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Previous: ARCH CAPITAL GROUP LTD, 8-K, 2000-05-19 |
Next: APAC CUSTOMER SERVICE INC, 10-Q/A, 2000-05-19 |
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, 2000
[ ] 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 X No
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: 9,621,490
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KNOWLEDGEBROKER, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 36,900 $ 44,027
Marketable Securities 51,525 51,504
Accounts Receivable - Trade, net of allowance
for doubtful accounts of $5,000 in 2000 and 1999 168,101 102,111
Prepaid Expenses 14,525 18,157
------- -------
TOTAL CURRENT ASSETS 271,051 215,799
-------- --------
PROPERTY AND EQUIPMENT 312,005 311,469
Less Accumulated Depreciation and Amortization (275,561) (270,193)
-------- --------
NET PROPERTY AND EQUIPMENT 36,444 41,276
-------- -------
OTHER ASSETS 3,089 3,089
---------- ----------
TOTAL ASSETS $310,584 $260,164
======== ========
</TABLE>
(Continued)
The accompanying note is an
integral part of these financial statements
F-1
<PAGE>
KNOWLEDGEBROKER, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 320,000 $ 275,000
Accounts Payable 87,122 86,269
Accrued Expenses 112,758 106,689
Deferred Income 175,332 168,455
----------- -----------
TOTAL CURRENT LIABILITIES 695,212 636,413
----------- -----------
NOTES PAYABLE - SHAREHOLDER 40,000 -
COMMITMENTS AND CONTINGENCIES - -
------ ------
TOTAL LIABILITIES 735,212 636,413
-------- --------
STOCKHOLDERS' DEFICIT
Preferred Stock, $0.01 par value, 5,000,000 shares authorized - -
Common Stock, $0.01 par value, 25,000,000 shares authorized,
9,624,690 shares issued 96,247 96,247
Additional Paid-In Capital 1,262,213 1,262,213
Retained Deficit (1,773,418) (1,725,039)
Treasury Stock, at cost, 26,000 shares (9,670) (9,670)
------------ -------------
TOTAL STOCKHOLDERS' DEFICIT (424,628) (376,249)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 310,584 $ 260,164
=========== ===========
</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,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES
Support Desk Services $ 98,278 $ 509,464
Software Sales 111,083 130,123
---------- ----------
TOTAL REVENUES 209,361 639,587
DIRECT PERSONNEL COST OF SUPPORT DESK
SERVICES AND SOFTWARE SALES 88,616 127,458
---------- ----------
REVENUES, NET OF DIRECT COSTS 120,745 512,129
-------- ----------
EXPENSES
Selling, General and Administrative 155,985 176,331
Depreciation and Amortization 5,368 9,698
----------- ----------
TOTAL EXPENSES 161,353 186,029
---------- ----------
OPERATING (LOSS) INCOME (40,608) 326,100
OTHER INCOME (EXPENSE)
Interest and Other Income 1,593 5,670
Interest Expense (9,364) (11,054)
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES (48,379) 320,716
INCOME TAX - -
-------------- -----------
NET (LOSS) INCOME $ (48,379) $ 320,716
========== =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 9,624,690 9,624,690
========= =========
NET (LOSS) INCOME PER COMMON SHARE $ (0.00) $ 0.03
=========== ===========
</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,
----------------------------
2000 1999
---------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) Income $ (48,379) $320,716
Adjustments to Reconcile Net (Loss) Income to Net
Cash (Used) Provided by Operating Activities
Depreciation and Amortization 5,368 9,698
Changes in Assets and Liabilities
Trade Accounts Receivable (65,990) (107,667)
Prepaid Expenses and Other 3,632 1,000
Marketable Securities (21) 913
Accounts Payable 853 (45,135)
Accrued Liabilities 6,069 (118,325)
Deferred Income 6,877 (21,244)
------ --------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (91,591) 39,956
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (536) -
Purchase of Treasury Stock - (2,935)
-- ----------
NET CASH USED BY INVESTING ACTIVITIES (536) (2,935)
----- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Repayments on Lines of Credit - (48,842)
Borrowings Under Lines of Credit 45,000 -
Borrowings From Shareholders 40,000 -
------- -------------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 85,000 (48,842)
--------- ---------
(DECREASE) IN CASH (7,127) (11,821)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 44,027 196,009
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 36,900 $184,188
========= ========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND
INCOME TAXES PAID DURING THE PERIOD
Interest $ 3,295 $ 11,054
========== ==========
Income Taxes $ - $ -
============= ============
</TABLE>
The accompanying note is an
integral part of these financial statements
F-4
<PAGE>
KNOWLEDGEBROKER, INC.
NOTE TO FINANCIAL STATEMENTS
MARCH 31, 2000
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, 1999. 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, 2000, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000.
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, 2000, Compared to Three Months Ended March 31, 1999
Because of the cost of Support desk services, the Company determined to reduce
support desk services and emphasize Sales and licensing of software in 1999.
Additionally, prior to the Company determining to reduce Support desk services,
the first quarter of the year usually reflected strong revenues because of the
introduction of computer and software products in the holiday season that
required support. Accordingly, revenue from Support desk services declined to
$98,278 in the first quarter of 2000 compared to $509,464 in the first quarter
of 1999. Furthermore, revenue from software sales and licensing also declined in
the first quarter of 2000 to $111,083 from $130,123 in the first quarter of 1999
largely because of the favorable timing of software sales and licensing in the
first quarter of 1999 and the unfavorable timing of software sales and licensing
in the first quarter of 2000.
Revenues for the first quarter of 1999 were $639,587 compared to $209,361 in the
first quarter of 2000, and gross profit in the first quarter of 1999 was
$512,129 compared to gross profit of $120,745 in the first quarter of 2000.
Selling general and administrative expenses also declined in 2000, to $155,985,
when compared to the $176,331 in the first quarter of 1999, largely reflecting
the reduced management effort required for decreased Support desk services.
The large gross profit in the first quarter of 1999 absorbed the Company's
expenses resulting in Net income of $320,716 in the 1999 period compared to a
loss of $48,379 in the first quarter of 2000.
Liquidity and Capital Resources
The Company's operating capital has been provided by operations, the issuance of
stock and bank lines of credit, supplemented by stockholder loans. 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. The Company's
emphasis upon software and license revenues makes cash flows less even because
revenues are tied to large sales rather than continued, daily services.
<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.
May 17, 2000 /s/__Sharon Stanley
-----------------------------------
Sharon Stanley,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 36,900
<SECURITIES> 51,525
<RECEIVABLES> 168,101
<ALLOWANCES> 5,000
<INVENTORY> 0
<CURRENT-ASSETS> 271,051
<PP&E> 312,005
<DEPRECIATION> 275,561
<TOTAL-ASSETS> 310,584
<CURRENT-LIABILITIES> 695,212
<BONDS> 0
0
0
<COMMON> 96,247
<OTHER-SE> 1,252,543
<TOTAL-LIABILITY-AND-EQUITY> 310,584
<SALES> 209,361
<TOTAL-REVENUES> 209,361
<CGS> 88,616
<TOTAL-COSTS> 249,969
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,364
<INCOME-PRETAX> (48,379)
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,379)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,379)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0
</TABLE>
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