SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-83418-LA
CYBERIA HOLDINGS, INC.
(Exact name of Small Business Issuer as Specified 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 Executive Offices)
(310) 260-3163
(Issuer's Telephone Number, Including Area Code)
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
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, $.0001 par value per share: 30,000,000
outstanding as of November 1, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended September 30, 1999
ITEM PAGE HEREIN
Item 1 - Financial Statements:
Consolidated Balance Sheet as of September 30, 1999 3
Consolidated Statements of Operations
for the three months ended September 30, 1999 4
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1999 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and
Analysis or Plan of Operation 8
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
September 30, 1999
TOTAL
ASSETS
Current Assets
Cash $ 72,729
Accounts receivable 488,147
Advances to Employees/Other 19,492
Deferred tax asset 72,607
Loans Receivable 7,329
Total current assets 660,304
Non-current assets
Property, plant and equipment (net) 119,798
Investment in LLC 0
Other assets 38,914
Total non-current assets 158,712
Total assets $819,016
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 145,487
Due to affiliate 234,262
Accrued payroll and payroll taxes 20,456
Discontinued Operations 811
Income tax payable 69,035
Deferred Income 1,500
Total current liabilities 471,551
Long term liabilities
Deferred income taxes - long term 12,041
Total long term liabilities 12,041
Minority Interest 94,055
Stockholders' equity
Common stock 3,000
Additional paid in capital 9,269
Capital 0
Retained earnings 75,305
Net Income 153,795
Total stockholders' equity 241,369
Total liabilities
& stockholders' equity $ 819,016
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
7/1/99 7/1/98
THROUGH THROUGH
9/30/99 9/30/98
Sales $392,464 $348,311
Cost of sales 71,701 168,629
General and administrative expenses 608,208 225,482
Total expenses 679,909 394,111
Net income from operations (287,445) (45,800)
Other income (expense)
Interest income 624 797
Equity in Earnings of Med Rev - -
Interest expense - -
Total other income (expense) 624 797
Income from continuing operations
before taxes (286,821) (45,003)
Income taxes 8,719 -
Net income of continuing operations $(295,540) $(45,003)
Discontinued Operations
Income from operations
of discontinued $ (2,058) 47,077
subsidiary (Net of expenses)
Net income before minority interest $(297,597) 2,074
Minority Interest 12,631 8,279
Net income $(310,228) $ (6,205)
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
1/1/99 1/1/98
THROUGH THROUGH
9/30/99 9/30/98
Sales $1,935,128 $1,010,032
Cost of sales 209,772 306,781
General and administrative expenses 1,411,392 719,681
Total expenses 1,621,165 1,026,462
Net income from operations 313,963 (16,430)
Other income (expense)
Interest income 1,241 3,738
Equity in Earnings of Med Rev - 447
Interest expense (13,603) -
Total other income (expense) (12,362) 4,185
Income from continuing
operations before taxes 301,601 (12,245)
Income taxes 110,536 2,351
Net income of continuing operations 191,066 (14,596)
Discontinued Operations
Income from operations
of discontinued (58) 130,248
subsidiary (Net of expenses)
Net income before minority interest $191,008 $115,652
Minority Interest 37,213 0
Net Income 153,795 115,652
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS
1/1/99 1/1/98
THROUGH THROUGH
9/30/99 9/30/98
Operating Activities:
Net income $153,795 $(15,042)
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization 12,501 14,985
Minority Interest 37,213 -
(Increase) decrease in:
Accounts receivable (311,674) 19,286
Due from affiliate - (23,250)
Due from others (10,806) -
Advances to employees/others - 673
Prepaid and other current assets - 1,275
Other assets (16,961) (2,898)
Increase (decrease) in:
Accounts payable and accrued expenses 43,176 30,758
Due to affiliates 133,764 22,116
Accrued P/R & P/R taxes (478) (55,751)
Income Tax Payable 59,540 -
Deferred income (1,500) (3,500)
Net cash provided by (for) operating
activities - continuing 98,570 (11,348)
Net cash provided by (for) operating
activities - discontinued (88,000) (67,454)
Investing Activities:
Purchase of computer equipment (53,570) (27,002)
Disposition of Assets 10,731 4,087
Net cash provided by (for)
investing activities - continued (42,839) (22,915)
Net cash provided by (for)
investing activities - discontinued (2,101)
Net increase in cash (32,269) (103,818)
Cash, beginning of period 104,998 211,392
Cash, end of period $ 72,729 $ 107,574
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. PRESENTATION OF INTERIM INFORMATION
The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles for
interim financial information and with Regulation S-B. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all normal, recurring adjustments considered necessary for a fair
presentation have been included. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1998. The results of operations for the nine months
ended September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1999.
2. FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of
the Company and its subsidiary, Media Revolution. All significant intercompany
balances, transactions and stockholdings have been eliminated.
3. FURNITURE AND EQUIPMENT
Furniture and equipment at September 30,1999 (unaudited) consisted of
the following:
SEPTEMBER 30, 1999
Furniture and Fixtures $ 9,292
Computer Equipment 135,226
Office Equipment 20,584
Leasehold Improvements 13,272
178,374
Less accumulated depreciation
and amortization 58,576
Total $119,798
4. SUBSEQUENT EVENTS
A. As part of the resignation of Media Revolution's Chief Executive
Officer and the Company's Executive Vice President, Media Revolution purchased
1,500,000 shares of Cyberia Holdings, Inc. common stock owned by the Executive
Vice President for Seventy Thousand ($70,000) Dollars.
B. Subsequent to the transaction referred to in the foregoing
subparagraph, Jay Rifkin, the Company's President, purchased said 1,500,000
shares from Media Revolution for Forty Three Thousand Eight Hundred and Ninety
Nine ($43,899) Dollars. Media Revolution recognized a loss in the amount of
Twenty Six Thousand One Hundred and One ($26,101) Dollars.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with the
Financial Information and Notes thereto included in this report 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 ACyberia 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 AReconfirmation
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 (AMedia 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 the Bord of Directors elected 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 disposal date of March 31, 1999.
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
Net sales for the three month period ended September 30, 1999 were
$392,464 as compared to $348,311 for the three month period ended September 30,
1998, an increase of $44,153 or 11%. This increase is primarily due to the
Company's restructuring and change in marketing strategy which management
believes has allowed the Company to better compete in the Internet consulting
services arena. These results reflect the decision of a client to scale back
the scope of a project for which income had been recognized and net sales had
been recorded in the three month period ended June 30, 1999. Upon instruction
from the client, Think New Ideas, the project was scaled back and an invoice
from the second quarter for $288,290 was voided. Management has no reason to
believe that the reduction in the scope of future projects will occur and
believes this to be a non-recurring event.
Cost of sales was $71,701 for the three month period ended September
30, 1999 as compared to $168,629 for the three month period ended September 30,
1998, a decrease of $96,928 or 57%. This decrease is primarily due to a
restructuring and a streamlining of the production process which has assisted
in reducing production costs.
General and administrative expenses were $608,208 for the three month
period ended September 30, 1999 compared to $225,482 for the three month period
ended September 30, 1998, an increase of $382,726 or 169%. The increase is
primarily due to an increase in rent following the move of Media Revolution into
a new location, the continued search for and hiring of new employees by Media
Revolution and related employment placement fees incurred in connection with
these new hires, and accounting, management and legal fees incurred as part of
the restructuring of Media Revolution.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
Net sales for the nine months ended September 30, 1999 were
$1,935,128 as compared to $1,010,032 for the nine month period ended September
30, 1998, an increase of $925,096 or 91%. This increase is
primarily due to the Company's restructuring and change in
marketing strategy which management believes has allowed the Company
to better compete in the Internet consulting services arena.
Cost of sales was $209,772 for the nine month period ended
September 30, 1999 as compared to $306,781 for the nine month
period ended September 30, 1998, a decrease of $97,009 or 31%.
This decrease is primarily due to a restructuring and a
streamlining of the production process which has assisted in reducing
production costs.
General and administrative expenses were $1,411,392 for the nine
month period ended September 30, 1999 compared to $719,681 for
the nine month period ended September 30,1998, an
increase of $691,711 or 96%. The increase is primarily due to an
increase in rent following the move of Media Revolution into a new location,
the continued search for and hiring of new employees by Media Revolution and
related employment placement fees incurred in connection with these new
hires, and accounting, management and legal fees incurred as part of the
restructuring of Media Revolution.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company had a working capital surplus of
$188,753. The ratio of current assets to current liabilities was approximately
1.35 to 1 at September 30, 1999. At September 30, 1999, the Company had
stockholders' equity of $241,369.
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 for the next thirteen months. 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 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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None.
Item 5. OTHER INFORMATION.
A. Effective as of October 22, 1999 the Company's Executive
Vice President who was also serving as the Chief Executive Officer
of Media Revolution submitted his resignation to the Company to
pursue other business opportunities. The Company is in the
process of seeking a replacement and believes it will be able to
do so in the near future. Management believes the departure of
such Executive will not have a material effect on the Company.
B. As part of the resignation of Media Revolution's Chief Executive
Officer and the Company's Executive Vice President, Media
Revolution purchased 1,500,000 shares of Cyberia Holdings, Inc.
common stock owned by the Executive Vice
President for Seventy Thousand ($70,000) Dollars.
C. Subsequent to the transaction referred to in the foregoing
subparagraph, Jay Rifkin, the Company's President,
purchased said 1,500,000 shares from Media
Revolution for Forty Three Thousand Eight Hundred
and Ninety Nine ($43,899) Dollars.
Media Revolution recognized a loss
in the amount of Twenty Six Thousand
One Hundred and One ($26,101) Dollars.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the
fiscal quarter ended September 30, 1999.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
CYBERIA HOLDINGS, INC.
(Registrant)
Dated: NOVEMBER 19, 1999 By: /S/ JAY RIFKIN
Jay Rifkin, President
Dated: NOVEMBER 19, 1999 By: /S/ JAY RIFKIN
Jay Rifkin, Principal Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CYBERIA
HOLDINGS, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 72,729
<SECURITIES> 0
<RECEIVABLES> 488,147
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 660,304
<PP&E> 119,798
<DEPRECIATION> 58,576
<TOTAL-ASSETS> 819,016
<CURRENT-LIABILITIES> 471,551
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 9,269
<TOTAL-LIABILITY-AND-EQUITY> 819,016
<SALES> 1,935,128
<TOTAL-REVENUES> 1,935,128
<CGS> 209,772
<TOTAL-COSTS> 209,772
<OTHER-EXPENSES> 1,411,392
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 301,601
<INCOME-TAX> (110,536)
<INCOME-CONTINUING> 191,066
<DISCONTINUED> (58)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 153,795
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
