--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ________ to _________
COMMISSION FILE NO. 0-25677
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 51-0384117
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
STEFAN - GEORGE - RING 19-23
81929 MUNICH, GERMANY
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
49-89-993-150
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL
YEAR IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]
Number of shares outstanding of the issuer's class of Common Stock as of
August 8, 2000: 23,355,663
<PAGE>
TABLE OF CONTENTS
PAGE
PART I FINANCIAL INFORMATION ............................................. 3
ITEM 1. Financial Statements ......................................... 3
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 10
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk ... 18
PART II OTHER INFORMATION ................................................ 18
ITEM 1. Legal Proceedings ........................................... 18
ITEM 2. Changes in Securities and Use of Proceeds ................... 18
ITEM 3. Defaults upon Senior Securities ............................. 18
ITEM 4. Submission of Matters to a Vote of Security Holders ......... 18
ITEM 5. Other Information ........................................... 18
ITEM 6. Exhibits and Reports on Form 8-K ............................ 18
Page 2 of 19
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ --------
(in thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents.................................................... $ 73,213 $ 53,506
Short-term investments....................................................... 41,237 15,833
Accounts receivable-- trade, net of allowance for doubtful accounts of
$1,192,000 and $1,090,000 at December 31, 1999 and June 30, 2000 respectively
9,162 8,689
Other receivables............................................................ 5,052 7,152
Restricted investments....................................................... 10,091 20,182
Prepaid expenses and other assets............................................ 2,201 1,297
-------- --------
Total current assets......................................................... 140,956 106,659
Property and equipment, net.................................................. 28,479 40,150
Product development costs, net............................................... 3,096 2,485
Goodwill, net................................................................ 26,240 27,369
Deferred income taxes ....................................................... 20,771 26,009
Restricted investments....................................................... 48,158 27,638
Other assets................................................................. 20,100 20,343
-------- --------
TOTAL ASSETS.................................................................... $287,800 $250,654
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Overdrafts and short-term borrowings....................................... $ 437 35
Trade accounts payable..................................................... 18,229 10,079
Other accrued liabilities.................................................. 15,144 15,019
Current portion long term debt and capital lease obligations............... 1,728 1,541
Accrued personnel costs.................................................... 2,694 1,711
-------- --------
Total current liabilities............................................. 38,232 28,385
Long-term debt ............................................................ 178,372 184,544
Capital lease obligations.................................................. 2,437 3,581
SHAREHOLDERS' EQUITY
Common stock $.001 par value, 50,000,000 shares authorized, 20,970,000 and
23,212,000 shares issued and outstanding at December 31, 1999 and June 30,
2000 respectively............................................................ 21 23
Preferred stock $.001 par value, 50,000,000 shares authorized, 4,793,000 and
3,203,000 issued and outstanding December 31, 1999 and June 30, 2000
respectively................................................................. 4 3
Additional paid in capital................................................. 134,951 140,540
Accumulated deficit........................................................ (57,971) (97,425)
Other comprehensive income (loss).......................................... (8,246) (8,997)
-------- --------
Total shareholders' equity................................................. 68,759 34,144
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...................................... $287,800 $250,654
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
Page 3 of 19
<PAGE>
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1999 2000 1999 2000
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenue
Internet Projects................................. $ 1,067 $ 1,292 $ 2,459 $ 1,928
Network Services.................................. 3,532 7,461 5,994 13,883
------- -------- -------- --------
Total revenues......................................... 4,599 8,753 8,453 15,811
Cost of revenues:
Internet Projects................................. 977 1,272 2,056 1,966
Network Services.................................. 3,564 5,228 6,534 11,602
Depreciation and amortization..................... 1,131 909 1,545 1,976
------- -------- -------- --------
Total cost of revenues................................. 5,672 7,409 10,135 15,544
Gross margin (loss).................................... (1,073) 1,344 (1,682) 267
General and administrative expenses................ 2,314 5,068 3,770 11,785
Sales and marketing expenses....................... 3,340 3,528 5,147 6,434
Research and development........................... 883 626 2,146 803
Depreciation and amortization...................... 387 3,619 1,228 6,781
------- -------- -------- --------
Total operating expenses 6,924 12,841 12,291 25,803
Operating loss......................................... (7,997) (11,497) (13,973) (25,536)
Interest expense....................................... 53 9,328 64 18,187
Interest income........................................ 123 1,870 383 3,194
Foreign currency gains (losses)........................ -- (155) -- (5,065)
------- -------- -------- --------
Loss before taxes and minority interest................ (7,927) (19,110) (13,654) (45,594)
Income tax benefit..................................... 3,143 3,212 5,302 6,139
------- -------- -------- --------
Net loss before minority interest...................... (4,784) (15,898) (8,352) (39,455)
Minority interest...................................... 103 -- 103 --
------- -------- -------- --------
Net loss.............................................. $(4,681) $(15,898) $ (8,249) $(39,455)
======= ======== ======== ========
Basic and diluted loss per share....................... (0.25) (0.68) (0.44) (1.69)
======= ======== ======== ========
Number of shares used to compute earnings per share ... 18,762 23,472 18,918 23,287
======= ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
Page 4 of 19
<PAGE>
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For six months ended June 30,
1999 2000
---- ----
(in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss............................................................... $ (8,249) $(39,454)
Adjustments to reconcile net loss to net cash used by operations:
Deferred tax credit................................................ (5,309) (6,282)
Depreciation and amortization...................................... 2,772 8,757
Provision for losses on accounts receivable........................ 651 (102)
Amortization of Bond discount...................................... -- 2,656
Accreted interest expense on long term debt........................ -- 4,815
FX loss............................................................ -- 5,065
Changes in operating assets and liabilities:
Trade accounts receivable.......................................... (1,759) 70
Other receivables.................................................. 139 (2,346)
Other assets....................................................... (1,250) (92)
Prepaid expenses and other current assets.......................... (693) 797
Trade accounts payable............................................. 1,757 (7,262)
Other accrued expenses and liabilities............................. 517 613
Accrued personnel costs............................................ 80 (852)
-------- --------
Total changes in operating assets and liabilities (1,209) (9,072)
-------- --------
Net cash used in operating activities............................. (11,344) (33,617)
Cash Flows from Investing Activities:
Purchase of short term investments..................................... (403) (34,153)
Proceeds from sale of short term investments........................... -- 67,669
Purchase of property and equipment..................................... (6,587) (16,426)
Product development costs.............................................. (686) (133)
Acquisition of businesses, net of cash acquired........................ (24,192) (1,990)
Payment of deferred purchase obligations............................... (4,172) --
-------- --------
Net cash provided by investing activities......................... (36,040) 14,967
Cash Flows from Financing Activities:
Proceeds from issuance of bonds and other borrowings................... 23,805 780
Repayment of borrowings................................................ -- --
-------- --------
Net cash provided by financing activities......................... 23,805 780
-------- --------
Translation adjustments................................................ (4,323) (1,837)
-------- --------
Net (decrease) increase in cash and cash equivalents................... (27,902) (19,707)
Cash and cash equivalents at beginning of period....................... 42,876 73,213
-------- --------
Cash and cash equivalents at end of period............................. $ 14,974 53,506
======== ========
Supplemental disclosure of non-cash investing and financing activities:
Acquisitions (Note 4):
Fair value of assets acquired ..................................... $ 34,344 $ 11,820
Less:
Cash acquired................................................. 73 195
Cash paid .................................................... 22,850 2,186
Stock issued.................................................. 4,626 5,590
-------- --------
Liabilities assumed ............................................... 6,795 3,847
======== ========
Stock dividend.........................................................
Other supplemental cash flow disclosures:
Cash paid for interest............................................ -- 10,091
Cash paid for taxes............................................... -- --
Depreciation...................................................... 2,258 4,978
Amortization...................................................... 514 4,779
</TABLE>
See accompanying notes to consolidated financial statements
Page 5 of 19
<PAGE>
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of financial position and results of
operations have been included. Operating results for the six months ending June
30, 2000 are not necessarily indicative of results to be expected for the year
ended December 31, 2000. For further information, refer to the Consolidated
Financial Statements and Footnotes thereto included in the Company's annual
report of Form 10-K for the year ended December 31, 1999. Certain prior year
amounts in the consolidated financial statements have been reclassified to
conform to the current year presentation.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share:
June 30,
1999 2000
---- ----
(in thousands, except
per share data)
Numerator:
Net loss-numerator for basic and diluted loss per share.. $ (8,249) $(39,455)
Denominator:
Denominator for basic and diluted loss
per share -- weighted average shares outstanding....... 18,918 23,287
Basic and diluted loss per share........................... $ (.44) $ (1.69)
The denominator for diluted earnings per share excludes the convertible
preferred stock and stock options because the inclusion of these items would
have an anti-dilutive effect.
3. Segment information
The Company evaluates performance and allocates resources based on the operating
profit of its subsidiaries. The Company operates in one line of business, which
is providing international Internet backbone and access services and network
business solutions for corporate customers. The Company's reportable segments
are divided by country since each country's operations are managed and evaluated
separately. Information concerning the Company's geographic locations is
summarized as follows:
Six months ended June 30,
1999 2000
---- ----
(in thousands)
Revenues:
Germany................................. $ 5,455 $ 8,223
U.S..................................... -- --
Italy................................... 976 4,329
Other................................... 2,022 3,259
-------- --------
Total................................... $ 8,453 $ 15,811
======== ========
Depreciation and Amortization:
Germany................................. $ 2,381 $ 2,946
U.S..................................... 127 4,506
Italy................................... 145 639
Other................................... 120 667
-------- --------
Total................................... $ 2,773 $ 8,758
======== ========
Page 6 of 19
<PAGE>
Six months ended June 30,
1999 2000
---- ----
(in thousands)
Interest Expense:
Germany............................... $ 16 $ 81
U.S................................... 9 17,952
Italy................................. 7 151
Other................................. 32 3
-------- --------
Total................................. $ 64 $ 18,187
======== ========
Interest Income:
Germany............................... $ 10 $ 53
U.S................................... 373 3,126
Italy................................. -- 9
Other................................. -- 6
-------- --------
Total................................. $ 383 $ 3,194
======== ========
Loss before Taxes:
Germany............................... $(11,723) $ (7,581)
U.S................................... (597) (30,986)
Italy................................. (765) (3,458)
Other................................. (569) (3,569)
-------- --------
Total................................. $(13,654) $(45,594)
======== ========
Income tax benefit:
Germany............................... $ 5,305 $ 6,139
U.S................................... -- --
Italy................................. -- --
Other................................. 3 --
-------- --------
Total................................. $ 5,305 $ 6,139
======== ========
Total Assets:
Germany............................... $ 36,681 $ 75,427
U.S................................... 50,101 154,509
Italy................................. 7,537 14,378
Other................................. 2,467 6,340
-------- --------
Total................................. $ 96,786 $250,654
======== ========
4. Business Acquisitions
Effective April 13, 1999, the Company acquired 51% of the outstanding shares of
Sunweb Internet Services SIS AG ("Sunweb") for a total consideration of DM
3,103,000 ($1,639,000). DM 1,807,000 ($954,000) of the purchase price was paid
in cash (in Swiss Francs) with the remainder settled in exchange for the
issuance of 25,680 shares of the common stock of the Company. The Stock Purchase
Agreement also contains provisions for put and call options for the sellers and
buyers, respectively, for the remaining 49% of the outstanding stock of Sunweb.
The purchase price per the agreement for the remaining 49% of the shares is
based on a multiple of Sunweb's net profit or loss before taxes. The put and
call options expire on December 31, 2001. The acquisition has been accounted for
using the purchase method of accounting and as such the accompanying financial
statements reflect Sunweb's results of operations from April 13, 1999. Goodwill
recorded in connection with the acquisition of Sunweb, amounting to DM 2,678,000
($1,414000), is being amortized over 10 years.
Effective June 30, 1999, the Company acquired 100% of the outstanding shares of
Cybernet Italia S.p.A.(formerly Flashnet S.p.A.) for a total consideration of DM
52,816,000 ($27,890,000). DM 41,464,000 ($21,896,000) of the purchase price was
paid in cash (in Italian Lire) with the remainder settled in exchange for the
issuance of 301,290 shares of the common stock of the Company. The acquisition
has been accounted for using the purchase method of accounting and as such the
accompanying financial statements reflect Cybernet Italia's results from June
30, 1999. Goodwill recorded in connection with the acquisition of Cybernet
Italia, amounting to DM 32,136,000 ($16,970,000), is being amortized over 10
years.
Effective October 28 1999, the Company acquired of 51% of the outstanding shares
of Novento Telecom AG ("Novento") and 51% of Multicall Telefonmarketing AG
("Multicall") for a consideration of DM 3,178,000 ($2,373,000). DM 2,002,000
($1,092,000) of the purchase price was paid in cash with the remainder settled
in exchange for the issuance of 39,412 shares of the common stock of the
Company. The acquisition has been accounted for using the purchase method of
accounting and as such the accompanying financial statements
Page 7 of 19
<PAGE>
reflect Novento and Multicall's results from October 28, 1999. Goodwill recorded
in connection with the acquisition of Novento, amounting to DM 1,913,000
($1,043,000) is being amortized over 10 years.
Effective October 29, 1999 the Company acquired the remaining 34% of the
outstanding shares of Eclipse, in which the Company already owned 66% of the
outstanding shares, for a total consideration of DM 4,320,000 ($2,356,000). DM
707,000 ($386,000) of the purchase price was paid in cash with the remainder
settled by way of the depositing of 136,402 shares of the common stock of the
Company in a pooling trust from which the shares will be released to the
sellers. Goodwill recorded in connection with the acquisition of the remaining
shares in Eclipse, amounting to DM 3,718,000 ($2,359,000), is being amortized
over the remaining life of the goodwill associated with the acquisition of the
majority shareholding at the end of 1997. Under the terms of the agreement the
price was reviewed in light of the subsequent movement in the share price of
Cybernet. As a consequence of this review an addition 108,390 shares were issued
to the vendors in May 2000. Goodwill of DM 2,187,000 ($1,036,000) was recorded
in Q2 1999, and is being amortized over the remaining life of the goodwill
associated with the acquisition of the majority shareholding at the end of 1997.
Effective January 1, 2000, the Company acquired the remaining 49% of the
outstanding shares of Novento Telecom AG ("Novento") and the remaining 49% of
Multicall Telefonmarketing AG ("Multicall") (together "Novento"), businesses in
which the Company already owned 51% of the outstanding shares, for a
consideration of DM 10,860,000 ($5,582,000). DM 2,000,000 ($1,028,000)of the
purchase price was paid in cash with the remainder settled in exchange for the
issuance of 543,812 shares of the common stock of the Company. Goodwill recorded
in connection with the acquisition of the remaining shares in Novento, amounting
to DM5,798,000 000 ($2,981,000) is being amortized over 5 years.
Effective April 17, 2000, the Company acquired Cybernet S.a.g.l., an internet
service provider located in Lugano Switzerland, for a maximum purchase price of
SFr 500,000 ($304,000) and 12,000 shares of our common stock. Of the SFr
500,000, SFr 100,000 will only be paid upon the achievement of certain revenue
targets during the period from March 1, 2000 to August 31, 2000. The 12,000
shares of common stock will be released to the former owners only upon the
achievement of certain revenue targets during the fiscal year 2000. Of the
purchase price SFr 400,000 has been paid in cash. The acquisition has been
accounted for using the purchase method of accounting and as such the
accompanying financial statements reflect Cybernet S.a.g.l's results from April,
1999. Goodwill recorded in connection with the acquisition of Cybernet S.a.g.l,
amounting to DM454,000 ($222,000), is being amortized over 10 years.
Effective June, 2000, the Company acquired the remaining 49% of the outstanding
shares of Sunweb AG, a business in which the Company already owned 51% of the
outstanding shares, for a consideration of DM 1,887,000 ($917,000). The whole
purchase price was paid in cash. Goodwill recorded in connection with the
acquisition of the remaining shares in Sunweb amounting to DM1,887,000
($917,000) is being amortized over 10 years.
The following unaudited pro forma consolidated results of operations for the six
months ended June 30, 1999 and 2000 assume the acquisitions of Sunweb, Cybernet
Italia, Novento and Multicall had occurred as of January 1, 1999.
Page 8 of 19
<PAGE>
Six months ended June 30,
1999 2000
---- ----
(in thousand except per share data)
Revenue ................................ $ 15,483 $ 15,811
Net loss ............................... (11,279) (39,455)
Basic and diluted loss per share ....... (0.54) (1.69)
5. Subsequent events
The Company has been repurchasing a portion of its 14% Senior Notes due 2009
(the "Notes"). During July 2000, the Company repurchased $50.3 millions of Notes
at average prices equal to 44% of the face value of the Notes repurchased. As
required by the terms of the Notes, the Company has established an escrow
account to provide for payment in full of the first six scheduled interest
payments on the Notes. The amounts contained in the escrow account are carried
on the Company's balance sheet as "Restricted investments". As a result of the
repurchase of Notes in July, approximately $13.2 million will be released from
the escrow account and will be available to the Company. The price of the Notes
repurchased in July net of amounts released from the escrow account was
approximately $9 million. The face amount of the Notes outstanding after the
July repurchases is approximately $100 million.
Page 9 of 19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The following table sets forth, for the periods indicated, the items of
Consolidated Statements of Loss for the three month and six month periods ended
June 30, 1999 and 2000, respectively, expressed as a percentage of total
revenues:
<TABLE>
<CAPTION>
For three months ended For six months ended
June 30, June 30,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Internet Projects....................... 23.2% 14.8% 29.1% 12.2%
Network Services........................ 76.8% 85.2% 70.9% 87.8%
Total revenues............................... 100.0% 100.0% 100.0% 100.0%
Cost of revenues:
Internet Projects....................... 21.2% 14.5% 24.3% 12.4%
Network Services........................ 77.5% 59.7% 77.3% 73.4%
Depreciation and amortization........... 24.6% 10.4% 18.3% 12.5%
Total cost of revenues....................... 123.3% 84.6% 120.0% 98.3%
Gross margin (loss).......................... (23.3)% 15.4% (20.0)% 1.7%
General and administrative expenses..... 50.3% 57.9% 44.6% 74.5%
Sales and Marketing expenses............ 72.6% 40.3% 60.9% 40.7%
Research and development................ 19.2% 7.2% 25.4% 5.1%
Depreciation and amortization........... 8.4% 41.3% 14.5% 42.9%
Total operating expenses..................... 150.6% 146.7% 145.4% 163.2%
Operating loss............................... (173.9)% (131.3)% (165.3)% (161.5)%
Interest expense............................. 1.2% 106.6% 0.8% 115.0%
Interest income.............................. 2.7% 21.4% 4.5% 20.2%
Realized foreign currency translation losses. 0.0% (1.8)% 0.0% (32.0)%
Loss before taxes and minority interest...... (172.4)% (218.3)% (161.5)% (288.4)%
Income tax benefit........................... 68.3% 36.7% 62.7% 38.8%
Net loss before minority interest............ (104.0)% (181.6)% (98.8)% (249.5)%
Minority interest............................ 2.2% 0.0% 1.2% 0.0%
Net loss..................................... (101.8)% (181.6)% (97.6)% (249.5)%
</TABLE>
Results of operations -- Three Months Ended June 30, 2000 Compared to the Three
Months Ended June 30, 1999
Revenues
Total revenues increased 90.3% from $4,599,000 in the three months to June 30,
1999 to $8,753,000 in the second quarter of 2000, primarily as a result of
increased Network Services revenues. Internet Project revenues increased 21.1%
from $1,067,000 in the second quarter of 1999 to $1,292,000 for the same period
in 2000, while Network Services revenues increased 111.2% from $3,532,000 to
$7,461,000. The second quarter Network Services revenues represented 76.8% of
total revenues in 1999, as compared with 85.2% in 2000.
The increase in revenues from Network Services is mainly a result of expansion
of our customer base, which provides us with a stream of recurring revenues.
Although we have focused on building recurring revenues from Network Services,
building relations with Internet Project customers remains a continuing
strategy. In addition, revenues for the three months ended June 30, 1999 reflect
$2,227,000 of Cybernet Italia revenues, and $1,138,000 of Novento's revenues in
the second quarter of 2000. Both of these companies were acquired after June
1999. The revenues of these companies are derived primarily from Network
Services. Excluding the
Page 10 of 19
<PAGE>
revenues of these acquisitions, Network Services revenues increased 16.0% in the
second quarter of 2000 compared with revenues of the corresponding period in
1999, and Internet Projects revenues increased by 21.1%.
From the second quarter of 1999 to the second quarter of 2000, the Euro
depreciated approximately 16.5% against the US dollar. As our principal
operating currency is the Euro, the depreciation of the Euro had an unfavorable
impact on our revenues which are reported in US dollars. Reported US dollar
revenues increased approximately 90% in the second quarter of 2000 over the same
period in 1999. Had the exchange rate of the Euro remained stable against the US
dollar during this period, our US dollar revenues would have increased
approximately 115%.
Costs of Revenues
Total costs of revenues increased 30.6% from $5,672,000 in the second quarter of
1999 to $7,409,000 in the second quarter of 2000. Cost of revenues as a
percentage of revenues fell from 123.3% in the second quarter of 1999 to 84.6%
in the second quarter of 2000. Cost of revenues mainly consists of (i)
telecommunications expenses, (ii) technical and operations personnel and related
overhead costs, (iii) the cost of hardware and software sold, (iv) amortization
of product development costs, (v) depreciation of network facilities and
equipment, and (vi) consulting expenses in the area of network and software
development. Telecommunications expenses mainly represent the cost of
transporting Internet traffic from our customer's location through a local
telecommunications carrier to one of our access nodes and the cost of leasing
lines to interconnect our backbone nodes. Technical and operational personnel
included in cost of revenues are those individuals involved in the managing of
our network and the providing services over this network. We had 64 such
technical and operations personnel on June 30, 2000 and approximately 90 such
personnel at June 30, 1999.
The cost of revenues from Internet Projects increased by 30.2% from $977,000 in
the second quarter of 1999 to $1,272,000 in the second quarter of 2000. Cost of
Internet Projects as a percentage of related revenues increased from 91.6% in
the second quarter of 1999 to 98.5% in the second quarter of 2000.
The cost of revenues from Network Services increased 46.7% from $3,564,000 in
the second quarter of 1999 to $5,228,000 in the second quarter of 2000. This
increase primarily resulted from the additional leased line expenses related to
the expansion of our network backbone, additional leased lines to our customer's
premises, an increase in network personnel and consolidation of expenses of
companies acquired in 1999. Cost of Network Services as a percentage of related
revenues decreased from 100.9% in the second quarter of 1999 to 70.1% in the
second quarter of 2000. This decrease is primarily attributable to improved
network utilization and heightened productivity of personnel in our network
operations.
Depreciation and amortization included in the cost of revenues decreased from
$1,131,000 in the second quarter of 1999 to $909,000 in the second quarter of
2000. This decrease reflects a reclassification of depreciation from operating
expenses to cost of revenue which took place in the second quarter of 1999 and
caused an unusually high charge for that quarter.
General and Administrative Expenses
General and administrative expenses increased 119.0% from $2,314,000 in the
second quarter of 1999 to $5,068,000 in the second quarter of 2000. General and
administrative expenses consist principally of salaries and other personnel
costs for our administrative staff, office rent, and external legal and
accounting advisory costs. The increase in our general and administrative
expenses reflects the costs of building a corporate infrastructure to support
our anticipated growth and the addition of the general and administrative
expenses of the companies acquired in the last six months of 1999. We incurred
significant legal, accounting and other external advisory costs associated with
our financing activities, acquisitions and alliances in the second half of 1999.
As a percentage of revenues, general and administrative expenses increased from
50.3% in the second quarter of 1999 to 57.9% in the second quarter of 2000.
Within general and administrative expenses are the personnel cost of general and
administrative personnel and technical staff who are not involved in the day to
day management of the network. These personnel totaled 71 at the end of June
2000. The non technical general and administrative personnel increased from
approximately 59 at the end of June 1999 to 86 at the end of June 2000. Most of
these additions were made to the financial, human resources, and IT management
of the operating companies and to the executive management in the
Page 11 of 19
<PAGE>
corporate headquarters. We made reductions in support functions and related
overhead in the fourth quarter of 1999. These reduced general and administrative
expenses by 29% in the three months ended March 31, 2000 as compared to the
three months ended December 31, 1999, and a further decrease of 25% in the three
months to June 30, 2000 (see also the section on comparatives to previous
quarters at the end of this MD&A section).
Excluding the general and administrative expenses in the companies acquired
since the end of the second quarter of 1999, general and administrative expenses
increased 75% from $2,314,000 in the second quarter of 1999 to $4,090,000 in the
second quarter of 2000.
Sales and Marketing Expenses
Sales and marketing expenses increased by 5.6% from $3,340,000 in the second
quarter of 1999 to $3,528,000 in the second quarter of 2000. Sales and marketing
expenses consist principally of salaries of our sales force and marketing
personnel and advertising and communication expenditures. The number of sales
and marketing staff increased from approximately 88 on June 30, 1999 to 127 on
June 30, 2000. As a percentage of revenues, our sales and marketing expenses
decreased from 72.6% in the second quarter of 1999 to 40.3% in the second
quarter of 2000.
Excluding the sales and marketing expenses in the companies acquired since the
end of the second quarter of 1999, sales and marketing expenses decreased 14%
from $3,340,000 in the second quarter of 1999 to $2,860,000 in the second
quarter of 2000.
Research and Development
Research and development expenses decreased 29.1% from $883,000 in the second
quarter of 1999 to $626,000 in the second quarter of 2000. Research and
development expenses consist principally of personnel costs of employees working
on product development, consulting costs and certain overhead items. As a
percentage of revenues, research and development decreased from 19.2% in the
second quarter of 1999 to 7.2% in the second quarter of 2000.
Depreciation and Amortization
Depreciation and amortization expenses increased from $387,000 in the second
quarter of 1999 to $3,619,000 in the second quarter of 2000. This increase
reflects increased depreciation of property and equipment purchased to build the
corporate infrastructure necessary to support our anticipated growth, and in
particular increased amortization of goodwill related to our acquisitions.
Goodwill represents the excess of the purchase price of companies we purchased
over the fair value of the tangible assets of those companies. Goodwill is
amortized over 5 - 10 years. In addition, in the second quarter of 1999 there
was a reclassification of depreciation from operating expenses to cost of
revenue resulting in a lower charge for the quarter under operating expenses.
Interest Income and Expense
Interest expense increased from $53,000 in the second quarter of 1999 to
$9,331,000 in the second quarter of 2000 as a result of our issuance of debt
securities in the second half of 1999. Interest income increased from $123,000
in the second quarter of 1999 to $1,869,000 in the second quarter of 2000 as a
result of interest earned on the unutilized proceeds of these offerings.
In the second quarter of 2000 we incurred net foreign exchange losses of
$155,000 because our borrowings are denominated in US dollars but our principal
operating currency is the Euro. Such losses will continue if the US dollar
continues to strengthen against the Euro.
Income Taxes
We recorded income tax benefits of $3,143,000 in the second quarter of 1999 and
$3,212,000 in the second quarter of 2000, arising principally from operating
losses. Although we have additional operating losses, a valuation allowance has
been established to reflect the estimated amount of the tax benefit that may not
be realized. The majority of the operating losses and the associated valuation
allowance are associated with operations subject to taxation under the German
tax code. Under the current German tax code, these net
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<PAGE>
operating losses may be carried forward indefinitely and used to offset our
future taxable earnings.
Results of operations -- Six Months Ended June 30, 2000
Compared to the Six Months Ended June 30, 1999
Revenues
Total revenues increased 87% from $8,453,000 in the six months to June 30, 1999
to $15,81,000 in the first six months of 2000, primarily as a result of
increased Network Services revenues. Internet Project revenues decreased 21.6%
from $2,459,000 in the first six months of 1999 to $1,928,000 for the same
period in 2000, while Network Services revenues increased 131.6% from $5,994,000
to $13,883,000. The first six months Network Services revenues represented 70.9%
of total revenues in 1999, as compared with 87.8% in 2000.
The increase in revenues from Network Services is mainly a result of expansion
of our customer base, which provides us with a stream of recurring revenues.
Although we have focused on building recurring revenues from Network Services,
building relations with Internet Project customers remains a continuing
strategy. In addition, revenues for the six months ended June 30, 2000 reflect
$3,361,000 of Cybernet Italia revenues, and $2,406,000 of Novento's revenues.
These companies were acquired after June 1999. The revenues of these companies
are derived primarily from Network Services. Excluding the revenues of these
acquisitions, Network Services revenues increased 35.5% in the first six months
of 2000 compared with revenues of the corresponding period in 1999, and Internet
Projects revenues decreased by 21.9%.
From the first six months of 1999 to the first six months of 2000, the Euro
depreciated approximately 13% versus the US dollar. As our principal operating
currency is the Euro, the depreciation of the Euro had an unfavorable impact on
our revenues which are reported in US dollars. Reported US dollar revenues
increased approximately 87% in the first six months of 2000 over the same period
in 1999. Had the exchange rate of the Euro remained stable against the US dollar
during this period, our US dollar revenues would have increased approximately
112%.
Costs of Revenues
Total costs of revenues increased 53.4% from $10,135,000 in the first six months
of 1999 to $15,544,000 in the first six months of 2000. Cost of revenues as a
percentage of revenues fell from 120.0% in the first six months of 1999 to 98.3%
in the first six months of 2000. Cost of revenues mainly consists of (i)
telecommunications expenses, (ii) technical and operations personnel and related
overhead costs, (iii) the cost of hardware and software sold, (iv) amortization
of product development costs, (v) depreciation of network facilities and
equipment, and (vi) consulting expenses in the area of network and software
development. Telecommunications expenses mainly represent the cost of
transporting Internet traffic from our customer's location through a local
telecommunications carrier to one of our access nodes and the cost of leasing
lines to interconnect our backbone nodes. Technical and operational personnel
included in cost of revenues are those individuals involved in the planning,
building and managing of our network and the providing services over this
network.
The cost of revenues from Internet Projects decreased by 4.4% from $2,056,000 in
the first six months of 1999 to $1,966,000 in the first six months of 2000. Cost
of Internet Projects as a percentage of related revenues increased from 24.3% in
the first six months of 1999 to 102.0% in the first six months of 2000.
The cost of revenues from Network Services increased 77.6% from $6,534,000 in
the first six months of 1999 to $11,602,000 in the first six months of 2000.
This increase primarily resulted from the additional leased line expenses
related to the expansion of our network backbone, additional leased lines to our
customer's premises, a large increase in network personnel and consolidation of
expenses of companies acquired in 1999. Cost of Network Services as a percentage
of related revenues decreased from 109.0% in the first six months of 1999 to
83.6% in the first six months of 2000. This decrease is primarily attributable
to improved network utilization and heightened productivity of personnel in our
network operations.
Depreciation and amortization included in the cost of revenues, increased 27.9%
from $1,545,000 in the first six months of 1999 to $1,976,000 in the first six
months of 2000 as a result of investments in our own network infrastructure and
supporting systems.
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<PAGE>
General and Administrative Expenses
General and administrative expenses increased 212.6% from $3,770,000 in the
first six months of 1999 to $11,785,000 in the first six months of 2000. General
and administrative expenses consist principally of salaries and other personnel
costs for our administrative staff, office rent, and external legal and
accounting advisory costs. The increase in our general and administrative
expenses reflects the costs of building a corporate infrastructure to support
our anticipated growth and the addition of the general and administrative
expenses of the companies acquired in the last six months of 1999. We incurred
significant legal, accounting and other external advisory costs associated with
its financing activities, acquisitions and alliances in the second half of 1999.
As a percentage of revenues, general and administrative expenses increased from
44.6% in the first six months of 1999 to 74.5% in the first six months of 2000.
Within general and administrative expenses are the personnel cost of general and
administrative personnel as well as technical staff who are not involved in the
day to day management of the network. These personnel totaled 71 at the end of
June 2000. The non technical general and administrative personnel increased from
approximately 59 at the end of June 1999 to 86 at the end of June 2000. Most of
these additions were made to the financial, human resources, and IT management
of the operating companies and to the executive management in the corporate
headquarters.
Excluding the general and administrative expenses in the companies acquired
since the end of the first six months of 1999, general and administrative
expenses increased 170% from $3,770,000 in the first six months of 1999 to
$10,169,000 in the first six months of 2000.
Sales and Marketing Expenses
Sales and marketing expenses increased by 25% from $5,147,000 in the first six
months of 1999 to $6,434,000 in the first six months of 2000. Sales and
marketing expenses consist principally of salaries of our sales force and
marketing personnel and advertising and communication expenditures. The growth
in these expenses was partially due to additions to the sales and marketing
staff which increased from approximately 88 on June 30, 1999 to 127 on June 30,
2000. As a percentage of revenues, our sales and marketing expenses decreased
from 60.9% in the first six months of 1999 to 40.7% in the first six months of
2000.
Excluding the sales and marketing expenses in the companies acquired since the
end of the first six months of 1999, sales and marketing expenses decreased 1%
from $5,147,000 in the first six months of 1999 to $5,114,000 in the first six
months of 2000.
Research and Development
Research and development expenses decreased 62.6% from $2,146,000 in the first
six months of 1999 to $803,000 in the first six months of 2000. Research and
development expenses consist principally of personnel costs of employees working
on product development, consulting costs and certain overhead items. As a
percentage of revenues, research and development decreased from 25.4% in the
first six months of 1999 to 5.1% in the first six months of 2000.
Depreciation and Amortization
Depreciation and amortization expenses increased from $1,228,000 in the first
six months of 1999 to $6,781,000 in the first six months of 2000. This increase
reflects increased depreciation of property and equipment purchased to build the
corporate infrastructure necessary to support our anticipated growth, and in
particular increased amortization of goodwill related to our acquisitions.
Goodwill represents the excess of the purchase price of companies we purchased
over the fair value of the tangible assets of those companies. Goodwill is
amortized over 5 - 10 years.
Interest Income and Expense
Interest expense increased from $64,000 in the first six months of 1999 to
$18,187,000 in the first six months of 2000 as a result of our issuance of debt
securities in the second half of 1999. Interest income increased from $383,000
in the first six months of 1999 to $3,194,000 in the first six months of 2000 as
a result of interest earned on the unutilized proceeds of these offerings.
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<PAGE>
In the first six months of 2000 we incurred net foreign exchange losses of
$5,065,000 because our borrowings are denominated in US dollars but our
principal operating currency is the Euro. We will continue to record such losses
if the US dollar strengthens against the Euro.
Income Taxes
We recorded income tax benefits of $5,302,000 in the first six months of 1999
and $6,139,000 in the first six months of 2000, arising principally from
operating losses. Although we have additional operating losses, a valuation
allowance has been established to reflect the estimated amount of the tax
benefit that may not be realized. The majority of the operating losses and the
associated valuation allowance are associated with operations subject to
taxation under the German tax code. Under the current German tax code, these net
operating losses may be carried forward indefinitely and used to offset our
future taxable earnings.
Liquidity and Capital Resources
Cash Flow
Operating activities used cash of $33,617,000 in the first six months of 2000
compared to $11,344,000 for the comparable period in 1999. This is principally
the result of higher net losses as explained above.
For the first six months of 2000 investing activities provided cash of
$14,967,000 compared to cash used of $36,040,000 for the comparable period in
1999. This increase in cash generated from investing activities represents the
net proceeds from the purchase and sale of short-term investments, partially
offset by the cash outflows for the purchases of property and equipment
($16,426,000). Expenditures for property and equipment consisted principally of
the fit-out of Points of Presence and data facilities, the purchases of computer
hardware and software and other expenditures related to our Internet backbone
and equipment.
For the first six months of 2000, net cash provided by financing activities was
$780,000 compared to $23,805,000 in the same period in 1999.
Working Capital
On June 30, 2000, our working capital, defined as the excess of our current
assets over our current liabilities, was $78,274,000 as compared $102,724,000 at
December 31, 1999.
Our accounts receivable as of June 30, 2000, reflects $8,689,0000 for net
accounts receivable compared to $9,162,000 as at December 31, 1999. We have
taken steps to improve the timely collection of receivables, some of which have
started to show an impact.
Cash and cash equivalents amounted to $53,505,000 at June 30, 2000 compared
$73,213,000 at December 31, 1999. Of this, approximately $43,500,000 is held in
US dollars. We also had various short-term investments denominated in Euro's
totaling $15,800,000 at June 30, 2000. In addition, at June 30, 2000 we had
approximately $47,820,000 of restricted cash held in escrow, to meet the next
five semi-annual interest payments on our 14% Senior Notes. This amount is
invested in US Government securities.
Credit Arrangements
As of June 30, 2000, we had short-term unsecured overdraft facilities under
which we and our subsidiaries could borrow up to $1,195,000. These facilities
are denominated in Italian Lire (in the amount of $1,125,000) and Austrian
Schilling (in the amount of $69,000). The interest rates fluctuate based upon
current lending rates. The weighted average borrowing rate on these facilities
was 6.43% as June 30, 2000. In addition, certain of our banks provide overdraft
protection exceeding the limits specified in these agreements As of June 30,
2000, we and our subsidiaries had used $35,000 of these facilities. In addition,
as June 30, 2000, we had long-term capitalized lease obligations of $5,122,000.
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<PAGE>
Capital Expenditures
For the six months ended June 30, 2000, capital expenditures totaled
approximately $16,572,000. We funded these capital expenditures primarily from
net cash provided by financing activities. Our investments in the first six
months of 2000 included: (i) investments in our backbone infrastructure and
equipment approximately totaling DM 4,694,000 ($2,304,000), (ii) investments in
data facilities and data center premises totaling approximately DM 17,600,000
($8,642,000), and (iii) investments in other equipment totaling approximately DM
11,322,000 ($5,480,000).
Comparison of last three quarters in Euro's
We set out below a summary of the development of our results over the last three
quarters in Euro (which is equivalent to 1.95583 DM). We are showing the amounts
in Euro's as this is the main currency in which we operate; and the impact of
exchange rate movements is eliminated - the dollar amounts are included in
parentheses for reference
<TABLE>
<CAPTION>
Three months ended Three months ended Three months ended
December 31, 1999 March 31, 2000 June 30, 2000
------------------ ------------------ ------------------
(in thousands - Euro unless stated)
(in thousands, except Revenue per employee)
Euro (US $) Euro (US $) Euro (US $)
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Revenue .......................... 7,212 ($7,554) 7,163 ($7,058) 9,303 ($8,753)
Cost of revenue - excluding
depreciation and amortization .. 7,923 ($8,318) 7,173 ($7,068) 6,957 ($6,500)
------- ------- ------ -------- ------- -------
Gross margin - before
depreciation and amortization .. (711) ($764) (10) ($10) 2,346 ($2,253)
Operating expenses - excluding
depreciation and amortization .. 14,222 ($14,973) 9,946 ($9,800) 9,864 ($9,222)
------- -------- ------ -------- ------- -------
EBIDTA (Operating result before
depreciation and amortization) . (14,933) ($15,737) (9,956) ($9,810) (7,518) ($6,969)
................................. ------- -------- ------ -------- ------- ---------
Revenue per employee ............. 67,718 ($70,930) 79,149 ($77,989) 107,085 ($100,754)
</TABLE>
Revenue
Revenue denominated in Euro's fell slightly from the fourth quarter of 1999 to
the first quarter of 2000, due to a slow down in project revenue. This slow down
resulted from certain projects not being fully completed and therefore not
billed during the first quarter of 2000. Revenue increased by 29.9% in the
second quarter of 2000 compared with the first quarter of 2000 reflecting the
completion of projects, and the continued development of the recurring revenue
streams. Italy in particular reported increased revenue in the second quarter of
2000 resulting from a higher number of business customers for connectivity
services, including dedicated lines and dial-up products.
Cost of revenues
Total cost of revenues, excluding depreciation and amortization, denominated in
Euro's decreased by 3% in the second quarter of 2000 compared with the first
quarter of 2000. Cost of revenue, excluding depreciation and amortization, as a
percentage of sales decreased from 110% in the fourth quarter of 1999 to 100% in
the first quarter of 2000 and to 75% in the second quarter of 2000. This
reflects the greater cost efficiencies being obtained by higher utilization of
our infrastructure and the lower level of technical and operational staff now
deployed.
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<PAGE>
Gross margin
The higher revenue and lower level of costs of sales has increased our gross
margin, before depreciation and amortization as denominated in Euro over the
last three quarters. This has increased from a negative margin of 10% in the
fourth quarter of 1999 to 0% in the first quarter of 2000 and 25% in the second
quarter of 2000. The gross margin, before depreciation and amortization of the
network services has increased from a negative margin of 20% in fourth quarter
of 1999, to 1% in the first quarter of 2000 and 29% in the second quarter of
2000.
General and Administrative expenses
General and administrative expenses denominated in Euro have decreased from Euro
8,967,000 ($9,471,000) in the fourth quarter of 1999 to Euro 6,816,000
($6,716,000) in the first quarter of 2000 and further to Euro 5,457,000
($7,461,000) in the second quarter of 2000. This represents a reduction as a
percentage of sales from 124% in the fourth quarter of 1999 to 95% in the first
quarter of 2000 and 59% in the second quarter of 2000. This reflects the
reduction in the level of staff and related overheads which we started in the
fourth quarter of 1999. The lower general and administrative expenses also
reflects additional cost controls which have been implemented by management
towards the end of 1999 and in 2000.
Sales and marketing expenses
Sales and marketing expenses denominated in Euro decreased from Euro 4,747,000
($4,994,000) the fourth quarter of 1999 to Euro 2,949,000 ($2,906,000) in the
first quarter of 2000 reflecting a reduction in staff, and a general reduction
in marketing expenses and the implementation of tight cost control. Sales and
marketing expenses denominated in Euro subsequently increased in the second
quarter of 2000 to Euro 3,751,000 ($3,528,000) as a result of increased
advertising expense, and the replacement of some of the sales and marketing
staff who departed the company at the end of 1999 and the start of 2000.
Research and development
Research and development expenses denominated in Euro decreased from Euro
509,000 ($509,000) the fourth quarter of 1999 to Euro 180,000 ($177,000) in the
first quarter of 2000. Research and development expenses denominated in Euro
increased in the second quarter of 2000 to Euro 657,000 ($626,000).
EBIDTA
EBIDTA, operating results before depreciation and amortization, as denominated
in Euro have improved from a loss of Euro 14,933,000 ($15,373,000) in the fourth
quarter of 1999 to losses of Euro 9,956,000 ($9,800,000) in the first quarter of
2000 and Euro 7,518,000 in the second quarter of 2000. This improved result is
due to the increased revenue and cost saving exercise implemented by management.
Other matters
The Company has been repurchasing a portion of its 14% Senior Notes due 2009
(the "Notes"). During July 2000, the Company repurchased $50.3 millions of Notes
at average prices equal to 44% of the face value of the Notes repurchased. As
required by the terms of the Notes, the Company has established an escrow
account to provide for payment in full of the first six scheduled interest
payments on the Notes. The amounts contained in the escrow account are carried
on the Company's balance sheet as "Restricted investments". As a result of the
repurchase of Notes in July, approximately $13.2 million will be released from
the escrow account and will be available to the Company. The price of the Notes
repurchased in July net of amounts released from the escrow account was
approximately $9 million. The face amount of the Notes outstanding after the
July repurchases is approximately $100 million.
As noted in our 10K for December 1999, we offer voice services to our customers.
We have been pursuing a strategy pursuant to which we would own voice switches
and have interconnection agreements with other operators as necessary. We are
now reconsidering whether it is best for us to use such traditional voice
telephony technology, or whether it would be more appropriate to use different
technologies which would be more closely aligned to our internet protocol
services and technology, or whether to continue using third party
telecommunications operators, or use a combination of these possibilities.
Page 17 of 19
<PAGE>
At the end of the first half of the year we completed a data center in Frankfurt
of approximately 3,350 net square meters, and a second data centre of similar
size was completed in Munich in July 2000. We continue to believe that such data
centres will be a profitable product line, and are pushing ahead with the
completion of a third data centre in Hamburg.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not utilize market-risk-sensitive instruments, such as derivative
financial instruments. Our primary market risk is in the area of interest rate
and foreign currency exchange rate fluctuations.
We maintain our cash balances in deposits at banks and in highly liquid short-
term investments, such as money market funds and U.S. Treasury Bonds, therefore
lowering our exposure to interest income risks. As a result of our sale of Units
consisting of 14% Senior Notes due 2009 and warrants in July 1999 (the "Unit
Offering"), as well as our sale of Convertible Notes in August, 1999 we have a
substantial amount of debt in U.S. dollars.
While our reporting currency is U.S. dollars, our functional currency is the
Deutsche Mark and as such significant fluctuations in the U.S. dollar to
Deutsche Mark exchange rate could have an adverse impact on the amount of
Deutsche Marks required to satisfy this debt. We estimate that a 10% increase in
the exchange rate between the Deutsche Mark and the U.S. dollar would increase
the Deutsche Mark amount required to settle the debt outstanding from the Unit
offering and our sale of Convertible Notes by approximately $20,000,000.
All of our revenues and a significant portion of our expenses are denominated in
currencies other than our reporting currency, the U.S. dollar. Approximately 52%
of our revenues in the first six months of 2000 were denominated in Deutsche
Marks and another 38% of revenues were denominated in other European Monetary
Union member currencies. The majority of our foreign exchange rate exposure
relates to the translation of our Deutsche Mark financial statements into U.S.
dollars which is impacted by changes in the exchange rates between the Euro and
the U.S. dollar.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
Page 18 of 19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
BY: /s/ Andreas Eder
------------------------------
Andreas Eder
Chairman of the Board, President, and
Chief Executive Officer
BY: /s/ Paolo Di Fraia
------------------------------
Paolo Di Fraia
Chief Financial Officer and Treasurer
Dated: August 15, 2000
Page 19 of 19
