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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-28423
SOCHRYS.COM, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
NEVADA 58-2541997
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
Route de Jussy 29, CH 1226 Thonex, Geneva, Switzerland
(Address of principal executive offices)
Issuers' telephone number: 011-41-22-869-2070
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 [ ]
12,392,924 Shares of the registrant's Common Stock were outstanding as of May
19, 2000
Transitional Small Business Disclosure Format: Yes [ ] NO [ X ]
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOCHRYS.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
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<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 203,084 $ 171,628
Other current assets 149,350 12,833
----------- -----------
Total current assets 352,434 184,461
Fixed assets (at cost, net of accumulated amortization) 200,111 183,600
Other long-term assets 9,801 26,928
----------- -----------
Total assets $ 562,347 $ 394,989
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 330,461 $ 141,637
Due to related parties -- 5,178
----------- -----------
Total current liabilities 330,461 146,815
----------- -----------
Total liabilities 330,461 146,815
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SHAREHOLDERS' EQUITY:
Common stock, ($0.001 par value. Authorized 50,000,000 shares;
Issued and outstanding 12,267,924 shares at March 31, 2000 and
11,992,924 shares at December 31, 1999 12,267 11,992
Additional paid in capital 1,368,724 823,877
Accumulated other comprehensive income (loss) (30,870) 4,411
Deficit accumulated during the development stage (1,118,235) (592,106)
----------- -----------
Total shareholders' equity 231,885 248,174
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Total liabilities and shareholders' equity $ 562,347 $ 394,989
=========== ===========
</TABLE>
See accompanying notes to unaudited interim period consolidated
condensed financial statements.
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SOCHRYS.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
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<CAPTION>
PERIOD FROM
AUGUST 3,
1999 TO MARCH
31, 2000
2000 1999 (NOTE 1)
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Consulting revenues $ -- $ 76,017 $ --
Software revenues -- -- --
------------ ------------ ------------
Total Revenues -- 76,017
Operating expenses (income):
Research and development 287,666 45,811 562,024
General and administrative 207,727 1,865 521,146
Interest and foreign currency translations gains 250 575 (624)
Amortization 30,486 19,934 56,993
------------ ------------ ------------
526,129 68,185 1,139,539
Net income (loss) $ (526,129) $ 7,832 $ (1,139,539)
============ ============ ============
Earnings (loss) per share $ (0.04) $ (0.00) $ (0.10)
============ ============ ============
Weighted average number of common shares outstanding during period 12,076,757 8,459,000 11,875,901
============ ============ ============
</TABLE>
See accompanying notes to unaudited interim period consolidated
condensed financial statements.
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SOCHRYS.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
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<CAPTION>
PERIOD FROM
AUGUST 3,
1999 TO
MARCH 31,
2000
2000 1999 (NOTE 1)
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<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (526,129) $ 7,832 $(1,139,539)
Adjustments to reconcile net income (loss) to net cash used in
Operating activities:
Amortization of fixed assets 30,486 19,934 56,993
Increase (decrease) in cash resulting from changes in:
Prepaid and other current assets (167,973) (68,248) (114,551)
Accounts payable and accrued liabilities 183,646 18,847 311,863
----------- ----------- -----------
Net cash used in operating activities (479,970) (21,635) (855,234)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (46,997) (4,706) (202,017)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common shares 550,000 -- 1,560,000
Share issuance costs (27,775) -- (209,009)
----------- ----------- -----------
Net cash provided by financing activities 522,225 -- 1,350,991
Effects of exchange rates on cash and cash equivalents 36,198 1,307 (125,455)
----------- ----------- -----------
Net Increase (decrease) in cash and cash equivalents 31,456 (25,034) 168,285
Cash and cash equivalents:
Beginning of period 171,628 7,056 34,799
----------- ----------- -----------
End of Period $ 203,084 $ 17,978 $ 203,084
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest -- -- --
Income taxes -- -- --
</TABLE>
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SOCHRYS.COM, INC. AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
SOCHRYS.com Inc. (the "Company") was incorporated in the State of Nevada
on April 12, 1989 as CCC Funding Corp. The Company went through several
name changes before being renamed to SOCHRYS.com Inc on August 3, 1999.
Since August 3, 1999, the efforts of the Company have been devoted to the
development of a high speed, highly secure method of transacting business
using the internet. As of the date of these financial statements, no
software applications were ready for commercial use. Prior to August 3,
1999, the Company provided consulting services for web site
implementation, multimedia CD design, computer graphic publication, as
well as implementation of dedicated software solutions used in connection
with the French Minitel and the internet. The Company also conducted
research and development on its Universal Computer technology.
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts
of Sochrys.com, Inc. and its wholly owned subsidiaries (collectively, the
"Company") after elimination of all significant intercompany balances and
transactions. The financial statements have been prepared in conformity
with generally accepted accounting principles in the United States which
require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
While management has based its assumptions and estimates on the facts and
circumstances currently known, final amounts may differ from such
estimates.
The interim financial statements contained herein are unaudited but, in
the opinion of management, include all adjustments (consisting only of
normal recurring entries) necessary for a fair presentation of the
financial position and results of operations of the Company for the
periods presented. The results of operations for the three months ended
March 31, 2000 are not necessarily indicative of the operating results
for the full fiscal year ending December 31, 2000. Moreover, these
financial statements do not purport to contain complete disclosure in
conformity with generally accepted accounting principles used in the
United States and should be read in conjunction with the Company's report
filed on Form 10-SB as filed on December 6, 1999.
Since August 1999 the efforts of the Company have been devoted to the
development of the Universal Computer Technology range of software
products. To date the Company has not sold any of its products and is
considered to be in the development stage. Two of the Company's products
are completed and ready for beta site implementation. The Company expects
to continue the development of related software applications.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 130, "Reporting
Comprehensive Income" ("FAS 130"), which established standards for
reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owner
sources. For the three months ended March 31, 2000 the Company's net loss
and comprehensive income were $561,410.
In June 1998, the FASB issued FAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133") which established
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for
hedging activities. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company is not
a party to any transactions that are contemplated by FAS 133.
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2. Foreign Currency Translation
THE REPORTING CURRENCY FOR THE FINANCIAL STATEMENTS OF THE COMPANY IS THE
UNITED STATES DOLLAR. THE FUNCTIONAL CURRENCY FOR THE COMPANY'S WHOLLY
OWNED SUBSIDIARIES, GRAPH-O-LOGIC S.A. AND SOCHRYS TECHNOLOGIES S.A. IS
THE SWISS FRANC. ACCORDINGLY, THEIR ASSETS AND LIABILITIES ARE INCLUDED
IN THE FINANCIAL STATEMENTS BY TRANSLATING THEM IN THE REPORTING CURRENCY
AT THE EXCHANGE RATES APPLICABLE AT THE END OF THE REPORTING PERIOD. THE
STATEMENTS OF OPERATIONS AND CASH FLOWS ARE TRANSLATED AT THE AVERAGE
MONTHLY EXCHANGE RATES DURING THE REPORTING PERIOD. TRANSLATION GAINS OR
LOSSES ARE ACCUMULATED AS A SEPARATE COMPONENT OF SHAREHOLDERS' EQUITY.
CURRENCY TRANSACTION GAINS OR LOSSES ARISING FROM TRANSACTIONS IN
CURRENCIES OTHER THAN THE SWISS FRANC ARE INCLUDED IN THE STATEMENT OF
OPERATIONS FOR EACH PERIOD.
3. Related Party Transactions
During the three months ended March 31, 1999 the Company performed
consulting services to a related party, generating $76,017 in revenue.
This amount was receivable at March 31, 1999. There were no such services
during the three months ended March 31, 2000.
4. Common Stock Transactions
During the three months ended March 31, 2000 the Company issued 275,000
shares of its common stock as a result of the exercise of 275,000 Series
'A' warrants, each with a cash strike price of $2.00 per common share
issued. Subsequent to March 31, 2000, through May 19, 2000 the Company
issued a further 125,000 shares of its common stock as a result of the
exercise of 125,000 Series 'A' warrants, each with a cash strike price of
$2.00 per common share issued.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
The discussion in this Form 10-QSB contains both historical information and
forward-looking information. The forward-looking information, which generally is
information stated to be anticipated, expected or projected by us, involves
known and unknown risks, uncertainties and other factors which may cause our
actual results and performance to be materially different from any future
results and performance expressed or implied by such forward-looking
information. Potential risks and uncertainties include, without limitation and
in addition to other factors discussed in this report:
- - the uncertainties inherent in the development of new software applications;
- - our need for additional capital funding;
- - the need for acceptance of our software applications by third party payers;
and
- - rapid developments in technology, including developments by competitors.
We are a software development company focused on commercializing a high speed,
highly secure method of transacting business using the Internet. As of the date
of this report we have two software applications, Universal Commerce and
Universal Banking ready for beta site implementation that we are actively
marketing. In addition, we continue developing other related software
applications.
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1999.
REVENUE: We generated no revenues during the three months ended March 31, 2000.
This is down from the $76,017 we generated during the three months ended March
31, 1999. During the three months ended March 31, 1999 we provided consulting
services to related parties. As of August 1999 we directed all of our attention
towards the completion of the software applications discussed above. We believe
that if we are successful in our development and marketing efforts, we will
generate a source of revenues in the future from sales and/or licensing of our
software applications.
RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses consist
primarily of personnel costs and consulting expenses directly associated with
the development of our software applications. During the three months ended
March 31, 2000, we spent $287,666, an increase of $241,855 (526%) in developing
our Universal Computer Technology, and implemented it into two commercial
products: Universal Commerce and Universal Banking. In addition, we continued to
develop related software applications. During the three months ended March 31,
1999 we spent $45,811 on research and development directed towards the early
stages of the core software for the Universal Computer. In August 1999 we made
the strategic decision to direct all of our efforts towards the development of
the software applications. We have significantly increased our research and
development team. During the three months ended March 31, 2000 we had an average
of 20 people working directly on the project, compared to only three in the
comparable period in 1999. This increase in staffing is the primary reason for
the increase in research and development costs.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses consist
primarily of personnel costs, professional fees, communications, occupancy costs
and other miscellaneous costs associated with supporting our research and
development activities. During the three months ended March 31, 2000 we spent
$207,727 as compared to $1,865 during the three months ended March 31, 1999.
This increase of $205,862 (10,300%) is a reflection of our increased activity as
we shifted our focus from a consulting service to research and development
activities.
NET LOSS: We incurred a loss of $526,129 ($0.04 per share) for the three months
ended March 31, 2000, compared to a profit of $7,832 ($0.00 per share) for the
three months ended March 31, 1999. Our revenues and future profitability and
future rate of growth are substantially dependent on our ability to:
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- - identify clients willing to install beta sites for our Universal Commerce
and Universal Banking products;
- - operate successfully these beta sites, integrating our technology into
their operations;
- - modify the software applications based on the results of the beta site
results;
- - license the software applications to sufficient number of clients;
- - modify the successful software applications, over time, to provide enhanced
benefits to existing users;
- - successfully develop related software applications.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL: Since inception we have funded our operations from private placements
of equity, including the exercise of warrants issued by us in August 1999. In
addition, until September 1999 we derived revenues from consulting contracts
with affiliated parties, the proceeds of which were used to fund operations.
Until such time as we are able to generate adequate revenues from the licensing
of our software applications we cannot assure that cash from the exercise of
existing warrants and the placements of additional equity securities will be
sufficient to fund our research and development and general and administrative
expenses.
SOURCES OF CAPITAL: In August 1999 we made a transition in business strategies.
Prior to August 1999 we provided consulting services in addition to developing
our Universal Computer technology. Since then, we have directed all of our
efforts to developing of our software applications. Our principal source of
capital for funding our business activities subsequent to August 1999 has been
the private placements of equity, primarily from the exercise of the warrants we
issued in August 1999. During the three months ended March 31, 2000 we issued
275,000 shares of our common stock to the holders of Series 'A' warrants that
exercised 275,000 of these Series 'A' warrants at an exercise price of $2.00 per
common share, for total equity investments of $550,000. Subsequent to March 31,
2000, through May 19, 2000 we have issued 125,000 more common shares in response
to the exercise of 125,000 Series 'A' warrants. We received an additional
$250,000 in cash proceeds from these exercises. Between August 1999 and the date
of this report, we have received $1,560,000 and issued 780,000 common shares in
response to the exercise of 780,000 Series 'A' warrants.
USES OF CAPITAL: Since commencing operations in February 1995 through July 1999
we generated revenues from consulting contracts and used the funds in excess of
that required to perform the consulting services to fund the development of the
software applications. Since August 1999 we have directed our efforts towards
the development of our Universal Commerce and Universal Banking and other
related software applications. In May 2000, we started to actively market our
Universal Commerce and Universal Business products.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ISSUANCES OF COMMON STOCK During the three months ended March 31, 2000 pursuant
to Section 4 (2) of the Securities Act, we issued an aggregate of 275,000 shares
of common stock to holders of 275,000 Series 'A' warrants upon the exercise of
the warrants. The exercise price was $2.00 per common share.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
NONE.
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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
27 FINANCIAL DATA SCHEDULE
(b) REPORTS ON FORM 8-K
NONE
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
SOCHRYS.COM, INC.
By: /s/ Jean-Pierre Hofman
-------------------------------------
Jean-Pierre Hofman
President and Chief Executive Officer
By: /s/ Andre Hensler
-------------------------------------
Andre Hensler
Chief Financial Officer
Dated: May 22, 2000
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 203,084
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 352,434
<PP&E> 200,111
<DEPRECIATION> 0
<TOTAL-ASSETS> 562,347
<CURRENT-LIABILITIES> 330,461
<BONDS> 0
0
0
<COMMON> 12,267
<OTHER-SE> 1,368,724
<TOTAL-LIABILITY-AND-EQUITY> 562,347
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 526,129
<LOSS-PROVISION> (526,129)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (526,129)
<EPS-BASIC> (0.04)
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