2000-04-13 ~ 10KSB40

[Franko10 ™]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-KSB

(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999
---------------------------

[ ] 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 0-26919
---------

CYBER MARK INTERNATIONAL CORP.
-----------------------------------
(Name of Small Business Issuer in Its Charter)

Delaware N/A
- - ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

359 Enford Road, Unit 1
Richmond Hill, Ontario, Canada L4C 3G2
- - --------------------------------------- ---------------------
(Address of Principal Executive Offices) (Zip Code)

Issuer's telephone number: [phone]
---------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.0001 per share

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___

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: $241,849


There were no sales of the issuers Common Stock to determine the value of
the shares held by non-affiliates of the issuer. At March 31, 2000, 6,104,300
shares of issuer's Common Stock were outstanding.


CYBER MARK INTERNATIONAL CORP.

1999 FORM 10-KSB ANNUAL REPORT

TABLE OF CONTENTS

SECTION PAGE NO.

PART I

Item 1. Business 3

Item 2. Properties 6

Item 3 Legal Proceedings 6

Item 4. Submission of Matters to a Vote of Security
Holders 6

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 6

Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operation 7

Item 7. Financial Statements and Supplementary Data 10

Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 11

PART III

Item 9. Directors and Executive Officers of the Registrant 11

Item 10. Executive Compensation 12

Item 11. Security Ownership of Certain Beneficial Owners
and Management 12

Item 12. Certain Relationships and Related Transactions 13

PART IV

Item 13. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 13

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

General

We manufacture virtual reality equipment and develop games for use with our
equipment through our wholly owned subsidiary, The CM300 Corporation. The two
main products that we currently manufacture and sell are the Cobra Immersive
Virtual Reality System which includes up to six different games and the Virtual
Speedway 300. Uniquely, we design and assemble the hardware, create the games
for use with our hardware, write the software for the operation of our hardware
and games and offer remote technical support.

Virtual reality is an emerging technology which attempts to fully immerse
the user in an interactive computer generated environment. The participant in a
virtual reality experience interacts with the system through a series of
sophisticated sensors which are both input and output devices. Input devices
include data gloves which track hand positions and configurations and body suits
which sense the entire orientation of the virtual reality participant. Output
devices include complex head mounted displays and surround-sound audio systems.
The result is an illusion to the participant that he is surrounded by
three-dimensional computer generated objects.

From its initial beginnings merely thirty years ago, virtual reality is
evolving into many applications including those in the fields of industry,
architecture, medicine, science and entertainment. We believe that virtual
reality technology is developing in a manner similar to the personal computer
where it was initially thought there were limited applications and its purpose
was limited to specific tasks. Although entertainment promises the most
potential, we believe that many other uses will be developed as the technology
is refined and more readily available at commercially competitive prices.

Corporate History

We were incorporated under the laws of the State of Delaware on June 9,
1998 to serve as a holding company for CM300. CM300 was incorporated under the
laws of the Province of Ontario on January, 1996 and became our wholly-owned
subsidiary on the same day that we were incorporated.

Products and Services

Our principal products are the Cobra System and the related six games and
the Virtual Speedway.

Cobra System

The Cobra System is an immersive virtual reality system generated by
computer. We have developed a second generation system that we are currently
marketing. The Cobra System pod incorporates a cross platform capability which
allows it to use PC based games adapted from systems such as Nintendo 64, Sony
and Sega. The pod uses 18 1/2 square feet of space and weighs about 150 pounds.
It is constructed from modular parts making it portable and easily repairable.
The pod is designed with built in instructional videos and token, card, coin or
bill verification to reduce the need for dedicated operational personnel for
each or a limited number of pods as is the case with many competing products. We
have been selling the Cobra System and its earlier versions since 1996, and the
current average selling price of a Cobra System is approximately $11,000

The six games currently available for use with the Cobra System are:

o Tresspasser

o Heavy Gear II

o Soldier of Fortune

o Quake II;

o Decent Free Space Battle Pack; and

o Unreal Tournament.

The above are all new games developed in 1998 - 1999.

Because maintaining and expanding the variety of games available for use in
this type of entertainment equipment is essential to their continued appeal, we
devote substantial resources to developing various game applications. It is
anticipated that we will develop additional games and new versions of old games
for use with the Cobra System as demand and sales increase.

Virtual Speedway

The Virtual Speedway is a real time virtual reality (as opposed to computer
generated) system based on miniature models and motion video. To achieve a true
sense of motion and involvement, a virtual race, the Virtual Speedway uses a
miniature race track measuring 40 by 20 feet. Up to six race cars, built to
scale, are equipped with miniature television cameras and transmitters to
replicate the kind of television coverage in use at race tracks. Next to the
track, there are six control consoles equipped with a steering wheel,
accelerator and reverse pedals and a head mounted device with reception
capability and optics. The player's view, from the car mounted camera,
"literally" places the participant inside the car as they race around the track.
The Virtual Speedway is fully developed and was commercially available for the
first time in November 1997. The current average selling price of a Virtual
Speedway system is approximately $120,000.

We are in the process of developing a remote system to be used with the
Virtual Speedway. The planned remote system, as yet untested in real-time
situations, will enable players to race against each other from remote, off-site
locations. The tracks, cars and computer will be situated in one central
location. Up to 24 control consoles (play stations) per track will be dispersed
throughout specific geographic territories in bars, entertainment centers,
theaters and the like. Any remote station can participate in any race.

Markets

The principal markets for the Cobra System are amusement arcades and family
entertainment centers of which there are approximately 6,500 amusement arcades
and 2,500 family entertainment centers in Canada and the United States. The
principal markets for the Virtual Speedway will be amusement parks, theme parks,
shopping malls, bars and major exhibitions as well as amusement arcades and
family entertainment centers. We generally sell more than one unit for use at
each of the parks and centers. We have installed Cobra Systems in Canada, the
United States, Denmark, Hungary, Ukraine, Lebanon, Brazil, Peoples Republic of
China, Hong Kong, Malaysia and Guam. To date, we have installed Virtual Speedway
systems in the United States on a summer seasonal basis in major amusement parks
but we anticipate that the market for the Virtual Speedway will be as
internationally widespread as the Cobra System. We anticipate the completion of
development of the VS300 in the second or third fiscal quarter of 2000.

In the recent past, we have experienced slow acceptance of our virtual
reality products. In 1997- 1999, sales were impacted by the bankruptcy of a
major producer of a virtual reality entertainment system which raised questions
in the market as to the viability of virtual reality in commercial and
entertainment settings. We have responded to this by developing a second
generation of the Cobra System and improving the related programming.

We have shown our products at trade shows and similar venues. We derive
exposure and sales, including beta testing sales, from participation in these
venues.

We seek to create brand recognition for our group of products through
advertising in appropriate trade publications and participating in trade show
exhibitions. Marketing is oriented towards the entertainment industry primarily
using in-house personnel. We research potential markets to establish whether
basic criteria are met. As is the case with retail establishments, demographic
data, site assessment and competitive review are essential to the success of the
product. Our products are installed using both lease and revenue sharing
arrangements and sales to end users.

Manufacturing

Our products are manufactured from a large number of components,
approximately 85% of which are commercially available parts and the remainder of
which are designed and manufactured to our specifications by outside
manufacturers. It is our policy to maintain more than one source for each of our
major components, to the extent possible, although certain suppliers are
currently the sole source of one or more items. No assurance can be given that
the necessary components will be available from the current sources.

We employ our own programmers to maintain quality control. From time to
time, we may outsource some programming. In the past, some outsourcing of
programming has not resulted in quality levels needed for our products; thus, we
do not anticipate outsourcing except in special circumstances.

We offer on-line diagnostic capability for servicing world-wide. The use of
modular construction and an open architecture of non-proprietary parts make
repairs easy and quick. We also believe that our products are better constructed
than those of our competitors resulting in longer useful lives and less repair
problems.

Research and Development

We expensed $133,896 on research and development activities in 1999 and
$229,066 in 1998. These expenses were for the purpose of developing the second
generation Cobra System. We have budgeted to spend approximately $200,000 in
2000, but this amount will depend on obtaining financing. To the extent that
revenues are not sufficient and outside financing is not available, research and
development expenses will be reduced or curtailed, which will significantly
affect product enhancement and development. This may also have a subsequent
adverse impact on product sales and revenues.

Competition

Our products compete directly with video games and similar amusement arcade
and park entertainments. We compete with companies such as Sega, Midway,
Nintendo and Atari. These and other entities with competing products have
substantially greater financial resources, manufacturing and marketing
capabilities, research and development staff and production facilities than we
do. No assurance can be given that these competitors and potential competitors
will not develop technology and/or products that will be as or more advanced and
affordable than the ones we produce. We compete on the basis of price, our
program of development of new games and the quality of our products which result
in longer useful lives and higher profit margins. In addition, our products
generally require no operational staff, resulting in substantial savings for the
entertainment facility which is another competitive factor.

[Franko10 ™]

Employees

We currently have 11 employees, of which two are senior executives, three
are programmers, two are supervisors and four are assembly technicians.

ITEM 2. DESCRIPTION OF PROPERTIES.

Our executive offices are located at 359 Enford Road, Unit1, Richmond Hill,
Ontario, Canada L4C 3G2 and our telephone number is [phone]. We rent this
space for our offices and manufacturing/ assembly facilities. The lease expires
in March 2001 and we are committed to paying $45,000 per year. We believe that
our current office and other facilities are adequate to meet our needs into the
near future.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock became eligible for quotation on the OTC Bulletin Board on
February 14, 2000 under the symbol "CMKI." The following table sets forth, for
the periods indicated, the high and low unpriced quote trades for our common
stock as reported on the OTC Bulletin Board, without retail mark- ups,
mark-downs or commissions, and may not necessarily represent actual
transactions). There has not been any electronic bid or asked quote.

Period High($) Low($)
------ ------- ------

Fiscal 2000

First Quarter* $4.00 $3.00


* From February 14, 2000.

Holders

As of March 15, 2000, there were 27 holders of record of our common stock.

Dividends

We have never declared or paid cash dividends on our common stock and we
anticipate that all future earnings in the near future will be retained for
working capital and business expansion. The payment of any future dividends will
be at the sole discretion of our board of directors and will depend upon, among
other things, future earnings, capital requirements, our financial condition and
general business conditions. Therefore, there can be no assurance that any
dividends on our common stock will be paid in the future.

Recent Sales of Unregistered Securities

We have made the following sales of unregistered securities within the past
three years:

<TABLE>
Consideration
Received and If Option,
Description of Warrant or
Underwriting or Convertible
Other Discounts to Exemption Security,
Market Price from Terms of
Date of Title of Afforded to Registration Exercise or
Sale Security Number Sold Purchasers Claimed Conversion
- - --------- ----------- ---------- ------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
6/16/98 Common Stock 3,930,000 In consideration of 4(2) N/A
CM300 becoming our
wholly-owned
subsidiary

6/16/98 Common Stock 320,000 $32 4(2) N/A

7/2/98 Common Stock 1,330,000 $500,080 Rule 504 of N/A
Regulation D

8/5/98 Common Stock 100,000 $10 4(2) N/A

8/16/98 Common Stock 46,000 In consideration of the 4(2) N/A
cancellation of an
existing debt of
$23,000

9/18/98 Common Stock 186,000 $119,875 Rule 504 of N/A
Regulation D

10/1/98 Common Stock 152,300 $77,587 Rule 504 of N/A
Regulation D

3/10/99 Common Stock 40,000 $20,000 Rule 504 of N/A
Regulation D
</TABLE>


All the proceeds of the above offerings, unless otherwise indicated, were
used for general working capital purposes.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Forward-Looking Statements

When used in this Form 10-KSB and in our future filings with the
Commission, the words or phrases "will likely result," "management expects" or
"we expect," "will continue," "is anticipated," "estimated" or similar
expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking statements,
each of which speak only as of the date made. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. We have no obligation to publicly release the result of any revisions
which may be made to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such
statements.

Selected Financial Data

Because we continue to develop our products and are still in the earlier
stages of our marketing, selected financial data would not be meaningful.
Reference is made to our financial statements included elsewhere in this
document.

Sales

We had sales of $288,873 for the fiscal year 1998 and sales of $151,184 for
the fiscal year 1999. The decline in sales was the result of dislocation in the
market for virtual reality entertainment products caused by the bankruptcy of a
major producer. This bankruptcy caused some to question whether virtual reality
will be a viable entertainment medium. As a result of the business failure,
there was substantial discounting of its existing inventory which affected our
ability to sell and maintain the selling price of the Cobra System. To offset
this unfavorable market condition, we began development of the second generation
of the Cobra System. Our sales were also reduced because we were concentrating
on research and development of new products and systems rather than promoting
sales.

Cost of Sales

The cost of sales for the fiscal year 1998 was $170,381 and for the fiscal
year 1999 was $$126,888.

Expenses

Our expenses for the fiscal year 1998 were $673,448 and for the fiscal year
1999 were $481,184. The principal reason for the decrease in expenses is the
decrease in research and development for new products to be offered by us and
reduction in other expenses due to our limited resources. There were some
savings in certain categories of expenses, but these were insufficient to off
set the increase in other expenses. The expenses related to administration and
general expenses increased because of our move to our new premises.

In the fiscal year 1999, we expensed $133,896 for research and development.
In the fiscal year 1998, we expensed $229,066 for research and development.

Losses

We had a loss of $524,793 for the fiscal year 1998 and of $366,223 for the
fiscal year 1999. The principal reasons for the significant decrease in losses
was the reduced expenses caused by fewer sales and other income and efforts to
reduce expenses. The net loss per share remained the same for both periods at
$.06; however, there were additional shares outstanding for the later period.

Liquidity and Capital Requirements

Our working capital deficiency at December 31, 1999 was $200,368. We had cash
and cash equivalent assets of $1,521 at December 31, 1999. Our working capital
requirements since incorporation have been funded by the sale of securities from
time to time, borrowings (including bank overdrafts) and revenues from sales.
The proceeds of these financings were used to fund losses and for developmental
activities.

At December 31, 1999, we had aggregated debt and loans from shareholders of
$77,641. At December 31, 1999 we had $48,503 in demand loans due to a bank with
interest at the bank prime rate plus 1 3/4% per annum. This loan is secured by a
general security agreement.

Of the outstanding debt, $122,227 at December 31, 1999 was a business
development loan from The Business Development Bank of Canada. This loan bears
interest at the rate of 5% above the floating base interest rate charged by the
bank. The loan is repayable at the rate of $2,739 per month and matures June
2002. We must also pay a royalty to the bank of .1942% per annum, until June
2002 which aggregated $293 in the fiscal year ended December 31, 1999. This loan
is secured by a pledge of all the assets of CM300 and shareholder guarantees.

We have a term loan with the Royal Bank of Canada. The outstanding
principal amount at December 31, 1999 was $28,871. We pay interest at 3% over
the bank's prime rate, and the loan matures in May 2000. This loan is secured by
a general pledge of the assets of CM300 and shareholder guarantees.

We are negotiating interim and long term financing which is anticipated to
be through private placements of debt securities and warrants to purchase common
stock. We believe the private placements will be with individual investors who
are "accredited investors." The terms of these arrangements are still being
negotiated and are contingent on many factors, including determination of the
final terms, due diligence by the purchasers, regulatory compliance and
obtaining the commitment of the investors. Funding is also dependent on our
business and financial prospects. No assurance can be given that we will obtain
any portion or all of these funds.

We require additional financing to continue to develop our business.
Principally, funds are required for product research and development,
manufacturing and production, marketing activities and operational losses. If we
do not increase our income or obtain funding, we will not be able to continue
our business. Management cannot determine how long we will require to fund
operational losses and our other activities with funds from the sale of
securities and credit arrangements. Management believes the amount of funds
required now and in the future will be substantial. Except as discussed above,
we currently have no regular sources of financing, including bank or private
lending sources, or equity capital sources. No assurance can be given that we
will be able to develop sources of financing in the future when funds are needed
or on acceptable terms.

Year 2000

Overview

We have evaluated the potential impact of the situation commonly referred
to as the "Year 2000 Issue". Y2K concerns the inability of information systems,
primarily computer software programs, to properly recognize and process date
sensitive information relating to the year 2000 and beyond. Many of the world's
computer systems currently record years in a two-digit format. These computer
systems will be unable to property interpret dates beyond the year 1999, which
could lead to business disruptions in the U.S. and internationally. The
potential costs and uncertainties associated with Y2K will depend on a number of
factors, including software, hardware and the nature of the industry in which a
company operates.

Accounting Systems and Production Equipment

Because we began operations during 1996 when the issues of Y2K were being
recognized, we believed that the computer programs we purchased were Y2K
compliant. Management made an informal assessment of our computer programs and
the products we purchased for use in our Cobra System and Virtual Speedway, and
determined that we did not have any assets with embedded computer chips or
programs that would be affected by the Y2K issues.

[Franko10 ™]

Other Entity Compliance

We do not engage in electronic data interchange with other entities on any
significant basis. Therefore, management believes that we do not have any
significant Y2K exposure directly from other entities and their failure to be
Y2K compliant. Tangentially, however, the failure of other entities to be Y2K
compliant may cause us issues, none of which are yet apparent to management.

Contingency Planning

We do not have any contingency plan for computer systems that may be found
not to be Y2K compliant in the future, nor do we have a contingency plan in the
event a critical service, supplier or customer will not be Y2K compliant.

Cost of Year 2000 Compliance

We did not spend any amount on Y2K compliance nor do we expect to have to
spend any material amount on Y2K compliance in the future.

ITEM 7. FINANCIAL STATEMENTS.

Index to Consolidated Financial Statements: Page
----

Report of Citrin Cooperman & Company, LLP .............................F-1

Consolidated Balance Sheets as of December 31, 1999 and 1998...........F-2

Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998........................................F-3

Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended December 31, 1999 and 1998....................F-4

Consolidated Statements of Cash Flows for the years ended
December 31, 1999 and 1998........................................F-5

Notes to the Consolidated Financial Statements.................F-6 to F-10

INDEPENDENT AUDITORS' REPORT

Board of Directors
Cyber Mark International Corp.

We have audited the consolidated balance sheets of Cyber Mark International
Corp. as at December 31, 1999 and 1998 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years then ended.
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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles 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 aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Cyber Mark
International Corp. as at December 31, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has suffered significant losses from
operations, has breached certain loan covenants and has deficiencies in working
capital and stockholders' equity. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 10. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Citran Cooperman & Company, LLP

CERTIFIED PUBLIC ACCOUNTANTS

April 7, 2000
New York, New York

CYBER MARK INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998



1999 1998
-------- ------

ASSETS

Current assets:
Cash and cash equivalents $ 1,521 $106,865
Investment tax credits receivable 163,208 252,401
Accounts receivable 9,281 11,447
Inventory 24,479 87,573
Prepaid expenses 5,004 20,879
-------- --------
Total current assets 203,493 479,165

Property and equipment - net 142,334 181,688
-------- --------

Total assets $345,827 $660,853
======== ========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current:
Bank indebtedness $ 48,503 $ -
Accounts payable and accrued liabilities 126,619 68,559
Long-term debt - current portion 151,098 76,354
Advances from shareholder 77,641 67,337
-------- --------
Total current liabilities 403,861 212,250

Long-term debt, less current portion - 114,914
-------- --------

Total liabilities 403,861 327,164
-------- --------

Stockholders' equity (deficit):
Capital stock 610 606
Additional paid in capital 740,367 720,371
Cumulative translation adjustment (41,217) 4,283
Retained earnings (deficit) (757,794) (391,571)
-------- --------

Total stockholders' equity (deficit) (58,034) 333,689
-------- --------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $345,827 $660,853
======== ========

See accompanying notes to consolidated financial statements.

CYBER MARK INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998



1999 1998
Revenues:
Sales $ 151,184 $ 288,873
Other 90,665 14,783
--------- ---------
241,849 303,656

Cost of sales 126,888 170,381
--------- ---------

Gross profit 114,961 133,275
--------- ---------

Expenses:
Wages and benefits 66,698 99,952
Professional fees 52,070 52,949
Interest 25,373 42,580
Rent and occupancy 72,394 39,818
Office and general 15,930 33,741
Trade shows and events 15,158 32,761
Marketing 22,191 25,585
Bad debts - 24,498
Telephone 10,374 12,929
Travel and entertainment 4,865 11,510
Automobile 7,583 7,233
Insurance 7,084 6,497
Consulting fees 8,215 5,145
Depreciation and amortization 39,353 49,184
Research and development 133,896 229,066
--------- ---------
481,184 673,448
--------- ---------

Loss before income taxes (366,223) (540,173)

Income tax recovery - deferred - (15,380)
--------- ---------

NET LOSS $(366,223) $(524,793)
========= =========

Loss per share $ (0.06) $ (0.06)
========= =========

See accompanying notes to consolidated financial statements.

CYBER MARK INTERNATONAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
Total
Share-
Common Stock Additional Retained Cumulative Comprehen- holder's
------------ Paid in Earnings Translation sive Income Equity
Shares Amount Capital (Deficit) Adjustment (Loss) (Deficit)
--------- ------ --------- ---------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1998 4,250,000 $ 425 $ - $ 133,222 $ 1,568 - $135,215

Common stock issued to officer 100,000 10 - - - - 10

Common stock issued in private
placement July 2, 1998 1,330,000 133 499,947 - - - 500,080

Common stock issued upon
conversion of loan and interest 46,000 4 22,996 - - - 23,000

Common stock issued in private
placement September 18, 1998 186,000 19 119,856 - - - 119,875

Common stock issued in private
placement October 1, 1998 152,300 15 77,572 - - - 77,587

Net loss (524,793) $(524,793)
Other comprehensive income:
Cumulative translation adjustment 2,715 2,715
---------
Total comprehensive loss $(522,078) (522,078)
---------- -------- --------- --------- ----------- ========= ---------
Balance - December 31, 1998 6,064,300 606 720,371 (391,571) 4,283 333,689

Common stock issued in private
placement March 10, 1999 40,000 4 19,996 20,000

Net loss (366,223) $(366,223)
Other comprehensive loss:
Cumulative translation adjustment (45,500) (45,500)
----------
Total comprehensive loss $(411,723) (411,723)
---------- -------- --------- --------- --------- ========== ---------
Balance - December 31, 1999 6,104,300 $ 610 $740,367 $(757,794) $(41,217) $(58,034)
========== ======== ========= ========= ======== =========
</TABLE>

See accompanying notes to consolidated financial statements.

[Franko10 ™]

CYBER MARK INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


1999 1998
--------- -------
Cash flows from operating activities:
Net loss $(366,223) $(524,793)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 39,353 49,184
Deferred income taxes (15,380)
Changes in assets and liabilities:
Investment tax credits receivable 101,946 (53,405)
Accounts receivable 4,877 (248)
Inventory 66,600 12,552
Prepaid expenses 17,521 (14,568)
Accounts payable and accrued
liabilities 56,195 23,520
--------- ---------

Net cash used by operating
activities (79,731) (523,138)
--------- ---------

Cash flows from investing activities:

Purchase of property and equipment (42,528)
Development costs 76,273
--------- ---------
Net cash provided by investing
activities 33,745
--------- ---------

Cash flows from financing activities:

Issuance of capital stock 20,000 720,617
Long-term debt (31,546) (79,467)
Advances from shareholder 5,927 (21,293)
Bank indebtedness 28,046 (37,150)
--------- ---------

Net cash provided by financing
activities 22,427 582,707
--------- ---------

Effect of exchange rate changes on cash (48,040) 13,551
--------- ---------

Increase (decrease) in cash and cash
equivalents (105,344) 106,865

Cash and cash equivalents - beginning 106,865
---------- ---------

CASH AND CASH EQUIVALENTS - ENDING $ 1,521 $ 106,865
========== =========

See accompanying notes to consolidated financial statements.

CYBER MARK INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

On July 2, 1998, the shareholders of The CM 300 Corp. ("CM300") exchanged
all their issued common shares for common shares of Cyber Mark
International Corp. ("Cyber"). The acquisition of CM300 by Cyber is a
reverse takeover whereby CM300 is identified as the acquiring company.
Cyber was incorporated in Delaware in June 1998, and prior to the
acquisition Cyber was inactive. The consolidated financial statements
include the operations of CM300 for the years. The consolidated financial
statements include the accounts of the Company and its subsidiary after
eliminating all intercompany accounts and transactions.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of
three months or less from time of purchase to be cash equivalents.

Inventory

Inventory is valued at lower of cost or market. Cost is determined on the
first-in-first-out basis.

Property and equipment

Property and equipment are stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful life of the assets, usually
five years. For leasehold improvements, depreciation is provided on a
straight-line basis over five years.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates and assumptions.

Financial instruments

The Company considers the fair value of all financial instruments to be not
materially different from their carrying value at year end.

CYBER MARK INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Translation of foreign currencies

The Company uses the local currency as the functional currency and
translates all assets and liabilities at year-end exchange rates, all
income and expense accounts at average rates and records adjustments
resulting from the translation in a separate component of common
shareholders' equity.

NOTE 2 - PROPERTY AND EQUIPMENT

Accumulated
Depreciation Net Book Value
and Amorti- --------------
Cost zation 1999 1998
-------- ------- -------- --------
Manufacturing equipment $ 84,801 $ 48,245 $ 36,556 $ 46,464
Furniture and fixtures 12,336 7,212 5,124 6,457
Office and ship equipment 23,480 8,329 15,151 18,692
Entertainment equipment 75,595 33,219 42,376 53,398
Moulds 14,932 4,267 10,665 13,439
Software 4,486 4,486 - 2,243
Leasehold improvements 51,283 18,821 32,462 40,995
-------- -------- -------- --------
$266,913 $124,579 $142,334 $181,688
======== ======== ======== ========

Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $39,353 and $49,184, respectively.

NOTE 3 - BANK INDEBTEDNESS

The bank indebtedness is payable on demand, bears interest at the bank
prime rate plus 1 3/4% per annum and is secured by a general security
agreement and a postponement of claim signed by the shareholder.

NOTE 4 - LONG-TERM DEBT

Business development loan bearing interest
at a rate of 5% above the bank's daily
floating base interest rate, repayable in
monthly installments of $4,200 (Canadian)
and matures December, 2002. The Company is
required to pay the bank additional interest
in the form of a royalty of 0.1942% on the
combined sales of the Company. The royalty
is payable monthly at the rate of one twelfth
of .1942 percent of combined sales. Total
royalties paid during 1999 and 1998 were $263
and $4,190, respectively. The loan is secured
by a general security agreement, joint and
several guarantees of the shareholders,
assignment of shareholder loans, life insurance
on the lives of the shareholders and assignment
of property insurance.

CYBER MARK INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

1999 1998
----- -----
NOTE 4 - LONG-TERM DEBT (CONTINUED)

As discussed in Note 10, the Company has
breached certain loan covenants as of
December 31, 1999. Because of this the
entire debt is classified as current at
December 31, 1999. $122,227 $131,483

Bank term loan bearing interest at the bank
prime rate plus 3% perannum, repayable in
monthly installments of $5,555 (Canadian),
maturing May, 2000. Monthly principal
payments were deferred until September,
1998 at which time all principal payments
in arrears were due. The loan is secured
by a general security agreement, postponement
and assignment of claim signed by the share-
holder and a guarantee in the amount of
$100,000 by the shareholder 28,871 59,785
--------- -------

151,098 191,268

Less: current portion 151,098 76,354
--------- -------
$ - $114,914
========= ========
NOTE 5 - ADVANCES FROM SHAREHOLDER

These advances are unsecured and non-interest bearing with no specific
terms of repayment.

NOTE 6 - CAPITAL STOCK
1999 1998
------- ------
Authorized Issued
---------- --------
500,000 Preferenced shares,
issuable in series,
par value $.001
10,000,000 6,104,300 Common shares, par
(1999) and value $.0001 $ 610 $ 606
6,064,300 ======== =======
(1998)

During the year ended December 31, 1999, the Company issued 40,000 common
shares in private placements for $20,000.

[Franko10 ™]

CYBER MARK INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 6 - CAPITAL STOCK (CONTINUED)

During the year ended December 31, 1998, the Company issued 1,768,300
common shares in private placements for $697,552 and converted principal
debt and interest of $23,000 for 46,000 common shares. In addition,
3,930,000 common shares were issued in exchange for all the issued and
outstanding shares of CM300, which along with the initial 320,000 shares
have been reflected back to January 1, 1997 in the accompanying
consolidated financial statements.

During 1998, the Company adopted a plan for granting stock options to
employees to purchase common stock at a price not lower than its fair
market value at the respective date of grant. On August 6, 1998 options to
purchase a total of 490,000 common shares at prices ranging from $.50 to
$1.25 per share were granted to certain employees. The options are
exercisable until three years from date of grant subject to certain
conditions.

The Company applies Accounting Principles Board Opinion No. 25 (Accounting
for Stock Issued to Employees) and related interpretations in accounting
for its stock option plans. Accordingly, no compensation expense is
recognized when options are granted. Had compensation expense been
determined based on the fair market methodology prescribed SFAS No. 123
(Accounting for Stock-Based Compensation) issued by the Financial
Accounting Standards Board in October, 1995, net earnings for 1998 would
have been reduced by approximately $29,000 for options granted during 1998.
The fair value for options granted during 1998 was estimated at $.07 on the
date of grant using the Black-Scholes option-pricing model with the
following assumptions: dividend yield 0%, volatility o%, risk-free interest
rate of 5.25% and an expected life of 3 years.

NOTE 7 - INCOME TAXES

The Company's deferred taxes as of December 31, are estimated as follows:

1999
--------
Canada U.S. Total
--------- -------- --------
Net operating loss carryforward $ 388,000 $ 6,000 $ 394,000
Valuation allowance (388,000) (6,000) (394,000)
--------- -------- ---------
Net deferred tax asset $ - $ - $ -
========= ======== =========

1998
--------
Canada U.S. Total
--------- -------- --------
Net operating loss carryforward $ 210,000 $ - $ 210,000
Valuation allowance (210,000) - (210,000)
--------- -------- ---------
Net deferred tax asset $ - $ - $ -
========= ======== =========

A valuation allowance has been applied to offset the deferred tax asset in
recognition of the uncertainty that such benefits will be realized.

CYBER MARK INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 7 - INCOME TAXES (CONTINUED)

At December 31, 1999, the Company has available net operating loss
carryforwards for U.S. tax reporting purposes of approximately $15,000
which is available to offset future taxable income, if any. This
carryforward expires in 2019. For Canadian income tax purposes, the Company
has available net operating loss carryforward of approximately $869,000
which are available to offset future taxable income, if any. These
carryforwards expire in 2004, 2005 and 2006. The deferred tax recovery in
1998 represents a 1997 Canadian deferred tax liability which was reversed
during 1998.

NOTE 8 - LOSS PER COMMON SHARE

Loss per common share is based on the weighted average number of common
shares outstanding during each period. Loss per common share is the same
for both basic and dilutive since stock options would be antidilutive and
therefore not included in the calculation.

NOTE 9 - COMMITMENTS

The Company is committed under various operating leases for occupied
premises and equipment which expire in the year 2003. Future minimum annual
payments (exclusive of taxes, insurance and maintenance costs) as of
December 31, 1998 as are follows:

2000 $ 55,354
2001 57,480
2002 54,162
2003 9,295
--------
$176,291
========

Rent expense for the years ended December 31, 1999 and 1998 amounted to
$72,394 and $39,818, respectively.

NOTE 10 - GOING CONCERN

As shown in the accompanying financial statements, the Company has incurred
significant losses over the past two (2) years. In addition, as of December
31, 1999, the Company has breached certain loan covenants and has
deficiencies in working capital and stockholders' equity. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.

The Company's ability to continue as a going concern is dependent upon
future profitability and its ability to obtain additional or alternative
financial support from shareholders or other if required. The financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern.

Management's plans include continuing to actively pursue new revenue
sources as well as obtaining financing through private placements of debt
securities and long term financing.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.


PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Our officers and directors are as follows:

Name Age Position
- - ---- --- ---------
Samuel Singal 51 Chairman of the Board, Chief Operating
Officer and sole Director
Joseph Byck 67 Treasurer
Monika Runge 24 Secretary


Mr. Samuel Singal was our founder and the founder of our principal
subsidiary, CM300. Mr. Singal has been our Chairman and Chief Operating Officer
since 1998 and the President of CM300 since 1996. From 1994 until 1996, Mr.
Singal was employed at Cybermind Systems, where he held the position of
President.

Mr. Joseph Byck has been the Marketing Director of CM300 since 1996. Mr.
Byck has been our Treasurer since July 1999. From 1994 to 1999, Mr. Byck was the
president of Herbs International Corp., a company that manufacturers specialty
herbal products related to the neutralizing effects of alcohol.

Ms. Monika Runge has been employed by CM300 since February 1999. From
February 1997 to date, Ms. Runge has been a student for a degree in business
administration at York University, Ontario and from September 1996 to February
1997 she was a student at Trinity Western University in British Columbia. From
May 1994 to September 1996, Ms. Runge held various positions with Cybermind
Canada Inc.

Board Meetings and Committees

During the fiscal year ended December 31, 1999, our board of directors took
unanimous written action on one occasion. The board of directors has established
no committees. Directors serve for a term of one year after election or until
their earlier resignation or their successor is elected or appointed and
qualified.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers, directors and persons who beneficially own more than ten percent
of a registered class of our equity securities ("ten-percent shareholders") to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and ten-percent shareholders are also
required to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of the copies of such forms furnished to us, and written
representations that no other reports were required, we believe that during the
fiscal year ended December 31, 1999, all of our officers, directors and
ten-percent shareholders complied with the Section 16(a) reporting Requirements.

ITEM 10. EXECUTIVE COMPENSATION.

We currently do not pay any salaries to Messrs. Singal or Byck. We pay a
monthly salary of $1,280 to Ms. Runge.

Option Grants

No options were granted to executives in the fiscal year ended December 31,
1999.

Remuneration of the Board of Directors

A director who is an employee does not receive any compensation as a
director. There is no plan in place for compensation of persons who are
directors who are not our employees.

Keyman Life Insurance

We do not own life insurance covering the death of any officer, director or
key employee.

Employment Contracts

None of our executive officers are employed under a written contract of
employment.

1998 Stock Option Plan

We have a Performance Equity Plan which provides for the issuance of
stock-based awards for up to 260,000 shares of common stock. The awards under
this plan may be granted separately or together with other awards. The awards
include incentive and non-incentive stock options, stock bonuses and cash
payment awards. Incentive stock options may only be granted to persons who are
our employees. Other forms of awards may be granted to consultants, directors,
employees and officers of the Company. We have not granted any options under
this plan.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information as of March 30 , 2000
information regarding the beneficial ownership of our common stock based upon
the most recent information available to us for (i) those persons or group of
persons known by us to beneficially own more than five percent (5%) of our
voting securities, (ii) each director and director-nominee of Cyber Mark and
(iii) all executive officers and directors as a group.

Number of
Shares of Percent of
common stock Ownership of
Beneficially* common stock
Name of Beneficial Owner Owned Outstanding
- - ------------------------ ------------ -----------

Samuel Singal. . . . . . . . . . . . . . . . . . 4,130,000(1) 67.7%
Chancery Corporate Services. . . . . . . . . . . 1,000,000(2) 16.4%
Directors and officers as a group (3 persons) . 4,703,000(3) 73.4%

- - ------------------------------------
* Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock
issuable upon the exercise of options or warrants currently exercisable, or
exercisable or convertible within 60 days, are deemed outstanding for computing the percentage ownership of the person holding such options or
warrants but are not deemed outstanding for computing the percentage
ownership of any other person.

[Franko10 ™]

(1) The address for Mr. Singal is care-of Cyber Mark International Corp. at 359
Enford Road, Unit 1, Richmond Hill, Ontario, Canada L4C 3G2.

(2) The address for Chancery Corporate Services ("CCS") is Nassau, Bahamas. CCS
is the corporate trustee with full voting and dispositive authority for the
trusts which own Tinto Inc. and Dungavel Inc. Each of Tinto Inc. and
Dungavel Inc. own 500,000 shares of Common Stock.

(3) Includes 300,000 shares of common stock under currently exercisable options
and excludes 100,000 shares of common stock under options which vest in the
future.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits Filed.

See Exhibit Index appearing later in this Report.

(b) Reports on Form 8-K.

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

CYBER MARK INTERNATIONAL CORP.
(Registrant)

Dated: April 12, 2000 /s/Samuel Singal
By: ____________________________________
Name: Samuel Singal
Title: President and Chief Operating
Officer

EXHIBIT INDEX

Incorporated
By Reference
Exhibit from No. in
Number Description Document Document Page
- - ------- ------------ ------------ -------- --------

3.1 Certificate of Incorporation A 3.1
3.2 By-Laws A 3.2
4.1 Form of Common Stock Certificate A 4.1
10.1 1998 Performance Equity Plan A 10.1
21 Subsidiaries of Registrant A 21.1
27 Financial Data Schedule - - Filed
Herewith

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

A. Registrant's Registration Statement on Form 10-SB filed August 3, 1999
(File No. 0-26919).