U.S. 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
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
Commission File No. 0-26405
CBCOM, INC.
--------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Delaware 95-4635025
----------------------------------- ------------------------
(State or other jurisdiction of (I.R.S Employer
incorporation of organization) Identification No.)
16830 Ventura Blvd., Suite 211, Encino, California 91436
-----------------------------------------------------------------------------
Address of principal executive office
(818)461-0800
----------------------------------
Issuer's telephone number
Check whether the issuer has (1) filed all reports required by Section 12 or
15(d) of the Exchange Act during the past 12 months, and (2) been subject to
such filing requirements for the past ninety (90) days. Yes ( X ) No ( )
As of June 30, 2000, 17,997,740 shares of Common Stock were outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CBCOM, INC.
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ ------------
Assets (Unaudited)
Current assets:
<S> <C> <C>
Cash $ 31,844 $ 486
Prepaid expenses 4,771 16,407
----------- -----------
Total current assets 36,615 16,893
----------- -----------
Property, plant and equipment, net 53,288 43,846
Other assets:
Deposit 19,897 29,722
Prepaid interest 165,000 128,334
Prepaid rent in Beijing representation office 197,917 166,667
----------- -----------
Total other assets 382,814 324,723
----------- -----------
Total assets $ 472,717 $ 385,462
----------- -----------
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 331,412 $ 298,739
Salaries payable - Former CEO 363,649 --
Salaries payable - other 557,250 522,938
Accrued expenses 129,922 154,803
Income tax payable 2,400 2,400
Capital lease obligation - current 32,433 32,433
Loan payable - shareholders 11,988 11,988
----------- -----------
Total current liabilities 1,429,054 1,023,301
Loan from related party 157,184 542,645
----------- -----------
Total liabilities
1,586,238 1,565,946
Shareholders' Deficit
Common stock; par value $0.001 per share, 100,000,000 17,212 17,998
shares authorized and 17,212,240 and 17,997,740
shares issued and outstanding as of December 31, 1999,
and June 30, 2000, respectively
Additional paid-in capital 6,021,944 6,527,522
Subscription receivable (1,300 (1,250
Accumulated deficit (7,151,377 (7,724,754
----------- -----------
Total shareholders' deficit (1,113,521 (1,180,484
----------- -----------
Total liabilities and shareholders' deficit $ 472,717 $ 385,462
----------- -----------
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
CBCOM, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception
(April 23,
1997)
Three Months Ended June 30, Six Months Ended June 30, to March 31,
-------------------------- --------------------------
1999 2000 1999 2000 2000
----------- ----------- ----------- ------------ --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales $ - $ - $ - $ - $ -
Cost of sales - - - - -
----------- ----------- ----------- ------------ --------------
Gross profit - - - - -
Selling expense - - - - -
General and administrative expense 204,023 261,616 567,305 527,247 7,147,850
Merger transaction expense - - - - 399,950
----------- ----------- ----------- ------------ --------------
Loss from operations (204,023 ) (261,616 ) (567,305 ) (527,247 ) (7,547,800 )
Other income (expense):
Interest expense, net (18,333) (27,797 ) (18,333 ) (46,130 ) (168,999 )
Other, net 6,500 - 6,500 - (5,555 )
----------- ----------- ----------- ------------ --------------
Loss before income taxes (215,856 ) (289,413 ) (579,138 ) (573,377 ) (7,722,354 )
Income tax provision - - - - 2,400
----------- ----------- ----------- ------------ --------------
Net loss $ (215,856 ) $ (289,413 ) $ (579,138 ) $ (573,377 ) $ (7,724,754 )
----------- ----------- ----------- ------------ --------------
Weighted average number of common shares 15,327,500 17,213,982 15,327,500 17,213,982
outstanding
----------- ----------- ----------- ------------
Basic and diluted loss per share $ (0.01 ) $ (0.02 ) $ (0.04 ) $ (0.03 )
----------- ----------- ----------- ------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CBCOM, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
From Inception
(April 23,
1997)
Six Months Ended June 30, to June 30,
---------------------------------
1999 2000 2000
-------------- -------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (579,138 ) $ (573,377 ) $ (7,724,754 )
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 32,276 40,692 83,744
Write-off assets in Beijing - - 187,500
Write-off of pager inventory 31,779 - 136,620
Issuance of stock for signing bonus - - 436,625
Forgiveness of interest on shareholder's loan - 9,464 62,300
Compensation cost related to options granted - - 131,250
Issuance of stock for promotion and facilitation service - - 623,750
Issuance of stock for payroll expense - - 560,000
Issuance of stock for merger transaction expenses - - 250,000
Increase(decrease) in cash from changes in:
Receivables 8,655 - -
Pager inventory 18,333 25,030 189,842
Deposits (13,255 ) - (136,620 )
Prepaids (3,075 ) (9,825 ) (29,722 )
Accounts payable 19,266 (32,673 ) 298,739
Salaries payable - former CEO (122,685 ) (363,649 ) -
Salaries payable - other 181,751 192,188 749,438
Accrued liabilities and income tax payable 33,625 24,881 157,203
-------------- -------------- ----------------
Net cash used in operating activities (389,468 ) (687,269 ) (4,024,085 )
-------------- -------------- ----------------
Cash flows from investing activities:
Purchase of furniture and equipment - - (64,336 )
Refund of purchase price on a piece of furniture - - 500
-------------- -------------- ----------------
Net cash provided by investing activities - - (63,836 )
-------------- -------------- ----------------
Cash flows from financing activities:
Repayment of capital lease - - (71 )
Proceeds from related party 122,685 385,461 542,645
Repayments of related party loans - - (226,261 )
Proceeds from issuance of stock and warrants 150,000 50 855,075
Proceeds from stockholder loans 120,495 270,400 2,917,019
-------------- -------------- ----------------
Net cash provided by financing activities 393,180 655,911 4,088,407
-------------- -------------- ----------------
Net increase (decrease) in cash and cash equivalents 3,712 (31,358 ) 486
Cash and cash equivalents, beginning of period 240,000 31,844 -
-------------- -------------- ----------------
Cash and cash equivalents, end of period $ 243,712 $ 486 $ 486
============== ============== ================
Supplementary information Cash paid during the year:
Interest $ - $ 36,666 $ 168,999
============== ============== ================
</TABLE>
4
<PAGE>
CBCOM, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Supplemental disclosure of non - cash activities
<S> <C> <C> <C>
Issuance of stock to purchase selected assets in CBCom - - 187,500
Beijing
Capital lease - - 32,504
Issuance of stock for signing bonus - - 436,625
Issuance of stock for prepaid rents in Beijing - - 312,500
Conversion of shareholder's loan into Common Stock - 270,400 2,682,370
Issuance of stock for directors' compensation - - 560,000
Issuance of stock for promotion and facilitation service - - 623,750
Issuance of stock for merger transaction expenses - - 250,000
Deemed interest for Polmont - - 220,000
Forgiveness of interest accrued - 46,437
Conversion of accrued salary payable into common stock $ - $ 226,500 $ 226,500
============== ============== ================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CBCOM, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Information as of June 30, 2000 and for the six months ended June 30, 1999 and
2000, respectively, is unaudited)
1. The Organization and Business
CBCom, Inc. ("the Company") was incorporated under the laws of the State of
Delaware on April 23, 1997 and is registered to do business as a foreign
corporation in the State of California. The strategic mission of the Company is
to participate in the development of telecommunication, Internet, and
information service businesses in the People's Republic of China. The Company
will seek to acquire existing Internet Service Providers (ISP) and web based
Internet content providers (ICP) and operates through a series of Sino-foreign
joint venture companies. The Company previously established a joint venture in
order to operate in the pager network business in China; however, this venture
was closed due to the inability at that time to raise sufficient capital.
The Company incurred consecutive losses in 1997, 1998, and 1999 and for the
first quarter of 2000 and had negative working capital in 1998 and 1999,
respectively, that raises substantial doubt about its ability to continue as a
going concern. Historically, one of the Company's directors and major
shareholders provided the Company with substantial financing sources. The
director has provided a letter of support indicating that he pledges to provide
continuous financial support to enable the Company to satisfy its working
capital requirements and to complete its commitments to the Company's joint
venture projects on a going concern basis. While there is no assurance that
funding will be available, the Company is continuing to actively seek funding to
complete the Shanghai joint venture project through equity and/or debt
financing. There is an uncertainty that management fund raising will be
successful. The accompanying financial statements do not include any provisions
or adjustments, which might result from the outcome of the uncertainty discussed
above.
2. Presentation of Interim Information
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310 of regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The accompanying unaudited financial statements reflect all adjustments that, in
the opinion of the management, are considered necessary for a fair presentation
of the financial position, results of operations, and cash flows for the periods
presented. The results of operations for such periods are not necessarily
indicative of the results expected for the full fiscal year or for any future
period. The accompanying financial statements should be read in conjunction with
the audited consolidated financial statements of the Company included in the
Company's Form 10-KSB for the year ended December 31, 1999.
6
<PAGE>
CBCOM, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
3. Related Party Transactions
Employment Agreements
The Company had a five-year employment agreement starting from May 17, 1997 with
the former CEO who left the Company in January 1999. He filed a lawsuit against
the Company for the unpaid compensation of $520,833 through May 15, 1999 plus
$30,000 for repurchasing the shares currently owned by him and the relevant
compensation remaining on his employment agreement. In accordance with the
employment agreement, the former CEO's annual base salary and bonus were
guaranteed up to May 15, 1999 by 800,000 shares of a publicly traded company's
common stock in an escrow account, which were owned by Polmont Investment
Limited.
4. Related Party Transactions
On January 21, 1999, the Company entered into a settlement agreement with the
former CEO as follows: (1) the delayed compensation of $520,833 would be paid by
the proceeds from the sale of the asset held in the escrow account plus $30,000
for the repurchase of his CBCom Common Stock; and (2) both parties agreed to
submit any remaining compensation claims to binding arbitration. To the extent
that the former CEO wins an award in excess of $550,833, he will be authorized
to sell remaining shares in the escrow account to the extent of 3,500 shares per
day; and (3) the former CEO agreed to look solely to the escrowed shares for his
satisfaction of his claim in this lawsuit, waive any claim for damages in excess
of their value, and generally release all parties to this lawsuit, such release
being subject to the performance of the obligations of the related defendants.
As of June 30, 2000, the escrow has sold 250,000 shares and the former CEO has
received the entire compensation of $520,833 plus $16,407 towards the purchase
of his Common Stock. In lieu of binding arbitration, on July 31, 2000, the
Company and the former CEO agreed to transfer an additional 190,000 shares held
in the escrow as full and final settlement for all claims.
Based upon the above settlement agreement, the Company understands that the
total obligation to Polmont will depend on the market value of the 190,000
shares at the time these are delivered to the former CEO as final settlement. As
of June 30, 2000, there were 550,000 shares remaining in the escrow account with
a market price of $2,100,000. According to the agreement between the Company and
Polmont, the Company has recognized the corresponding loan payable to Polmont as
shares were sold and the proceeds were used to settle its obligation to the
former CEO.
7
<PAGE>
CBCOM, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Shareholder loans
During the six months ended June 30, 2000, the principal shareholder of the
Company provided $270,400 in cash to fund the Company's operations. According to
the agreement between the principal shareholder and the Company, the principal
shareholder will continue to provide funds to the Company on a going forward
basis and that any balance of loan payable to the principal shareholder should
be due on April 24, 2000 bearing an interest rate of 7% per annum. According to
the agreement, the principal shareholder has the option to convert his
outstanding loan balance into the Company's common stock at a conversion price
of $0.50 per share at any time prior to April 23, 2000 the maturity date of the
loan. On April 24, 2000 the Company extended the note between the Company and
the principal shareholder for one additional year to April 24, 2001. The
principal shareholder retains the option to convert his outstanding loan balance
into the Company's Common Stock; however, the conversion price for all loans
advanced after April 24, 2000 will be $1.00 per share.
The principal shareholder converted $198,100 of shareholder loan at $.50 per
share into 396,200 shares and $72,300 of shareholder loan at $1.00 per share
into 72,300 shares. At June 30, 2000 the balance due to the principal
shareholder was zero.
The agreement also specified that the conversion price may be adjusted if the
Company shall at any time undergo a stock split, stock dividend or other
combination or subdivision that does not involve payment of consideration for
such shares. As of March 31, 2000, the principal shareholder waived his accrued
interest receivable of $642.
5. Subsequent Events
The Company filed Form 211 with the NASD to initiate a listing on the OTC
Bulletin Board and is awaiting notification.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Financial Condition at June 30, 2000
The Company had an accumulated deficit of $7,724,754 as of June 30, 2000. Since
its inception in 1997, the Company has suffered consecutive losses in the fiscal
years ended December 31, 1997, 1998, and 1999. The Company had $486 cash on hand
at June 30, 2000.
Results of Operations
The Second Quarter Ended June 30, 2000 Compared to The Second Quarter Ended June
30, 1999
The general and administrative expense results of operations for the quarter
ending June 30, 2000 was $261,616 compared to $204,023 for the quarter ending
June 30, 1999. The components of these general and administrative expenses
included $147,600 of compensation expense (of which $72,050 was accrued),
$31,417 of rental expense for both the Beijing and California offices, and
$19,306 in legal and accounting fees. The decrease of $57,593 mainly represents
the decrease of $35,350 in compensation expense and $10,000 in investment
banking fees.
The interest expense for the quarter ending June 30, 2000 was $27,797 compared
to $18,333 for the quarter ending June 30, 1999. The increase in interest
expense is accrued interest relating to the shareholder loan.
The Six Months Ended June 30, 2000 Compared to The Six Months Ended June 30,
1999
The general and administrative expense results of operations for the six months
ending June 30, 2000 was $527,247 compared to $567,305 for the six months ending
June 30, 1999. The components of these general and administrative expenses
included $295,950 of compensation expense (of which $152,750 was accrued),
$63,542 of rental expense for both the Beijing and California offices, and
$67348 in legal and accounting fees. The decrease of $40,058 mainly represents
the decrease of $22,549 in investment banking fees and $30,625 in business
development expenses of the Beijing office.
The interest expense for the six months ended June 30, 2000 was $46,130 compared
to $18,333 for the six months ending June 30, 1999. The increase in interest
expense was due mainly to the amortization of the deemed interest expense for
the purchase right assigned to Polmont to acquire the 500,000 shares of common
stock currently owned by the ex-CEO. See Note 4 to the Financial Statements
about related party transactions for more information. The balance of the
interest expense is accrued interest on the shareholder's loan.
9
<PAGE>
Plan of Operation
CBCom was formed to develop telecommunications projects and Internet-related
information services in the People's Republic of China. CBCom establishes joint
venture partnerships with Chinese companies having data networking technologies
or customer bases to which CBCom will contribute United States technology and
management resources. In order to execute its Business Plan, CBCom plans to list
its common shares on the OTC Bulletin Board and undertakes a Private Placement
of $5.0-10.0 million. The funds will be used to capitalize the joint venture
partnerships and acquire Internet companies in China. If CBCom is unable to
raise funds through a Private Placement, the company would be dependent upon its
major shareholders for funds and would have to alter its acquisition strategy
and timetable.
To limit the use of valuable cash reserves, CBCom will negotiate its first
acquisitions using only CBCom shares. The terms of any acquisition must give
operating control of the acquired business to CBCom. CBCom will provide the
necessary operating cash as well as management and technical staff to operate
the consolidated business. There is good cause to believe that owners of the
ISPs in China will welcome the opportunity to own stock in a United States
public company.
E-Commerce has not yet become a mainstream business in China, as credit cards
are essentially non-existent, and its parcel delivery services are inadequate.
ICP businesses offering free information and services financed solely by web
site "banner ads" are not yet profitable. The most secure Internet revenues are
those paid to the Internet Service Providers, as anyone wishing to access the
Internet must pay access fees. There is a large profit potential for ISPs both
now and in the foreseeable future.
Entering this business is attractive, as start-up costs are relatively low. This
has resulted in a large number of small, unsuccessful ISPs and ICPs that are
under capitalized. The typical smaller ISP is unable to support its overhead,
even less capable of proper marketing, and is thus unable to increase its
subscribers enough to turn a profit.
CBCom plans an aggressive series of mergers, acquisitions, and service
expansions. CBCom will offer convenient accessibility through local access
numbers nationwide, fast access speeds, high quality customer support, and
user-friendly services, all of which are currently lacking in China but are
taken for granted in America. Internet Content will include unique and targeted
applications on its various web sites thereby drawing an ever-increasing
customer base to its ISP business, as well as generating revenue by charging
fees for specialized information and service web sites.
In order to quickly reach a profitable number of subscribers, CBCom plans to
acquire a number of smaller ISPs and by using current technology, combine the
existing customers into a single ISP. The infrastructure requirements of a very
small ISP are essentially the same as that of a very large ISP and the cost to
maintain operations are virtually fixed. Therefore the single most important
component of profitability is a high number of subscribers. By acquiring
existing businesses, CBCom will immediately benefit from achieving economies of
scale.
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<PAGE>
CBCom has entered into a memorandum of understanding with Shanghai Stock
Exchange Communication Co., Ltd. ("SSECC") and Shanghai Xingtong
Telecommunications Science & Technology Co., Ltd. to form a Sino-foreign joint
venture to develop a financial data network in China called "China Financial
Network" or "CFN". SSECC is a subsidiary of the Shanghai Stock Exchange formed
as a joint venture between Shanghai Stock Exchange and Shanghai Stock Central
Clearing Company. The memorandum contemplates that SSECC will provide access to
its existing satellite communication system as well as licenses, permissions and
rights to use the logo, name and promotional information of the Shanghai Stock
Exchange. Shanghai Xingtong Telecommunications will participate in network
design and management to ensure efficient utilization of the satellite network
and will provide technical assistance. CBCom will provide the resources to
collect and compile global financial information, United States technology,
management resources and capital.
The memorandum of understanding anticipates the project planned in two phases.
Phase I is to market and distribute financial information in Chinese provided by
the Shanghai Stock Exchange over a network to various terminals throughout
China, exclusively targeting Chinese stockbrokers, financial institutions and
corporate users. The financial information provided will include prices for
commodities and futures, precious metals, Asian and global equities and foreign
currencies, global market indexes and real time international news and
commentary. The information provided will differ from information provided by
competitors in that it will be entirely in Chinese at a lower rate. Phase II is
to market to individual consumers real-time financial data, news and on-line
investment trading bundled as a single service, developing into the equivalent
of a commercial Internet Service Provider.
The parties to the memorandum must enter into a joint venture and obtain the
required approvals from the Chinese government authorities by December 31, 2000
(the original deadline was June 30, 2000) or may lose the exclusive right to the
use of the SSECC satellite communication system. CBCom has advanced $250,000 in
start-up expenses which was expensed during 1998 and which could be credited
toward its capital contribution to the joint venture company when the joint
venture is completed. If the joint venture has not been set up and exclusive
licenses to use the satellite communication network owned by Shanghai Stock
Exchange and use the logo and name of Shanghai Stock Exchange have not been
obtained, the issuance of promotional stock to Sinoway, Ltd. could be cancelled.
CBCom intends to continue its sale of the Microtron 2000 in addition to the
development of the joint venture project for the creation of the China Financial
Network. CBCom believes that the Shanghai Stock Exchange and its members provide
a ready market for the sale of the Microtron 2000 and its capability to receive
stock quotes.
Liquidity and Capital Resources
The Company has suffered losses in 1997, 1998, 1999 and the first six months of
2000 and had negative working capital in all of these periods. The operating
activities of the Company have been funded by the principal shareholders in the
form of equity and shareholder loans. Funds loaned by the principal shareholder
to the Company amounted to $679,000 in 1998, $137,000 in 1999 and $274,100 in
the first six months of 2000. During 1999, the Company raised money through a
series of private placements obtaining net proceeds of $304,000 after selling
commissions.
11
<PAGE>
One of the Company's directors and major shareholders continue to provide the
Company with substantial financing sources. The director has provided a letter
of support indicating that he pledges to provide continuous financial support to
enable the Company to satisfy its working capital requirements and to complete
its commitments to its joint venture projects. The consecutive losses and the
negative working capital situation raise substantial doubt about the company's
ability to continue as a going concern. While there is no assurance that funding
will be available, the Company is continuing to actively seek funding to
complete its joint venture projects and execute its Business Plan through equity
and/or debt financing. Without outside funding, the Company is totally dependent
upon its major shareholders and would need to reconsider its Business Plan.
PART II - OTHER INFORMATION
CBCOM, INC.
JUNE 30, 2000
Item 1. Legal Proceedings
CBCom entered into a settlement agreement with Bernard J. Luskin, the former
Chief Executive Officer of CBCom, in January,1999, settling an outstanding
dispute for unpaid salary and other compensation. Mr. Luskin had an employment
contract with CBCom which guaranteed payment of his salary through an escrow
account containing 800,000 shares of common stock of Amtec, Inc., which shares
were pledged by Polmont Investments, Ltd., a British Virgin Islands corporation
controlled by one of the principal stockholders of CBCom.
Through the settlement, the parties agreed that Mr. Luskin will receive unpaid
salary and bonus through May 15, 1999 totaling $520,833, plus $30,000 for the
repurchase of his Company Common Stock, plus additional compensation as may be
determined by binding arbitration; but in no event shall CBCom's liability
exceed the value of the shares held in escrow. As of June, 2000, the escrow
has sold 250,000 shares for proceeds of $537,240; accordingly the unpaid salary
amount of $520,833 has been fully paid and $16,407 toward the repurchase of his
company stock has been paid. In lieu of submitting to binding arbitration, the
parties agreed, on July 31, 2000 to transfer an additional 190,000 Amtec shares
to Mr. Luskin in full and final settlement of all obligations.
Mr. Luskin waived any rights to satisfy any claims against CBCom from any
assets other than those shares held in the escrow account. CBCom is obligated to
repay Polmont the amount it has paid to Mr. Luskin from the sale of its Amtec,
Inc. shares. Polmont has agreed to accept payment in the form of shares of
CBCom, Inc. valued at $0.50 per share. Due to the nature of this off-balance
sheet financing, the Company has recognized prepaid interest of $220,000 and the
corresponding amount in additional paid-in capital and has amortized the prepaid
interest over a period of three years.
On August 30, 1999, a lawsuit was filed in the Superior Court of the State of
California against CBCom, Inc., Max Sun, and Charles Lesser (Case No. LCO49888)
by Com VU Corporation, a Delaware corporation, based on an alleged breach of a
12
<PAGE>
prior agreement between CBCom and Com VU. The parties entered into a merger
agreement on March 26, 1999, which merger was never effected. Com VU is alleging
CBCom (i) failed to consummate the merger by failure to use its best efforts to
effect it (ii) failed to pay $50,000 in outstanding debts to two shareholders on
behalf of Com Vu (iii) terminated the agreement improperly and (iv) breached a
covenant of good faith. Com Vu is requesting payment of the $50,000 plus losses
of approximately $15,000 in expenses and costs. CBCom disputes the allegations
of the claims and intends to defend the action vigorously. A trial date has been
set for September 18, 2000.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
Not applicable
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. None
(b) Reports on Form 8-K. None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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, in the city of Encino,
California, on the 18th day of August, 2000.
CBCOM, INC.
By /s/ Chian Yi Sun
----------------------------
Chian Yi Sun
Chairman of the Board
By /s/ Charles A. Lesser
----------------------------
Charles A. Lesser
Chief Financial Officer
14
