SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-83418-LA
CYBERIA HOLDINGS, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
Delaware 93-1138967
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
1531 14th Street
Santa Monica, California 90404
(Address of Principal Executive Offices)
(310) 260-3163
(Issuer's Telephone Number, Including Area Code)
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
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, $.0001 par value per share: 30,000,000
outstanding as of November 1, 2000
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended September 30, 2000
Item Page Herein
Item 1 - Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2 - Management's Discussion and
Analysis or Plan of Operation 8
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
September 30, 2000
ASSETS
Current Assets
Accounts receivable $414,923
Work in process 2,631
Due from officer 28,349
Due from affiliates 27,066
Deferred tax asset 18,320
Total current assets 491,289
Non-current assets
Property, plant and
equipment(net) 238,598
Other assets 47,308
Total non-current assets 285,906
Total assets $777,195
LIABILITIES & STOCKHOLDERS' DEFICIENCY
Current liabilities
Book overdraft $ 14,371
Accounts payable and
accrued expenses 144,011
Deferred income 127,718
Due to affiliate 251,083
Due to others 1,500
Accrued payroll and payroll taxes 89,715
Income tax payable 28,197
Capital lease payable current 21,127
Total current liabilities 677,722
Long term liabilities
Capital lease - long term 126,422
Deferred income taxes
- long term 7,144
Total long term liabilities 133,566
Minority interest 46,600
Stockholders' deficit
Common stock 3,000
Additional paid in capital 9,269
Accumulated deficit (92,962)
Total stockholders' deficit (80,693)
Total liabilities
& stockholders' deficit $ 777,195
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
7/1/00 7/1/99
THROUGH THROUGH
9/30/00 9/30/99
Sales $ 420,390 $ 392,464
Cost of sales 88,575 71,701
General and administrative expenses 656,365 608,208
Total expenses 744,940 679,909
Net loss from operations (324,550) (287,445)
Other income (expense)
Interest income 273 624
Interest expense (6,411) -
Total other income(expense) (6,138) 624
Loss from before taxes (330,688) (286,821)
Income taxes 21 8,719
Net loss from continuing operations (330,709) (295,540)
Discontinued operations
Loss from operations of discontinued subsidiary
(net of income taxes) - (2,058)
Net loss before minority interest (330,709) (297,597)
Minority interest (62,018) 12,631
Net loss $(268,691) $(310,228)
Basic and diluted earnings per share $ (.01) $ (.01)
Weighted average common shares outstanding 30,000,000 30,000,000
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
1/1/00 1/1/99
THROUGH THROUGH
9/30/00 9/30/99
Sales $ 1,926,754 $1,935,128
Cost of sales 246,221 209,772
General and administrative expenses 2,002,896 1,411,392
Total expenses 2,249,117 1,621,165
Net income (loss) from operations (322,363) 313,963
Other income (expense)
Interest income 4,213 1,241
Interest expense (18,635) (13,603)
Total other income (expense) (14,422) (12,362)
Income (loss) from continuing operations
before taxes (336,785) 301,601
Income taxes 7,007 110,536
Net income (loss)
from continued operations (343,792) 191,066
Discontinued operations
Loss from operations
of discontinued subsidiary
(net of income taxes) - ( 58)
Net income (loss) before
minority interest (343,792) 191,008
Minority interest (54,153) 37,213
Net income (loss) $ (289,639) $ 153,795
Basic and diluted earnings per share $ (.01) $ .01
Weighted average common
shares outstanding 30,000,000 30,000,000
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS
1/1/00 1/1/99
THROUGH THROUGH
9/30/00 9/30/99
Operating Activities:
Net income (loss) $ (289,639) $ 153,795
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 90,908 12,501
Minority interest (60,985) 37,213
(Increase) decrease in:
Accounts receivable (65,082) (311,674)
Due from others - (10,806)
Prepaid and other current assets 9,346 -
Work in process (2,631) -
Other assets (4,621) (16,961)
Increase (decrease) in:
Accounts payable and
accrued expenses 97,175 43,176
Book overdraft (10,492) -
Due to affiliates 81,933 133,764
Due to other 1,500 -
Accrued payroll and payroll taxes 64,676 (478)
Income tax payable 96 59,540
Deferred income 126,218 (1,500)
Net cash provided by operating activities
- - continuing 38,402 98,570
Net cash used in operating activities
- - discontinued (811) (88,000)
Total net cash provided by
operating activities 37,591 10,570
Investing Activities:
Due from officer (2,248) -
Purchase of computer equipment (11,467) (53,570)
Disposition of assets - 10,731
Net cash used in investing activities (13,715) (42,839)
Financing Activities:
Payments on capital leases (51,313) -
Net cash used in financing activities (51,313) -
Net decrease in cash (27,437) (32,269)
Cash, beginning of period 27,437 104,998
Cash, end of period $ 0 $ 72,729
Cash paid for interest $ 19,456 $ 12,984
Cash paid for income taxes $ 6,809 $ 50,996
Supplemental Schedule of Non-Cash Investing and Financing Activities:
During the nine months ended September 30, 2000 the Company entered
into a capital lease agreement for computer equipment valued at $86,259.
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(UNAUDITED)
1. Presentation of Interim Information
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles for
interim financial information and with Regulation S-B. Accordingly, they do
not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all normal, recurring adjustments considered
necessary for a fair presentation have been included. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1999. The results of
operations for the three months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2000.
2. Financial Statements
The consolidated financial statements include the accounts of the
Company and its majority owned subsidiary, Media Revolution. All
significant intercompany balances, transactions and stockholdings have been
eliminated.
3. Furniture and Equipment
Furniture and equipment at September 30, 2000 (unaudited) consisted of
the following:
Furniture and fixtures $ 16,702
Computer equipment 269,760
Office equipment 20,584
460,383
Less accumulated depreciation
and amortization 221,785
Total $238,598
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with the
Financial Information and Notes thereto included in this report and is
qualified in its entirety by the foregoing.
Background
The Company was organized under the laws of the State of Delaware on
February 24, 1994 under the name NW Venture Corp. In October 1995, the
Company completed an initial public offering of certain shares of its
Common Stock pursuant to a Registration Statement declared effective by the
Securities and Exchange Commission on June 30, 1995 as a "blank check"
offering subject to Rule 419 of Regulation C under the Securities Act of
1933.
In May 1996, the Company executed an agreement with Cyberia, Inc., a
California corporation ("Cyberia"), and its shareholders to acquire all of
the issued and outstanding shares of capital stock of Cyberia in exchange
for 25,500,000 shares of Common Stock of the Company (the "Cyberia
Acquisition"). At the time thereof and through December 31, 1998, Cyberia
was primarily involved in the business of creating original music for
television and radio commercials. As of December 26, 1996, and following
successful completion of a reconfirmation offering required pursuant to
Rule 419, the Company consummated the Cyberia Acquisition whereby Cyberia
became a wholly-owned subsidiary of the Company.
During 1996, Cyberia entered into an agreement to form Media
Revolution, LLC ("Media Revolution"), which was organized to design
Internet web sites, computer games and software. The Company owns 80% of
this entity and has control of the day-to-day operations. A non-related
party owns the remaining 20%.
On January 13, 1997, the Company changed its corporate name to Cyberia
Holdings, Inc. to reflect the change of direction and new business of the
Company which resulted from the aforesaid transaction with Cyberia.
On October 6, 1998 a meeting of the Board of Directors and Officers
was held in which it was decided to cease the operations of Cyberia as of
December 31, 1998 to allow the Company to focus its resources on the growth
and development of Media Revolution. All existing assets and liabilities
at the close of operations on December 31, 1998 were transferred to
Cyberia Holdings, Inc. as per the Certificate of Dissolution filed in the
Office of the Secretary of State of California.
RESULTS OF OPERATIONS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000 vs. SEPTEMBER 30, 1999
FOR THE PERIODS
7/1/00 7/1/99
THROUGH THROUGH
9/30/00 9/30/99
Sales $ 420,390 $ 392,464
Cost of sales 88,575 71,701
General and administrative expenses 656,365 608,208
Total expenses 744,940 679,909
Net loss from operations (324,550) (287,445)
Other income (expense)
Interest income 273 624
Interest expense (6,411) -
Total other income(expense) (6,138) 624
Loss from before taxes (330,688) (286,821)
Income taxes 21 8,719
Net loss from continuing operations (330,709) (295,540)
Discontinued operations
Loss from operations of discontinued subsidiary
(net of income taxes) - (2,058)
Net loss before minority interest (330,709) (297,597)
Minority interest (62,018) 12,631
Net loss $(268,691) $(310,228)
Net sales for the three month period ended September 30, 2000 were $420,390
as compared to $392,464 for the three month period ended September 30,
1999, an increase of $27,926 or 7%. This increase is primarily due to the
change in the composition of the Company's client base. The Company has
continued to focus on its new sectors and is beginning to see the results
of the previously untapped revenue sources.
Cost of sales was $88,575 for the three month period ended September 30,
2000 as compared to $71,701 for the three month period ended September 30,
1999, an increase of $16,874 or 24%. This increase is primarily due to an
increase in staff and salaries required in order to retain employees.
Additionally, the Company has implemented a new system for tracking project
labor that has allowed the Company to more accurately record the labor cost
dedicated to each project.
General and administrative expenses were $656,365 for the three month
period ended September 30, 2000 compared to $608,208 for the three month
period ended September 30,1999, an increase of $48,157 or 8%. The increase
is primarily due to an increase in administrative salaries due to the
addition of non project related staffing. During the period Media
Revolution hired an in-house Controller and Senior Account Planner whose
salaries are not attributed to Cost of Sales.
The addition of the Controller will allow Media Revolution to reduce the
amount paid to a related third party for accounting services. At the same
time the hiring of the Controller will increase the ability of Media
Revolution to evaluate project profitability and other financial matters
internally.
The Senior Account Planner will allow Media Revolution to provide its
clients the same services provided by larger advertising houses. The
Account Planner will try to make certain the consumer's perspective is
fully considered in any solutions Media Revolution proposes to a client.
The Account Planner will continually conduct research to evaluate the
Client's strategic and creative position in the marketplace, providing the
Business Development, Client Relations and Creative departments with a
better understanding of what the clients of Media Revolution want and need.
Lastly, the Company entered into a capital lease for approximately $86,000
of computer equipment which led to an increase in depreciation expense.
RESULTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 vs. SEPTEMBER 30, 1999
FOR THE PERIODS
1/1/00 1/1/99
THROUGH THROUGH
9/30/00 9/30/99
Sales $ 1,926,754 $1,935,128
Cost of sales 246,221 209,772
General and administrative expenses 2,002,896 1,411,392
Total expenses 2,249,117 1,621,165
Net income (loss) from operations (322,363) 313,963
Other income (expense)
Interest income 4,213 1,241
Interest expense (18,635) (13,603)
Total other income (expense) (14,422) (12,362)
Income (loss) from continuing operations
before taxes (336,785) 301,601
Income taxes 7,007 110,536
Net income (loss) from continued operations (343,792) 191,066
Discontinued operations
Loss from operations
of discontinued subsidiary (net of income taxes) - ( 58)
Net income (loss) before minority interest (343,792) 191,008
Minority interest (54,153) 37,213
Net income (loss) $ (289,639) $ 153,795
Net sales for the nine month period ended September 30, 2000 were
$1,926,754 as compared to $1,935,128 for the nine month period ended
September 30, 1999, a decrease of $8,374 or .04%. Although the Company has
maintained a relatively constant figure for net sales, the composition of
the client base has changed from entertainment-based clients to clients in
the new target sectors, primarily start up companies and "dot.com"
companies.
Cost of sales was $246,221 for the nine month period ended September 30,
2000 as compared to $209,772 for the nine month period ended September 30,
1999, an increase of $36,449 or 17%. This increase is primarily due to an
increase in salaries and benefits needed in order to avoid employee
turnover as the industry's salaries and benefits are continually becoming
more competitive. Additionally, the Company has implemented a new system
for tracking project labor that has allowed the Company to more accurately
record the labor cost dedicated to each project.
General and administrative expenses were $2,002,896 for the nine month
period ended September 30, 2000 compared to $1,411,392 for the nine month
period ended September 30, 1999, an increase of $591,504 or 42%. The
increase is primarily due to an increase in rent following the move of
Media Revolution into a new location, increased employee benefits needed
in order to remain competitive with other employers in the industry and the
hiring of a Controller and Senior Account Planner by Media Revolution.
Liquidity and Capital Resources
At September 30, 2000, the Company had a working capital deficiency of
$186,433. The ratio of current assets to current liabilities was
approximately .72 to 1 at September 30, 2000. At September 30, 2000, the
Company had a stockholders' deficiency of $80,693.
To date, the Company has funded its activities principally from cash
flows generated from operations. However, the Company anticipates cash
flows from operating activities to be negative over the foreseeable future.
It is expected that available cash and anticipated revenues from operations
will be adequate to fund operations over the next three to four months.
Consistent with its business strategy, the Company's financing plan
involves near term financing. In the near term the Company has initiated
discussions with a number of potential financing sources. However, no firm
agreement or commitment to provide such financing exists at this time, and
no assurances can be given with respect to the terms upon which such a
financing will take place, if at all.
Subsequent to the close of the period, the Subsidiary secured a
convertible note for $100,000 from the father of the Company's President in
order to meet its cash flow requirements until certain receivables can be
collected. In the event that the Note is outstanding at February 1, 2001,
the holder shall receive 1% of profits in a manner which is consistent with
the Operating Agreement of the subsidiary. If at May 1, 2001, the
principal balance of the Note remains unpaid, the holder is entitled to
1.5% of the profits in a manner which is consistent with the Operating
Agreement.
Year 2000 Issue
The year 2000 issue is the result of computer programs being written
using two digits, rather than four, to define the applicable year.
Software programs and hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a major system failure or
miscalculations causing disruptions of operations, including a temporary
inability to engage in normal business activities.
Although no assurance can be given that there will be no
interruption of operations due to year 2000 issues, the Company has not to
date suffered any significant problems and believes that it has reasonably
assessed all of its systems in order to ensure that the
Company will not suffer any material adverse effect in the future.
The Company has used and will continue to use, if necessary, internal
resources to resolve year 2000 issues. Costs incurred to date by the
Company have not been material. The Company does not anticipate incurring
any further costs.
Forward-Looking Statements
This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs and
assumptions made by the Company's management as well as information
currently available to the management. When used in this document, the
words "anticipate", "believe", "estimate", and "expect" and similar
expressions, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the
fiscal quarter ended September 30, 2000.
None.
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.
CYBERIA HOLDINGS, INC.
(Registrant)
Dated: November 20, 2000 By: /s/ Jay Rifkin
Jay Rifkin, President
Dated: November 20, 2000 By: /s/ Jay Rifkin
Jay Rifkin, Principal
Financial Officer