U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR (15d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission File Number _________
CYBERFAST SYSTEMS, INC..
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(Exact name of small business issuer as specified in its charter)
FLORIDA 13-539-8600
- ----------------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
777 YAMATO ROAD, SUITE 116
BOCA RATON, FL. 33431
-----------------------------------------------
(Address of principal executive offices)
(561)995-6255
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days
Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Number of Shares Outstanding
as of September 30, 1999
----------------
CLASS
-----
Class A Common Stock 1,435,450
Class B Common Stock 4,540,050
---------
Transitional small business disclosure format:
Yes [ ] No [X]
<PAGE>
CYBERFAST SYSTEMS, INC.
INDEX TO 10-QSB
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Balance Sheets as of Stptember 30, 1999 and
------- December 31, 1998
Consolidated Statements of Operations for the nine months ended
September 30, 1999 and September 30, 1998
Notes to Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and
------- Results of Operations for the nine months ended September 30, 1999
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
-------
ITEM 6. Exhibits and Reports on Form 8-K
-------
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CYBERFAST SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1999 WITH
COMPARATIVE FIGURES FOR DECEMBER 31, 1998
UNAUDITED
ASSETS 1999 1998
------ ---- ----
<S> <C> <C>
Current assets:
Cash and Equivalents $ (21,909) $ 538,087
Accounts Receivable
Prepaid Expenses
Investment
----------------------------
Total Current Assets (21,909) 538,097
Equipment 442,581 135,187
Less: Accumulated Depreciation 31,436
----------------------------
Net 411,145 135,187
Other
----------------------------
389,236 673,274
============================
LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------
<S> <C> <C>
Current Liabilities
Accounts Payable 199,821 196,794
Income Tax Payable 245,000
Customer Deposits 65,530 65,530
----------------------------
265,351 507,324
Shareholder Loan 1,006,968
Shareholders's Equity
Common Stock $0.01 par value, 45,000,000 authorized, 59,755 58,200
5,975,500 and 5,820,000 issued and outstanding at September 30, 1999 and
December 31, 1998, respectively
Additional Pain-in Capital 660,071
Retained Earnings (Deficit) (1,602,909) 107,750
------------
Total Stockholder's Equity (Deficit) (883,083) 165,950
389,236 673,274
============================
</TABLE>
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<PAGE>
CYBERFAST SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
UNAUDITED
NINE MONTHS ENDED SEPT. 30
----------------------------
1999 1998
---- ----
Revenues 435,739 8,009,555
Expenses
Carriers 276,807 1,275,195
System Maintenance 163,794 1,828,654
General and Administrative 658,219 1,625,561
Depreciation 31,436 267,108
Termination Costs 635,615
----------------------------
Total Expenses 1,130,256 5,632,133
----------------------------
Income (loss) from Operations (694,517) 2,377,422
and before Income Tax (benefits)
Other 13,287
----------------------------
Net Income (loss) (694,517) 2,364,135
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<PAGE>
CYBERFAST SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
UNAUDITED
NINE MONTHS ENDED SEPT. 30
----------------------------
1999 1998
---- ----
Cash Flows from Operating Activities:
Net income (loss) $(694,517) $ 2,919,196
Adjustments to reconcile net income to net
cash provided (used by) performing activities:
Depreciation 31,436 257,108
(Increase) decrease in Carrier Deposits 20,000
Increase (decrease) in Billing Deposits (210,000)
Increase (decrease) in Accounts Payable (911) (204,934)
----------------------------
Total adjustments 30,525 (137,826)
Net cash provided (used) by operating activities (663,992) 2,781,370
----------------------------
Cash flows from investing activities:
Purchase of property and equipment (304,368) (9,800)
(Increase) decrease in shareholder loan receivable 936,468 125,500
(Increase) decrease in property and notes held
for sale 36,292
----------------------------
Net cash provided (used) by
investing activities 632,100 151,992
----------------------------
Cash flows from financing activities
Expenditures for public entity (66,000)
Distributions to shareholders (2,880,675)
----------------------------
Net cash provided (used) by
financing activities (2,946,675)
----------------------------
Increase (decrease) in cash (31,892) (13,313)
Cash and cash equivalents-beginning 9,982 178,531
Cash and cash equivalents-ending $ (21,910) $ 165,218
============================
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<PAGE>
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 310b 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. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine and three months ended September
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes related thereto included in the
Company's audited annual report on Form 10-KSB for the year ended December 31,
1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-QSB contains forward-looking statements. For
this purpose, any statements contained in it that are not statements of
historical fact should be regarded as forward-looking statements. For example,
the words "believes," "anticipates," "plans," and "expects" are intended to
identify forward-looking statements. These factors include those shown in the
company's 1999 Amendment No. 1 to Form 10-SB.
The following discussion of the Company's results of operations and financial
condition should be read together with the Company's condensed consolidated
unaudited Financial Statements.
GENERAL
Cyberfast Systems, Inc. (referred to as either "Cyberfast" or the
"Company") is an international provider of data communications services
operating primarily between the United States and underserved, underdeveloped or
developing countries. Our network is capable of delivering voice Iternet Potocol
Telephony ("IP Telephony") services. The Company leases capacity on private
fiber optic and satellite-based circuits from first-tier telecommunications
carriers. These circuits originate in the United States and terminate in the
underserved countries where we provide service. The Company then sells wholesale
voice and data services to first-tier and second-tier carriers seeking to route
calls to those underserved locations on a per- minute basis.
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<PAGE>
Our customers sell VoIP and other IP Telephony services to other
carriers, network operators and corporate customers. The Cyberfast network
allows its customers to complete their customers' calls in the areas where we
provide service at a lower cost than the traditional long-distance telephone
providers. This is partially due to the very long-term contracts the traditional
long-distance telephone providers have entered into with countries all around
the world at fixed settlement rates.
RESULTS OF OPERATION
In general a major event had significant impact on the company in 1999-
The interruption of our service to the Caribbean, was very damaging to this
year's revenue position. We had an agreement in place and our equipment was
operating as planned. However, a change in the administration of the local
telephone network caused our service to be interrupted and we had to
re-negotiate our arrangement. As a result revenues and resulting net income were
dramatically reduced. For example, 1998 revenues were $8.0 million. Through the
same period of 1999 revenues were less than $500,000.
This event, together with a similar but unrelated experience in 1998, has caused
the company to review and modify its approach to establishing its international
Points of Presence (PoP's). Under new guidelines 21 new POP's have been
identified and are either in negotiation or already under contract to be put in
place.
Subsequent to September 30, 1999 four other important events took place:
In November the Company became aware of a possible conflict of interest between
its accountant and its auditor. As a result the Company has contracted for the
services of Feldman & Feldman, P.A. to review its accounting procedures. In
addition, the Company contracted for the services of Rachlin Cohen & Holtz, LLP,
to provide an audit of the years 1997 and 1998. Cyberfast is scheduled to file
an amended 10-SB in January, 2000.
The second major event was the establishment of a relationship with Royal Dutch
Telecom (KPN). This arrangement allows Cyberfast to direct traffic between our
targeted countries and Western Europe.
The third event was the acquisition of Global Telcom. Global is a start-up
company based in Denver Colorado that will be focused on building an
international base of retail customers using IP telecom services in developing
countries. The geographic targets are very compatible with those of Cyberfast.
The acquisition will give the company the ability to direct significant amounts
of traffic over its wholesale lines and take advantage of lower rates. The
addition of a retail strategy also eases the company's long term dependence on
the wholesale markets.
The fourth and latest significant event was the expansion of the Board of
Directors and the establishment of an Advisory Board. Through the acquisition of
Global Telcom, the company added additional operational and advisory personnel.
In an press release dated December 12th, the company named a new president,
three new board members and established a three person advisory board.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27.1 Financial data schedule
(b) REPORTS ON FORM 8-K
None
No other Items of Part II are applicable to the Registrant for
the period covered by this Quarterly Report on Form 10-QSB.
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<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 authorized.
Registrant
Dated: December 30, 1999 /s/ Bruce Walko
--------------------------
Bruce Walko
President
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<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> (21,910)
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> (21,910)
<PP&E> 442,581
<DEPRECIATION> 31,436
<TOTAL-ASSETS> 380,235
<CURRENT-LIABILITIES> 265,351
<BONDS> 0
0
5,000
<COMMON> 4,750,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 389,235
<SALES> 435,739
<TOTAL-REVENUES> 435,739
<CGS> 0
<TOTAL-COSTS> 1,130,256
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (694,517)
<INCOME-TAX> 0
<INCOME-CONTINUING> (694,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (694,517)
<EPS-BASIC> (0.116)
<EPS-DILUTED> (0.116)
</TABLE>
