SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to . ------------ --
Commission file number: I-9418
CYBERAMERICA CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Salt Lake City, Utah 84101
(Address of principal executive office) (Zip Code)
(801) 575-8073
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes XX No
The number of outstanding shares of the issuer's common stock, $0.001 par
value (the only class of voting stock), as of July 31, 1996 was 8,290,472.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................5
PART II
ITEM 1. LEGAL PROCEEDINGS....................................................10
ITEM 5. OTHER INFORMATION....................................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................12
SIGNATURES....................................................................13
INDEX TO EXHIBITS.............................................................14
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
PART I
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets..................................................F-1
Consolidated Statements of Operations........................................F-3
Consolidated Statements of Stockholders' Equity..............................F-4
Consolidated Statements of Cash Flows........................................F-5
Condensed Notes to Consolidated Financial Statements.........................F-6
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 (Unaudited) and December 31, 1995
ASSETS
June 30 December 31
1996 1995
--------- ---------
CURRENT ASSETS
Cash ........................................... $ 15,038 $ 18,605
Receivable - brokerage account ................. 815 3,337
Accounts receivable - trade .................... 726,991 248,129
Accounts receivable - related parties .......... 593,870 200,017
Accounts receivable - other .................... 185,396 --
Note receivable - current portion .............. 12,458 12,000
Inventories .................................... -- 36,371
Prepaid expenses ............................... 210,167 36,677
----------- -----------
TOTAL CURRENT ASSETS ............................. 1,744,735 555,136
----------- -----------
PROPERTY AND EQUIPMENT ........................... 7,159,712 4,860,260
----------- -----------
OTHER ASSETS
Investment - securities ....................... 1,169,610 968,396
Mortgages receivable .......................... 353,000 353,000
Notes receivable - net of current portion ..... 734,525 653,027
Investments - other ........................... 221,341 244,321
Deposits ...................................... 46,187 16,345
Media and other credits ....................... 252,443 223,885
-----------
TOTAL OTHER ASSETS ............................... 2,777,106 2,458,974
----------- -----------
$11,681,553 $ 7,874,370
=========== ===========
See notes to consolidated unaudited financial statements.
F-1
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
June 30, 1996 (Unaudited) and December 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 December 31
1996 1995
-------- ---------
CURRENT LIABILITIES
Notes payable ............................... $ -- $ 57,493
Current maturities of long-term debt ........ 352,594 149,059
Accounts payable ............................ 399,032 328,751
Accounts payable - related parties .......... 174,947 17,413
Accrued liabilities ......................... 172,589 160,000
Interest .................................. 23,246 19,330
Real estate taxes ......................... 361,244 317,751
Payroll and related taxes payable ......... 137,727 143,200
Deferred income ............................. 33,152 25,979
Deposit - real estate sales ................. 171,900 171,900
------------ ------------
TOTAL CURRENT LIABILITIES ...................... 1,826,431 1,390,876
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, less current portion ........ 3,519,400 2,764,757
------------
MINORITY INTEREST .............................. 1,149,333 347,923
------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock par value $.001; 20,000,000
shares authorized; No shares issued
Common stock par value $.001; 200,000,000
shares authorized; 8,206,618 and 5,886,799
shares issued ............................. 8,207 5,887
Additional paid-in capital .................. 14,313,420 11,428,674
Stock subscriptions receivable .............. (1,194,712) --
Accumulated deficit ......................... (7,940,526) (8,063,747)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ..................... 5,186,389 3,370,814
------------
$ 11,681,553 $ 7,874,370
============ ============
See notes to consolidated unaudited financial statements.
F-2
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
---------------------------- -----------------------
1996 1995 1996 1995
---------------------------- ------------------------
Revenue
Consulting ............................................. $ 791,812 $ 136,026 $ 1,557,440 $ 681,721
Rentals ................................................ 117,871 42,678 223,089 98,264
Other .................................................. 3,442 1,470 63,234 10,081
----------- ----------- ----------- ---------
Total Revenue ..................................... 913,125 180,174 1,843,763 790,066
Cost of Revenue
Consulting ............................................. 359,306 245,865 701,468 478,263
Rentals ................................................ 143,782 96,548 246,119 154,481
Other .................................................. 3,921 1,813 44,168 5,037
----------- ----------- ----------- ---------
Total Cost of Revenue ............................. 507,009 344,226 991,775 637,781
Gross Profit (Loss) ............... 406,116 (164,052) 852,008 152,285
Selling, general and administrative expenses .............. 372,885 269,784 709,264 152,285
Environmental Clean-up ................................. -- -- 20,000 --
----------- ---------- ---------- ----------
Total Selling, general and administrative expenses 372,885 269,784 729,264 506,025
Operating Profit (Loss) ............... 33,231 (433,836) 122,744 (353,740)
----------- ----------- ----------- -----------
Other income (expense):
Interest income ........................................ 10,466 12,958 11,020 28,838
Interest expense ....................................... (99,603) (45,796) (171,462) (75,201)
Gain (Loss) from sale of assets ........................ -- 71,660 -- 71,660
Gain (Loss) from investments ........................... (43,807) 33,812 73,066 142,562
Loss on foreclosure - related party .................... -- (519,342) -- (519,342)
Other income (expense) ................................. 17,102 66,870 37,490 71,490
----------- ----------- ----------- -----------
Total Other Income (Expense) ............... (115,842) (379,838) (49,886) (279,993)
Income (Loss) Before Discontinued Operations .............. (82,611) (813,674) 72,858 (633,733)
----------- ----------- ----------- -----------
Gain (Loss) from Discontinued Operations ............... -- 28,525 -- 28,525
----------- ----------- ----------- -----------
Minority Interest in Loss ................................. 31,827 -- 50,363 --
----------- ----------- ----------- -----------
Net Income (Loss) ............... $ (50,784) $ (785,149) $ 123,221 $ (605,208)
============ =========== =========== ===========
Income (loss) per share:
Income (loss) before discontinued operations ........... $ (0.01) $ (0.23) $ 0.01 (0.20)
Gain (loss) from discontinued operations ............... 0.00 0.01 0.00 0.01
Minority Interest in loss .............................. 0.00 0.00 0.01 0.00
------------ ---------- ----------- -----------
Net Income (loss) ............... $ (0.01) $ (0.22) $ 0.02 $ (0.19)
=========== =========== =========== ===========
Weighted average number of shares outstanding .......... 6,820,487 3,511,133 6,361,516 3,114,071
See notes to consolidated unaudited financial statements
F-3
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For Six Months Ended June 30, 1996 (Unaudited)
Additional Stock Total
Common Stock Paid-in Subscriptions Accumulated Shareholders'
Shares Amount Capital Receivable Deficit Equity
BALANCES AT DECEMBER 31, 1995 ... 5,886,799$ 5, 887 $11,428,674 $ -- $ (8,063,747) $ 3,370,814
Common Stock Activity:
Issued for services ......... 794,818 795 396,613 -- -- 397,621
Issued for assets ........... 225,000 225 308,775 -- -- 309,000
Issued for cash ............. 1,300,001 1,300 2,179,145 -- -- 2,180,445
Stock Subscription Receivable -- -- -- (1,194,712) -- (1,194,712)
Net Profit for period ........... -- -- -- -- 123,221 123,221
------------ ---------- ----------- ----------- ----------- ----------
BALANCES AT JUNE 30, 1996 ....... 8,206,618 $ 8,207 $ 14,313,420 $(1,194,712) $(7,940,526) $ 5,186,389
=========== =========== =========== ============ =========== ============
See notes to consolidated financial statements.
F-4
CYBERAMERICA CORPORATION FORMERLY KNOWN AS
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
Unaudited
1996 1995
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ....................................... $ 123,221 $ (605,208)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and Amortization ...................... 111,204 88,500
Stock issued for assets and debt ................... 309,000 62,886
Loss (gain) on foreclosure - related party ......... -- 519,342
Loss (gain) on investments ......................... (73,066) (142,562)
Stock issued for services and expenses ............. 397,621 99,784
Minority Interest in loss .......................... 50,363 --
(Increase) decrease in:
Accounts receivable - trade ......................... (478,862) (82,117)
Receivable - related parties ........................ (393,853) 52,402
Other current assets ................................ (322,973) (50)
Increase (decrease) in:
Accounts payable .................................... 70,281 23,086
Payables - related parties .......................... 157,534 79,428
Accrued liabilities ................................. 54,525 (2,040)
Current portion of long-term debt ................... 146,042 (44,636)
Deferred income ..................................... 7,173 (137,324)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 160,732 $ (88,509)
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of land sold ..................................... -- 77,840
Minority Interest in Subsidiary ....................... 825,000 --
Purchase of assets .................................... (2,891,719) (113,852)
----------- -----------
NET CASH FLOWS (USED) IN INVESTING ACTIVITIES .. $(2,066,719) $ (36,012)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash .................................. 2,180,445 283,941
Stock subscription receivable .......................... (1,194,712) --
Proceeds from borrowing ................................ 1,012,372 --
Payment on debt ........................................ (95,685) (50,348)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...... $ 1,902,420 $ 233,593
NET INCREASE (DECREASE) IN CASH ........................... (3,567) 109,072
CASH AT BEGINNING OF PERIOD ............................... 18,605 29,009
----------- -----------
CASH AT END OF PERIOD ..................................... $ 15,038 $ 138,081
=========== ===========
See notes to consolidated unaudited financial statements
F-5
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
NOTE 1: Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have
been prepared by management in accordance with the instructions for Form 10-QSB
and therefore, do not include all information and footnotes required by
generally accepted accounting principles and should therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
fiscal year ended December 31, 1995.
In management's opinion, the accompanying consolidated unaudited condensed
financial statements contain all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of the results for the
interim periods presented. The interim operation results are not necessarily
indicative of the results for the fiscal year ending December 31, 1996.
Certain prior year amounts have been reclassified to conform to the 1996
classification.
NOTE 2: Revenue Recognition
Revenue from the sales of Internet mall sites is generally tied to certain
contingencies relating to product development and sales of the clients'
securities. As such, recognition of any revenue is postponed until those
contingencies are met. The contracts for the Internet mall sites also provide
for the client's payment of costs associated with the development and service of
the mall site. Revenue from these sources is generally recognized as the related
costs are incurred.
NOTE 3: Stock Option Plans and Agreement
On January 18, 1996 the Company established a new stock option plan for its
employees and consultants ("The 1996 Stock Option Plan of The Canton Industrial
Corporation"). Each option issued under the plan has a term of one year and an
exercise price of ninety percent (90%) of the bid price on the day of exercise.,
unless otherwise established by the Board of Directors. Under the plan, up to
one million (1,000,000) shares can be issued.
During the quarter ended June 30, 1996, the Company granted options under
the plan for 561,605 shares, of which 343,261 shares were exercised in the same
quarter.
As of June 30, 1996 no options had been exercised pursuant to the Stock
Option Agreements with AZ Professional Consultants ("AZ") and Investment
Sanctuary Corporation ("ISC") which were entered into on December 22, 1995.
Under the agreements, the Company granted options giving AZ and ISC the right to
purchase a quantity of shares of the Company's common stock equivalent to
twenty-six percent (26%) and twenty-five percent (25%), respectively, of the
issued and outstanding shares of the Company's common stock on the exercise
date, with an established price of $0.59 per share.
NOTE 4: Contingencies
In March 1995, Xeta Corporation filed suit against the Company seeking
recovery of $116,500 which Xeta contends was fraudulently transferred to the
Company by ATC, a client of the Company's subsidiary Canton Financial Services
Corporation, in order to avoid payment of a judgment held by Xeta against ATC.
On April 16, 1996 the Court granted Summary Judgment against the Company. An
objection to the entry of such a judgment has been filed and the Company
continues to dispute the allegations.
CYBERAMERICA CORPORATION FORMERLY KNOWN AS
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
NOTE 4: Contingencies (continued)
KMC Foods, Inc. ("KMC"), a subsidiary of the Company, received a claim from
the Division of Revenue of the Department of Finance for the State of Delaware
in excess of $300,000. The claim is for alleged taxes due based upon the gross
revenues of KMC for the tax period April 1, 1989 through March 31, 1992. This
tax period is prior to the purchase of KMC by the Company. Prior management has
assured the Company that the tax does not apply as all sales of products were
outside the State of Delaware, and thus the Delaware tax is not due. The Company
has retained an attorney in Delaware to resolve the liability issue.
In March 1994, the State of Illinois filed an action against the Company
seeking cleanup of tires and toxic paint drums at its Canton, Illinois warehouse
site. The Court issued an Interim Order requiring the deposit of $140,000 into
an escrow account and required the complete removal of the tires by December 31,
1995. The Company did not deposit the required funds. In August 1995, the
Company began removal of the tires from the facility. In September 1995, the
Company was informed by the Illinois Environmental Protection Agency ("IEPA")
that it had rejected the Company's proposed plan for removal and was proceeding
with its own removal plan. The Company sought relief in Court from this
decision, but was not successful. The State concluded work in the first quarter
of 1996 believing all waste tires had been removed from the site.
In April 1996, the State informed the Company of its intent to seek
recovery of its estimated cost of $325,000 incurred in the removal of tires. The
Company believes the ultimate intent of the Interim Order, the complete removal
of the tires, has been met because the tires had been completely removed or
reduced to the IEPA's control but not within the Court's exact specifications.
The State has filed a complaint with the Illinois Pollution Control Board
seeking recovery of these funds. The Company and the State are currently
attempting to resolve a dispute about the number of tires actually removed from
the site.
On July 1, 1996, Steven A. Christensen, the former president of the
Company, filed suit against the Company seeking recovery of wages, benefits,
bonuses, and other items. The Company believes that it has no further obligation
to Christensen and that he has been justly and completely compensated for his
term as an employee and an officer. The Company intends to defend the suit and
will deny any liability.
The Company believes that the ultimate outcome of all pending litigation
matters should not have a material adverse effect on the financial position of
the Company; however it is possible that the results of operations or cash flows
of the Company in any particular quarterly or annual periods or the financial
condition of the Company could be materially affected by the ultimate outcome of
certain pending litigation matters. Management is unable to derive a meaningful
estimate of the amount or range of any possible loss in any particular quarterly
or annual period or in the aggregate.
NOTE 5: Stockholders' Equity
During the quarter ended June 30, 1996, the Company issued 727,527 shares
of its common stock in exchange for services provided to the Company by
employees and consultants; 225,000 shares where exchanged for assets; and
1,300,001 were issued under Regulation S for cash and pursuant to promissory
notes. At June 30, 1996, the Company is owed $1,194,526 under the promissory
notes by the various entities for the 1,300,001 shares of the Company's common
stock that they purchased.
On May 15, 1996, the Company paid a property dividend in the form of common
stock of Oasis Hotel, Resort & Casino I, Inc. ("OHRCI") and Oasis Hotel, Resort
& Casino II, Inc. ("OHRCII"). The dividend declared March 4, 1996 was one share
in each OHRCI and OHRCII for every 100 shares of the common stock of the Company
owned by each shareholder of record on March 27, 1996.
CYBERAMERICA CORPORATION FORMERLY KNOWN AS
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
NOTE 5: Stockholders' Equity (continued)
On June 1, 1996, the Company paid a property dividend in the form of common
stock of Zahav, Inc. ("Zahav") and Cyber Information, Inc. ("CI"). The dividend
declared March 21, 1996 was one share in each Zahav and CI for every 100 shares
of common stock of the Company owned by each shareholder of record on April 23,
1996.
On June 14, 1996, the Company declared a property dividend in the form of
common stock of INFOTECH International, Inc. The dividend declared was one share
in INFOTECH for every 100 shares of common stock of the Company owned by each
shareholder of record on June 24, 1996.
NOTE 6: Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other material
change in the information disclosed in the notes to the financial statements
included in the Company Annual Report on Form 10-KSB for the year ended December
31, 1995. Therefore those footnotes are included herein be reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As used herein, the term "Company" refers to CyberAmerica Corporation, a
Nevada corporation f/k/a The Canton Industrial Corporation, its subsidiaries and
predecessors, unless otherwise indicated. The Company's name changed in the
second quarter of 1996 pursuant to its annual meeting of shareholders, held on
June 18, 1996. For more information on the meeting, see "Part II, Item 4
Submission of Matters to a Vote of Security Holders."
The Company provides a variety of Internet-related products and services ,
financial consulting services, and invests in real estate. The Company employs
professionals with expertise in law, accounting, finance, the Internet, public
and investor relations, and real estate. Typically, the Company provides
services and support functions that include: advice relating to regulatory
compliance; document preparation; capital formation; financial analysis;
promotional campaign; debt settlement; and general corporate problem solving.
The Company recorded a net profit for the six months ended June 30, 1996,
$123,221, although it recorded a net loss of $50,784 for the three months ended
June 30, 1996. The Company believes its overall financial condition continued to
improve during the second quarter of 1996.
INTERNET SERVICES
In the first six months of fiscal 1996, the Company began focusing on
providing Internet services through a wholly owned subsidiary, CyberMalls, Inc.
Through CyberMalls, the Company is involved in the preparation, development and
sales of Internet virtual malls within which organizations can advertise their
products and services on individual Internet locations or malls. An Internet
virtual mall is similar to a real-world shopping mall because they are both
collections of retail and informational shops, but virtual malls are accessible
via a computer. Each shop within a virtual mall has its own home page and
catalog of sales and promotional information on its goods and services.
Companies involved in the same business or industry often group their home pages
together for synergistic results.
The Company is attempting to assert its niche and gain market position
within this rapidly growing industry through its development of a revolutionary
new search engine called "Web SafariTM"surrounding a collective association of
retailers. This type of engine, as opposed to others currently on the market,
will allow people to enter a single query and have the engine search from shop
to shop and mall to mall to locate the specific item sought, and make all
purchases together. Although the Company expects this search engine to be
initially usable by the end of September 1996, no assurances can be given that
it will ever perform as described or generate any profits for the Company.
Continued sales from Internet services are expected to constitute a
substantial portion of future cash flow, although no such assurances can be
given. The reason behind the Company's name change, to CyberAmerica Corporation
from The Canton Industrial Corporation, was to reflect its entry into the
Internet and electronic commerce market.
Internet Product and Service Development
The Company is currently developing a number of products and services for
the use on the Internet, including "virtual malls." These malls will allow
individual businesses to congregate and sell their products and services. These
businesses pay "rent" for space to advertise and sell their products on the
Internet and pay for the initiation and maintenance of their information. The
Company provides both the space for this information and the technical support,
maintenance and service for these individual businesses, thus generating
revenues upon the initial sale of the malls as well as related support
functions.
As of August 12, 1996, there were 25 employees working on the Company's
Internet products and services. This number of Internet personnel represents an
increase from March 31, 1996 of approximately 20 persons. To meet anticipated
demand the Company estimates that it will need to hire additional personnel as
follows: seven computer programmers; six graphic artists; two writers; five
advertisers/marketers; and five customer service representatives. In the event
the Company is unsuccessful in hiring and keeping competent personnel, it may
experience problems in meeting clients' deadlines which could result in reduced
revenues.
The Company is in the process of attempting to secure protection for its
intellectual property, including trademarks on product names, computer and
software protocols as well as copyrights on promotional, sales and other
informative materials. A patent attorney has been retained to explore the
possibility of securing protection for these assets. A patent application
relating to the process surrounding the Company's search engine, Web SafariTM,
will most likely be made upon the completion of the engine. However, no
assurances can be given that this application will be submitted or approved at
any time in the future.
As part of the sales price for the virtual malls, the Company customizes
each mall area to the purchaser's desires. This includes ongoing modifications
and the incorporation of any technological advances. For example, the virtual
mall software is being designed to contain encryption technology that will make
the malls a safer haven for the conduct of business. Any advancements in this
procedure would be immediately passed on to the mall customers.
Each virtual mall can house up to 10,000 different vendors. The Company is
currently selling entire virtual malls that are under construction as well as
sites within various virtual malls to vendors. Many of the Company's malls are
being developed with specific themes (i.e., music, baseball, travel) which the
Company believes will provide synergistic and complementary effects for vendors.
Some of the virtual malls developed are and will continue to be wholly owned by
the Company. As of August 12, 1996, approximately 17 vendors had purchased sites
within several malls.
Shopping on the Internet for goods and services requires the use of a type
of search engine that will enable them to change location as their interest
desires. This is the reason behind the Company's focus on creating Web SafariTM.
As of August 12, 1996, this search engine was successfully tested in its first,
or alpha version and is expected to be ready for initial public use by the end
of September 1996. However, due to increasing competition in the search engine
arena, no assurances can be given that, even if Web SafariTM does operate as
planned, it will be accepted by the public or yield profits.
The Company expects to benefit from Web SafariTM both directly and
indirectly. In order to be included in the search engine's database, individual
business and mall owners will pay a yearly subscription or membership fee
averaging $15,000. Additional revenue may be generated by selling advertising
space on the "home page" to the search engine. It is also anticipated that the
search engine will generate increased sales of its virtual malls because they
will revolve around a search engine that has more practical applications and
thus be more attractive to individual businesses and to prospective mall site
owners than existing search engines.
The Company has plans to develop hundreds of virtual malls each of which
would be capable of handling hundreds of home pages. The development of these
plans hinges largely on procurement of substantial additions of technology and
personnel.
During the first six months of fiscal 1996 which were also the first six
months of CyberMalls' operations, five new clients were obtained. These clients
represent different industries, such as music, sports, health and travel. The
long-term goal of the Company's Internet division is to continue to expand its
client base to achieve substantial future cash flows.
A typical agreement between CyberMalls and a mall purchaser involves
CyberMalls representation and agreement to design and produce a virtual mall to
the satisfaction of the purchaser. Such an agreement also involves CyberMalls'
agreement to provide ongoing support and maintenance services for the mall for
as long as CyberMalls' believes the mall is not self sufficient. The mall
purchaser has the option of choosing among three alternative maintenance plans,
differing primarily in terms of complexity of the mall site, maintenance and
price of such production and support. CyberMalls is compensated for these
services by receiving either cash, equity, promissory notes secured by equity,
or some combination of these. For each mall, the total amounts to be paid to
CyberMalls over several years, based to a large extent on each mall's
performance and on arbitrary stock values range anywhere from $6 to $15 million
(see "Part I, Item 1 - Financial Statements - Notes to Consolidated Unaudited
Condensed Financial Statements Note 2: Revenue Recognition" for more information
about the accounting treatment of these sales)
Distribution
Providing Internet services is dependent to a large extent on the supply of
data communications from Sprint. The Internet is essentially based on the
interconnection of computers and networks which require telecommunication
services. Sprint is the organization the Company employs for this connection and
to the Company's knowledge is also the carrier for approximately 75% of the
Internet market. In the event this connection with Sprint is interrupted, the
Company would either seek another direct connection with a competitor of Sprint,
such as MCI or AT&T, or seek indirect connections. In either event, the
connection could be completed without a drastic interruption in its services,
however, the connection would then be, in the Company's opinion, less dependable
than Sprint.
Trends, Events or Uncertainties in the Internet Industry & the Regulation of the
Internet
The Internet and its multimedia enabled subset, the Web, have evolved from
a worldwide collection of thousands of interconnected computer networks into a
mass communications medium which allows consumers to interact electronically.
Originally a government-sponsored public network, the Internet has swiftly grown
into a cultural and economic phenomenon. Technological advances improving access
to the Web have enabled millions of consumers and businesses to use the Web as a
new vehicle for communicating, marketing, selling, buying, educating and
entertaining.
The commercial use of the Internet is still very new. Technology relating
to the Internet is developing extremely rapidly and its structure is very
complex. Although not currently subject to governmental regulations, the
possibility exists that governmental intervention will occur and regulate the
content, quantity, type of access providers, and other aspects of the Internet.
This underlying uncertainty renders an analysis of future trends unreliable and
requires strong warnings to investors that no assurances can be given that the
Company's Internet goals will be achieved or if they are, that they will benefit
the Company in any manner.
The Company has expended approximately $300,000 toward the research and
development of the Company's Internet products and services, as of June 30,
1996. The majority of these costs are being incorporated into the prices being
charged for the Company's malls. A small portion of these expenses, roughly 10%,
will be charged to the vendors within the malls.
Expenses for the research, development and sales of the Company's Internet
products and services are expected to increase in the immediate future.
Estimations of such expenses are very difficult to make because the amount of
expenses incurred will relate directly to the amount of business generated by
the Company's Internet division, which the Company cannot guarantee. The
Company's best estimate is that the Internet expenses should approximately
double before the end of the fiscal year 1996.
CONSULTING SERVICES
The types of consulting services the Company performs for its clients
include: document preparation; capital formation; financial analysis; debt
settlement; and general corporate problem solving. The Company has also begun
assisting private organizations in need of capital by preparing limited private
placement offering documentation, although the Company does not actively assist
in the actual placement (i.e., the selling of shares) of the offering.
Acceptable payments and the size of payments the Company charges for its
services vary with the volatility of the clients' securities, the amount and
nature of work involved, and the expenses related to the services being
rendered. The Company accepts consulting fees that range, in order of frequency,
from the clients' equity, to cash, to other assets. When payment is made in
equity, the number of shares to be paid is dependent on the price of the
clients' equity, when available. The Company accepts equity with the expectation
that its services will assist in the stock's appreciation, thus allowing the
Company to be paid and make a return on the payments for its services.
The number of the Company's clients, the nature of services being rendered
and the type of compensation received from clients vary greatly. At a given
time, the Company may be actively providing consulting services to more than 35
clients. Therefore, projecting the revenues that could be produced by the
Company's performance of these services is very difficult. The difficulty of
such projections is further enhanced because the Company receives a majority of
its compensation in the form of equity payments which cannot be readily resold,
thereby limiting its cash flow and reducing its liquidity. The Company estimates
that it will be able to obtain at least two additional clients per quarter for a
term of no less than one year.
During the second quarter of 1996, the Company continued efforts to expand
its client base through the addition of new clients who will utilize the
Company's consulting services. However, the Company cannot give any assurances
that its client base will continue to expand. In addition, because the number of
clients, the financial strength of clients, the types of payments and the range
of services provided can vary greatly from quarter to quarter, it is difficult
for the Company to project the revenue that can or is likely to be produced by
performing these services.
The Company generates a substantial portion of its cash flow by liquidating
the non-cash assets received as fees for consulting services. As most fees are
paid in the form of equity, the Company's ability to generate cash flows is
somewhat tied to the price of its clients' equity. Therefore, material
fluctuations in the price of clients' equity may significantly impact both the
short-term and long-term liquidity of the Company.
REAL ESTATE HOLDINGS
Part of the Company's business operations include the acquisition,
management, lease and sale of real estate. The Company has acquired a variety of
commercial properties. While most of the Company's real estate holdings are in
Utah, the Company also owns several properties in other parts of the United
States. The Company hopes to increase revenues generated from these properties
and obtain additional real estate holdings. A key to the Company's success is
the ability of management to locate and acquire real estate with little or no
cash down and turn such properties into profitable assets.
The Company manages its real estate holdings in-house and plans to fill
vacancies for the Company's property holdings in Salt Lake City, Utah. The
Company, as of June 30, 1996, had approximately 37% of its commercial space
vacant, generated approximately $39,000 in gross monthly rents, and operated at
a loss of approximately $8,600 per month as compared to a loss of approximately
$17,900 for the same period in 1995. These real estate operations are continued
despite the losses for two reasons. First, the Company hopes to eliminate the
losses by increasing the rental income from the property. Second, these
operations are pursued primarily for appreciation purposes. Thus, while the
Company seeks to minimize and reverse its real estate operating losses, its long
term goal is to generate a capital gain upon disposition that it sufficient to
offset any previous losses, although no such assurances can be given. Many of
these properties have MAI appraisals valuing them at twice the current book
value, although no assurances can be given that the values of such properties
will be maintained.
There is a risk that the Company may lose control of the properties, (e.g.,
through foreclosure), if enough funds are not derived from the rental income for
both the financing obligations and ongoing operations. Currently, due to
expanded acquisition activity and deficiencies in rental income from the
properties acquired, the Company does not have sufficient rental revenues to
service the debt and cover operating costs of all properties. The Company
currently has to use capital from other sources to fund this deficit. Although
management's goal is to increase the occupancy and rental rates and thus
increase the rental income so that such income will cover both operating costs
and debt service, no such assurances can be made. The Company's primary reason
for acquiring most of its real estate is for potential appreciation.
A wholly owned subsidiary of the Company, Cyber Real Estate, Inc., a Nevada
corporation ("CRE"), purchased a dormitory building located at 830 Edgebrook
Drive, in DeKalb, Illinois, on February 20, 1996. The property was purchased by
CRE on that date for a purchase price of $1,100,000. The purchase price was paid
by CRE's issuance of its preferred stock valued at $825,000 and a $275,000
Mortgage evidenced by a Uniform Real Estate Contract, with an interest rate of
6% per annum payable to the seller. Payments of interest only are due quarterly
with the entire balance due on or before February 20, 1997, with no penalties
for prepayment. As of August 12, 1996, CRE had located a prospective purchaser
and was in the process of negotiating a sale for the dormitory in DeKalb,
Illinois.
TAC, Inc., a Utah corporation ("TAC"), was a wholly-owned subsidiary of the
Company until the fourth quarter of 1995 when the subsidiary sold additional
shares of its common stock in a private placement offering pursuant to Rule 504.
This offering effectively diluted the Company's ownership to 51%. The sole asset
of TAC is, and has been since its inception, a warehouse is located at 5320 West
Wells Park Road, West Jordan, Utah. The building had been leased since June 1993
by TAC, Inc. ("TAC"). The Company purchased this building on June 28, 1996, for
$599,850. An existing mortgage of $306,456 was assumed and $293,394 in principal
was paid. The building has approximately 60,000 sq. ft. of interior space of
which approximately 90% is leased to eight tenants at an average of $0.25 per
sq. ft. There is currently a shortage of industrial and warehouse space in the
Salt Lake Valley and the Company feels the occupancy rate will remain high,
although no such assurances can be given.
The Company purchased an option to purchase 47,000 acres of mostly raw land
in Northwest Utah for $10,000 on June 11, 1996. The option price on this land
varies from $39-41 per acre, depending on when the closing of the purchase
occurs. As of August 12, 1996, the Company is unable to state if it will attempt
to exercise this option due to many variables surrounding the land.
During August 1996, one of the Company's wholly owned subsidiaries, KMC
Foods, Inc., a Delaware corporation, began the process of foreclosing on
property located in Cheriton, Virginia. For more information on this property
and the foreclosure proceeding, see "Part II, Item 1 - Legal Proceedings."
RESULTS OF OPERATIONS
Consulting
Revenue from consulting services for the quarter ended June 30, 1996, was
$791,812 compared to $136,026 for the second quarter of 1995. Revenue from
consulting services for the six months ended June 30, 1996 more than doubled
over the same period in 1995. The increase is attributable to an increase in the
number of clients for which the Company provides services. The costs of
providing consulting services for the second quarter of 1996 increased over the
costs of providing services for the second quarter of 1995 by $113,441. The
costs of providing consulting services for the six months ended June 30, 1996
increase by $223,205 over the same period in 1995. The increase in the costs of
providing consulting services is due to an increase in personnel expense
resulting from the addition of new employees hired to meet the needs of the
Company's expanded client base. Gross profit from consulting services during the
second quarter of 1996 was $432,506 compared with a gross loss of $109,839 for
the second quarter of 1995. Gross profit from consulting services for the six
months ended June 30, 1996 increased by $652,514 over the same period in 1995.
Rental Properties
Revenue from rental of the Company's properties in the second quarter of
1996 increased to $117,871 from $42,678 for the same period of 1995. Revenue
from rental of the Company's properties for the six months ended June 30, 1996
increased by $124,825 over the same period in 1995. This increase is primarily
due to an increase in the number of properties under the Company's control. This
is also the reason for the increase in cost of rental revenue from $96,548 for
the second quarter of 1995 to $143,782 for the second quarter of 1996.
Other Revenue
Other revenue was $3,442 for the quarter ended June 30, 1996, compared with
$1,470 for the same period of 1995. Other revenue for the six months ended June
30, 1996 was $63,234 compared with $10,081 for the same period of 1995. This
increase of $52,153 is primarily due to the Company's operation of a retail
complex in Oasis, Nevada until March 9, 1996. The Company has leased this retail
operation on a month to month basis to an operator and therefore revenue from
this source will not continue, although the Company will receive rental revenue
from this lease.
Net income for the first six months ended June 30, 1996, was $123,221
compared with a net loss of $605,208 in the first six months of 1995. Higher
revenues, resulting from an expanded client base and an increase in services
provided, and a corresponding reduction of the costs of revenue as a percentage
of revenue had led to the increase in income.
During the first two quarters of fiscal 1996, the Company expended
significant costs in developing its Internet division. For more information on
this division, please see "Part I, Item 2 - Management's Discussion and Analysis
or Plan of Operation - Internet Services." The Company expects this increase in
Internet expenses to continue.
CAPITAL RESOURCES AND LIQUIDITY
The deficiency in working capital decreased from $835,740 on June 30, 1995,
to a deficit of $81,696 at June 30, 1996. This decrease is primarily due to an
increase in receivables resulting from an expanded client base. The Company had
slightly negative cash flows during the first six months of 1996. Operating cash
flows are closely aligned with consulting revenue and the cost of providing
consulting services. The most significant cost of providing consulting service
is the payroll for the Company's approximately 80 employees. The Company expects
to increase payroll expenses if its consulting services division is increased as
a result of a substantial influx of clients.
During the quarter ended June 30, 1996, the Company issued 727,527 shares
of its common stock in exchange for services provided to the Company by
employees and consultants; 225,000 shares where exchanged for assets; and
1,300,001 were issued under Regulation S for cash and pursuant to promissory
notes. At June 30, 1996 the Company is owed $1,194,526 under the promissory
notes by the various entities for the 1,300,001 shares of the Company's common
stock that they purchased.
On May 15, 1996, the Company paid a property dividend in the form of common
stock of Oasis Hotel, Resort & Casino I, Inc. ("OHRCI") and Oasis Hotel, Resort
& Casino II, Inc. ("OHRCII"). The dividend declared March 4, 1996 was one share
in each OHRCI and OHRCII for every 100 shares of the common stock of the Company
owned by each shareholder of record on March 27, 1996.
On June 1, 1996, The Company paid a property dividend in the form of common
stock of Zahav, Inc. ("Zahav") and Cyber Information, Inc. ("CI"). The dividend
declared March 21, 1996 was one share in each Zahav and CI for every 100 shares
of common stock of the Company owned by each shareholder of record on April 23,
1996.
On June 14, 1996, the Company declared a non-cash dividend of INFOTECH
International, Inc. ("INFOTECH") or the cash equivalent of this stock. The
dividend rate was declared to be one share in INFOTECH per 100 shares of the
Company's Common Stock held of record, with the record date being June 24, 1996.
The board of directors also valued this dividend at $0.01 per 100 shares of
Common Stock held by shareholders of record. The Company expects to commence
this distribution within 30 days.
During the quarter ended June 30, 1996, the Company, through its wholly
owned subsidiary, Canton Financial Services Corporation ("CFSC"), acquired a 50%
ownership interest in Terrace Auto SuperCenter, a Florida corporation located in
Tampa, Florida ("Terrace"). In exchange for CFSC's assistance in obtaining
capital needed to satisfy one of Terrace's judgments, CFSC received 50% of
Terrace. Terrace owns a shopping mall exclusive to automotive needs. Ownership
of the mall is subject to a $1.4 million mortgage.
PART II
ITEM 1. LEGAL PROCEEDINGS
The following are legal proceedings that had material developments during
the second quarter of 1996. Other material legal proceedings are pending,
however, no developments occurred during the second quarter of 1996. (For
further information, see "Part I, Item 3 - Legal Proceedings" in the Company's
Annual Report on Form 10-KSB/A for the year ended December 31, 1995).
KMC Foods, Inc. vs. Potomac Engineering Management Systems Co. (PEMSCO) -
KMC Foods, Inc., a subsidiary of the Company, filed a Motion for Relief from the
Automatic Stay in PEMSCO's Chapter 11 bankruptcy case filed in the United States
Bankruptcy Court for the Eastern District of Virginia, Norfolk Division, Case
No. 95-23691-DHA. PEMSCO owed KMC $600,000 for full satisfaction of KMC's
secured interest in the property. However, PEMSCO did not pay this amount, and
with the Bankruptcy Court's permission, KMC is in the process of foreclosing on
the property.
Xeta Corporation vs. The Canton Industrial Corporation. Xeta originally
filed suit in the Northern District of Oklahoma. The suit was later dismissed
based on a lack of jurisdiction. The same suit was refiled on March 8, 1995, in
the United States District Court, in the Central District of Utah, Case Number
95CV-218G. Xeta seeks to recover $116,500 which it contends was fraudulently
transferred to the Company by ATC II, Inc., a client of the Company's subsidiary
Canton Financial Services ("CFS"), in order to avoid payment of a judgment held
by Xeta against ATC II. Richard Surber and Gerald Curtis, both former officers
of ATC II, are also named as individual defendants. The Company has responded to
the claims of Xeta by stating that CFS provided bona fide services to ATC II,
and that the bulk of the funds were used for operating expenditures of ATC II. A
Motion for Summary Judgment was filed by Xeta and, after a hearing by the Court,
was granted as to the Company only on April 16, 1996. An objection to the entry
of such a judgment was filed and the Company continues to dispute the
allegations.
The Canton Industrial Corporation and Canton Industrial of Salt Lake City
vs. Delmar A. Janovec and KLH Engineering Group, Inc. - Filed by the Company on
April 19, 1995, in the United States District Court, in the Central District of
Utah, Civil Case No. 2:95 CV 363G. The Company sought enforcement of the August
31, 1994 Settlement Agreement and Mutual Release to which the Company, Janovec
and KLH were parties. In the first quarter of 1996, court ordered mediation
yielded a settlement agreement involving the Company's retaining approximately
9.5 million shares of KLH common stock.
Steven A. Christensen v. The Canton Industrial Corporation, Canton
Personnel, Inc. and Allen Z. Wolfson. Suit was filed on July 1, 1996 in the
Third Judicial District Court of Salt Lake County, State of Utah Civil Action
No. 96-0904584CV, by Christensen, former President of the Company. The suit
seeks recovery of wages, benefits, bonuses, and other items. Allegations as
contained in the suit are so general at this time as to deny the Company an
adequate opportunity to respond. A motion to compel a full disclosure of the
basis upon which Christensen seeks to proceed has been filed with the court. The
Company does not believe that it has any further obligation to Christensen and
that he has been justly and completely compensated for his term as an employee
and an officer. The Company intends to defend the suit and will deny any
liability.
Possible Actions by Governmental Authorities
State of Illinois vs. The Canton Industrial Corporation - This action is
pending in the Ninth Judicial Circuit, State of Illinois, County of Fulton, Case
No. 93MR45, filed in September of 1993 and amended on January 28, 1994. The
State of Illinois sought the cleanup of tires and toxic paint drums at the site.
The State has raised an issue that drums are still located on the site and is
requesting certification of their contents and proper disposal. An Interim Order
for the cleanup of the property was entered and approved by the Court on March
8, 1994. Pursuant to the Interim Order, the sum of $140,000 was to be deposited
in an escrow account within the State of Illinois by May 15, 1994, to insure the
complete removal of the tires. The Interim Order also required the cleanup to be
completed no later than December 31, 1995. The Company entered into an agreement
for the removal of all tires with Gardens, Inc., who then subcontracted with
Eco-Systems Inc. Work began to bale the waste tires into blocks for disposal and
use by Eco-Systems, Inc. in August 1995. On September 28, 1995, the Company was
informed by the IEPA that it had rejected the Company's proposed plan for
removal and had hired its own contractor to remove the tires from the site. The
Company sought relief from this decision from the Circuit Court in Fulton
County. The Court denied the Company any relief at a hearing on October 10,
1995. On October 16, 1995, the Company filed an appeal with the Director of the
IEPA, which was also denied. Currently, the State has concluded work believing
that all waste tires have been removed from the site. In April 1996, the State
informed the Company of its intent to seek recovery of its estimated costs of
$325,000 incurred in removal of the tires. The Company believes that the
ultimate intent of the Interim Order, the complete removal of the tires, has
been met because either the tires had been completely removed or reduced to the
IEPA's control but not within the Court's exact specifications. The IEPA and the
Company are currently attempting to resolve a dispute as to the amount of tires
removed from the site. A complaint has been filed with the Illinois Pollution
Control Board seeking recovery of the State's costs related to the removal of
tires.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Company's shareholders was held on June 18, 1996.
The record date for this meeting was May 27, 1996, and 6,616,782 shares were
issued and outstanding on this date. The holders of a majority of the Company's
outstanding shares of common stock, $0.001 par value ("Common Stock"), were
presented with and approved the following actions: a change the Company's name
from The Canton Industrial Corporation to CyberAmerica Corporation ("Proposal
1"); a proposal to reelect three directors (Richard Surber, Philip Lamb, & Lorin
Pace) to the board ("Proposal 2"); a proposal to ratify the selection of
Andersen, Andersen & Strong, L.C. as the Company's independent auditors for the
fiscal year ending December 31, 1996 ("Proposal 3"); and any other matters
properly raised (none of which were raised) ("Proposal 4").
No persons other than those elected at the meeting serve as directors of
the Company.
The change in the Company's name stems from its expanded involvement in
providing a variety of Internet related services. For more information on these
services, see "Part I, Item 2 - Management's Discussion and Analysis."
The table below states the number of votes cast for, against, and withheld,
as well as the number of abstentions and broker non-votes as to each matter:
Voting Results For Against Abstain
Proposal 1 4,371,696 38,392 15,439
Proposal 2
Richard Surber 4,337,271 22,329 11,727
Lorin Pace 4,337,266 22,329 11,727
Philip Lamb 4,337,471 22,329 11,727
4,286,484 18,488 66,555
Proposal 4,254,090 15,364 102,073
ITEM 5 OTHER INFORMATION
In 1986, Allen Z. Wolfson, a control person of the Company, was convicted
of violating 18 U.S.C. ss.ss.1001 and 1002; and 18 U.S.C. ss.ss.1014 and 1002 in
the U. S. District Court for the Middle District of Florida (the "Florida
Court"). Mr. Wolfson was on probation for these violations until May 1995. In
February 1995, a complaint was filed with the Court alleging that Mr. Wolfson
had violated the terms of the probation. The Florida Court changed jurisdiction
to the U. S. District Court for the District of Utah, Central Division (the
"Utah Court"). The Utah Court heard the matter in August 1995 and on October 20,
1995, Bruce S. Jenkins, Senior U. S. District Court Judge, ruled that a
violation of the original terms of the probation had occurred. This finding
effectively revoked Mr. Wolfson's probation. On January 25, 1996, a sentencing
hearing was held before the Utah Court. At this hearing the Utah Court imposed a
three-year sentence, suspended, pursuant to additional terms of probation. On
April 11, 1996, the judge of the Utah Court signed a written order containing
new probation terms that are effective for three years. Mr. Wolfson has filed an
objection seeking clarification of the probation terms, which is presently
before the Utah Court. (For further information on Mr. Wolfson, see "Part II,
Item 12 - Certain Relationships and Related Transactions," in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995).
Change in Control
A change in the control of the Company occurred on May 6, 1996, when Steven
A. Christensen was discharged from his position as president of the Company by
the board of directors. The board of directors believed that this change in
control was in the best interest of the Company as it was not satisfied with Mr.
Christensen's general performance. On May 6, 1996, the Company's board of
directors appointed Richard D. Surber as the president of the Company, a
position he had held until Mr. Christensen's appointment in August 1995. Mr.
Surber is also a director and the chief executive officer of the Company and the
nephew of Allen Z. Wolfson.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits on page 14 of
this Form 10-QSB, and are incorporated herein by this reference.
(b) Reports on Form 8-K. The Company filed one report on Form 8-K
during the quarter ended June 30, 1996. On June 20, 1996, a Form
8-K was filed reporting under Item 5 that the Company's name had
changed to CyberAmerica Corporation from The Canton Industrial
Corporation.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 14th day of August 1996.
CYBERAMERICA CORPORATION
Date: August 14, 1996 By: /s/ Richard D. Surber
--------------------------
Name : Richard D. Surber
Title: President
Date: August 14, 1996 By: /s/ Susan S. Waldrop
-----------------------
Name: Susan S. Waldrop
Title: Chief Financial Officer, Secretary/Treasurer
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION OF EXHIBIT
3(i) * Articles of Incorporation are incorporated
herein by reference.
(3)(ii) * Bylaws are incorporated herein by reference.
10i(c)a 22 Agreement of Exchange of Stock signed on
April 9, 1996, by and between CyberAmerica
Corporation and Terrace AutoSupercenter.
27 25 Order of the Court involving Plaintiffs,
Canton Industrial Corporation and, Canton
Industrial Corporation of Salt Lake City and
Defendants, KLH Engineering, signed by Judge
Tena Campbell and effective July 23, 1996.
10i(b)b 28 Development and Purchase Agreement by and
between Canton Financial Services
Corporation (through its subsidiary,
CyberMall)and Bust-It Records regarding the
development and sale of a Mall site on the
Internet, effective June 13, 1996.
10i(c)c 39 Guaranty and Assumption, Modification and
Extension Agreement by and between Canton
Financial Services Corporation and The
Canada Life Assurance Company regarding the
purchase of the TAC Warehouse Building
effective June 28, 1996.