UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 5(d) OF THE SECURITIES ACT OF 1934:
For the Quarterly Period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from __________________ to __________________
Commission file number 0-26919
CYBER MARK INTERNATIONAL CORP.
-----------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware N/A
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
359 Enford Road, Unit 1
Richmond Hill, Ontario, Canada L4C 3G2
- --------------------------------------- ---------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number: (905) 770-4602
---------------
Indicate by check mark whether the registrant (1) has filed has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES ____ NO. ____
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 11, 2000, 6,104,300 shares of the Issuer's Common Stock were
outstanding.
<PAGE>
CYBER MARK INTERNATIONAL CORP.
PART I. FINANCIAL INFORMATION Page No.
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets (Unaudited) as of
March 31, 2000 and December 31, 1999 3
Consolidated Statements of Operations (Unaudited)
for the Three Months Ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows (Unaudited)
for Three Months Ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
PART II. OTHER - INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
2
<PAGE>
Cyber Mark International Corp.
Consolidated Balance Sheets
As at March 31, 2000 and December 31, 1999
- --------------------------------------------------------------------------------
March 31, December 31,
2000 1999
ASSETS (Unaudited)
Current
Cash and cash equivalents $ - $ 1,521
Investment tax credits receivable 162,524 163,208
Accounts receivable 16,500 9,281
Inventory 24,376 24,479
Prepaid expenses 4,983 5,004
------------ -------------
Total current assets 208,383 203,493
Property and equipment - net 132,334 142,334
------------ -------------
Total assets $ 340,717 $ 345,827
============ =============
LIABILITIES AND STOCKHOLDERS" EQUITY
(DEFICIT)
Current
Bank indebtedness $ 98,348 $ 48,503
Accounts payable and accrued
liabilities 107,527 126,619
Long-term debt - current portion 150,465 151,098
Advances from shareholder 130,985 77,641
------------ -------------
Total liabilities 487,325 403,861
------------ -------------
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock 610 610
Additional paid in capital 740,367 740,367
Cumulative translation adjustment (23,073) (41,217)
Deficit (864,512) (757,794)
------------ -------------
Total stockholders" equity (deficit) (146,608) (58,034)
------------ -------------
Total liabilities and stockholders"
equity $ 340,717 $ 345,827
============ =============
The accompanying notes are an integral part of these consolidated
financial statements
3
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Cyber Mark International Corp.
Consolidated Statements of Operations and Deficit
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
- -------------------------------------------------------------------------------
2000 1999
Revenue
Sales $ - $ 38,972
Other 1,302 22,900
-------------- --------------
1,302 61,872
Cost of sales - 26,789
-------------- --------------
Gross profit 1,302 35,083
-------------- --------------
Expenses
Marketing 30,260 31,756
Research and development 19,047 12,670
Wages and benefits 16,070 30,122
Rent and occupancy 9,180 16,400
Professional fees 8,574 18,974
Interest 6,568 8,210
Office and general 3,589 25,130
Telephone 2,732 2,790
Insurance 2,000 3,300
Depreciation and amortization 10,000 10,590
-------------- --------------
108,020 159,942
-------------- --------------
Net loss $ (106,718) $ (124,859)
============== ==============
Loss per share $ (0.02) $ (0.02)
============== ==============
The accompanying notes are an integral part of these consolidated
financial statements
4
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Cyber Mark International Corp.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
- -------------------------------------------------------------------------------
2000 1999
Cash flows from operating activities
Net loss $ (106,718) $ (124,859)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation and amortization 10,000 10,590
Changes in assets and liabilities
Investment tax credits receivable 684 (24,696)
Accounts receivable (7,219) 527
Inventory 103 (2,427)
Prepaid expenses 21 (14,121)
Accounts payable and accrued
liabilities (19,092) 53,350
------------ ------------
Net cash used by operating activities (122,221) (101,636)
------------ ------------
Cash flows from financing activities
Bank indebtedness 49,845 18,972
Long-term debt (633) (9,383)
Advances from shareholder 53,344 (5,252)
----------- ------------
Net cash provided by financing activities 102,556 4,337
----------- ------------
Effect of exchange rate changes on cash 18,144 (9,566)
----------- ------------
Increase (decrease) in cash and cash
equivalents (1,521) (106,865)
Cash and cash equivalents, beginning of period 1,521 106,865
------------ ------------
Cash and cash equivalents, end of period $ - $ -
============ =============
Supplementary information:
Interest paid $ 6,568 $ 8,210
============ =============
The accompanying notes are an integral part of these consolidated
financial statements
5
<PAGE>
Cyber Mark International Corp.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
- -------------------------------------------------------------------------------
1. The financial information included herein is unaudited; however, such
information reflects all adjustments, consisting solely of normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the periods indicated. Certain information and footnote
disclosures normally included in financial statements prepared in
conformity with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. These condensed financial statements
should be read in conjunction with the consolidated financial statements
and related notes contained in the Company's Annual Report for the twelve
months ended December 31, 1999.
The following is a summary of the significant accounting policies followed
by the Company:
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the company and its wholly-owned subsidiary. All significant intercompany
transactions and balances have been eliminated in consolidation.
Cash and cash equivalents
The company considers all highly liquid investments with a maturity of
three months or less from time of purchase to be cash equivalents.
Inventory
Inventory is valued at lower of cost or market. Cost is determined on the
first-in-first-out basis.
Property and equipment
Property and equipment are stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful life of the assets, usually
five years. For leasehold improvements, depreciation is provided on
straight-line basis over five years.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates and assumptions.
6
<PAGE>
Cyber Mark International Corp.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
Financial instruments
The company considers the fair value of all financial instruments to be not
materially different from their carrying value at year end.
Translation of foreign currencies
The company uses the local currency as the functional currency and
translates all assets and liabilities at year-end exchange rates, all
income and expense accounts at average rates and records adjustments
resulting from the translation in a separate component of common
shareholders' equity.
Loss per common share
Loss per common share is based on the weighted average number of common
shares (2000 - 6,104,300, 1999 - 6,064,300) outstanding during each period.
Loss per common share is the same for both basic and dilutive since stock
options would be antidilutive and therefore not included in the
calculation.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Overview
Because we continue to develop our products and services, we are
still in the earlier stages of development. Therefore, selected
financial data would not be meaningful. Reference is made to the financial
statements elsewhere in the document. Included in this document are the
unaudited financial statements for the three months ended March 31, 2000
and 1999.
Results of Operations
There were no sales for the three months ended March 31, 2000 compared
to $38,972 for the comparable 1999 period. The company's sales declined
from those in 1999 because it was concentrating on developing new Windows
based software for its games and operational programs. In addition, the
marketing orientation of the company is shifting from sales to revenue
sharing arrangements which has adversely impacted sales and overall
revenues. Because of the lack of sales and shifting marketing focus, cost
of sales and gross profit declined accordingly.
Expenses for the three months ended March 31, 2000 were $108,000, a
decline of $51,942 from $159,942 for the comparable 1999 period. The
reduction was achieved by eliminating staff and reducing overhead by moving
to smaller, less expensive premises. Also, in 1999 there was a one-time
professional fee. The reduction of expenses was also a response to the
absence of revenue during the period due to its redesign of the products
and change in marketing.
The net loss for the period ended March 31, 2000 was $106,718,
compared to $124,859 for the same period in 1999. The reduction was due to
reduced expenses. The net loss per share remained constant.
Liquidity and Capital Requirements.
The working capital deficiency of CyberMark at March 31, 2000 was
$278,942, compared to a working capital deficiency of $200,368 at December
31, 1999.
The company is in default of certain covenants given to its
lenders. The company has not received any notice of default. Because of the
default status, however, all debt is classified as current.
The company's bank debt was $356,340 at March 31, 2000.
The company's use of cash for operations was partly funded by an
infusion of cash by the sole director of the company. There can be no
assurance that this source of funds will be available in future periods.
The company has $162,524 worth of Canadian government Investment Tax
Credits which have been approved, and the company anticipates collecting
this amount in the near term.
We will require additional capital financing to continue to develop
our business and fund sales or revenue sharing arrangements. We will also
need capital to fund operational expenses as well as research and
development and capital expenses. We have determined that the funds needed
for full implementation of our current business plan will be substantial.
If we are unable to raise capital or increase our revenues, we will have to
curtail aspects of our business plan and operations or cease our operations
altogether. We are reviewing our immediate capital requirements and
consulting with investment banking professionals with a view towards
raising additional equity capital. No assurance can be given that the
company will be able to sell its securities or sell them on acceptable
terms.
8
<PAGE>
Forward-Looking Statements
When used in this Form 10-QSB and in future filings by CyberMark
with the Securities and Exchange Commission, words or phrases "will likely
result", "management expects", "will continue", "is anticipated", "plans",
"believes", "estimates", "seeks", variation of such words and similar
expressions are intended to identify such forward-looking statements within
the Private Securities Litigation Reform Act of 1995. Readers are cautioned
not to place undue reliance on any such forward-looking statements, each of
which speak only as of the date described below. Actual results may differ
materially from historical earnings and those presently anticipated of
projected. CyberMark has no obligation to publicly release the result
of any revisions, which may be made to any forward-looking statements to
reflect anticipated events or circumstances occurring after the date of
such statements.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K: None
Exhibit No. Exhibit
- ----------- --------
(27.1) Financial Data Schedule
8
<PAGE>
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.
CYBER MARK INTERNATIONAL CORP.
Dated: May 22, 2000 /s/ Samuel Singal
By: ____________________________________
Name: Samuel Singal
Title: President and Chief Operating
Officer
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
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<SECURITIES> 0
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<COMMON> 610
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0
<OTHER-SE> 147,218
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<EPS-BASIC> (.02)
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