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 JUNE 30, 2001
[ ] 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 August 1, 2001
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended June 30, 2001
Item Page Herein
Item 1 - Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Condensed
Consolidated Financial Statements 6
Item 2 - Management's Discussion
and Analysis 7
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
June 30, 2001
ASSETS
Current Assets
Cash $ 21,605
Accounts receivable, less allowance
for doubtful accounts of $84,600 410,908
Work in process 99,982
Prepaid expenses 28,591
Deferred tax asset 47,800
Due from affiliates 780
Total Current Assets 609,666
Non-Current Assets
Property, plant and equipment(net) 166,152
Deferred tax asset 34,500
Other assets 53,464
Total Non-Current Assets 254,116
Total Assets $ 863,782
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Book overdraft $ 45,831
Accounts payable and accrued expenses 259,183
Deferred income 431,745
Due to affiliate 331,081
Accrued payroll and payroll taxes 31,499
Capital lease payable - current 60,170
Total Current Liabilities 1,159,509
Long Term Liabilities
Capital lease payable - long term 35,419
Total Long Term Liabilities 35,419
Stockholders' Deficit
Common stock 3,000
Additional paid in capital 9,269
Capital -
Accumulated deficit (343,415)
Total Stockholders' Deficit (331,146)
Total Liabilities
& Stockholders' Deficit $ 863,782
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 2001 2000
Sales $569,934 $404,921 $1,180,364 $1,506,364
Cost of sales 291,130 166,064 911,455 367,721
General and
administrative
expenses 325,007 638,241 451,644 1,139,132
Total expenses 616,137 804,305 1,363,099 1,506,853
Net loss
from operations (46,203) (399,384) (182,735) (489)
Other income (expense)
Interest income 249 2,377 19,204 3,941
Interest (expense) (8,994) (6,764) (37,467) (12,224)
Total other (expense) (8,745) (4,387) (18,263) (8,283)
Loss from operations
before taxes and
minority interest (54,948) (403,771) (200,998) (8,772)
Benefit from (Provision for)
income taxes - 123,995 - (6,986)
Net loss before
minority interest (54,948) (279,776) (200,998) (15,758)
Minority interest - (33,689) - 7,865
Net loss $ (54,948) $(246,087) $(200,998) $(23,623)
Basic and
diluted loss
per share $ (.002) $ (.008) $ (.007) $ (.001)
Weighted average common
Shares outstanding 30,000,000 30,000,000 30,000,000 30,000,000
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
2001 2000
Operating Activities:
Net loss from continuing operations $ (200,998) $ (23,623)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 46,167 56,252
Minority interest - 1,033
(Increase) decrease in:
Accounts receivable (263,247) 22,949
Work in process (94,937) (6,639)
Prepaid and other current assets (26,505) 7,397
Due from officer 26,101 (2,225)
Other assets (6,243) (4,447)
Increase (decrease) in:
Accounts payable and
accrued expenses 47,658 11,989
Book overdraft 45,831 (24,863)
Due to affiliates 75,161 (108,208)
Accrued payroll (27,049) 57,852
Income tax payable (15,751) 96
Deferred income 342,965 92,869
Net cash provided by (used in)
Operating activities - continuing (50,847) 80,432
Net cash provided by (used in)
Operating activities - discontinued - (811)
Investing Activities:
Purchase of equipment (1,519) (8,830)
Net cash provided by (used in)
investing activities (1,519) (8,830)
Financing Activities:
Capital lease payments (31,625) (33,699)
Notes and loan payable (100,000) -
Net cash provided (used in)
Financing activities (131,625) (33,699)
Net increase (decrease) in cash (183,991) 37,092
Cash, beginning of period 205,596 27,437
Cash, end of period $ 21,605 $ 64,529
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(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, 2000. The results
of operations for the six months ended June 30, 2001 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 2001.
2. Financial Statements
The consolidated financial statements include the accounts of
the Company and its subsidiary, Media Revolution. All
significant intercompany balances, transactions and
stockholdings have been eliminated.
3. Reclassifications
Certain amounts in the prior period financial statements have
been reclassified to conform with the current period
presentation. For the three months ended June 30, 2000,
the Company has reclassified non-salary expenses of $295,087
to Cost of Sales from General and Administrative Expenses based
on total direct labor hours at a rate of $40 per hour to form a
direct cost overhead charge. The overhead rate is an estimate
of non-salary expenses over employee hours.
4. Furniture and Equipment
Furniture and equipment at June 30, 2001 (unaudited) consisted
of the following:
Furniture and fixtures $ 24,073
Computer equipment 421,430
Office equipment 20,584
466,087
Less accumulated depreciation
and amortization 299,935
Total $ 166,152
Depreciation expense was $45,831 and $56,252 for the six months
ended June 30, 2001 and 2000, respectively.
Item 2. Management's Discussion and Analysis
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 JUNE 30, 2001
vs. JUNE 30, 2000
Net sales for the three month period ended June 30, 2001 were
$569,934 as compared to $404,921 for the three month period
ended June 30, 2000, an increase of $165,013 or 41%. The
increase is attributable to a quarterly decrease of deferred
income of $13,692 for the three months ended June 30, 2001,
versus an increase in deferred income of $87,225 for the three
months ended June 30, 2000.
Cost of sales was $291,130 for the three month period ended
June 30, 2001 as compared to $166,064 for the three month
period ended June 30, 2000, an increase of $125,066 or 75%.
This increase is due to the implementation of a system for
tracking direct labor that has allowed the Company to more
accurately record the labor cost dedicated to each project.
The result of the new system allocates more labor to cost of
sales and less to general and administrative expenses.
General and administrative expenses were $325,007 for the three
month period ended June 30, 2001 compared to $638,241 for the
three month period ended June 30, 2000, a decrease of $313,234
or 49%. The decrease in expenses is due in part to the new
system utilized for tracking direct labor, which has allowed
the Company to more accurately record the labor cost dedicated
to each project. The result of the new system allocates more
labor to cost of sales and less to general and administrative
expenses. Cost reductions in payroll and payroll-related
expenses and marketing expenses also contribute to the
reduction in general and administrative expenses.
The Company instituted a new reporting procedure to present a
more reasonable presentation of Cost of Sales, by reclassifying
non-salary expenses to Cost of Sales from General and
Administrative Expenses. The allocation of non-salary expenses
to direct costs is based on total direct labor hours at a rate
of $40 per hour to form a direct cost overhead charge. The
overhead rate is an estimate of non-salary expenses over
employee hours. For presentation purposes, the year 2000
comparative Cost of Sales and General and Administrative
Expenses have been adjusted to reflect the overhead allocation
based on direct labor hours captured for the comparative period
at the same overhead rate as is used for year 2001.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001
vs. JUNE 30, 2000
Net sales for the six month period ended June 30, 2001 were
$1,180,364 as compared to $1,506,364 for the six month period
ended June 30, 2000, a decrease of $326,000 or 22%. The
decrease is attributable to an increase of deferred income of
$342,965, the majority of which is expected to be recognized in
the third quarter of 2001. The net sales reported are
consistent with the annualized net sales for year 2000. The
composition of the client base includes entertainment-based
clients and clients in new target sectors, primarily start up
companies and "dot.com" companies.
Cost of sales was $911,455 for the six month period ended June
30, 2001 as compared to $367,721 for the six month period ended
June 30, 2000, an increase of $543,734 or 148%. This increase
is due to the implementation of a system for tracking direct
labor that has allowed the Company to more accurately record
the labor cost dedicated to each project. The result of the
new system allocates more labor to cost of sales and less to
general and administrative expenses.
General and administrative expenses were $451,644 for the six
month period ended June 30, 2001 compared to $1,139,132 for the
six month period ended June 30, 2000, a decrease of $687,488 or
60%. The decrease in expenses is due in part to the new
system utilized for tracking direct labor, which has allowed
the Company to more accurately record the labor cost dedicated
to each project. The result of the new system allocates more
labor to cost of sales and less to general and administrative
expenses. Cost reductions in payroll and payroll-related
expenses and marketing expenses also contribute to the
reduction in general and administrative expenses.
The Company instituted a new reporting procedure to present a
more reasonable presentation of Cost of Sales, by reclassifying
non-salary expenses to Cost of Sales from General and
Administrative Expenses. The allocation of non-salary expenses
to direct costs is based on total direct labor hours at a rate
of $40 per hour to form a direct cost overhead charge. The
overhead rate is an estimate of non-salary expenses over
employee hours. For presentation purposes, the year 2000
comparative Cost of Sales and General and Administrative
Expenses have been adjusted to reflect the overhead allocation
based on direct labor hours captured for the comparative period
at the same overhead rate as is used for year 2001.
Liquidity and Capital Resources
At June 30, 2001, the Company had a working capital deficiency
of $549,843. The ratio of current assets to current
liabilities was approximately .53 to 1 at June 30, 2001. At
June 30, 2001, the Company had a stockholders' deficiency of
$331,146. To date, the Company has funded its activities
principally from cash flows generated from operations. The
Company has had to supplement its operational cash flow with
near term financing. The Company had an outstanding line of
credit amount of $331,000 at June 30, 2001. The Company is
currently negotiating with major shareholders about the
possibility of making additional capital investments, should
the need for funding arise.
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 June 30, 2001.
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: August 20, 2001 By: /s/ Jay Rifkin
Jay Rifkin, President
Dated: August 20, 2001 By: /s/ Jay Rifkin
Jay Rifkin,
Principal Financial Officer