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, 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 October 31, 2001
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended September 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
September 30, 2001
ASSETS
Current Assets
Accounts receivable, less allowance
for doubtful accounts of $84,600 $ 252,675
Work in process 67,888
Prepaid expenses 11,239
Deferred tax asset 47,800
Due from affiliates 826
Total Current Assets 380,428
Non-Current Assets
Property, plant and equipment(net) 138,017
Deferred tax asset 34,500
Other assets 55,469
Total Non-Current Assets 227,986
Total Assets $ 608,414
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Book overdraft $ 56,069
Accounts payable and accrued expenses 214,851
Deferred income 131,721
Due to affiliate 480,381
Accrued payroll and payroll taxes 42,191
Capital lease payable - current 56,850
Total Current Liabilities 982,063
Long Term Liabilities
Capital lease payable - long term 27,841
Total Long Term Liabilities 27,841
Stockholders' Deficit
Common stock 3,000
Additional paid in capital 9,269
Accumulated deficit (413,759)
Total Stockholders' Deficit (401,490)
Total Liabilities
& Stockholders' Deficit $ 608,414
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000 2001 2000
Sales $ 603,270 $ 420,390 $ 1,783,634 $ 1,926,754
Cost of sales 411,591 188,575 1,323,046 556,221
General and
administrative
expenses 261,271 556,365 712,915 1,692,896
Total expenses 672,862 744,940 2,035,961 2,249,117
Net loss
from operations (69,592) (324,550) (252,327) (322,363)
Other income (expense)
Interest income 157 273 19,558 4,213
Interest (expense) (6,390) (6,411) (43,857) (18,635)
Total other (expense) (6,233) (6,138) (24,299) (14,422)
Loss from operations
before taxes and
minority interest (75,825) (330,688) (276,626) (336,785)
Benefit from (Provision for)
income taxes 5,284 (21) 5,284 (7,007)
Net loss before
minority interest (70,541) (330,709) (271,342) (343,792)
Minority interest - (62,018) - (54,153)
Net loss $ (70,541) $(268,691) $(271,342) $(289,639)
Basic and diluted
loss per share $ (.002) $ (.009) $ (.009) $ (.010)
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
NINE MONTHS ENDED
SEPTEMBER 30,
2001 2000
Operating Activities:
Net loss from
continuing operations $ (271,342) $ (289,639)
Adjustments to reconcile
net income
to net cash provided by
operating activities:
Depreciation and amortization 77,330 90,908
Minority interest - (60,985)
(Increase) decrease in:
Accounts receivable (105,014) (65,082)
Work in process (62,843) (2,631)
Prepaid and other
current assets (12,739) 9,346
Due from officer 29,687 (2,248)
Other assets (8,248) (4,621)
Increase (decrease) in:
Accounts payable and
accrued expenses 3,327 98,675
Book overdraft 56,069 (10,492)
Due to affiliates 224,415 81,933
Accrued payroll (16,358) 64,676
Income tax payable (15,751) 96
Deferred income 42,941 126,218
Net cash provided by
(used in)Operating
activities - continuing (58,526) 36,154
Net cash provided by
(used in)Operating
activities - discontinued - (811)
Investing Activities:
Purchase of equipment (4,547) (11,467)
Net cash provided by (used in)
investing activities (4,547) (11,467)
Financing Activities:
Capital lease payments (42,523) (51,313)
Notes and loan payable (100,000) -
Net cash provided (used in)
Financing activities (142,523) (51,313)
Net increase (decrease)
in cash (205,596) (27,437)
Cash, beginning of period 205,596 27,437
Cash, end of period $ 0 $ 0
Cash paid for interest $ 47,207 $ 19,456
Cash paid for income taxes $ 1,600 $ 6,809
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 nine months ended September 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 majority-owned 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 to the current period
presentation. The Company has reclassified non-salary expenses
to Cost of Sales from General and Administrative Expenses based
on total direct labor hours to form a direct cost overhead
charge.
4. Furniture and Equipment
Furniture and equipment at September 30, 2001 (unaudited)
consisted of the following:
Furniture and fixtures $ 24,073
Computer equipment 424,457
Office equipment 20,584
469,114
Less accumulated depreciation
and amortization 331,097
Total $ 138,017
Depreciation expense was $77,330 and $90,908 for the nine
months ended September 30, 2001 and 2000, respectively.
5. Subsequent Event
In October 2001, the Company received $20,000 pursuant to two
$20,000, 8% Convertible Promissory Notes (the "Notes") issued
on August 17, 2001 to the Company's two principal
shareholders/officers. The holders of the Notes have the
option to convert the Notes at any time after the date of
issuance of the Notes. The Notes and any accrued interest are
convertible at the average of the low bid and asked price of
the Company's common stock for the three trading days prior to
conversion. Principal and any unpaid interest on the Notes are
due on demand.
In accordance with generally accepted accounting principles,
the difference between the conversion price of the Notes and
the Company's stock price on the date of issuance of the Notes
is considered to be interest expense. It will be recognized in
the statement of operations during the period from the issuance
of the Notes to the time at which the Notes first become
convertible.
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 SEPTEMBER 30,
2001 vs. SEPTEMBER 30, 2000
Net sales for the three month period ended September 30, 2001
were $603,270 as compared to $420,390 for the three month
period ended September 30, 2000, an increase of $182,880 or
44%. The increase was due to more high revenue projects for
the current quarter than for the same period last year and also
a revenue reversal of $48,300 taken in the period ended
September 30, 2000 to offset the cancellation of a project
recognized in the period ended March 31, 2000.
Cost of sales was $411,591 for the three month period ended
September 30, 2001 as compared to $188,575 for the three month
period ended September 30, 2000, an increase of $223,016 or
118%. 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 $261,271 for the three
month period ended September 30, 2001 compared to $556,365 for
the three month period ended September 30, 2000, a decrease of
$295,094 or 53%. 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 to form a
direct cost overhead charge. 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 NINE MONTHS ENDED SEPTEMBER 30,
2001 vs. SEPTEMBER 30, 2000
Net sales for the nine month period ended September 30, 2001
were $1,783,634 as compared to $1,926,754 for the nine month
period ended September 30, 2000, a decrease of $143,120 or 7%.
Sales recognized for the current year are at a much more stable
rate than the sales levels recognized last year, which
recognized 46% of the year's sales in the first quarter of year
2000. On an annualized basis, sales for the current year
through September 30, 2001 are less than 1% below the
annualized sales for the year ended December 31, 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 $1,323,046 for the nine month period ended
September 30, 2001 as compared to $556,221 for the nine month
period ended September 30, 2000, an increase of $766,825 or
138%. 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 $712,915 for the nine
month period ended September 30, 2001 compared to $1,692,896
for the nine month period ended September 30, 2000, a decrease
of $979,981 or 58%. 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 to form a
direct cost overhead charge. 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 September 30, 2001, the Company had a working capital
deficiency of $601,635. The ratio of current assets to current
liabilities was approximately .39 to 1 at September 30, 2001.
At September 30, 2001, the Company had a stockholders'
deficiency of $401,490. 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 $391,000 at September 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 September 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: November 16, 2001 By: /s/Jay Rifkin
Jay Rifkin, President
Dated: November 16, 2001 By: /s/Jay Rifkin
Jay Rifkin,
Principal Financial Officer