<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 2000
[ ] Transition report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to _________
CYBERECORD, INC.
(Exact name of small business issuer as specified in its charter)
Commission file number: 000-24757
FLORIDA 91-1985843
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
800 Bellevue Way NE, 4/th/ Floor
Bellevue, WA 98004
(Address of principal executive offices)
(425) 990-5593
(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 [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Not applicable
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 10, 2000 the
Registrant had 17,173,064 shares of Common Stock outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (check one): Yes [_] No [X]
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<TABLE>
<CAPTION>
Page
Index Number
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at September 30, 2000 (unaudited)
and December 31, 2000 (audited) 3
Statements of Operations For the Three-Months and Nine-Months
ended September 30, 2000 (unaudited) and the Period From
September 27, 1996 to September 30, 2000 4
Statements of Stockholder's Equity (unaudited) 5
Statements of Cash Flows for the Nine-Months ended September 30,
2000 (unaudited), and the Period From September 27, 1996
to September 30, 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation 8
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
</TABLE>
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
CYBERECORD, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
ASSETS (Unaudited) (Audited)
------------------- -------------------
<S> <C> <C>
Current Assets
Cash $ 193,944 $ 111,154
Certificate of Deposit 50,000
Prepaid expenses and deposits 35,560 15,194
----------- -------------
Total current assets 279,504 126,348
Furniture and Equipment, at cost, less accumulated
depreciation of $30,940 at September 30, and $3,940 at
December 31, 1999 107,814 25,328
Capitalized Development Costs 940,004
----------- -------------
$ 1,327,322 $ 151,676
=========== =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 318,063 $ 21,436
Stockholders' Equity
Common stock, par value $.01 171,961 154,719
Additional paid-in-capital 7,566,977 4,342,269
Deficit accumulated during the development stage (6,427,729) (4,366,748)
----------- -------------
1,311,209 130,240
Less: Stock subscriptions receivable (301,950)
----------- -------------
1,009,259 130,240
----------- -------------
$ 1,327,322 $ 281,916
=========== =============
</TABLE>
See Notes to Financial Statements
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<PAGE>
CYBERECORD, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS-- Unaudited
For the Three Months and Nine Months Ended September 30, 2000 and 1999,
and the Period
From September 27, 1996 to September 30, 2000
<TABLE>
<CAPTION>
Total Accumulated
During Development
Three Months Ended Nine Months Ended Stage (September 27,
------------------- ------------------ 1996 to
September 30, September 30, September 30, September 30, September 30, 2000)
2000 1999 2000 1999
<S> <C> <C> <C> <C> <C>
Revenues, Interest income $ 295 $ -- $ 15,072 $ -- $ 15,072
Expenses
Write-off of acquired
research and
development -- 3,000,000 3,000,000
Research and
development 18,843 96,699 147,160 272,124
General and
administrative 655,196 280,581 1,979,354 355,367 3,170,677
------------- ----------- ------------- ------------- ------------
655,196 299,424 2,076,053 3,502,527 6,442,801
------------- ----------- ------------- ------------- ------------
Net loss $ (654,901) $ (299,424) $ (2,060,981) $ (3,502,527) $ (6,427,729)
============= =========== ============= ============= ============
Basic loss per share of
common stock $ (0.04) $ (0.02) $ (0.12) $ (0.25) $ (0.50)
============= =========== ============= ============= ============
Weighted average number
of common shares
outstanding 16,896,597 15,401,864 16,513,442 14,258,753 12,849,244
============= =========== ============= ============= ============
</TABLE>
See Notes to Financial Statements
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CYBERECORD, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY - Unaudited
For the Nine Months Ended September 30, 2000 and 1999, and the Period From
September 27, 1996 to September 30, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Common Common Additional Development Receivable for
Shares Stock Paid-in-Capital Stage Shares Sold Total
----------- -------- --------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances, September 27, 1996 335,864 $ 3,359 $ 769 $ - $ - $ 4,128
Issuance of common stock (October and
November 1996) 8,700,000 8,700 49,410 58,110
Net loss (3,192) (3,192)
----------- -------- ---------- ----------- ----------- -----------
Balances, December 31, 1996 9,035,864 12,059 50,179 (3,192) 59,046
Issuance of common stock, net of effects
of exchange of Chrysalis shares for
Pillar shares (October 1997) 3,300,000 111,300 128,700 240,000
Additional capital contributed by
shareholders 46,700 46,700
Net loss (345,688) (345,688)
----------- -------- ---------- ----------- ----------- -----------
Balances, December 31, 1997 12,335,864 123,359 225,579 (348,880) 58
Additional capital contributed by
shareholders 83,500 83,500
Net loss (82,251) (82,251)
----------- -------- ---------- ----------- ----------- -----------
Balances, December 31, 1998 12,335,864 123,359 309,079 (431,131) 1,307
Issuance of common stock in exchange for
subscription receivable (March 1999) 1,970,000 19,700 965,300 (985,000) -
Issuance of common stock in exchange for
services (March 1999) 6,000 60 2,940 3,000
Additional capital contributed by
shareholders 8,050 8,050
Contribution of shares back to the
corporation by shareholders (April 1999) (5,000,000) (50,000) 50,000
Issuance of common stock in exchange for 90,000 900 36,100 37,000
services (April 1999)
Issuance of common stock in exchange for
Kristal Group assets (April 1999) 6,000,000 60,000 2,940,000 3,000,000
Collection of subscriptions receivable 500,000 500,000
Net loss (3,502,527) (3,502,527)
----------- -------- ---------- ----------- ----------- -----------
Balances, September 30, 1999 15,401,864 154,019 4,311,469 (3,933,658) (485,000) 46,830
Issuance of common stock in exchange for
services (November 1999) 70,000 700 30,800 31,500
Collection of subscriptions receivable 485,000 485,000
Net loss (433,090) (433,090)
----------- -------- ---------- ----------- ---------- -----------
Balances, December 31, 1999 15,471,864 154,719 4,342,269 (4,366,748) - 130,240
Issuance of common stock in exchange for
cash (March 2000) 1,275,000 12,750 2,218,500 2,231,250
Issuance of Common stock in exchange for
cash and subscriptions receivable
(August and September 2000) 449,200 4,492 1,006,208 (301,950) 708,750
Net loss (2,060,981) (2,060,981)
----------- -------- ---------- ----------- ---------- -----------
Balances, September 30, 2000 17,196,064 $171,961 $7,566,977 $(6,427,729) $ (301,950) $ 1,009,259
=========== ======== ========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
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CYBERECORD, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS -- Unaudited
For the Nine Months Ended September 30, 2000 and 1999, and the Period
From September 27, 1996 to September 30, 2000
<TABLE>
<CAPTION>
Total
Accumulated
During
Development
Stage
(September 27,
1996 to
September 30,
2000 1999 2000)
----------- ------------ -------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $(2,060,981) $(3,502,527) $(6,427,729)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 27,000 1,943 30,940
Write-off of purchased in-process research and
development that had not reached technological
feasibility 3,000,000 3,000,000
Professional fees exchanged for common stock 40,000 71,500
Changes in operating assets and liabilities
Certificate of Deposit (50,000) (50,000)
Prepaid expenses and deposits (20,366) (11,700) (35,560)
Accounts payable 296,627 22,932 318,063
----------- ----------- -----------
Cash used in operating activities (1,807,720) (449,352) (3,092,786)
Cash Flows From Investing Activities
Purchase of equipment (109,486) (24,953) (138,754)
Capitalized Development Costs (940,004) (940,004)
----------- ----------- -----------
Cash used in investing activities (1,049,490) (24,953) (1,078,758)
Cash Flows From Financing Activities
Issuance of common stock 2,940,000 500,000 4,223,110
Capital contribution 8,050 138,250
----------- ----------- -----------
Cash provided by financing activities
2,940,000 508,050 4,361,360
----------- ----------- -----------
Net increase in cash 82,790 33,745 189,816
Cash, beginning of period 111,154 1,307 4,128
----------- ----------- -----------
Cash, end of period $ 193,944 $ 35,052 $ 193,944
------------------------------------------------
</TABLE>
See Notes to Financial Statements.
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CYBERECORD, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and therefore do not include all the
disclosures necessary for a fair presentation of financial position, results of
operations, changes in stockholders' equity, and cash flows in conformity with
generally accepted accounting principles. The operating results for interim
periods are unaudited and are not necessarily an indication of the results to be
expected for the full fiscal year. In the opinion of management, the results of
operations as reported for the interim period reflect all adjustments that are
necessary for a fair presentation of operating results.
Note 2. Per Share Information
Basic loss per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted loss per share has not been presented, as inclusion of any such
shares would be anti-dilutive to the loss per share.
Note 3. Capitalized Development Costs
CybeRecord's ScanServer product reached the stage of technological feasibility
as defined by Statements of Financial Accounting Standards ("SFAS") 86 on
February 16, 2000. Technological feasibility was determined in February 2000 as
two prototype units were completed and tested with only insignificant changes
required. Pilot production and customer acceptance are important but secondary
concerns in determining feasibility as CybeRecord's research has determined a
need and demand for the product and the completion of the prototype units with
few needed changes validates the basic design for pilot production.
Additionally, various governmental and safety approvals were also considered in
determining feasibility. The required tests are relatively routine and did not
play a significant role in determining feasibility.
All product development costs prior to February 15, 2000 have been charged to
expense as research and development and all product development costs subsequent
to that date have been included in capitalized development costs.
CybeRecord expects to lease all ScanServer products. Accordingly, SOP 97-2 and
98-9 related to software revenue recognition are not expected to significantly
affect CybeRecord's financial statements.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Statement of Forward-Looking Information
The matters discussed in this report contain forward-looking statements that
involve known and unknown risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Words such as "may," "could,"
"would," "expect," "anticipate," "intend," "plan," "believe," "estimate," and
variations of such words and similar expressions are intended to identify such
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which are based on out current expectations and
projections about future events, are not guarantees of future performance, are
subject to risks, uncertainties and assumptions (including those described
below) and apply only as the date of this report. Our actual results could
differ materially for those anticipated in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below in "Risk Factors that May Effect Operating
Results" as well as those discussed in this section and elsewhere in this
report, and the risks discussed in the "Risk Factors" section included in our
Form 10-SB and other documents and reports filed with the Securities and
Exchange Commission.
Overview
CybeRecord, Inc. was formed on February 17, 1969 under the laws of the State of
Florida. The Company was first named Flexi-Built Modular Housing Corporation. In
March 1984, we changed our name to Flexicare, Inc., and then to Pillar
Entertainment Group Inc. in September 1996. In November 1997 we acquired all of
the outstanding stock of Chrysalis Hotels and Resorts Corp. and changed our name
to Chrysalis Hotels and Resorts Corp.
In April 1999 we acquired assets from a group of people who were working
independently to develop technology relating to microfilm scanning device
design. The people from whom we acquired the assets were James J. Lucas, Glenn
and Paulette Kimball, Marek Niczyporuk, James L. and Barbara Baker Quinn,
Herbert and Patricia Walker, and Alva D. and Kirsten Cravens (the "Kristal
Group").
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<PAGE>
The assets we acquired from the Kristal Group in April 1999 all related to the
development, production, and marketing of our key product: a low-cost,
high-speed automated microfilm scanning device, which we have named
"ScanServer." The assets we acquired included: (a) owned and licensed
intellectual property rights for the device's overall design, and all hardware
design; (b) computer programming code and all software developed including (but
not limited to) all software needed to allow ScanServer to operate reliably and
with commercial quality and efficiency; (c) programs software, including all
related trademarks and intellectual property, in machine readable or human
readable form (or both); (d) rights to, and any rights to apply for and
register, patents and patent applications, copyrights, trademarks, trade secrets
and all other proprietary rights relating to the intellectual property we
acquired; (e) records and files relating to manufacturing, quality control,
sales, marketing, customer support, and designs for the intellectual property we
acquired; (f) derivative works of intellectual property; and (g) all related
documentation. We also acquired hardware patents, rights to hardware patents,
customer lists, contracts, agreements, licenses or license agreements,
commitments, warranties, claims, and other existing and inchoate rights. We
treated the costs of these assets as research and development expenses because
we determined that the assets had not, at the time we acquired them, reached
technological feasibility.
We issued Company common stock to pay for the assets we acquired from the
Kristal Group in April 1999. In May 1999 we changed our name to CybeRecord, Inc.
Since April 1999 we have continued to conduct our research and development and
marketing activities under the name CybeRecord, Inc. As of the filing date of
this registration statement, we are in the early stages of manufacturing
ScanServers for commercial distribution.
Our business is to develop, manufacture, and market a low-cost high-speed
automated microfilm scanner. We believe the key drivers for microfilm conversion
are the desire to have speedier and more convenient access to records, and the
desire to share and transmit images electronically. Our ScanServer technology
creates images that can be transmitted across the Internet or placed on a server
and made accessible by intranet. Users can select the standard image format they
wish to use for their converted microfilm images, which are stored on a computer
hard-drive. Among the standard image formats available are "tif," "jpg," and bit
map files. The stored images can be cataloged, viewed, and transmitted
electronically using standard "off-the-shelf" software.
Our ScanServer does not produce a computer file that can be edited as text or
other types of data. The digital record is essentially an electronic picture of
the original microfilm image. A converted image, if it consists of text, could,
if a customer chose, be loaded into an optical character recognition ("OCR")
device or program. This step is not part of what ScanServer provides to its
users, however. It would require customers to use separate applications with the
necessary capabilities. We envision that in the future we may find opportunities
to develop alliances with other types of information management businesses, such
as in the areas of conversion to word-processible documents or databases that
could be edited, sorted, or searched. We do not presently have any alliances of
this type in place or under development. We have incorporated nothing into
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ScanServer's current design to mesh with or enable other conversion processes,
except the ability of ScanServer software to improve the clarity and contrast of
imperfect or deteriorated microfilm images.
We plan to rent our microfilm scanners to customers who can use them to convert
their microfilm records to digital form. We currently do not intend to encourage
customers to purchase ScanServers. We plan to base the fees we charge our
customers on the number of images they convert from microfilm to digital format.
We call this per-image fee a "click-charge."
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1999.
Revenues
Revenues for the three and nine months ended September 30, 2000 were $295 and
$15,072, respectively, as compared to no revenues for the three and nine months
ended September 30, 1999. Through September 30, 2000, our revenues have been
derived solely from interest income.
Costs and Expenses
Write-off of Acquired Research and Development
Expenses related to the write-off of acquired research and development for the
three and nine months ending September 30, 2000 were both zero, as compared to
zero and $3,000,000, respectively, for the three and nine months ended September
30, 1999. The decision to write-off such expenses was based on the fact that at
such time The Company's ScanServer product had not reached technological
feasibility.
Research and Development
Research and development expenses include salaries, development materials,
equipment lease, electronics, and costs associated with developing the Company's
product. Gross research and development expenses for the three months ended
September 30, 2000 were zero and $96,699 for the nine-months ended September 30,
2000 and for the same periods in 1999, the Company's gross research and
development expenses were $18,843 and $147,160, respectively. The lack of
research and development expenses for the three months ended September 30, 2000
is because all product development costs subsequent to February 15, 2000 have
been included in capitalized development costs; prior to such date all product
development costs prior had been charged to expense as research and development.
General and Administrative
General and administrative expenses consist principally of salaries and fees for
professional services, legal fees incurred in connection with patent filing and
related matters, amortization, as well as other marketing and administrative
expenses. General
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<PAGE>
and administrative expenses, for the three and nine months ending September 30,
2000 were $655,196 and $1,979,354 respectively, as compared to $280,581 and
$355,367, respectively, for the three and nine months ended September 30, 1999.
The increase in general and administrative expenses is primarily due to
increases in production activity, personnel costs, marketing expenses,
professional services, travel and patent filings.
Net Loss
Net loss for the three and nine months ended September 30, 2000 were $654,901
and $2,060,981, respectively, as compared to net loss of $299,424 and $3,502,527
for the same periods in 1999. Basic loss per share of common stock for the three
and nine months ended September 30, 2000 were $0.04 and $0.12, respectively, as
compared to $0.02 and $0.25 for the three and nine months ended September 30,
1999, respectively.
Liquidity and Capital Resources
Since inception we have financed our operations primarily through private
placements of equity securities.
Net cash used in operating activities was $1,807,720 for the nine months ended
September 30, 2000, compared to $449,352 for the nine months ended September 30,
1999.
Net cash used in investing activities was $1,049,490 for the nine months ended
September 30, 2000. This represented cash used for the purchase of equipment of
$109,486 and capitalized development costs of $940,004.
Net cash provided by financing activities was $2,940,000 for the nine months
ended September 30, 2000, and consisted primarily of proceeds from the issuance
of common stock in private placements of common stock. As of September 30, 2000,
we had $193,944 in cash and $50,000 in securities.
During July 2000, however, unexpected events placed demands on our available
cash certain of our consultants had been performing development work and
purchasing development services from third party vendors based on oral
authorizations that were not approved in writing by management. As a result, the
Company incurred costs for such work in excess of budgeted amounts. We
subsequently advised vendors and employees that no future invoices would be
honored unless the order was placed using a standard purchase order form with
proper authorizations. The Company believes that all purchase orders are
presently being generated using our accounting software, and following these
accounting procedures should enable us to avoid significant unexpected expenses
in the future.
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<PAGE>
In addition, during July 2000 the programs used to implement the quality control
testing process we had undertaken on our ScanServers revealed the need to re-
engineer the ScanServer's camera lens transport mechanism (as described above).
This required us to order new parts on short notice, which we needed for repairs
to previously shipped ScanServer units and to install into future production
units. As a result, we incurred unexpected re-engineering and part replacement
costs. The need to modify the ScanServer units we had previously shipped has
also delayed the generation of revenues from those units, as they could not be
placed into service without the necessary modifications. These items are
reflected in capitalized development costs on the Company's balance sheet.
In August and September 2000 we raised $708,750 through the private placement of
315,000 shares of our common stock at a price of $2.25 per share. Subsequent to
September 30, 2000 we have received an additional $250,200 through the private
placement of 111,200 shares of common stock at a price of $2.25 per share (the
purchase of such shares was subscribed to prior to September 30, 2000). We
have also received subscriptions for an additional 23,000 shares of common stock
at a price of $2.25 per share, but have not yet received the subscription price
of $51,750. We intend to raise additional capital through future additional
sales of equity securities or the incurrence of additional indebtedness. There
can be no assurance that we will successfully raise any equity financing or that
other sources of debt financing will be available to us if and when needed. The
failure to obtain adequate additional capital may require us to postpone some or
all of the expansion of our proposed business operations and, potentially, to
cease operations. Any additional equity financing may involve substantial
dilution to our then-existing shareholders.
Risk Factors that May Effect Operating Results
You should carefully consider the risks described below and the other
information in this quarterly report. While we have attempted to identify the
risks that are material to our business, additional risks that we have not yet
identified or that we currently think are immaterial may also impair our
business operations. The trading price of our common stock could decline due to
any of these risks. In assessing these risks, you should also refer to the other
information in this quarterly report, including the financial statements and
related notes and the risks discussed in the "Risk Factors" section included in
our Form 10-SB and other documents and reports filed with the Securities and
Exchange Commission.
Need for Additional Financing
During the next 12 months, our foreseeable cash requirements are expected to be
met by a combination of existing cash, revenue generated by our sales, and
additional equity financing. We are currently devoting substantial resources to
the development of our products and to the establishment of sales and
distribution relationships. Substantial additional capital may be required in
the future to fund product development and product launch cycles. No assurance
can be given that additional financing will be available or that, if available,
such financing will be obtainable on terms favorable to us or our shareholders.
If needed capital is unavailable, the Company's ability to continue in
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business will be jeopardized. To the extent we raise additional capital by
issuing equity or securities convertible into equity, ownership dilution to our
shareholders will result.
History of Losses and Negative Cash Flow; Anticipated Continued Losses
Since our inception, we have incurred significant losses and negative operating
cash flow. We have not achieved profitability and we expect to continue to incur
operating losses for the foreseeable future as we fund operating and capital
expenditures in areas such as establishment and expansion of markets,
advertising, brand promotion, sales and marketing, research and development and
operating infrastructure. We cannot assure investors that we will ever achieve
or sustain profitability or that our operating losses will not increase in the
future.
Competition
The market for microfilm scanning devices and services is highly competitive.
The competition for our products comes largely from large, well-established
companies with longer operating histories, greater name recognition, larger
retail bases and significantly greater financial, technical, and marketing
resources than us. Competition from these sources could materially adversely
affect our business, operating results or financial condition. Competitive
factors in the microfilm scanning and services market include innovative
products, product quality, marketing and distribution resources and price. While
we believe that we have the experience and ability to compete within our
identified market, there can be no assurance that we will be able to compete
successfully against current or future competitors.
Reliance on Key Individuals
We are dependent upon the active participation of several key management
personnel. We do currently maintain key employee insurance policies on some, but
not all, of our key employees. We will likely need to recruit additional
qualified personnel in order to expand according to our business plan. There can
be no assurance that we will be able to attract such persons or retain any of
its key personnel. The failure to attract and retain key personnel could have a
material adverse effect on our results of operations and financial performance.
Product Liability
Our business exposes us to potential product liability claims which are inherent
in the manufacture and sale of microfilm scanner devices. Although no such claim
has been brought against us to date, and to our knowledge no such claim is
threatened or likely, we may face liability to product users for damages
resulting from the faulty design or manufacture of products. Although we
maintain product liability insurance coverage, there can be no assurance that
product liability claims will not exceed coverage limits or that such insurance
will continue to be available at commercially reasonable rates, if at
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all. Consequently, a product liability claim or other claim in excess of insured
liabilities or with respect to uninsured liabilities could have a material
adverse effect on us.
Dependence on New Markets
Our future growth, if any, depends in part on its ability to penetrate new
markets. There can be no assurance that we will be successful in locating or
penetrating any new markets for its products.
Share Price Volatility
The trading price of the Common Stock could be subject to wide fluctuations in
response to quarter to quarter variations in operating results, changes in
earnings estimates by analysts, announcements of technological innovations or
new products by us or our competitors, general conditions in the personal
products industries and other events or factors. In addition, in recent years
the stock market in general has experienced extreme price fluctuations. This
volatility has had a substantial effect on the market price of securities issued
by many companies for reasons unrelated to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of the Common Stock. To date, our Common Stock has not traded in
sufficient volumes, or for a sufficient length of time, to produce any
meaningful evidence of correlation between its price and general market
volatility.
PART II--OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Between July 1, 2000 and September 30, 2000 we issued 315,000 shares of common
stock in conjunction with private placements. The shares of common stock were
sold at a price per share of $2.25, with aggregate proceeds totaling $708,750.
Subsequent to September 30, 2000 we have received sold additional 111,200 shares
of common stock at a price of $2.25 per share, with additional aggregate
proceeds totaling $250,200. No underwriters were engaged in connection with
these sales. These securities were issued in transactions exempt from
registration under the Securities Act and Regulation D and Regulation S
promulgated thereunder.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit No. Description
-------------- ----------------------------------------------------------
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
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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.
CYBERECORD, INC.
Dated: November 14, 2000 By: /s/ James J. Lucas
---------------------------------
James J. Lucas
President/Chief Executive Officer
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