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, 1998
[ ] 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 organization) Identification Number)
1547 14th Street
Santa Monica, California 90404
(Address of principal executive offices) (Zip Code)
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 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: $1,163,249.
As of March 31, 1999, the aggregate market value of the Common Stock held
by non-affiliates of the Issuer (450,000 shares) was approximately $59,625
(based upon the average bid and asked prices of such stock on the most
recently available date prior to March 31, 1999). The number of shares
outstanding of the Common Stock ($.0001 par value) of the Issuer as of the
close of business on March 31, 1999 was 30,000,000.
Documents Incorporated by Reference: None
<PAGE>
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"). At the time thereof and through December 31, 1998, Cyberia
was primarily involved in the business of creating original music for
television and radio 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.
During 1996, Cyberia entered into an agreement to form Media
Revolution, LLC ("Media Revolution"), which is a company created to design
Internet web sites, computer games and software. The Company owns 80% of
this entity and has control of the day to day operations. The remaining
20% is owned by a non-related party.
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.
In October 1998, Management decided to discontinue the operations
of Cyberia, Inc. as of December 31, 1998. Management believed that the
investment versus potential return was too high to support continuing
operations. It was decided it would be in the best interest of the Company
and its stockholders to focus its resources on its subsidiary company,
Media Revolution.
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.
Overview of Business and Production Process
Media Revolution is a digital communications company that develops and
builds interactive business solutions for globally branded clients. Media
Revolution combines its expertise in digital design and production with
strategic consulting and technology to create innovative interactive
solutions for its clients. Media Revolution offers its clients a wide range
of digital communications services including strategy consulting; analysis
and design; project management; Intranet, Extranet and Web site design; E-
commerce business systems; application development; graphic design and user
interface; online marketing and brand development; and maintenance. Media
Revolution is positioned to provide a wide range of digital communications
solutions to its clients through its professional full time staff coupled
with strategic partnerships with high quality service providers in systems
integration, enterprise e-commerce and media planning.
Media Revolution focuses on making its digital communications solutions
an integral part of its clients' business strategies in order to promote
long-term client relationships. Media Revolution uses project management
teams with experience in consulting, creative, media, technology and
production disciplines, led by experienced interactive producers, to
provide its integrated digital communication services. Media Revolution
employs a collaborative approach between the internal team and the client
to ensure that information is delivered and absorbed in ways that impact
the experience and influence the desired user behavior. The Company hand-
picks the technologies that it believes will work best for the client and
its target audience and works with high quality service providers in
disciplines which complement the staff of the Company.
Media Revolution has developed a process which it believes maximizes
the return on investment for its clients. From strategic consulting to web
development to ad banner development, the Company's overlying methodology
applies to all aspects of the services it provides. The three-step
circular process includes a discovery, strategy and production phase:
1. Discover : Internet Business Statement (IBS)
2. Strategize : Creative and Technical Specifications (CTS)
3. Produce : Digital File Delivery
Depending on the complexity of the project, the client's clarity on the
scope of work, and the Company's understanding of the project, Media
Revolution can either bid on providing strategic consulting to create an
IBS, bid on the cost to write an IBS and CTS, or bid on the cost to deliver
the complete project including digital file delivery. The client can also
supply an IBS or CTS for Media Revolution to bid on and implement. Once
Media Revolution delivers digital files to a client the Company believes it
is positioned to begin the process again.
Revenues and Clients
Revenues primarily consist of fees from consulting services
engagements (including both time-and-materials and fixed-price
engagements). The services offered by the Company include strategy
consulting; analysis and design; project management; Intranet, Extranet and
Web site design; e-Commerce business systems; application development;
graphic design and user interface; online marketing and brand development;
and maintenance. The Company's client list includes many of the world's top
companies and brands.
For the years ended December 31, 1998 and 1997, the Company had net
sales of approximately $1,163,000 and $874,000, respectively. During 1998
and 1997, the Company provided its services for approximately 67 and 51
projects, respectively. During the year ended December 31, 1998, the
Company did business with two customers, Twentieth Century Fox and/or its
affiliates and Gameworks, whose sales comprised approximately 36% and 13%
respectively, in net sales. During the year ended December 31, 1997, the
Company did business with three customers, Twentieth Century Fox, Candle
Corporation, and Sega Gameworks, whose sales comprised approximately 35%,
16% and 14%, respectively, in net sales.
Competition
The market for the Company's services is competitive, highly
fragmented and is characterized by pressures to incorporate new
capabilities, accelerate job completion schedules and reduce prices. The
Company faces competition from a number of sources, including traditional
advertising and marketing firms, project-oriented interactive marketing
firms and information technology service providers, many of which are
larger than the Company and have greater resources than the Company. Media
Revolution's primary competitors include US Interactive, Razorfish, iXL,
Think New Ideas and USWeb/CKS. Many traditional advertising agencies have
also started to develop digital media and interactive communications
capabilities. Moreover, certain project-oriented interactive marketing
firms and information technology service providers provide Internet
consulting, corporate identity and packaging, production, advertising and
website design services, and are technologically proficient in the digital
media and interactive communications fields. In addition, in-house
marketing and information systems departments and graphic design companies
compete with certain portions of the Company's business.
Competition depends to a large extent on clients' perceptions of the
quality and creativity as well as the technical proficiency of the
Company's digital communications services and those of the Company's
competitors. The Company also competes on the basis of price and the
ability to serve clients on a broad geographic basis. To the extent the
Company loses clients to its competitors because of dissatisfaction with
the Company's services, or if the Company's reputation is adversely
impacted for any other reason, the Company's future operating performance
could be materially and adversely affected.
Government Regulations
Although there are currently few laws or regulations directly governing
access to the Company's commerce on the Internet, due to the increasing
popularity and use of the Internet, a number of laws and regulations may be
adopted regarding user privacy, pricing, acceptable content, taxation and
quality of products and services. In addition, the government has been
requested to regulate and impose fees on Internet service providers and
online service providers in a manner similar to long distance telephone
carriers. The adoption of any such laws or regulations could affect the
costs of communicating on the Internet and adversely affect the growth in
use of the Internet, or decrease the acceptance of the Internet as a
communications and commercial medium, which could in turn decrease the
demand for Media Revolution's services or otherwise have a material adverse
effect on Media Revolution's business, results of operations and financial
condition.
Employees
As of December 31, 1998, Media Revolution employed approximately 15
full-time employees. Media Revolution also hires temporary employees and
contract service providers as necessary.
Item 2. Description of Property.
Through December 31, 1998 the Company maintained its offices pursuant
to a written agreement, in office space subleased from a limited liability
company, which is owned by Jay Rifkin and Hans Zimmer. Such offices are
located at 1542 15th Street, Santa Monica, California 90404, and are leased
from a third party. Rent expense paid by Cyberia was $65,100 for 1998 and
$30,700 for 1997. Media Revolution leased office space from a third party
at 1749 14th Street, Santa Monica, California 90404. Rent expense was
$52,100 and $37,859 for the years 1998 and 1997, respectively.
As a result of the discontinuance of the business of Cyberia,Inc. the
Company, which includes Media Revolution, relocated its offices from 1542
15th Street and 1749 14th Street to leased space at 1531 14th Street, Santa
Monica, California 90404. This leased space is owned by a Limited
Partnership which is owned by Jay Rifkin and Hans Zimmer. The Company
maintains its mailing address at 1547 14th Street, Santa Monica, California
90404.
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.
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.
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. As of August 1997, the
Company's Common Stock is traded in the over-the-counter market and is
listed on the OTC Bulletin Board under the symbol "CBHD". To date, there
has been only sporadic trading of the Company's Common Stock. The high
and low bid quotations for the Company's Common Stock tabulated below
represent prices between dealers and do not include retail markups,
markdowns, commissions or other adjustments and may not represent actual
transactions.
Bid Prices
Period High Low
Year Ended December 31, 1997:
Third Quarter $.18 $.125
Fourth Quarter $.18 $.125
Year Ended December 31, 1998:
First Quarter No prices available
Second Quarter $.1875 $.0625
Third Quarter $.1875 $.09
Fourth Quarter $.10 $.10
(b) Holders.
As of March 31, 1999 there were approximately 38 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"). At the time thereof and through December 31, 1998, Cyberia
was primarily involved in the business of creating original music for
television and radio 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.
During 1996, Cyberia entered into an agreement to form Media
Revolution, LLC ("Media Revolution"), which is a company created to design
Internet web sites, computer games and software. The Company owns 80% of
this entity and has control of the day to day operations. The remaining
20% is owned by a non-related party.
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.
On October 6, 1998 management decided to discontinue the operations of
Cyberia, Inc. as of December 31, 1998 to allow the Company to focus its
resources on the growth and development of Media Revolution. All assets
and liabilities of Cyberia, Inc. have been transferred to Cyberia Holdings,
Inc. and affiliates of the Company with the exception of $5,817 in net
assets related to leasehold improvements which were expensed.
As a result, operations of Cyberia, Inc. through December 31, 1998 are
reported as discontinued operations. The results from discontinued
operations included total revenues of $1,433,866 and $937,308 and net
income from operations of $129,012 and $61,201 for the years ended December
31, 1998 and 1997 respectively. The loss on the disposal of the subsidiary
also includes and accrual of $88,811 for the expenses to be incurred from
December 31, 1998 to the anticipated disposal date of March 31, 1999.
Results of Operations
Net sales for the year ended December 31, 1998 were $1,163,000 as
compared to $874,000 for the year ended December 31, 1997, an increase of
$289,000. This increase is primarily due to the Company's restructuring
and change in marketing strategy.
Cost of sales was $379,000 for the year ended December 31, 1998 as
compared to $203,000 for the year ended December 31, 1997, an increase of
$176,000. This increase is primarily due to an increase in the
number of projects during the year coupled with an increase in the scope of
the projects. During 1998, the Company engaged in projects which were
larger and more labor intensive which lead to an increase in cost of
sales.
General and administrative expenses were to $1,059,000 for the
year ended December 31, 1998 compared to $494,000 for the year ended
December 31,1997, an increase of $565,000. The increase is due to the
search for and hiring of new employees and related employment placement
fees which the Company incurred in connection with these new hires. In
July 1998, the Director of Sales and Marketing resigned which lead to
changes in the management structure. Additionally, during this transitional
period there was an increase in accounting, management and legal fees which
were needed in order to support the restructuring of Media Revolution.
Liquidity and Capital Resources
At December 31, 1998, the Company had a working capital surplus of
$45,000. The ratio of current assets to current liabilities was
approximately 1.13 to 1 at December 31, 1998. At December 31, 1998, the
Company had stockholders equity of $88,000.
To date, the Company has funded its activities principally from cash
flows generated from operations. It is anticipated that the Company's
continuing cash flows from operations will be sufficient to meet its cash
and working capital requirements at least through 1999. However, if the
Company's cash flows should be materially less than expected, the Company
may find it necessary to seek additional sources of financing to support
its cash and working capital requirements. Although the Company is hopeful
that such financing can be arranged, there can be no assurance the Company
will in fact be able to obtain such financing at the time, if any, such
need arises, or if obtained, on terms acceptable to the Company.
Year 2000 Issue
The year 2000 issue is the result of computer programs being written
using two digits, rather than four, to define the applicable year.
Software programs and hardware that have date-sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in a major system failure or
miscalculations causing disruptions of operations, including a temporary
inability to engage in normal business activities.
Based on recent assessments, the Company determined that its critical
software (primarily widely used software packages) and all of its critical
business systems, already are year 2000 compliant. Nevertheless, throughout
1999, assessment, testing and remediation, if necessary, will continue.
The Company is also actively working with critical suppliers of
products and services to determine that the suppliers' operations and the
products and services they provide are year 2000 compliant or to monitor
their progress toward year 2000 compliance. In this regard, the Company
believes its greatest year 2000 risk for disruption to its business is
the potential noncompliance of third parties. As a result, the Company
has initiated communications with third parties with whom the
Company has material direct and indirect business relationships. The
Company is currently in the process of contacting third parties in order
to determine the extent to which the Company's business is vulnerable
to the third parties failure to make their systems year 2000
compliant. To date, the Company is still continuing to gather
information from such other important third parties.
The Company currently does not have a contingency plan in the event of
a particular system, including the systems of material third parties, are
not year 2000 compliant. Such a plan will be developed if it becomes
clear that the Company is not going to achieve its scheduled compliance
objectives. Although no assurances can be given that there will be no
interruption of operations in the year 2000 the Company believes (and
assuming that third parties with whom the Company has material
business relationships successfully remediate their own year 2000 issues)
that it has reasonably assessed all of its systems in order to ensure that
the Company will not suffer any material adverse effect from the year 2000
issue.
The Company has used and will continue to use internal resources to
resolve its year 2000 issue. Costs incurred to date by the Company have not
been material. The Company does not anticipate incurring any further
costs.
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 43 President, Chief Executive 1997
Officer, Treasurer,
Chief Financial Officer
and Director
Hans Zimmer 41 Vice President, Secretary 1997
and Director
Mark S. Levy 32 Executive Vice President -
and General Manager
Martin Rifkin 37 Director 1994
JAY RIFKIN has been President, Chief Executive Officer, Treasurer and
a Director of the Company since January 1997, and Chief Financial Officer
since January 1999. 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, Secretary 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. 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
Academy Award Nominations for Best Original Score for the films "Rainman",
"As Good As it Gets" and "The Thin Red Line". 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 the Chief Executive Officer of Media Revolution
since August 1998. Prior to that time he had served as the Chief Operating
Officer of Media Revolution from January 1998 to July 1998. Mr. Levy also
served as Executive Vice President and General Manager of Cyberia since its
inception in February 1994. Following the acquisition of Cyberia in January
of 1997, Mr. Levy was named the Executive Vice President and General
Manager of the Company. He has also served as Vice President and General
Manager of Media Ventures from June 1993 until August 1998. 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.
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, Inc., 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., 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. since September 1983
and Vice President since June 1985. Such company is engaged in the
distribution of weatherstripping products. Martin Rifkin is the brother of
Jay Rifkin.
Item 10. Executive Compensation.
The Company 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 the Company for the years ended December 31, 1998, 1997 and
1996 of those persons who were, at December 31, 1998 (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 Long-Term
Compensation Compensation
Restricted Shares
Name and Principal Fiscal Stock Underlying
Position Year Salary Bonus Awards Options
Jay Rifkin, 1998 $0 $0 0 0
President and 1997 $0 $0 0 0
Chief Executive 1996 $30,000 $0 0 0
Officer
Hans Zimmer, 1998 $0 $0 0 0
Vice President and 1997 $0 $0 0 0
Secretary 1996 $30,000 $0 0 0
Mark S. Levy, 1998 $0 $0 0 0
Executive Vice 1997 $34,167 $5,000 0 0
President 1996 $61,061 $0 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 31, 1999, 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%
6350 N.E. Campus Drive
Vancouver, WA 98661
All Officers and Directors 29,550,000 98.5%
as a Group (4 Persons)
Item 12. Certain Relationships and Related Transactions.
Cyberia, Inc. paid approximately $38,707 and $56,947 to Media
Ventures, a company operated by Jay Rifkin and Hans Zimmer, for sound
mixing and recording services for the years ended December 31, 1998 and
1997, respectively. Cyberia, Inc. also paid Media Ventures $88,186 and
$63,223 for allocated overhead costs for the years ending December 31, 1998
and 1997 respectively. During these same years, Media Revolution paid
$160,553 and $11,067 to Media Ventures for allocated overhead costs.
During the year ended December 31, 1998, the line of credit for the
Company and all the Company's affiliates was transferred to an affiliate,
Media Ventures. All affiliates can draw down on the line of credit, and
the line of credit is collateralized by all assets of the Company and its
affiliates. The line of credit bears interest at prime (7.75% at December
31, 1997). At December 31, 1998, the Company owed $100,000 to Media
Ventures for advances on the line of credit.
See Part I, Item 2 elsewhere herein for information on the facilities
leased by the Company. Rent expense paid to related parties was $65,100
and $68,559 for the years ended December 31, 1998 and 1997, respectively.
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)
3.3 Registrant's by-laws(1)
4.1 Specimen certificate for common stock(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(3)
___________________
(1) Incorporated herein by reference from the Company's
Registration Statement on Form SB-2 declared effective as of
June 30, 1995.
(2) Incorporated herein by reference from the Company's Post-
Effective Amendment to the Registration Statement on Form
SB-2 declared effective as of December 24, 1996.
(3) Incorporated herein by reference from the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31,
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:
None.
<PAGE>
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 15, 1999
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 15, 1999
Jay Rifkin Executive Officer,
Treasurer, Director
(Principal Executive
Officer and Principal
Financial Officer)
/s/Hans Zimmer Vice President, April 15, 1999
Hans Zimmer Secretary, Director
/s/Martin Rifkin Director April 15, 1999
Martin Rifkin
/s/Kellie Hanscom Controller April 15, 1999
Kellie Hanscom
<PAGE>
CYBERIA HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONTENTS
December 31, 1998
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
Consolidated Balance Sheet 2
Consolidated Statements of Operations 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5 - 6
Notes to Consolidated Financial Statements 7 - 14
<PAGE>
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, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 1998.
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, 1998, and the
consolidated results of their operations and their consolidated cash flows
for each of the two years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
/s/Singer Lewak Greenbaum & Goldstein LLP
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
February 23, 1999
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1998
ASSETS
Current assets
Cash and cash equivalents $104,998
Accounts receivable 176,473
Note receivable 7,329
Prepaid expenses and other assets 8,686
Deferred tax asset 72,607
Total current assets 370,093
Furniture and equipment, net 89,460
Other assets 21,953
Total assets $481,506
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $102,312
Income taxes payable 9,495
Due to affiliates 100,497
Accrued payroll and payroll taxes 20,934
Deferred income 3,000
Net liabilities of discontinued operations 88,811
Total current liabilities 325,049
Deferred income taxes 12,041
Total liabilities 337,090
Minority interest 56,842
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value
50,000,000 shares authorized
30,000,000 shares issued and outstanding 3,000
Additional paid-in capital 9,269
Retained earnings 75,305
Total stockholders' equity 87,574
Total liabilities
and stockholders' equity $481,506
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
1998 1997
Net sales $1,163,249 $874,101
Expenses
Cost of sales 379,050 202,968
General and
administrative expenses 1,058,509 493,569
Total expenses 1,437,559 696,537
Income (loss) from operations (274,310) 177,564
Other income (expense)
Interest income 1,010 759
Other income 3,257 3,600
Interest expense (656) -
Minority interest - (40,781)
Total other income (expense) 3,611 (36,422)
Income (loss) from continuing
operations before taxes (270,699) 141,142
Provision for (benefit
from) income taxes (106,298) 1,600
Net income (loss) from continuing
operations (164,401) 139,542
Discontinued operations
Income (loss) from operations
of discontinued subsidiary,
net of provision for income
taxes of $67,000 and $66,378 101,414 (11,488)
Loss on disposal of subsidiary,
including provision of
$88,811 for operating losses
during the phase-out period,
net of benefit for income
taxes of $50,000 (76,786) -
Net income (loss) from
discontinued operations 24,628 (11,488)
Net income (loss) $(139,773) $128,054
Basic earnings (loss) per share
From continuing operations $ (0.01) $ 0.00
From discontinued operations 0.00 -
Total basic earnings (loss)
per share $ (0.01) $ 0.00
Weighted-average shares
outstanding 30,000,000 30,000,000
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31,
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
Balance,
December
31, 1996 30,000,000 $3,000 $9,269 $ 87,024 $ 99,293
Net income 128,054 128,054
Balance,
December
31, 1997 30,000,000 3,000 9,269 215,078 227,347
Net loss (139,773) (139,773)
Balance,
December
31, 1998 30,000,000 $3,000 $9,269 $ 75,305 $ 87,574
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
1998 1997
Cash flows from operating activities
Net income (loss) from
continuing operations $ (164,401) $ 139,542
Adjustments to reconcile net income
(loss) from continuing operations
to net cash provided by (used in)
operating activities
Depreciation 23,008 16,566
Minority interest - 40,781
Deferred income taxes (91,960) 31,394
(Increase) decrease in
Accounts receivable 82,375 (137,098)
Work in progress 25,050 (25,050)
Prepaid expenses and other assets (5,994) 5,804
Other assets (8,809) (3,149)
Increase (decrease) in
Accounts payable and accrued expenses 40,125 (28,026)
Income taxes payable (3,189) 12,684
Due to affiliates 12,041 (21,245)
Accrued payroll and payroll taxes (44,553) 36,945
Deferred income (77,000) 80,000
Net cash provided by (used in)
continuing operating activities (213,307) 149,148
Net cash provided by (used in)
discontinued operating activities 107,622 (11,488)
Net cash provided by (used in)
operating activities (105,685) 137,660
Cash flows from investing activities
Note receivable 11,500 (18,829)
Advances to employees 7,796 11,518
Purchase of furniture and equipment (25,824) (44,369)
Net cash used in continuing
investing activities (6,528) (51,680)
Net cash provided by discontinued
investing activities 5,817 -
Net cash used in investing activities (711) (51,680)
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
For the Years Ended December 31,
1998 1997
Cash flows from financing
activities
Net payments on line of credit $ - $ (70,000)
Loan from affiliate - 80,000
Payments to minority interest - (2,416)
Payments on note to stockholder - (4,000)
Net cash provided by continuing
financing activities - 3,584
Net increase (decrease) in cash (106,396) 89,564
Cash, beginning of period 211,394 121,830
Cash, end of period $104,998 $ 211,394
Supplemental disclosures of cash
flow information
Interest paid $ 656 $ 11,326
Taxes paid $ - $ 23,900
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
On December 28, 1996, NW Venture Corp. ("NW Venture") acquired all of the
outstanding stock of Cyberia, Inc. For accounting purposes, the
acquisition has been treated as a recapitalization of Cyberia, Inc. with
Cyberia, Inc. as the acquirer (reverse acquisition). NW Venture
subsequently changed its name to Cyberia Holdings, Inc. (the "Company").
The Company, through its wholly-owned subsidiary, Cyberia, Inc., 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, Cyberia, Inc. entered into a joint venture to form Media
Revolution, LLC. Cyberia, Inc. 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.
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 statements of cash flows, the Company considers all
highly-liquid investments purchased with original maturities of three
months or less to be cash equivalents. At December 31, 1998, cash and cash
equivalents consisted of cash in banks and money market funds.
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 as follows:
Furniture and fixtures 7 years
Computer equipment 3 years
Office equipment 7 years
Leasehold improvements 5 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 statements of
operations.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share
For the year ended December 31, 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding.
Diluted earnings per share is computed similar to basic earnings per share
except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive.
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, and
accounts payable and accrued expenses, the carrying amounts approximate
fair value due to their short maturities.
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 costs incurred on uncompleted contracts.
Deposits and progress billings are recorded as deferred revenue.
Revenue Recognition
Effective January 1, 1998, the Company changed its method of revenue
recognition from contracting services to the percentage of completion
method. This change was applied on a prospective basis to contracts
entered into after January 1, 1998. The Company's previous revenue
recognition policy for contracting services was upon completion. The
Company changed its revenue recognition policy in order to provide a better
matching of revenues and expenses. Given the Company's circumstances,
management believes the percentage of completion method to be preferable.
There is no cumulative effect of this change. The effect of this change on
net income for the year ended December 31, 1998 was to decrease the net
loss by $25,500 or $0.00 per share.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes under the liability method required
by SFAS No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting
amounts at each period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized. The provision for income taxes represents the tax payable for the
period and the change during the period in deferred tax assets and
liabilities. The Company has elected to use the cash method for reporting
income taxes.
Comprehensive Income
For the year ended December 31, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting comprehensive income and its components in a financial statement.
Comprehensive income as defined includes all changes in equity (net assets)
during a period from non-owner sources. Examples of items to be included
in comprehensive income, which are excluded from net income, include
foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gains and losses on available-for-sale
securities. Comprehensive income is not presented in the Company's
financial statements since the Company did not have any changes in equity
from non-owner sources.
Recently Issued Accounting Pronouncements
In February 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Post-Retirement Benefits." This statement is not applicable to the Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for financial
statements with fiscal years beginning after June 15, 1999. SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and
for hedging activities. This statement is not applicable to the Company.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (continued)
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise," which is effective
for financial statements with the first fiscal quarter beginning after
December 15, 1998. This statement is not applicable to the Company.
In February 1999, the FASB issued SFAS No. 135, "Rescission of FASB
Statement No. 75 and Technical Corrections," which is effective for
financial statements with fiscal years beginning February 1999. This
statement is not applicable to the Company.
NOTE 2 - DISPOSAL OF OPERATIONS
Effective October 6, 1998, the Company's Board of Directors elected to shut
down the Company's wholly-owned subsidiary, Cyberia, Inc. All assets of
Cyberia, Inc. have been transferred to affiliates of the Company except for
$5,817 in net assets related to leasehold improvements. As a result,
operations of Cyberia, Inc. through December 31, 1998 are reported as
discontinued operations. The results from discontinued operations included
total revenues of $1,433,866 and $937,308 and net income from operations of
$129,012 and $61,201 for the years ended December 31, 1998 and 1997,
respectively. The anticipated disposal date is March 31, 1999.
NOTE 3 - FURNITURE AND EQUIPMENT
Furniture and equipment at December 31, 1998 consisted of the
following:
Furniture and fixtures $ 15,855
Computer equipment 82,106
Office equipment 24,752
Leasehold improvements 13,272
135,985
Less accumulated depreciation
and amortization 46,525
Total $ 89,460
<PAGE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company subleases facilities for its corporate and operations offices
from a related party pursuant to a written agreement. The related party
leases the office building from an unrelated third party, and the lease
expires in February 2007.
The Company also leases certain additional facilities for its corporate
and operations offices from an unrelated third party. The lease expires
in May 2001.
Future minimum lease payments relating to these facilities are as follows:
Year Ending
December 31,
1999 $ 186,456
2000 182,112
2001 129,830
2002 108,000
2003 108,000
Thereafter 342,000
Total $1,056,398
Rent expense paid to related parties was $117,200 and $68,559 for the years
ended December 31, 1998 and 1997, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company paid approximately $38,707 and $56,947 to Media Ventures, which
has common ownership, for sound mixing and recording services for the years
ended December 31, 1998 and 1997, respectively. The Company also paid
Media Ventures $249,738 and $74,290 for related overhead cost for the years
ended December 31, 1998 and 1997, respectively. As of December 31, 1998,
$100,000 is due to Media Ventures.
During the year ended December 31, 1997, the line of credit for the Company
and all the Company's affiliates was transferred to an affiliate, Media
Ventures. All affiliates can draw on the line of credit, and the line of
credit is collateralized by all assets of the Company and its affiliates.
The line of credit bears interest at prime (7.75% at December 31, 1998).
At December 31, 1998, $100,000 of the amount due to Media Ventures was for
advances on the line of credit.
<PAGE>
NOTE 6 - SALES
During the year ended December 31, 1998, the Company conducted business
with two customers whose sales comprised approximately 36% and 13%,
respectively, of net sales.
During the year ended December 31, 1997, the Company conducted business
with three customers whose sales comprised approximately 35%, 16% and 14%,
respectively, of net sales.
NOTE 7 - INCOME TAXES
Significant components of the provision for taxes based on income for the
years ended December 31, 1998 and December 31, 1997 are as follows:
1998 1997
Current
Federal $ - $ -
State 2,351 1,600
2,351 1,600
Deferred
Federal (92,352) -
State (16,297) -
(108,649) -
Provision for income taxes $(106,298) $ 1,600
Significant components of the Company's deferred tax assets and liabilities
for income taxes consisted of the following at December 31, 1998:
Deferred tax assets
Assets arising from conversion to
cash basis tax payer $ 21,357
Due to affiliates 32,170
Deferred income 1,080
Net operating losses 18,000
Total deferred tax assets 72,607
<PAGE>
NOTE 7 - INCOME TAXES (Continued)
Deferred tax liabilities
Depreciation of furniture and equipment 12,041
Total deferred tax liabilities 12,041
Net deferred tax asset 60,566
Less current deferred tax asset 72,607
Long-term deferred tax liability ($12,041)
As of December 31, 1998, the Company had approximately $45,000 in
federal net operating loss carryforwards attributable to losses incurred
due to operations of the Company that may be offset against future taxable
income through the year 2013.
A reconciliation of the expected income tax computed using the federal
statutory income rate to the Company's effective rate for the years ended
December 31, 1998 and 1997 is as follows:
1998 1997
Income tax computed at federal
statutory tax rate 34.0% 34.0%
Other (1.0) -
Surtax exemptions - (6.0)
State taxes, net of federal benefit 6.0 6.0
Total 39.0% 34.0%
NOTE 8 - YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs being written using
two digits, rather than four, to define the applicable year. Software
programs and hardware that have date-sensitive software or embedded chips
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a major system failure or miscalculations causing
disruptions of operations, including a temporary inability to engage in
normal business activities.
Based on recent assessments, the Company determined that its critical
software (primarily widely used software packages) and all of its critical
business systems already are year 2000 compliant. Nevertheless, throughout
1999, assessment, testing and remediation, if necessary, will continue.
The Company is also actively working with critical suppliers of products
and services to determine that the suppliers' operations and the products
and services they provide are year 2000 compliant or to monitor their
progress toward year 2000 compliance. In this regard, the Company believes
its greatest year 2000 risk for disruption to its business is the potential
noncompliance of third parties. As a result, the Company has initiated
communications with third parties with whom the Company has material direct
and indirect business relationships. The Company is currently in the
process of contacting third parties in order to determine the extent to
which the Company's business is vulnerable to the third parties failure to
make their systems year 2000 compliant. To date, the Company is still
continuing to gather information from such other important third parties.
The Company currently does not have a contingency plan in the event of a
particular system, including the systems of material third parties, are
not year 2000 compliant. Such a plan will be developed if it becomes clear
that the Company is not going to achieve its scheduled compliance
objectives. Although no assurances can be given that there will be no
interruption of operations in the year 2000, the Company believes (and
assuming that third parties with whom the Company has material business
relationships successfully remediate their own year 2000 issues) that it
has reasonably assessed all of its systems in order to ensure that the
Company will not suffer any material adverse effect from the year 2000
issue.
The Company has used and will continue to use internal resources to resolve
its year 2000 issue. Based on the review of the computer systems,
management does not believe the cost of implementation will be material to
the Company's financial position and results of operations.
<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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 104,998
<SECURITIES> 0
<RECEIVABLES> 176,473
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 370,093
<PP&E> 135,985
<DEPRECIATION> 46,525
<TOTAL-ASSETS> 481,506
<CURRENT-LIABILITIES> 325,049
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 84,574
<TOTAL-LIABILITY-AND-EQUITY> 481,506
<SALES> 1,163,249
<TOTAL-REVENUES> 1,163,249
<CGS> 379,050
<TOTAL-COSTS> 379,050
<OTHER-EXPENSES> 1,058,509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (656)
<INCOME-PRETAX> (270,699)
<INCOME-TAX> (106,298)
<INCOME-CONTINUING> (164,401)
<DISCONTINUED> 24,628
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (139,773)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
