc.

Item 13. Certain Relationships and Related Transactions

         The Company currently maintains its principal offices at 56 Dune
Road, Atlantic Beach, New York 11509, on a month-to-month basis with rent of
$500 per month. The premises are owned by Allan P. Rothstein, President of
the Company. The Company believes that the amount of monthly rent paid to
Mr. Rothstein is comparable to the amount of rent which would be charged to
unaffiliated companies for the same or similar space.

         In February 1991, the Company purchased for $100,000, $97,500
principal amount of 10% Promissory Notes of H-Power Corp., a Delaware
corporation, headquartered in Bloomfield, New Jersey, and 25,000 common
shares, par value $.001 per share of H Power. H Power is a developmental
stage enterprise engaged in the development and exploitation of certain fuel
cell and metal hydride technologies which involve alternative energy
systems. The Promissory Notes, originally payable on February 3, 1993, were
extended to be payable on the earlier of August 1, 1994 or the closing of
any public offering by H Power. However, H Power failed to make payment when
due on August 1, 1994 and consequently was in default for a second time. On
October 13, 1997 the principal was collected in full, together with accrued
and unpaid interest.

         Allan P. Rothstein, director and president of the Company
beneficially owns 300,000 shares of H Power and the Company owns 25,000
shares; together with other members of his immediate family, they
beneficially own in the aggregate 1,565,625 common shares, or 29% of the
issued and outstanding shares of H Power.

<PAGE>

                                  SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant certifies that it has duly caused this Annual Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on the 28th day of October, 1998.

                                            DYNAMARK CORPORATION

                                            By: /s/ Allan P. Rothstein
                                              Allan P. Rothstein, President,
                                              principal executive and financial
                                              officer


<PAGE>

 
Dated:  October 28, 1998


         Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.

     Signature             Title                                Date

/s/ Allan P. Rothstein     President, Treasurer                 October 28, 1998
Allan P. Rothstein         and Director (principal executive
                           and financial officer)


<PAGE>


                                EXHIBIT INDEX

   Exhibit No.    Description

     3.1*         Restated Certificate of Incorporation (Exhibit 3.1 to
                  Registration Statement on Form S-18, Registration No.
                  33-18218-NY (the "Registration Statement No. 33-18218-NY")
                
     3.2*         By-laws of the Company, as amended (Exhibit 3.2 to the
                  Registration Statement No. 33-18218-NY)
                
     4.1*         Form of Common Stock Certificate (Exhibit 4.1 to the
                  Registration Statement No. 33-18218-NY)
                
     10.1*        Employment Agreement dated August 25, 1987 between Allan
                  P. Rothstein and the Registrant (Exhibit 10.1 to the
                  Registration Statement No. 33-18218-NY)
                
     10.3         Letter Agreement extending Employment Agreement between
                  Allan P. Rothstein and Registrant.
                
     28.1*        1987 Employee Incentive Stock Option Plan (Exhibit 28.1 to
                  the Registration Statement No. 33-18218-NY)
            
*       Incorporated by reference (pursuant to 17CFR Secs 201.24 and 240.125-32)
to the document referenced in brackets following the description of such
exhibits previously filed with the Commission.


<PAGE>


                            DYNAMARK CORPORATION

                                  FORM 10-K

                   For the fiscal year ended July 31, 1997




          EXHIBITS

          Exhibit 10.3





<PAGE>


         SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant certifies that it has duly caused this Annual Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on the ____ day of ________, 1998.

                                   DYNAMARK CORPORATION

                           By:
                               Allan P. Rothstein, President
                               and principal financial officer

Dated:  __________, 1998

         Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.

Signature                   Title                                   Date

                            President, Treasurer            October 28, 1998
Allan P. Rothstein                and Director


<PAGE>

                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                            FINANCIAL STATEMENTS

                  YEARS ENDED JULY 31, 1998, 1997 AND 1996
              AND THE PERIOD AUGUST 1, 1986 (DATE OF INCEPTION)

                              TO JULY 31, 1998

                                     AND

                        INDEPENDENT AUDITORS' REPORT


<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                            FINANCIAL STATEMENTS

   YEARS ENDED JULY 31, 1998, 1997 AND 1996 AND THE PERIOD AUGUST 1, 1986
                    (DATE OF INCEPTION) TO JULY 31, 1998

                                   PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 10-K

    (a)      1. Financial Statements

                The following indicated Financial Statements of the
                Company are annexed hereto immediately following the
                signature page to this Report:

                                                                  Page
                                                                  ----

Independent Auditors' Report                                     F-1

Balance Sheet - July 31, 1998 and 1997                           F-2

Statement of Operations - years ended July 31, 1998, 1997
  and 1996 and the period August 1, 1986
  (date of inception) to July 31, 1998                           F-3 - F-4

Statement of Changes in Shareholders' Equity (Deficiency)
  years ended July 31, 1998, 1997 and 1996 and the
  period August 1, 1986 (date of inception) to July 31, 1998     F-5

Statement of Cash Flows - years ended July 31, 1998, 1997
  and 1996 and the period August 1, 1986
  (date of inception) to July 31, 1998                           F-6 - F-7

Notes to Financial Statements                                    F-8 - F-14

             2.  Exhibits

                 Incorporated by reference to the Exhibit Index at the end
                 of this Report.

    (b)      Reports on Form 8-K

                 None


<PAGE>



                        INDEPENDENT AUDITORS' REPORT



TO THE SHAREHOLDERS OF DYNAMARK CORPORATION

         We have audited the accompanying balance sheet of DYNAMARK
CORPORATION (a development stage company) as of July 31, 1998 and 1997, and
the related statements of operations, changes in shareholders' equity
(deficiency) and cash flows for the years ended July 31, 1998, 1997 and 1996
and for the period August 1, 1986 (date of inception) to July 31, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

         We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of DYNAMARK
CORPORATION (a development stage company) as of July 31, 1998 and 1997, and
the results of its operations and its cash flows for the years ended July
31, 1998, 1997 and 1996, and for the period August 1, 1986 (date of
inception) to July 31, 1998, in conformity with generally accepted
accounting principles.

October 6, 1998



                                    F-1

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                                BALANCE SHEET

                           JULY 31, 1998 AND 1997

                                   ASSETS

<TABLE>
<CAPTION>
                                                                                    1998            1997
                                                                                  ---------      ---------
<S>                                                                               <C>            <C>
Current assets
   Cash - Note 3                                                                  $ 201,850      $  99,593
   Note receivable - Note 10                                                           --           97,500
   Accrued interest receivable                                                         --            7,734
   Prepaid income taxes - Notes 2 and 11                                                 15            395
                                                                                  ---------      ---------

           Total current assets                                                     201,865        205,222
                                                                                  =========      =========

Computer equipment - at cost, less accumulated
   depreciation of $13,556 in 1998 and 1997 - Note 2                                   --             --
                                                                                  ---------      ---------

                                                                                  $ 201,865      $ 205,222
                                                                                  =========      =========

                                         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Accrued expenses                                                               $  14,878      $  15,432
                                                                                  ---------      ---------

Due to officer - Note 7                                                             165,961        159,961
                                                                                  ---------      ---------

Commitments - Notes 6 and 8                                                            --             --

Shareholders' equity - Note 9
   Preferred stock, $.0001 par value; 5,000,000 shares
     authorized, none issued                                                           --             --
   Common stock, $.0001 par value; 50,000,000 shares
     authorized, 18,000,000 shares issued and outstanding                             1,800          1,800
   Additional paid-in capital                                                       556,751        556,751
   Deficit accumulated during the development stage                                (537,525)      (528,722)
                                                                                  ---------      ---------

                                                                                     21,026         29,829
                                                                                  ---------      ---------

                                                                                  $ 201,865      $ 205,222
                                                                                  =========      =========
</TABLE>


 The accompanying notes are an integral part of these financial statements.


                                    F-2


<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                           STATEMENT OF OPERATIONS



<TABLE>
<CAPTION>
                                                                                             Cumulative 
                                                                                              August 1,
                                                                                                1986   
                                                                                              (Date of 
                                                                                             Inception) 
                                                            Year Ended July 31,                  To  
                                                 --------------------------------------       July 31,
                                                    1998           1997          1996           1998
                                                 ---------      ---------     ---------      ---------
<S>                                              <C>            <C>           <C>            <C>
Revenues
   Interest income                               $   9,584      $  65,995     $   3,169      $ 209,986
   Licensing revenue                                  --             --            --            1,469
   Equity in operating losses of investee -
     Note 2                                           --             --            --          (14,894)
   Amortization of excess of investment over
     net assets acquired - Note 2                     --             --            --          (17,500)
   Write-downs of investments - Note 2                --             --             (13)       (91,994)
   Recovery of note receivable written off -                         --
     Note 10                                          --           97,500          --           97,500
                                                 ---------      ---------     ---------      ---------

           Total revenues                            9,584        163,495         3,156        184,567
                                                 ---------      ---------     ---------      ---------

Expenses
   Salaries
     Officer                                          --             --            --          282,980
     Other                                            --             --            --           29,820
   Automobile rental and expenses                     --             --            --           28,618
   Professional fees                                 6,599         12,244         9,749        178,994
   Other, including rent expense incurred
     to officer of $6,000 in 1998, 1997 and
     1996 and $72,000 for the period from
     inception to July 31, 1998                     11,788         10,678         9,706        188,973
   Licensing agreement
     Costs                                            --             --            --           11,238
     Loss on termination                              --             --            --            1,469
                                                 ---------      ---------     ---------      ---------

           Total expenses                           18,387         22,922        19,455        722,092
                                                 ---------      ---------     ---------      ---------

           Net income (loss)                     $  (8,803)     $ 140,573     $ (16,299)     $(537,525)
                                                 =========      =========     =========      =========
</TABLE>


 The accompanying notes are an integral part of these financial statements.


                                    F-3


<PAGE>


                                               DYNAMARK CORPORATION
                                           (A DEVELOPMENT STAGE COMPANY)

                                              STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                             Cumulative 
                                                                                              August 1,
                                                                                                1986   
                                                                                              (Date of 
                                                                                             Inception) 
                                                            Year Ended July 31,                  To  
                                                 --------------------------------------       July 31,
                                                    1998           1997          1996           1998
                                                 ---------      ---------     ---------      -----------
<S>                                              <C>            <C>           <C>            <C>

Basic income (loss) per common share -
   Note 2                                        $     --       $        .01  $     --       $      (.03)
                                                 ==========     ============  ==========     ===========

Weighted average number of shares
   outstanding - Note 2                          18,000,000       18,000,000  18,000,000      17,710,838
                                                 ==========     ============  ==========     ===========
</TABLE>







 The accompanying notes are an integral part of these financial statements.


                                    F-4


<PAGE>



                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

          STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)

           YEARS ENDED JULY 31, 1998, 1997 AND 1996 AND THE PERIOD
             AUGUST 1, 1986 (DATE OF INCEPTION) TO JULY 31, 1998


<TABLE>
<CAPTION>
                                                                                              Deficit                 
                                                             Common Stock                    Accumulated   Unrealized 
                                                          $.0001 Par Value      Additional   During the     Gain on   
                                                      -----------------------    Paid-In     Development   Marketable 
                                                        Shares       Amount      Capital       Stage       Securities       Total
                                                      ----------   ----------   ----------   ----------    ----------    ----------

<S>                                                   <C>          <C>          <C>          <C>           <C>           <C>       
Issuance of common stock                              15,000,000   $    1,500   $     --     $     --      $     --      $    1,500

Issuance of common stock pursuant to a
   public offering - Note 9                            3,000,000          300      556,751         --            --         557,051

Net loss for the period August 1, 1986 (date of
   inception) to July 31, 1995                              --           --           --       (652,996)         --        (652,996)

Cumulative unrealized gain on marketable securities         --           --           --           --           3,112         3,112
                                                      ----------   ----------   ----------   ----------    ----------    ----------

Balance, July 31, 1995                                18,000,000        1,800      556,751     (652,996)        3,112       (91,333)

Decrease in unrealized gain on marketable securities        --           --           --           --          (3,112)       (3,112)

Net loss for year ended July 31, 1996                       --           --           --        (16,299)         --         (16,299)
                                                      ----------   ----------   ----------   ----------    ----------    ----------

Balance, July 31, 1996                                18,000,000        1,800      556,751     (669,295)         --        (110,744)

Net income for year ended July 31, 1997                     --           --           --        140,573          --         140,573
                                                      ----------   ----------   ----------   ----------    ----------    ----------

Balance, July 31, 1997                                18,000,000        1,800      556,751     (528,722)         --          29,829

Net loss for year ended July 31, 1998                       --           --           --         (8,803)         --          (8,803)
                                                      ----------   ----------   ----------   ----------    ----------    ----------

Balance, July 31, 1998                                18,000,000   $    1,800   $  556,751   $ (537,525)        $ -0-    $   21,026
                                                      ==========   ==========   ==========   ==========    ==========    ==========
</TABLE>




 The accompanying notes are an integral part of these financial statements.


                                    F-5




<PAGE>



                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                           STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                             Cumulative 
                                                                                              August 1,
                                                                                                1986   
                                                                                              (Date of 
                                                                                             Inception) 
                                                            Year Ended July 31,                  To  
                                                 --------------------------------------       July 31,
                                                    1998           1997          1996           1998
                                                 ---------      ---------     ---------      ---------
<S>                                             <C>            <C>            <C>            <C>    
Cash flows from operating activities
Net income (loss)                               $  (8,803)     $ 140,573      $ (16,299)     $(537,525)
Adjustments to reconcile net income (loss)
  to net cash provided by (used in)
  operating activities
    Equity in operating losses of investee           --             --             --           14,894
    Amortization of excess of investment
      over net assets acquired                       --             --             --           17,500
    Write-down of investments                        --             --               13         91,994
    Recovery of note receivable written off          --          (97,500)          --          (97,500)
    Depreciation and amortization                    --             --             --           22,155
    Changes in assets and liabilities
      Accrued interest receivable                   7,734         (7,734)          --          (24,375)
      Prepaid income taxes                            380           (353)           408            (15)
      Deferred lease costs                           --             --             --           (7,200)
      Deposits                                       --             --             --             (797)
      Deposits repaid                                --             --             --              797
      Accrued expenses                               (554)        (3,095)         1,645         14,878
      Due to officer                                6,000          6,000          6,000        165,961
      Other                                          --             --             --              549
                                                ---------      ---------      ---------      ---------

        Net cash provided by (used in)
           operating activities                     4,757         37,891         (8,233)      (338,684)
                                                ---------      ---------      ---------      ---------




                                 (Continued)

 The accompanying notes are an integral part of these financial statements.

                                     F-6


<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                           STATEMENT OF CASH FLOWS




</TABLE>
<TABLE>
<CAPTION>
                                                                                             Cumulative 
                                                                                              August 1,
                                                                                                1986   
                                                                                              (Date of 
                                                                                             Inception) 
                                                            Year Ended July 31,                  To  
                                                 --------------------------------------       July 31,
                                                    1998           1997          1996           1998
                                                 ---------      ---------     ---------      ---------
<S>                                              <C>           <C>           <C>            <C>    
Cash flows from investing activities
   Investments and related advances              $    --       $    --       $    --        $(225,013)
   Proceeds from repayment of advances                --            --            --          125,000
   Collection of note receivable                    97,500          --            --           97,500
   Acquisition of computer equipment                  --            --            --          (13,556)
                                                 ---------     ---------     ---------      ---------

           Net cash provided by (used in)

              investing activities                  97,500          --            --          (16,069)
                                                 ---------     ---------     ---------      ---------

Cash flows from financing activities
   Proceeds of sale of common stock pursuant

     to a public offering                             --            --            --          576,030
   Payments of notes payable, affiliate               --            --            --          (19,427)
                                                 ---------     ---------     ---------      ---------

           Net cash provided by financing

              activities                              --            --            --          556,603
                                                 ---------     ---------     ---------      ---------

Net increase (decrease) in cash and

   cash equivalents                                102,257        37,891        (8,233)       201,850

Cash and cash equivalents, beginning

   of period                                        99,593        61,702        69,935           --
                                                 ---------     ---------     ---------      ---------

Cash, end of period                              $ 201,850     $  99,593     $  61,702      $ 201,850
                                                 =========     =========     =========      =========

Supplemental cash flow disclosures

   Income taxes paid                             $     380     $     453     $     384      $   6,726
                                                 =========     =========     =========      =========
</TABLE>



The accompanying notes are an integral part of these financial statements.

                                     F-7


<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

1 -  DEVELOPMENT STAGE COMPANY

          The Company, a Delaware corporation, has been in the development
     stage since its formation on August 1, 1986. It has not generated
     operating revenues as of July 31, 1998, and no assurance can be given
     that it will generate operating revenues and earnings in the future.

2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Use of Estimates

          Management uses estimates and assumptions in preparing financial
     statements. Those estimates and assumptions affect the reported amounts
     of assets and liabilities, the disclosure of contingent assets and
     liabilities, and the reported revenues and expenses.

     Stock Registration Costs

          Stock registration costs of $42,949 incurred by the Company in
     connection with its initial public offering were charged to additional
     paid-in capital.

     Amortization of Excess of Investment in H Power Corp. over Net Assets
     Acquired and Related Matters

          The $100,000 excess of the cost of the investment in H Power
     Corp., which consisted of common stock acquired and interest-bearing
     loans made by the Company, over net assets acquired, was amortized over
     an estimated life of 20 years under the straight-line method until July
     31, 1995.

          The Company accounted for its investment in H Power Corp. under
     the equity method, pursuant to Accounting Principles Board Opinion No.
     18, until the year ended July 31, 1995, when the remaining balance of
     the investment was written off as an impairment loss. From the
     acquisition date of the investment until the balance was written off,
     the following amounts relating to the investment were included as
     reductions of revenues:

         Amortization of excess of investment over
           net assets acquired                                  $ 17,500
         Equity in operating losses                               14,894
         Write-down, including accrued interest receivable,
           of $24,375                                             91,981
                                                                --------
         
                                                                $124,375
                                                                ========

                                    F-8
         
<PAGE>
         

                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Income or Loss Per Share of Common Stock

          The weighted average number of shares for purposes of computing
     basic loss per share of common stock on the cumulative net loss is
     computed as if all shares had been outstanding as of the beginning of
     the respective years.

     Depreciation

          Depreciation on computer equipment was computed over its estimated
     useful life of five years using the straight-line method.

     Deferred Income Taxes

          At July 31, 1998 and 1997, deferred tax assets include the future
     benefits of net operating loss carryforwards and temporary differences
     resulting from write-downs on an investment, which are nondeductible
     for tax purposes. Deferred tax assets at each date have been reduced by
     a valuation allowance equal to the total of such assets, until
     realization is assured.

     Marketable Equity Securities

          At July 31, 1995, marketable equity securities, which were
     classified as available-for-sale, were valued at fair value and the
     unrealized gain was reflected in shareholders' deficiency.

          A summary of changes in the unrealized gains on available-for-sale
     securities is as follows:

                                                1996          1995
                                              --------      --------

           Balance, beginning of year         $  3,112      $   --
           
           Cumulative effect of change in
             accounting principle                 --          10,925
           
           Decrease in unrealized gain          (3,112)       (7,813)
                                              --------      --------
           
           Balance, end of year                   $-0-      $  3,112
                                              ========      ========



                                    F-9

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

3 -  CONCENTRATION OF CREDIT RISK

          The Company maintains a money market fund with a stock brokerage
     firm. The balance is insured for up to $500,000 by the Securities
     Investor Protection Corporation.


4 -  MARKETABLE EQUITY SECURITIES

          The Company held 125,000 publicly traded shares of Phoenix Laser
     Systems, Inc., in which the Company had less than a controlling
     interest, of original $.0001 par value common stock valued at the lower
     of cost or market. At July 31, 1997 and 1996, the Company was holding
     12,500 shares of this entity's $.000001 par value common stock, as a
     result of a 10 for 1 reverse stock split. The shares had a market value
     of $1 per share on August 17, 1989, when they were sold to the public.
     At July 31, 1994, the securities were recorded at a cost of $13. At
     August 1, 1994 and July 31, 1995, the securities were recorded at their
     fair values of $10,938 and $3,112, respectively, under the provisions
     of Statement of Financial Accounting Standards No. 115, resulting in a
     decrease in the unrealized gain of $7,813 for the year ended July 31,
     1995. During the year ended July 31, 1996, Phoenix Laser Systems, Inc.
     ceased operations and the Company recognized a realized loss of $13 on
     the permanent decline in value of this investment. Accordingly, there
     was no remaining unrealized gain at July 31, 1996.

5 -  LICENSING AGREEMENT

          During the year ended July 31, 1991, the Company entered into a
     licensing agreement to distribute a video cassette. For the period in
     which the agreement was operative, the Company incurred licensing costs
     of approximately $11,200. During the year ended July 31, 1992, the
     agreement was terminated, resulting in a loss of $1,469.


                                    F-10

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

6 -  CONSULTING AGREEMENT

          During the year ended July 31, 1992, the Company entered into an
     agreement with an entity to render consulting services to the Company
     in identifying equity or debt financing and/or potential merger
     candidates. Under the agreement, the Company paid a $5,000
     nonrefundable fee to that entity, which was included in professional
     fees for the year ended July 31, 1992. Pursuant to the agreement, the
     Company will be obligated to pay an additional $5,000 upon
     identification of a potential source of financing or a
     merger/acquisition candidate. The Company is also obligated to make an
     additional $15,000 payment upon the successful closing (signed letter
     of intent) of either a financing agreement or merger/acquisition. In
     addition, the agreement provides that the consulting entity will
     receive shares of Dynamark Corporation, which will be restricted
     pursuant to Rule 144 of the Securities and Exchange Commission. The
     agreement will terminate upon successful identification of financing or
     a merger/acquisition, or when it is terminated by one of the parties.

          During the year ended July 31, 1992, the Company entered into a
     transaction covered by the consulting agreement, which resulted in a
     letter of intent qualifying for compensation under the agreement.
     During that year, the transaction was aborted. The Company incurred
     consulting fees of $2,500 to this consultant in settlement of its
     obligation concerning the letter of intent.

          As of July 31, 1998, there are no pending financings or
     merger/acquisitions subject to this agreement, which remains in effect.

7 -  RELATED PARTY TRANSACTIONS

     Rent

          The Company rents its principal office space from its president.
     Rentals began August 1, 1988 on a month-to-month basis at $500 per
     month. Rent expense incurred was $6,000 for each of the years ended
     July 31, 1998, 1997 and 1996. As of July 31, 1998 and 1997, $40,000 and
     $34,000, respectively, of unpaid rent expense is included in the
     balance due to officer.


                                    F-11

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

7 -  RELATED PARTY TRANSACTIONS (Continued)

     Due to Officer

          At July 31, 1998 and 1997, the balance due to officer consists of
     noninterest-bearing amounts payable to the president of the Company as
     follows:

                                               1998                 1997
                                           ------------         ------------

         Officer's salary (see Note 8)     $    125,961         $    125,961
         Rent                                    40,000               34,000
                                           ------------         ------------

                                           $    165,961         $    159,961
                                           ============         ============


8 -  COMMITMENT

          In August 1998, the Company renewed the contract with its
     president for a period of one year, beginning August 1, 1998, at a
     minimum annual salary of $50,000 a year, plus certain guaranteed fringe
     benefits. These benefits include medical and life insurance coverage,
     use of a Company-owned vehicle and reimbursement of related expenses,
     and a death benefit of $15,000 payable to the employee's estate or
     spouse if the employee dies during the term of the agreement. The
     Company will recognize the cost of providing the life insurance benefit
     by charging expense at the time the death benefit is paid. Beginning
     April 30, 1994 and continuing until the Company makes a financial
     turnaround, the president has agreed to provide his services without
     compensation. At July 31, 1998 and 1997, approximately $126,000 of the
     president's salary for the period prior to April 30, 1994 is unpaid and
     is included in due to officer.


                                    F-12

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

9 -  COMMON AND PREFERRED STOCK

     Public Offering of Common Stock and Related Warrants

          Pursuant to a proposed public offering of 100,000 units, the
     Company, on July 22, 1988, sold 84,335 units (under a minimum offering)
     at $6.00 per unit, consisting of 2,530,050 shares of the Company's
     $.0001 par value common stock and warrants to purchase an additional
     10,120,200 shares of the authorized but unissued stock. Each unit
     consisted of 30 shares of common stock, 60 Series A warrants to
     purchase 5,060,100 shares of common stock at $.25 per share, until
     March 10, 1992, and 60 Series B warrants to purchase 5,060,100 shares
     of common stock at $.40 per share, until March 10, 1992. The Company
     had the right to redeem the warrants at $.005 each during the exercise
     period on 30 days' written notice.

          On August 8, 1988, the remaining 15,665 units were sold,
     representing 469,950 shares of $.0001 common stock and the related
     Series A and Series B warrants.

          None of the Series A or Series B warrants were exercised or
     redeemed through March 10, 1992, when they expired.

     Preferred Stock

          The Company has authorized 5,000,000 shares of preferred stock,
     $.0001 par value, which may be issued in one or more series at the
     discretion of the board of directors, and which will be entitled to a
     preference over common stock as to dividends and liquidation values. At
     July 31, 1998 and 1997, none of the preferred stock has been issued.

     Incentive Stock Options Plan

          In April 1987, the Company adopted an Employee Incentive Stock
     Option Plan under which 2,500,000 shares of the common stock of the
     Company were authorized for issuance to key personnel, including
     eligible officers, directors, employees and independent consultants.
     The Plan terminated on April 7, 1997. No options were granted under the
     Plan.


                                    F-13

<PAGE>


                            DYNAMARK CORPORATION
                        (A DEVELOPMENT STAGE COMPANY)

                        NOTES TO FINANCIAL STATEMENTS

10 -  RECOVERY OF NOTE RECEIVABLE WRITTEN OFF

          During the year ended July 31, 1997, the Company collected
     approximately $24,000 of interest on a note receivable of $97,500
     previously written off. On October 13, 1997, the principal was
     collected in full. The recovery is reflected as of July 31, 1997 in the
     accompanying financial statements.

11 - INCOME TAXES

          The Company has net operating loss carryforwards of approximately
     $403,000 available to reduce future Federal taxable income expiring
     during the years 2004 to 2012.

          Valuation allowances of $161,000 and $149,000 were reflected at
     July 31, 1998 and 1997, respectively, representing the full amount of
     the related deferred tax assets.


12 - SUPPLEMENTARY NONCASH INVESTING AND FINANCING ACTIVITIES

          During the period from August 1, 1986 (date of inception) to July
     31, 1987, the Company incurred deferred registration costs of $10,000
     in connection with its initial public offering. These costs plus $90
     were paid by the Company's affiliate on behalf of the Company. The
     Company issued its noninterest-bearing note payable of $9,990 to this
     affiliate plus 1,000,000 shares of its $.0001 par value common stock,
     having a total par value of $100.

          During the year ended July 31, 1988, the Company's affiliate paid
     an additional $9,437 on behalf of the Company, for which the Company
     issued an interest-bearing note payable.

          During the period from August 1, 1986 (date of inception) to July
     31, 1987, the Company issued 14,000,000 shares of its $.0001 common
     stock as payment for $1,400 of organization costs.

          During the year ended July 31, 1995, liabilities of $141,961 for
     salary and rent incurred to the president of the Company were
     reclassified as a long-term liability based on the officer's intent not
     to demand payment of these obligations for a period of at least one
     year from the balance sheet date.


                                    F-14