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 MARCH 31, 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 May 11, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended March 31, 1999
Item Page Herein
Item 1 - Financial Statements:
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Condensed
Consolidated Financial Statements 6
Item 2 - Management's Discussion and
Analysis or Plan of Operation 7
<PAGE>
CYBERIA HOLDINGS. INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, 1999
TOTAL
ASSETS
Current Assets
Accounts receivable $678,829
Advances to Employees/Other 5,095
Deferred tax asset 72,607
Loans Receivable 7,329
Prepaid expenses and other current assets 4,586
Total current assets 768,446
Non-current assets
Property, plant and equipment(net) 81,815
Other assets 5,937
Total non-current assets 87,752
Total assets $856,198
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Book Overdraft 46,836
Accounts payable and accrued expenses 119,779
Due to affiliate 247,546
Accrued payroll and payroll taxes 26,442
Income tax payable 84,858
Deferred Income 1,500
Discontinued Operations 4,607
Total current liabilities 531,568
Long term liabilities
Deferred income taxes - long term $12,041
Total long term liabilities 12,041
Minority Interest 60,396
Stockholders' equity
Common stock 3,000
Additional paid in capital 9,269
Capital 0
Retained earnings 239,924
Total stockholders equity 252,193
Total liabilities &
stockholders' equity $856,198
<PAGE>
CYBERIA HOLDINGS. INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS
1/1/99 1/1/96
THROUGH THROUGH
3/31/99 3/31/98
Sales $675,940 $296,897
Cost of sales 71,913 121,711
General and administrative expenses 355,817 157,877
Total expenses 427,730 279,588
Net income from operations 248,210 17,309
Other income (expense)
Interest income 210 1,376
Other income - -
Minority interest - -
Interest expense (4,791) -
Total other income (expense) (4,581) 1,376
Income from continuing
operations before taxes 243,629 18,685
Income taxes 75,462 28
Net income of continuing operations $168,167 $18,657
Discontinued Operations
Income from operations
of discontinued - 61,172
subsidiary
Net income before minority interest $168,167 $79,829
Minority Interest 3,548 4,706
Net Income $164,619 $75,123
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS
1/1/99 1/1 /98
THROUGH THROUGH
3/31/99 3/31/98
Operating Activities:
Net income $164,619 $79,829
Adjustments to reconcile
net income to net cash
provided by operating activities
Depreciation and amortization 5,882 4,981
Minority Interest 3,548 4,706
Fixed assets issued as compensation 2,766
(Increase) decrease in:
Accounts receivable (502,356)
Work in process 24,916
Loans Receivable (11,329)
Prepaid and other current assets (1,119) 6,630
Other assets 16,016 (521)
Increase (decrease) in:
Accounts payable and accrued expenses 17,473 3,058
Book Overdraft 46,836
Due to affiliates 154,405 (72,842)
Accrued P/R & P/R taxes 5,508 (65,487)
Income Tax Payable 75,363 -
Deferred income (1,500) (75,000)
Net cash provided by (for)
operating activities - continuing (12,559) (101,059)
Net cash provided by (for)
operating activities - discontinued (84,204)
Total net cash - Operations (96,763)
Investing Activities:
Advances to employees - -
Purchase of computer equipment (8,235) (3,779)
Net cash provided by (for)
investing activities (8,235) (3,779)
Net cash provided by (for)
financing activities - -
Net increase in cash (104,998) (104,838)
Cash, beginning of period 104,998 211,392
Cash, end of period $ - $106,554
Supplemental disclosures of non-cash investing and financing activities:
During the three months ended March 31, 1999 the Company transferrd $11,518
of fixed assets with an accumulated depreciation of $4,286 to an affiliate.
<PAGE>
CYBERIA HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. Presentation of Interim Information
In the opinion of the management of Cyberia Holdings, Inc. and Subsidiary
(the "Company"), the accompanying unaudited condensed consolidated financial
statements include all normal adjustments considered necessary to present
fairly the financial position as of March 31, 1999, and the results of
operations for the three months ended March 31, 1998 and 1999, and cash flows
for the three months ended March 31, 1998 and 1999. Interim results are not
necessarily indicative of results for a full year.
2. Financial Statements
The condensed consolidated financial statements include the account of the
Company and its subsidiaries. All significant intercompany balances,
transactions and stockholdings have been eliminated.
3. Furniture and Equipment
Furniture and equipment at March 31, 1999 and January 1, 1999 consisted of
the following:
Furniture and Fixtures $ 9,292 $ 15,855
Computer Equipment 82,601 82,106
Office Equipment 20,584 24,752
Leasehold Improvements 13,272 13,272
125,749 135,985
Less accumulated depreciation
and amortization 43,931 46,525
Total $ 81,818 $ 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 anticipated disposal date of March 31, 1999.
<PAGE>
Results of Operations
Net sales for the period ended March 31, 1999 were $675,940 as compared to
$296,897 for the period ended March 31, 1998, an increase of $379,043. 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 $71,913 for the period ended March 31, 1999 as compared to
$121,711 for the period ended March 31, 1998, a decrease of $50,518. 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 $355,817 for the period ended March
31, 1999 compared to $157,877 for the period ended March 31,1998, an increase
of $197,940. The increase is primarily 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. 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 March 31, 1999, the Company had a working capital surplus of $236,878. The
ratio of current assets to current liabilities was approximately 1.44 to 1 at
March 31, 1999. At March 31, 1999, the Company had stockholders' equity of
$252,193.
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.
<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 March 31, 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: May 20, 1999 By:/s/Jay Rifkin
Jay Rifkin, President
Dated: May 20, 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
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 678,829
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 768,446
<PP&E> 125,749
<DEPRECIATION> 43,931
<TOTAL-ASSETS> 856,198
<CURRENT-LIABILITIES> 46,836
<BONDS> 0
<COMMON> 3,000
0
0
<OTHER-SE> 9,269
<TOTAL-LIABILITY-AND-EQUITY> 856,198
<SALES> 675,940
<TOTAL-REVENUES> 675,940
<CGS> 71,913
<TOTAL-COSTS> 71,913
<OTHER-EXPENSES> 355,817
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 243,629
<INCOME-TAX> (75,462)
<INCOME-CONTINUING> 168,167
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</TABLE>
