SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-83418-LA
CYBERIA HOLDINGS, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 93-1138967
(State or other jurisdiction I.R.S. Employer
of incorporation or Identification
organization) Number)
1547 14th Street
Santa Monica, California 90404
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number, including area code: (310) 260-3163
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ] N/A
State Issuer's revenues for its most recent fiscal year: $1,029,866.
As of March 15, 1997, the aggregate market value of the Common Stock held by
non-affiliates of the Issuer (450,000 shares) was approximately $45,000 (based
only upon the offering and sale price of the shares to the public). See Part
II, Item 5 for market information. The number of shares outstanding of the
Common Stock ($.0001 par value) of the Issuer as of the close of business on
March 15, 1997 was 30,000,000.
Documents Incorporated by Reference: None
PART I
Item 1. DESCRIPTION OF BUSINESS.
INTRODUCTION
Cyberia Holdings, Inc. (the "Company") was organized under the laws
of the State of Delaware on February 24, 1994 under the name NW Venture
Corp. In October 1995, the Company completed an initial public offering
(the "Offering") of 500,000 shares of its Common Stock at a price of $.10
per share pursuant to a Registration Statement declared effective by the
Securities and Exchange Commission on June 30, 1995 as a "blank check"
offering subject to Rule 419 of Regulation C under the Securities Act of
1933. The Company had been organized for the purpose of creating a
corporate vehicle to seek, investigate and, if such investigation warrants,
acquire an interest in business opportunities presented to it by persons or
firms who or which desire to employ the Company's funding in their business
or to seek the perceived advantages of a publicly-held corporation.
In May 1996, the Company executed an agreement with Cyberia, Inc., a
California corporation ("Cyberia"), and its shareholders to acquire all of
the issued and outstanding shares of capital stock of Cyberia in exchange
for 25,500,000 shares of Common Stock of the Company (the "Cyberia
Acquisition"). Cyberia is primarily involved in the business of creating
original music for television commercials. As of December 26, 1996, and
following successful completion of a reconfirmation offering required
pursuant to Rule 419 (the "Reconfirmation Offering"), the Company
consummated the Cyberia Acquisition whereby Cyberia became a wholly-owned
subsidiary of the Company.
On January 13, 1997, the Company changed its corporate name to Cyberia
Holdings, Inc. to reflect the change of direction and new business of the
Company which resulted from the aforesaid transaction with Cyberia.
Unless the context otherwise requires, all references herein to
the "Company" refer to Cyberia Holdings, Inc. and its consolidated
subsidiaries.
This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs and
assumptions made by the Company's management as well as information
currently available to the management. When used in this document, the
words "anticipate", "believe", "estimate", and "expect" and similar
expressions, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.
Background and History of Cyberia
Cyberia was incorporated in the State of California in February 1994
by Grammy Award winning producer Jay Rifkin and Academy Award winning
composer Hans Zimmer to create original music for television and radio
commercials. Cyberia has retained the services of various composers to
create original music for use by the advertising industry to promote
products and services. Such original music is produced, recorded and mixed
at the recording studio of Media Ventures, which is operated by Jay Rifkin
and Hans Zimmer located in Santa Monica, California. To date, the music
created and produced by Cyberia has played a role in the production in
television advertising for various products and services.
During 1996, Cyberia entered into an agreement to form Media
Revolution, LLC, which is a company created to design Internet web sites,
computer games and software. Cyberia owns 80% of this entity and has
control of the day to day operations. The remaining 20% is owned by a non-
related party.
For the years ended December 31, 1996 and 1995, Cyberia had net sales
of approximately $1,030,000 and $488,000, respectively. During 1996 and
1995, Cyberia provided its services for approximately 29 and 25 projects,
respectively.
Overview of Business and Production Process
The services of Cyberia are retained by either a commercial production
company or advertising agency. In connection therewith, Cyberia has
retained the services of sales representatives who offer Cyberia's services
to potential clients in various territories. Such territories to date
include the United States, Japan, Germany, Netherlands and France. The
sales representative will explain the services of Cyberia by showing the
potential client a demonstration video reel, featuring commercials that
Cyberia has scored, that are representative of the quality of music
composed and the production standards employed by Cyberia. If the agency
is interested in the work of Cyberia, the sales representative will arrange
a meeting, usually by conference call, with the Executive Music Producer
and the Agency Producer to discuss generally the musical style required.
The Executive Producer will negotiate the production budget and check
schedules of the desired composer. The Executive Producer will then submit
to the Agency Producer, a written bid outlining all the costs involved
producing a piece of original music for the agency. The Agency Producer
will then evaluate the bid and when accepted, submit to Cyberia a purchase
order agreeing to the costs to be incurred. Cyberia will then invoice the
agency for one-half of the above budget prior to the beginning of the
project.
A meeting will then be arranged, by conference call or by personal
meeting, with the Executive Music Producer, the composer and the
advertising agency creative team. A discussion will usually entail the
commercial's visual style, meaning and target demographies so that Cyberia
has a clear understanding of the musical direction. After the commercial
is shot and edited, the composer will receive a copy of the commercial on
video tape. The composer will have a room setup with his composing
equipment, keyboards, guitars, samplers and effects gear. The composer
will then write a piece of music based upon the input of the client and a
meeting will be held to play the new music for the client. After the music
is finally approved by the agency, it may also need the approval of the
agency's client. Upon receipt of the final approval, the music is recorded
to digital audio tape, musicians are hired to play and the music is mixed
by an audio engineer. The final music is delivered by the agency producer
on DAT (high quality digital audio tape). The invoice for the remainder of
the approved budget is then forwarded to the client.
Revenues and Clients
Cyberia's revenues to date have primarily derived from production
fees. Cyberia will generally realize 50% of the production fees upon a
contract award and the final 50% is normally received within 60 days of the
final invoice.
Cyberia's clients are primarily domestic and foreign advertising
agencies and commercial production companies. The Company's services are
marketed primarily through its sales representatives who offer Cyberia's
services to such advertising agencies and commercial production companies.
During the year ended December 31, 1996, Cyberia did business with two
customers Twentieth Century Fox (a production company) and Leo Burnett
Agency (an advertising agency) whose sales comprised approximately 17% and
41% respectively, in net sales.
Competition
The markets for Cyberia's services are intensively competitive and
characterized by significant price competition. Cyberia has a large number
of competitors which range from large national and international concerns
to small owner/operator shops. In addition, there are numerous other
entities which compete in the low end and mid-price range in the music
production market. Many of the competitors have the advantage of larger
installed customer bases then Cyberia. Many potential customers in
Cyberia's target markets are often reluctant to commit significant
resources to replace their current suppliers. In addition, Cyberia
competes with licensors of pre-recorded music who are able to license their
products at a lower price than creating original music. As a result of the
above factors, there can be no assurance that Cyberia will compete
successfully in the future.
Cyberia believes that its ability to compete depends on elements both
within and outside its control including the quality of the creative team,
success and timing of marketing and advertising efforts, the performance of
competitors and price and availability. There can be no assurance that
Cyberia will be able to compete successfully with respect to these factors.
In addition, there can be no assurance that Cyberia will successfully
differentiate its services from the services of its competitors or that the
marketplace will consider Cyberia's services to be superior to the
competing services. Moreover, Cyberia's competitors may introduce
additional services that are competitive with those of Cyberia, and there
can be no assurance that Cyberia's services can compete effectively with
such new services.
Employees
The Company currently employs seven persons, four of whom are the
officers of the Company, one who is an executive producer, one who is
technical staff, and one who is an administrative assistant. In addition,
the Company has obtained the services of outside sales representatives to
market the Company's services, and composers to create original music for
the Company's projects.
Item 2. Description of Property.
The Company maintains its executive offices pursuant to an oral
agreement, on a month-to-month basis, in office space provided by Media
Ventures, which is owned by Jay Rifkin and Hans Zimmer. Such offices are
located at 1537 14th Street, Santa Monica, California 90404, and are leased
by Media Ventures from a third party. Rent expense paid by Cyberia to
Media Ventures was $28,800 for 1996 and $28,800 for 1995, respectively.
In February 1997, the Company entered into a long-term lease agreement for
additional corporate and operations office space with monthly payments of
$1,000. Such offices are located at 1542 15{th} Street, Santa Monica,
California 90404, and are leased by a limited partnership which is owned
and controlled by Jay Rifkin and Hans Zimmer.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Company
is a party or to which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security-Holders.
Except for the Reconfirmation Offering completed by the Company in
December 1996 whereby investors in the Offering reconfirmed their
investments pursuant to Rule 419, no matter was submitted during the
fourth quarter of the fiscal year covered by this report to a vote of
security holders.
PART II
Item 5. Market for Common Equity
and Related Stockholder Matters.
(a) Market Information.
Since inception, there has been no market for the Common Stock of the
Company. Pursuant to Rule 419, the securities issued to subscribers in the
Offering remained in escrow and were not released until the completion of
the Reconfirmation Offering and Cyberia Acquisition which was consummated
as of December 26, 1996. Accordingly, until such time, there could be no
trading in the Common Stock of the Company. Since such time, no trading
market has yet to develop. Although the Company is hopeful that a trading
market will develop in the future, there is no assurance that such a market
will develop, and in any event any trading market that may develop may be
very restricted and liquidity may be extremely limited.
(b) Holders.
As of March 15, 1997 there were 18 record holders of the Company's
Common Stock.
(c) Dividends.
The Company has never declared any cash dividends on its Common Stock
and does not anticipate declaring cash dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis
or Plan of Operation.
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and is qualified in its
entirety by the foregoing.
Background
The Company was organized under the laws of the State of Delaware on
February 24, 1994 under the name NW Venture Corp. In October 1995, the
Company completed an initial public offering (the "Offering") of 500,000
shares of its Common Stock at a price of $.10 per share pursuant to a
Registration Statement declared effective by the Securities and Exchange
Commission on June 30, 1995 as a "blank check" offering subject to Rule
419 of Regulation C under the Securities Act of 1933. The Company had been
organized for the purpose of creating a corporate vehicle to seek,
investigate and, if such investigation warrants, acquire an interest in
business opportunities presented to it by persons or firms who or which
desire to employ the Company's funding in their business or to seek the
perceived advantages of a publicly-held corporation.
In May 1996, the Company executed an agreement with Cyberia, Inc., a
California corporation ("Cyberia"), and its shareholders to acquire all of
the issued and outstanding shares of capital stock of Cyberia in exchange
for 25,500,000 shares of Common Stock of the Company (the "Cyberia
Acquisition"). Cyberia is primarily involved in the business of creating
original music for television commercials. As of December 26, 1996, and
following successful completion of a reconfirmation offering required
pursuant to Rule 419 (the "Reconfirmation Offering"), the Company
consummated the Cyberia Acquisition whereby Cyberia became a wholly-owned
subsidiary of the Company.
On January 13, 1997, the Company changed its corporate name to Cyberia
Holdings, Inc. to reflect the change of direction and new business of the
Company which resulted from the aforesaid transaction with Cyberia.
Results of Operations
Net sales for the year ended December 31, 1996 increased to $1,029,866
as compared to net sales for the year ended December 31, 1995 of $488,237,
an increase of $541,629. This increase is primarily due to Cyberia's
increased visibility and recognition in the commercial music production
industry.
Cyberia reported operating income of $84,564 for the year ended
December 31, 1996 as compared to a net operating loss of $(41,208) for the
year ended December 31, 1995. This change resulted primarily from the
decrease in production costs as a percentage of sales in 1996 to 39%
compared to 54.5% in 1995. This decrease is due to Cyberia being able to
command higher fees for its services and at the same time keep the
production costs primarily consistent with the previous fiscal year.
General and administrative expenses increased to $543,951 for the year
ended December 31,1996 compared to $263,501 for the year ended December
31,1995, an increase of $280,450. The increase is due to additional
facilities and employees, and the implementation of a marketing campaign to
achieve a greater public presence for the Company.
Cyberia's effective tax rate was 1.0% and (12.1%) for the years ended
December 31,1996 and 1995, respectively. In 1995, Cyberia was taxed as an
S Corporation and reported revenue and expenses for tax purposes using the
cash method. The tax expense in 1995 of $4,865 represents the minimum
state taxes imposed on an S Corporation of 1.5% of taxable income. On
January 1,1996, Cyberia revoked its S Corporation status and elected to be
taxed as a C corporation. On that date Cyberia recorded a tax benefit from
the establishment of a net deferred tax asset resulting from its change in
tax status. Accordingly, the income tax expense for 1996 represents the
minimum state taxes imposed on a corporation.
Liquidity and Capital Resources
At December 31, 1996, Cyberia had working capital of $48,934. The
ratio of current assets to current liabilities was approximately 1.22 to 1
at December 31, 1996. At December 31, 1996, Cyberia had stockholders'
equity of $99,293.
To date, Cyberia has funded its activities principally from cash flows
generated from operations. It is anticipated that Cyberia's continuing
cash flows from operations will be sufficient to meet its cash and working
capital requirements at least through 1997.
Item 7. Financial Statements.
See the Consolidated Financial Statements annexed to this report.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act.
Set forth below are the present directors and executive officers of
the Company. Note that there are no other persons who have been nominated
or chosen to become directors nor are there any other persons who have been
chosen to become executive officers. There are no arrangements or
understandings between any of the directors, officers and other persons
pursuant to which such person was selected as a director or an officer.
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have
qualified. Officers serve at the discretion of the Board of Directors.
Present Position Has Served As
Name Age and Offices Director Since
Jay Rifkin 41 President, 1997
Chief Executive
Officer, Treasurer
and Director
Hans Zimmer 39 Vice President, 1997
Secretary
and Director
Mark S. Levy 30 Executive Vice -
President,
General Manager
Elisa M. Perlman 29 Chief Financial -
Officer
Martin Rifkin 35 Director 1994
JAY RIFKIN has been President, Chief Executive Officer and a Director
of Cyberia since its inception in February 1994, and has been President,
Chief Executive Officer, Treasurer and a Director of the Company since
January 1997 following the acquisition of Cyberia. Since 1989, Mr. Rifkin
has been President of Mojo Music, Inc. which is a general partner of Media
Ventures, which operates a recording studio in Santa Monica, California.
Mr. Rifkin is an award winning music producer and engineer having received
a Grammy Award as Producer for Best Children's Album and American Music
Awards for Producer of Best Album and Best Soundtrack. Jay Rifkin is the
brother of Martin Rifkin.
HANS ZIMMER has been Vice President and a Director of Cyberia since
its inception in February 1994 and has been Vice President, Secretary and a
Director of the Company since January 1997 following the acquisition of
Cyberia. Mr. Zimmer has been President of Remote Control Productions,
Inc., which is a general partner of Media Ventures since 1989. Mr. Zimmer
is an award winning composer having received an Academy Award and Golden
Globe for Best Original Score for "The Lion King". He also received a
Grammy Award as Producer of Best Children's Album and Best Instrumental
Arrangement with Accompanying Vocalist for "The Lion King". Mr. Zimmer
also received an Academy Award Nomination for Best Original Score for the
film "Rainman". He has composed the scores for numerous other major motion
pictures including but not limited to "Black Rain", "Driving Miss Daisy",
"Bird on a Wire", "Days of Thunder", "Pacific Heights", "Thelma & Louise",
"Crimson Tide" and "Nine Months".
MARK S. LEVY has been Executive Vice President and General Manager of
Cyberia since its inception in February 1994 and has been Executive Vice
President and General Manager of the Company since January 1997 following
the acquisition of Cyberia. Mr. Levy has also served as General Manager of
Media Ventures since June 1993. Previously thereto, and from 1992 to 1993,
he served as Production Auditor for Propaganda Films in Los Angeles. Mr.
Levy also co-founded an independent record company and served as a
Financial Analyst at Geffen Records from 1991 to 1992.
ELISA M. PERLMAN has been Financial Manager of Cyberia since its
inception in February 1994 and has been Chief Financial Officer of the
Company since January 1997 following the acquisition of Cyberia. Ms.
Perlman has also served as Financial Manager of Media Ventures since June
1993. Previously, from 1991 to 1993, she worked as the accountant for the
business management firm Savitsky, Satin and Geibelson, who at the time
were the business managers for Hans Zimmer, Jay Rifkin and Media Ventures.
She received her C.P.A. in 1991, while working as a senior in the tax and
audit departments at Kenneth Leventhal and Company.
MARTIN RIFKIN has been a Director of the Company since its inception
in February 1994 and was President, Secretary and Treasurer of the
Company from its inception through December 1996. Since December 1985, Mr.
Rifkin has been a Director of Nutrition Now Incorporated ("Nutrition Now"),
a company which manufactures and markets nutritional supplements and, since
November 1987, he has been its Secretary and Treasurer and since February
1992, its President. Also, from August 1988 to February 1992, he was its
Vice President. In addition, Mr. Rifkin has been, since April 1985, a
Director of Nova International Films, Inc. ("Nova"), a company which
principally has been engaged in the business of financing and producing
motion pictures, and from April 1985 to October 1994, he was its Vice
President, and since October 1994, he has been its President and Treasurer.
Such company is at the present time relatively inactive. In addition, Mr.
Rifkin has been Treasurer and Director of Profit Merchandising Corp.
("PMC") since September 1983 and Vice President since June 1985. PMC is
engaged in the distribution of weatherstripping products. Martin Rifkin is
the brother of Jay Rifkin.
Item 10. Executive Compensation.
During 1996, the then sole officer and director of the Company
received no cash compensation for his services as such and the Company had
no employment agreement with him.
Cyberia has no employment agreements with any of its executive
officers. The following summary compensation table sets forth information
concerning the annual and long-term compensation for services in all
capacities to Cyberia for the years ended December 31, 1996, 1995 and 1994,
of those persons who were, at December 31, 1996 (i) the chief executive
officer and (ii) the other most highly compensated executive officers of
the Company, whose annual base salary and bonus compensation was in excess
of $100,000 (the named executive officers):
Summary Compensation Table
Annual
Compensation
Name and Principal Fiscal
Position Year Salary Bonus
Jay Rifkin, 1996 $30,000 $0
President and 1995 $85,000 $0
Chief Executive 1994 $0 $0
Officer
Hans Zimmer, 1996 $30,000 $0
Vice President 1995 $65,000 $0
1994 $0 $0
Mark S. Levy, 1996 $61,061 $0
Executive Vice 1995 $15,000 $0
President 1994 $0 $0
Summary Compensation Table
Long-Term
Compensation
Restricted Shares
Name and Principal Fiscal Stock Underlying
Position Year Awards Options
Jay Rifkin, 1996 0 0
President and 1995 0 0
Chief Executive 1994 0 0
Officer
Hans Zimmer, 1996 0 0
Vice President 1995 0 0
1994 0 0
Mark S. Levy, 1996 0 0
Executive Vice 1995 0 0
President 1994 0 0
Since inception, no director has received any cash compensation for
his services as such. In the past, directors have been and will continue to
be reimbursed for reasonable expenses incurred on behalf of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 15, 1997, by
(i) each person who is known by the Company to own beneficially more than
5% of the Company's outstanding Common Stock; (ii) each of the Company's
directors; and (iii) directors and officers of the Company as a group:
Number Percent
of Shares of
Name and Address Owned Class
Jay Rifkin 12,000,000 40.0%
1547 14th Street
Santa Monica, CA 90404
Hans Zimmer 12,000,000 40.0%
1547 14th Street
Santa Monica, CA 90404
Mark S. Levy 1,500,000 5.0%
1547 14th Street
Santa Monica, CA 90404
Martin Rifkin 4,050,000 13.5%
501 S.E. Columbia
Shores Blvd.
#350
Vancouver, WA 98661
All Officers and Directors 29,550,000 98.5%
as a Group (5 Persons)
Item 12. Certain Relationships and Related Transactions.
The Company was incorporated on February 24, 1994, under the laws of
the State of Delaware, with an authorized capitalization of 50,000,000
shares of Common Stock, $.0001 par value each. In April 1994, the
Company issued 4,000,000 shares to Martin Rifkin for cash consideration of
$1,000.
In April 1994, the Company borrowed $4,000 from Martin Rifkin in order
to pay certain operating expenses of the Company and expenses of the
Offering. Such loans were due on demand and bear interest at 7% per annum.
Following completion of the Reconfirmation Offering and Cyberia
Acquisition, the Company repaid these loans from the proceeds of the
Offering.
In May 1996, the Company executed an Agreement and Plan of Tax Free
Reorganization with Cyberia and the shareholders of Cyberia pursuant to
which upon successful completion of the Reconfirmation Offering the Company
would acquire all of the issued and outstanding shares of capital stock of
Cyberia in exchange for 25,500,000 shares of Common Stock of the Company.
As of December 26, 1996, and following successful completion of the
Reconfirmation Offering, the Company consummated the Cyberia Acquisition
whereby Cyberia became a wholly-owned subsidiary of the Company.
In 1996, Cyberia paid approximately $83,000 to Media Ventures, a
company operated by Jay Rifkin and Hans Zimmer, for sound mixing and
recording services. Cyberia also paid Media Ventures $39,000 for related
overhead costs. As of December 31, 1996, $29,701 is due to Media Ventures
for these costs.
See Part I, Item 2 elsewhere herein for information on the facilities
leased by Cyberia on a month-to-month basis from Media Ventures and
additional office space leased from a limited partnership owned and
controlled by Jay Rifkin and Hans Zimmer.
Item 13. Exhibits, List and Reports on Form 8-K.
(a) Exhibits.
3.1 Registrant's certificate of incorporation(1)
3.2 Registrant's certificate of amendment to its certificate of
incorporation (filed January 13, 1997)
3.3 Registrant's by-laws(1)
4.1 Specimen certificate for common stock(1)
4.2 Promissory Note with Martin Rifkin(1)
10.1 Agreement and Plan of Tax Free Reorganization dated May 22,
1996 by and among NW Venture Corp., Cyberia, Inc.
("Cyberia") and the shareholders of Cyberia(2)
22.0 Cyberia Holdings, Inc., parent and subsidiaries
27.1 Financial Data Schedule
99.1 Escrow Agreement (form)(1)
___________________
(1) Filed with the Registration Statement on Form SB-2 declared
effective as of June 30, 1995.
(2) Filed with Post-Effective Amendment to the Registration
Statement on Form SB-2 declared effective as of December 24,
1996.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the last quarter of
the period covered by this report:
Items Reported Financial Statement Filed Date of Report
Changes in Control Incorporated by reference December 26, 1996
of Registrant; from Post-Effective Amendment
Acquisition to the Registration Statement
or Disposition on Form SB-2
of Assets
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.
CYBERIA HOLDINGS, INC.
(Registrant)
By: /s/Jay Rifkin
Jay Rifkin, President
Dated: April 14, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant, and in the capacities and on the dates indicated:
Signature Title Date
/s/Jay Rifkin President, Chief April 14, 1997
Jay Rifkin Executive Officer,
Treasurer, Director
(Principal Executive
Officer)
/s/Hans Zimmer Vice President, April 14, 1997
Hans Zimmer Secretary, Director
/s/Martin Rifkin Director April 14, 1997
Martin Rifkin
/s/Elisa M. Perlman Chief Financial Officer April 14, 1997
Elisa M. Perlman (Principal Financial
Officer and Principal
Accounting Officer)
CYBERIA HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
Consolidated Balance Sheet 2
Consolidated Statements of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Cyberia Holdings, Inc.
We have audited the accompanying consolidated balance sheet of Cyberia
Holdings, Inc. and subsidiaries as of December 31, 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for the each of the two years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cyberia
Holdings, Inc. and subsidiaries as of December 31, 1996, and the
consolidated results of their operations and cash flows for each of the two
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/Singer Lewak Greenbaum & Goldstein LLP
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
February 21, 1997
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
As of December 31, 1996
ASSETS (Note 3)
Current assets
Cash $ 121,830
Accounts receivable, net of allowance
for doubtful accounts of $0 121,750
Advances to employees 19,314
Prepaid expenses and other current assets 8,496
Total current assets 271,390
Furniture and equipment, net (Note 2) 58,841
Other assets 9,995
Total assets $340,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit (Note 3) $ 70,000
Note payable - stockholder (Note 4) 4,000
Accounts payable and accrued expenses 90,213
Due to affiliates (Note 6) 29,701
Accrued payroll and payroll taxes 28,542
Total current liabilities 222,456
Minority interest 18,477
Commitments and contingencies (Note 5)
Stockholders' equity
Common stock, $.0001 par value:
50,000,000 shares authorized,
30,000,000 shares issued and outstanding 3,000
Additional paid-in capital 9,269
Retained earnings 87,024
Total stockholders' equity 99,293
Total liabilities and stockholders' equity $340,226
The accompanying notes are an integral part of these financial statements.
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996
1996 1995
Net sales (Note 7) $1,029,866 $ 488,237
Cost of sales 401,351 265,944
General and administrative
expenses 543,951 263,501
Total expenses 945,302 529,445
Income (loss) from operations 84,564 (41,208)
Other income (expense)
Other income 4,476 1,043
Interest expense (1,216) -
Total other income (expense) 3,260 1,043
Income (loss) before taxes 87,824 (40,165)
Income taxes 800 4,865
Net income (loss) $87,024 $(45,030)
Net income (loss) per share $ 0.00 $ 0.00
Weighted average common shares
outstanding 25,536,986 25,500,000
The accompanying notes are an integral part of these financial statements.
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended December 31,
Additional
Common Stock Paid-in
Shares Amount Capital
Balance, December 31,
1994 25,500,000 $1,000 $ -
Net loss
Balance, December 31,
1995 25,500,000 1,000 -
Effect of change in
tax filing status (30,975)
Shares issued for
acquisition of NW
Ventures Corp. 4,500,000 2,000 40,244
Net income -
Balance, December 31,
1996 30,000,000 $3,000 $9,269
The accompanying notes are an integral part of these financial statements.
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Continued)
For the Years Ended December 31,
Retained
Earnings Total
Balance, December 31,
1994 $14,055 $15,055
Net loss (45,030) (45,030)
Balance, December 31,
1995 (30,975) (29,975)
Effect of change in tax
filing status 30,975 -
Shares issued for
acquisition of NW
Ventures Corp. 42,244
Net income 87,024 87,024
Balance, December 31,
1996 $87,024 $99,293
The accompanying notes are an integral part of these financial statements.
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1996 1995
Cash flows from operating activities
Net income (loss) $87,024 $(45,030)
Adjustments to reconcile net income
(loss) to net cash (used in) provided
by operating activities
Depreciation 5,016 4,370
(Increase) decrease in
Accounts receivable (57,228) (45,836)
Work in progress 19,007 (19,007)
Prepaid and other current assets (8,163) (262)
Other assets (4,720) -
Increase (decrease) in
Accounts payable and accrued
expenses 56,726 21,413
Due to affiliates 11,326 18,375
Accrued payroll and payroll taxes 28,542 -
Deferred income (148,157) 148,157
Net cash (used in) provided by
operating activities (10,627) 82,180
Cash flows from investing activities
Acquisition of NW Ventures Corp. 46,928 -
Advances to employees (19,314) -
Purchase of furniture and equipment (45,177) (4,201)
Net cash used in investing
activities (17,563) (4,201)
Cash flows from financing activities
Net proceeds from line of credit 70,000 -
Net increase in cash 41,810 77,979
Cash, beginning of period 80,020 2,041
Cash, end of period $121,830 $80,020
Supplemental disclosures of cash flow
information
Interest paid $ 1,216 $ -
Taxes paid $ 800 $ 4,865
Supplemental schedule of non-cash investing and financing activities
The Company issued 4,500,000 shares of common stock for the acquisition of
NW Ventures Corp.
The accompanying notes are an integral part of these financial statements.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
Cyberia, Inc. (the "Company" or "Cyberia") was incorporated in California
in February 1994. The Company composes background music for television and
radio commercials which are aired throughout the world. The Company also
designs Internet web sites, computer games, and software. The Company
sells its services to customers in the United States.
In August 1996, the Company entered into a joint venture to form Media
Revolution, LLC. The Company owns 80% of this entity and has control of
the day to day operations. The remaining 20% is owned by an unrelated
stockholder. Media Revolution, LLC has been consolidated with the Company
in the accompanying consolidated financial statements with the minority
interest reflected as a separate component of the consolidated balance
sheet.
Reverse Merger
On December 28, 1996, NW Venture Corp. ("NW Venture") acquired all of the
outstanding stock of Cyberia. For accounting purposes, the acquisition has
been treated as a recapitalization of Cyberia with Cyberia as the acquirer
(reverse acquisition). NW Venture subsequently changed its name to Cyberia
Holdings, Inc. (hereafter referred to as the "Company").
Principles of Consolidation
The consolidated financial statements include the accounts of Cyberia
Holdings, Inc. and its subsidiaries. All material intercompany
transactions and balances have been eliminated.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly-liquid investments purchased with original maturities of three
months or less to be cash equivalents.
Furniture and Equipment
Furniture and equipment are stated at cost. The Company provides for
depreciation and amortization using accelerated and straight-line methods
over the estimated useful lives of 3 to 7 years as follows:
Furniture and fixtures 7 years
Computer equipment 3 years
Office equipment 7 years
Expenditures for maintenance and repairs are charged to operations as
incurred, while renewals and betterments are capitalized. Gains or losses
on the sale of furniture and equipment are reflected in the statement of
operations.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk
The Company sells its products to customers throughout the United States.
(See Note 7 for sales to significant customers.) The Company's sales are
dependent on a small group of customers.
Net Income (Loss) Per Share
Net income (loss) per share is based on the weighted average number of
common and common equivalent shares outstanding during each year.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of the
Company's financial instruments, including cash, accounts receivable,
accounts payable, and accrued expenses, the carrying amounts approximate
fair value due to their short maturities. The amounts shown as line of
credit and note payable also approximate fair value because current
interest rates offered to the Company for lines of credit and notes payable
of similar maturities are substantially the same.
Impairment of Long-Lived Assets
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." The impact of such adoption was not
material.
Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements,
as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Work-in-process
Work-in-process consists of cost incurred on uncompleted contracts.
Deposits and progress billings are recorded as deferred revenue.
Revenue Recognition
Revenues from contracting services are recognized upon completion of the
contract.
Income Taxes
For the year ended December 31, 1995, the Company was taxed as an "S"
corporation. In lieu of corporate income taxes, the stockholders of an "S"
corporation were taxed on their proportionate share of the Company's
taxable income (loss).
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
Beginning January 1, 1996, the Company has elected to revoke the "S"
corporation status for income tax purposes; therefore, the Company will be
taxed at the federal and state statutory rates. The Company has elected to
use the cash method for reporting income taxes. The Company accounts for
income taxes in accordance with SFAS No. 109, "Accounting for Income
Taxes."
NOTE 2 - FURNITURE AND EQUIPMENT
Furniture and equipment at December 31, 1996 consist of the following:
Furniture and fixtures $ 8,718
Computer equipment 46,102
Office equipment 13,035
67,855
Less accumulated depreciation 9,014
Total $58,841
NOTE 3 - LINE OF CREDIT
The line of credit is secured by all assets of the Company and bears
interest at prime (8.25% at December 31, 1996) plus .75%. The Company is
required to observe a thirty-consecutive-day out-of-debt period prior to
the review date of August 31, 1997.
NOTE 4 - NOTE PAYABLE - STOCKHOLDER
The note payable is unsecured, due upon demand and bears interest at 7% per
annum.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company subleases a facility for its corporate and operations office
from a related party on a month-to-month basis pursuant to a verbal
agreement. The related party leases the office building from a third
party, and the lease expires in March 1997.
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company also has long-term lease agreements for certain facilities for
its corporate and operations offices from related parties. Future minimum
lease payments relating to these facilities are as follows:
Year Ending
December 31,
1997 $ 39,320
1998 40,320
1999 40,320
2000 40,320
2001 23,800
Thereafter 61,000
Total $ 245,080
Rent expense paid to related parties was $48,388 and $28,800 for 1996 and
1995, respectively.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company paid approximately $83,000 and $40,000 to Media Ventures, which
has common ownership, for sound mixing and recording services for 1996 and
1995, respectively. The Company also paid Media Ventures $39,000 and
$18,375 for related overhead cost for 1996 and 1995, respectively. As of
December 31, 1996, $29,701 is due to Media Ventures.
NOTE 7 - SALES
During the year ended December 31, 1996, the Company conducted business
with two customers whose sales comprised approximately 17% and 41%,
respectively, of net sales.
During the year ended December 31, 1995, the Company conducted business
with three customers whose sales comprised approximately 10%, 19%, and 35%,
respectively, of net sales.
NOTE 8 - SUBSEQUENT EVENTS
In February 1997, the Company entered into a long-term lease agreement for
additional corporate and operations office space with monthly payments of
$1,000. The future minimum lease payments relating to this lease have been
included in the schedule of future minimum lease payments in footnote 5.
NOTE 9 - INCOME TAXES
A reconciliation of the expected income tax computed using the federal
statutory income rate to the Company's effective rate for the year ended
December 31, 1996 is as follows:
Income tax computed at federal statutory
tax rate 34%
Deferred tax benefit resulting from
conversion from an "S"
corporation to a "C" corporation (34)
State taxes 1
Total 1%
Significant components of the Company's deferred tax assets and liabilities
for income taxes consist of the following at December 31, 1996:
Deferred tax assets:
Net operating loss carryforwards $17,754
Accounts payable and accrued liabilities 36,085
Accrued payroll and payroll taxes 6,652
60,491
Valuation allowance (10,591)
49,900
Deferred tax liabilities:
Accounts receivable (48,700)
Depreciation of furniture and equipment (1,200)
Total $ -
As of December 31, 1996, the Company has federal and state net operating
loss carryforwards of approximately $48,000 and $24,000, respectively, that
begin to expire in 2011 and 2001, respectively.
Commission File No. 33-83418-LA
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
EXHIBITS
filed with
ANNUAL REPORT
ON FORM 10-KSB
FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996
CYBERIA HOLDINGS, INC.
INDEX TO EXHIBITS
PAGE
3.1 Registrant's certificate of incorporation(1)
3.2 Registrant's certificate of amendment to its
certificate of incorporation (filed January 13, 1997)
3.3 Registrant's by-laws(1)
4.1 Specimen certificate for common stock(1)
4.2 Promissory Note with Martin Rifkin(1)
10.1 Agreement and Plan of Tax Free Reorganization
dated May 22, 1996 by and among NW Venture
Corp., Cyberia, Inc. ("Cyberia") and the
shareholders of Cyberia(2)
22.0 Cyberia Holdings, Inc., parent and subsidiaries
27.1 Financial Data Schedule
99.1 Escrow Agreement (form)(1)
_____________________
(1) Filed with the Registration Statement on Form SB-2 declared
effective as of June 30, 1995.
(2) Filed with Post-Effective Amendment to the Registration Statement
on Form SB-2 declared effective as of December 26, 1996.
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NW VENTURE CORP.
We, the undersigned, President and Secretary, respectively, of NW
Venture Corp., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware
DO HEREBY CERTIFY:
1. That paragraph 1 of the Certificate of Incorporation be and
it hereby is amended to read in its entirety:
"1. The name of the Corporation is CYBERIA HOLDINGS, INC."
2. That the amendment was authorized by the unanimous written
consent of the Board of Directors followed by written consent of the
stockholders being given in accordance with Sections 228 and 242 of the
General Corporation Law of the State of Delaware, and that written notice
has been given as provided therein.
IN WITNESS WHEREOF, we have hereunto signed this certificate this
6th day of January, 1997, and we affirm the statements contained herein as
true under penalties of perjury.
/s/Martin Rifkin
Martin Rifkin,
President
Attest: /s/Martin Rifkin
Martin Rifkin,
EXHIBIT 22.0
CYBERIA HOLDINGS, INC.
PARENT AND SUBSIDIARIES
Registrant: Cyberia Holdings, Inc.
Subsidiary, all of
whose voting securities
are owned directly or
indirectly by the
Registrant. Cyberia, Inc.
Subsidiary, 80% of
whose voting securities
are owned directly or
indirectly by the
Registrant. Media Revolution, LLC
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CYBERIA HOLDINGS, INC.'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 121,830
<SECURITIES> 0
<RECEIVABLES> 121,750
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 271,390
<PP&E> 67,855
<DEPRECIATION> 9,014
<TOTAL-ASSETS> 340,226
<CURRENT-LIABILITIES> 222,456
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 340,226
<SALES> 1,029,866
<TOTAL-REVENUES> 1,029,866
<CGS> 401,351
<TOTAL-COSTS> 401,351
<OTHER-EXPENSES> 543,951
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,216
<INCOME-PRETAX> 87,824
<INCOME-TAX> 800
<INCOME-CONTINUING> 87,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,024
<EPS-PRIMARY> .000
<EPS-DILUTED> .000
</TABLE>
