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 JUNE 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 August 1, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended June 30, 1999
Item Page Herein
Item 1 - Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 6
Notes to Condensed 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
June 30, 1999
TOTAL
ASSETS
Current Assets
Cash $151,508
Accounts receivable 594,733
Due from affiliate 50,787
Advances to Employees/Other 32,687
Deferred tax asset 72,607
Loans Receivable 7,329
Total current assets 909,651
Non-current assets
Furniture and Equipment (net) 111,362
Other assets 30,191
Total non-current assets 141,553
Total assets $1,051,204
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 103,201
Due to affiliate 168,958
Accrued payroll and payroll taxes 23,413
Discontinued Operations 811
Income tax payable 110,411
Total current liabilities 406,794
Long term liabilities
Deferred income taxes - long term 12,041
Total long term liabilities 12,041
Minority Interest 138,266
Stockholders' equity
Common stock 3,000
Additional paid in capital 9,269
Net Income 481,834
Total stockholders' equity 494,103
Total liabilities
& stockholders' equity $1,051,204
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
4/1/99 4/1/98
THROUGH THROUGH
6/30/99 6/30/98
Sales $866,724 $364,824
Cost of sales 66,239 169,338
General and administrative expenses 454,036 183,425
Total expenses 520,275 352,763
Net income from operations 346,449 12,061
Other income (expense)
Interest income 407 1,566
Interest expense (716) (3,126)
Other income 0 0
Total other income (expense) (309) (1,560)
Income from continuing operations
before taxes 346,140 10,501
Income taxes 26,354 2,323
Net income of continuing operations 319,786 8,178
Discontinued Operations
Income from operations
of discontinued 42,350
subsidiary (Net of expenses)
Net income before minority interest 319,786 50,528
Minority Interest 77,876 0
Net income $241,910 $ 50,528
Basic Earnings Per Share $ 0.01 $ 0.00
Diluted Earnings Per Share $ 0.01 $ 0.00
Weighted common average
shares outstanding 30,000,000 30,000,000
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
1/1/99 1/1/98
THROUGH THROUGH
6/30/99 6/30/98
Sales $1,542,664 $661,721
Cost of sales 138,152 291,049
General and administrative expenses 809,853 341,302
Total expenses 948,005 632,351
Net income from operations 594,659 29,370
Other income (expense)
Interest income 617 2,942
Interest expense (5,507) 0
Total other income (expense) (4,890) 2,942
Income from continuing
operations before taxes 589,769 32,312
Income taxes 101,816 2,351
Net income of continuing operations 487,953 29,961
Discontinued Operations
Income from operations
of discontinued 0 81,833
subsidiary (Net of expenses)
Net income before minority interest 487,953 111,794
Minority Interest 81,424 7,832
Net income $406,529 $103,962
Basic Earnings Per Share $ 0.01 $ 0.00
Diluted Earnings Per Share $ 0.01 $ 0.00
Weighted common average
shares outstanding 30,000,000 30,000,000
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS
1/1/99 1/1/98
THROUGH THROUGH
6/30/99 6/30/98
Operating Activities:
Net income from
continuing operations $406,529 $ 29,961
Adjustments to reconcile
net income from continuing
operations to net cash
provided by operating
activities:
Depreciation and amortization 7,926 9,263
Minority Interest 81,424 7,832
(Increase) decrease in:
Accounts receivable (418,260) (55,419)
Prepaid and other current assets (24,001) 1,304
Other assets (8,238) (2,986)
Increase (decrease) in:
Accounts payable and accrued expenses (611) 11,331
Due to affiliates 17,674 (15,599)
Accrued P/R & P/R taxes 2,479 (55,751)
Income Tax Payable 100,916 -
Deferred income (1,500) (250)
Net cash provided by (used in)
operating activities - continuing 164,338 (70,314)
Net cash provided by (used in)
operating activities - discontinued (88,000) 16,018
Investing Activities:
Purchase of computer equipment (29,828) (9,043)
Net cash used in investing activities (29,828) (9,043)
Net increase (decrease)in cash 46,510 (63,339)
Cash, beginning of period 104,998 141,797
Cash, end of period $151,508 $ 78,458
Supplemental disclosures of cash flow information
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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-X. 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 six months ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1999.
2. Financial Statements
The condensed consolidated financial statements include the account of the
Company and its subsidiary. All significant intercompany balances,
transactions and stockholdings have been eliminated.
3. Furniture and Equipment
Furniture and equipment at June 30, 1999 (unaudited) and December 31, 1998
consisted of the following:
June 30, 1999 December 31, 1998
Furniture and Fixtures $ 9,292 $ 15,855
Computer Equipment 118,002 82,106
Office Equipment 20,584 24,752
Leasehold Improvements 13,272 13,272
161,151 135,985
Less accumulated depreciation
and amortization 49,789 46,525
Total $111,362 $ 89,460
<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 "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 disposal date of March 31, 1999.
Results of Operations for the three months ended June 30, 1999
Net sales for the three month period ended June 30, 1999 were $866,724 as
compared to $364,824 for the three month period ended June 30, 1998, an
increase of $501,900 or 138%. 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 $66,239 for the three month period ended June 30, 1999 as
compared to $169,338 for the three month period ended June 30, 1998, a
decrease of $103,099 or 61%. 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 $454,036 for the three month
period ended June 30, 1999 compared to $183,425 for the three month period
ended June 30, 1998, an increase of $270,611 or 148%. The increase is
primarily due to an increase in rent following the move of the subsidiary
into a new location, the continued search for and hiring of new employees
by the subsidiary 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 six months ended June 30, 1999
Net sales for the period ended June 30, 1999 were $1,542,664 as compared to
$661,721 for the period ended June 30, 1998, an increase of $880,943 or
133%. 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 $138,152 for the period ended June 30, 1999 as compared
to $291,049 for the period ended June 30, 1998, a decrease of $107,897 or
37%. 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 $809,853 for the period ended
June 30, 1999 compared to $341,302 for the period ended June 30, 1998, an
increase of $468,551 or 137%. The increase is primarily due to an increase
in rent following the move of the subsidiary into a new location, the
continued search for and hiring of new employees by the subsidiary 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.
Liquidity and Capital Resources
At June 30, 1999, the Company had a working capital surplus of $502,857.
The ratio of current assets to current liabilities was approximately 2.23
to 1 at June 30, 1999. At June 30, 1999, the Company had stockholders'
equity of $494,103.
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.
None.
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 June 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: August 23, 1999 By:/s/Jay Rifkin
Jay Rifkin, President
Dated: August 23, 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 JUNE 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 151,508
<SECURITIES> 0
<RECEIVABLES> 594,733
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 909,651
<PP&E> 161,151
<DEPRECIATION> 49,789
<TOTAL-ASSETS> 1,051,204
<CURRENT-LIABILITIES> 406,794
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 9,269
<TOTAL-LIABILITY-AND-EQUITY> 1,051,204
<SALES> 1,542,664
<TOTAL-REVENUES> 1,542,664
<CGS> 138,152
<TOTAL-COSTS> 138,152
<OTHER-EXPENSES> 809,853
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 589,769
<INCOME-TAX> (101,816)
<INCOME-CONTINUING> 487,953
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 81,424
<NET-INCOME> 406,529
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
