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Previous: KNOWLEDGEBROKER INC, 10QSB, 2000-01-18 |
Next: AMERICAN EXPRESS CENTURION BANK, 8-K, 2000-01-18 |
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number: 0-26626
KnowledgeBroker, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 84-0856578
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
13295 Mira Loma Road, Reno, NV 89511
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(775) 852-5711
(Registrant's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 No _X__
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 9,692,490
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KNOWLEDGEBROKER, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 142,748 $ -
Marketable Securities 51,000 50,000
Accounts Receivable - Trade, net of allowance
for doubtful accounts of $69,098 in 1997 and 1996 470,042 677,744
Income Tax Receivable 184,845 184,845
Deferred Income Taxes 216,433 216,433
----------- ------------
TOTAL CURRENT ASSETS 1,065,068 1,129,022
---------- -----------
PROPERTY AND EQUIPMENT 287,820 278,548
Less Accumulated Depreciation and Amortization (155,227) (141,700)
----------- ------------
NET PROPERTY AND EQUIPMENT 132,593 _ 136,848
------------ -----------
OTHER ASSETS
Deferred Income Taxes 119,413 119,413
Other 7,101 3,376
------------- --------------
TOTAL OTHER ASSETS 126,514 122,789
------------ ------------
TOTAL ASSETS $1,324,175 $1,388,659
========== ==========
</TABLE>
(Continued)
The accompanying note is an
integral part of these financial statements
F-1
<PAGE>
KNOWLEDGEBROKER, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Cash Overdraft $ - $ 2,508
Note Payable 148,767 150,000
Accounts Payable 208,419 237,871
Accrued Expenses 494,247 544,802
Deferred Income 368,473 383,739
---------- ----------
TOTAL CURRENT LIABILITIES 1,219,906 1,318,920
---------- ----------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.01 par value, 5,000,000 shares authorized
Common Stock, $0.01 par value, 25,000,000 shares authorized,
9,375,091 shares issued 93,751 93,751
Treasury Stock - 3,000 shares, at cost (3,071) -
Additional Paid-In Capital 1,364,008 1,364,008
Retained Deficit (792,721) (830,322)
------------ ------------
661,967 627,437
Less Notes Receivable in connection with exercised stock options (557,698) (557,698)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 104,269 69,739
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,324,175 $1,388,659
========== ==========
</TABLE>
The accompanying note is an
integral part of these financial statements
F-2
<PAGE>
KNOWLEDGEBROKER, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
-------------- --------------
<S> <C> <C>
REVENUES
Support desk services $ 600,770 $ 369,519
Software sales 54,379 257,674
----------- -----------
TOTAL REVENUES 655,149 627,193
DIRECT PERSONNEL COST OF SUPPORT DESK
SERVICES AND SOFTWARE SALES 281,231 165,727
---------- -----------
REVENUES, NET OF DIRECT COSTS 373,918 461,466
---------- -----------
EXPENSES
Selling, general and administrative 361,599 311,198
Depreciation and amortization 13,527 11,124
----------- -----------
TOTAL EXPENSES 375,126 322,322
---------- -----------
OPERATING (LOSS) INCOME (1,208) 139,144
OTHER INCOME (EXPENSE)
Interest and other income 42,688 29,706
Interest expense (3,879) (882)
------------ --------------
INCOME BEFORE INCOME TAXES 37,601 167,968
INCOME TAX BENEFIT (EXPENSE) - (57,109)
-------------- -----------
NET INCOME $ 37,601 $ 110,859
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 9,375,091 9,301,771
========== ==========
NET INCOME PER COMMON SHARE $ 0.00 $ 0.01
============ =========
</TABLE>
The accompanying note is an
integral part of these financial statements
F-3
<PAGE>
KNOWLEDGEBROKER, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
----------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 37,601 $ 110,859
Adjustments to Reconcile Net Income to Net
Cash Provided (Used) by Operating Activities
Depreciation and Amortization 13,527 11,124
Deferred Income Taxes - 57,109
Changes in Assets and Liabilities
Trade Accounts Receivable 207,702 (138,794)
Prepaid Expenses (3,725) 1,545
Accounts Payable (29,452) (134,896)
Accrued Liabilities (50,555) (5,481)
Deferred Income (15,266) -
Marketable Securities Purchased (1,000) -
Cash Overdraft (2,508) -
---------- -------------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 156,324 (98,534)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (9,272) (16,222)
Purchase of Treasury Stock (3,071) -
---------- ------------
NET CASH USED BY INVESTING ACTIVITIES (12,343) (16,222)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Repayments on Line of Credit (1,233) (30,000)
Collections on Notes Receivable in Connection
with Exercised Stock Options - 33,290
Issuance of Warrants for Cash - 40,500
------------- ----------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (1,233) 43,790
---------- ----------
INCREASE (DECREASE) IN CASH 142,748 (70,966)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - 131,653
------------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $142,748 $ 60,687
======== =========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND
INCOME TAXES PAID DURING THE PERIOD
Interest $ 3,879 $ 882
========== ===========
Income Taxes $ - $ -
============= ==============
</TABLE>
The accompanying note is an
integral part of these financial statements
F-4
<PAGE>
KNOWLEDGEBROKER, INC.
NOTE TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulations S-X. They do not include all information and notes required
by generally accepted accounting principals for complete financial
statements. However, except as disclosed, there has been no material change
in the information disclosed in the notes to financial statements included
in the Annual Report on Form 10-K of KnowledgeBroker, Inc. for the year
ended December 31, 1996. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month
period ended March 31, 1997, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
F-5
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
The Company's results of operations are strongly affected by the size and timing
of contracts for support desk services and software sales. Contracts for the
Company's Support desk services are often tied to the introduction of a new
computer product for which support will be required as the new product is
introduced and for a period of time thereafter. In other instances the Company
will have agreements for Support desk services that are not so much based on a
particular product but require more general support for personal computers and
that rely upon the Company's data base. Revenues for Support desk services,
accordingly, often fluctuate significantly. The direct personnel costs for
Support desk services also have to be managed carefully and fluctuate
significantly, depending upon the volume of calls generated by the Support desk
services.
Software sales, which include sales and licensing of the Company's AskMe Pro and
KnowledgeBases, also fluctuate significantly. However, the gross margins for
software sales and licensing are significantly larger than for Support desk
services.
Three Months Ended March 31, 1997, Compared to Three Months Ended March 31, 1996
Revenues for the quarter ended March 31, 1997, increased approximately $28,000
or 4.6%, to $655,149 from $627,193 for the 1996 quarter. The modest increase in
overall revenues masked the significant drop in sales and licensing of the
Company's software and the significant increase in Support desk sales that
resulted from the addition of two large clients in the first quarter of 1997.
The Company, however, incurred a small operating loss in the first quarter of
1997 compared to an operating profit of $140,000 in the first quarter of 1996.
Although revenues were essentially unchanged between the periods, the cost of
Support desk services increased more than $115,000, that is, the gross margins
on support desk services are not as large as software sales and licenses and the
larger percentage of sales that are derived from support desk services cannot
offset smaller software sales and licensing to maintain profitability.
The Company did have a profit for the first quarter of 1997, $37,600, although
less than the $110,900 profit in the first quarter of 1996. The first quarter of
1997 was favorably affected by interest income derived from the Company's cash
position.
Liquidity and Capital Resources
The Company's operating capital has been provided by operations, the issuance of
stock and bank lines of credit. The Company's long-term continuation depends
upon its ability to generate profits. Because the Company's losses have largely
been funded with debt, its ongoing ability to survive will depend upon its
ability to increase revenues.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Index
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K: 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.
KnowledgeBroker, Inc.
January 12, 2000 /s/ Sharon Stanley
-----------------------------------
Sharon Stanley,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 142,748
<SECURITIES> 51,000
<RECEIVABLES> 470,042
<ALLOWANCES> 69,098
<INVENTORY> 0
<CURRENT-ASSETS> 1,065,068
<PP&E> 287,820
<DEPRECIATION> 155,227
<TOTAL-ASSETS> 1,324,175
<CURRENT-LIABILITIES> 1,219,906
<BONDS> 0
0
0
<COMMON> 93,751
<OTHER-SE> 803,239
<TOTAL-LIABILITY-AND-EQUITY> 1,324,175
<SALES> 655,149
<TOTAL-REVENUES> 655,149
<CGS> 281,231
<TOTAL-COSTS> 656,357
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,300
<INTEREST-EXPENSE> 3,879
<INCOME-PRETAX> 37,601
<INCOME-TAX> 0
<INCOME-CONTINUING> 37,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,601
<EPS-BASIC> 0.00
<EPS-DILUTED> 0
</TABLE>
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