-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DTcE9Qp698eP4GDcjfVrZjwUNOhSOkPBGAVqADOPyFwge+nztvNWrEKZJw1IetbE QgR7G3ThYW4K3MF3ok3aqA== 0001094891-01-500274.txt : 20010830 0001094891-01-500274.hdr.sgml : 20010830 ACCESSION NUMBER: 0001094891-01-500274 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYBERMARK INTERNATIONAL CORP CENTRAL INDEX KEY: 0001092299 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26919 FILM NUMBER: 1726318 BUSINESS ADDRESS: STREET 1: 14435 FM 2920 CITY: TOMBALL STATE: TX ZIP: 00000 MAIL ADDRESS: STREET 1: 14435 FM 2920 CITY: TOMBALL STATE: TX ZIP: 77378 10QSB 1 cybermark_10qsb-63001.txt CYBER MARK INT'L - 10QSB FOR 6-30-01 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT UNDER SECTION 13 OR 5(d) OF THE SECURITIES ACT OF 1934: For the Quarterly Period ended June 30, 2001 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the transition period from __________________ to __________________ Commission file number 0-26919 CYBER MARK INTERNATIONAL CORP. ----------------------------------- (Name of Small Business Issuer in Its Charter) Delaware N/A - ------------------------------- ----------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 14435 FM 2920 Tomball, Texas 77375 - --------------------------------------- --------------------- (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number: (281) 351-1831 --------------- Indicate by check mark whether the registrant (1) has filed has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES ____ NO _____ APPLICABLE ONLY TO CORPORATE ISSUERS As of August 27, 2001, 332,223,510 shares of the Issuer's Common Stock were outstanding. CYBER MARK INTERNATIONAL CORP. PART I. FINANCIAL INFORMATION Page No. Item 1. Consolidated Financial Statements: Consolidated Balance Sheets (Unaudited) as of June 30, 2001 and December 31, 2000 3 Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2001 and 2000 4 Consolidated Statements of Cash Flows (Unaudited) for Three and Six Months Ended June 30, 2001 and 2000 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 8 PART II. OTHER - INFORMATION Item 2 - Changes in Securities and Use of Proceeds. 10 Sales of Unregistered Securities 10 Other Issuances 10 Item 6 - Exhibits and Reports on Form 8-K 10 2 Cyber Mark International Corp. Consolidated Balance Sheets As at June 30, 2001 and December 31, 2000 - --------------------------------------------------------------------------------
June 30, 2001 December 31, ASSETS (Unaudited) 2000 Current Cash and cash equivalents $ - $ 0 Investment tax credits receivable - 90,226 Accounts receivable - 0 Inventory - 16,775 Prepaid expenses - 5,919 ------------- ----------- Total current assets - 112,920 Property and equipment - net 71,051 24,855 ------------- ----------- Total assets $ 71,051 $ 137,775 ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Bank indebtedness $ - $ 34,877 Accounts payable and accrued Liabilities 201,825 256,026 Long-term debt - current portion - 346,994 Advances from shareholder 1,144 76,051 ------------- ----------- Total liabilities 202,969 713,948 ------------- ----------- STOCKHOLDERS' DEFICIT Capital Stock 21,629 1,315 Additional paid in capital 3,322,974 1,520,397 Cumulative translation adjustment - 4,301 Deficit (3,476,521) (2,102,186) ------------- ----------- Total stockholders' deficit (131,918) (576,173) ------------- ----------- Total liabilities and stockholders' Equity $ 71,051 $ 137,775 ============= ===========
The accompanying notes are an integral part of these consolidated financial statements. 3 Cyber Mark International Corp. Consolidated Statements of Operations and Deficit For the Three and Six Months Ended June 30, 2001 and 2000 (Unaudited) - ------------------------------------------------------------------------------
Three months ended Six months ended June 30 June 30 2001 2000 2001 2000 Revenue Sales $ - $ - $ - $ - Other - 973 - 2,275 ----------- ----------- ----------- ----------- Cost of sales - 973 - 2,275 ----------- ----------- ----------- ----------- Gross profit $ - $ 973 $ - $ 2,275 =========== =========== =========== =========== Expenses Marketing $ - $ 14,475 $ - $ 44,898 Research and development - 48,001 - 66,885 Wages and benefits 522 54,674 12,307 70,744 Rent and occupancy 4,654 4,242 9,505 13,422 Professional fees 889,361 30,806 1,582,764 39,380 Interest 3,678 9,962 18,943 17,730 Office and general 3,716 7,430 8,325 11,019 Telephone 356 4,405 1,350 7,137 Insurance - 2,000 1,240 4,000 Depreciation and amortization 5,000 10,000 6,500 20,000 ----------- ----------- ----------- ----------- 907,287 185,995 1,640,934 295,215 ----------- ----------- ----------- ----------- Loss before gain on disposal of subsidiary (907,287) (185,022) (1,640,934) (292,940) Gain on disposal of subsidiary $ 266,599 - 266,599 - ----------- ----------- ----------- ----------- Net loss $ (640,688) $ (185,022) $(1,374,335) $ (292,940) =========== =========== =========== =========== Loss per share $ (0.03) $ (0.01) $ (0.07) $ (0.02) =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 Cyber Mark International Corp. Consolidated Statements of Cash Flows For the Six Months ended June 30, 2001 and 2000 (Unaudited) - -------------------------------------------------------------------------------
2001 2000 Cash flows from operating activities Net loss $(1,374,335) $ (292,940) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 6,500 20,000 Gain on disposal of subsidiary (266,599) - Shares issued for services 1,546,840 - Changes in assets and liabilities 90,917 Investment tax credits receivable - 7,217 Accounts receivable - (1,522) Prepaid expenses - Accounts payable and accrued liabilities 33,303 (46,577) ----------- ----------- Net cash used in operating activities $ (54,291) $ (222,905) =========== =========== Cash flows from financing activities Bank indebtedness $ - $ (26,195) Long-term debt - 157,431 Advances from shareholder 1,144 9,083 Issuance of capital stock - 15,000 ----------- ----------- Net cash provided by financing activities 1,144 155,319 ----------- ----------- Cash flows from investing activities - - Disposal of subsidiary 53,147 - ----------- ----------- Net cash provided by investing activities 53,147 - ----------- ----------- Effect of exchange rate changes on cash - 66,065 ----------- ----------- Decrease in cash and cash equivalents - (1,521) Cash and cash equivalents, beginning of period - 1,521 ----------- ----------- Cash and cash equivalents, end of period $ - $ - =========== =========== Supplementary information: Interest paid $ 18,943 $ 17,730 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 5 Cyber Mark International Corp. Notes to Consolidated Financial Statements For the Six Months Ended June 30, 2001 and 2000 (Unaudited) - ------------------------------------------------------------------------------- 1. The financial information included herein is unaudited; however, such information reflects all adjustments, consisting solely of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Annual Report for the twelve months ended December 31, 2000. The following is a summary of the significant accounting policies followed by the Company: Basis of Presentation The accompanying consolidated financial statements include the accounts of the company and its wholly-owned subsidiary to the date of deposition on May 23, 2001. All significant intercompany transactions and balances have been eliminated in consolidation. Cash and cash equivalents The company considers all highly liquid investments with a maturity of three months or less from time of purchase to be cash equivalents. Inventory Inventory is valued at lower of cost or market. Cost is determined on the first-in-first-out basis. Property and equipment Property and equipment are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of the assets, usually five years. For leasehold improvements, depreciation is provided on straight-line basis over five years. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions. 6 Cyber Mark International Corp. Notes to Consolidated Financial Statements For the Six Months Ended June 30, 2001 and 2000 (Unaudited) Financial instruments The company considers the fair value of all financial instruments to be not materially different from their carrying value at year end. Translation of foreign currencies The company uses the local currency as the functional currency and translates all assets and liabilities at year-end exchange rates, all income and expense accounts at average rates and records adjustments resulting from the translation in a separate component of common shareholders' equity. Loss per common share Loss per common share is based on the weighted average number of common shares (2001 - 19,074,538, 2000 - 12,508,600) outstanding during each period. Loss per common share is the same for both basic and dilutive since stock options would be antidilutive and therefore not included in the calculation. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. Qualified Auditor's Report On April 11, 2001, the independent auditors of the company issued its report on the December 31, 2000 financial statements in which it assumed the company will continue as a going concern but noted that the company had suffered significant losses from operations, was in breach of certain loan covenants and had deficiencies in working capital and stockholders equity. These factors raised substantial doubt about the company's ability to continue as a going concern. The company continues to have no revenues and is therefore unable to fund operations and continues to incur obligations which primarily are professional fees, rent and certain other overhead expenses. Management is exploring various options, including terminating its operations, sale of its various assets and corporate reorganization. No assurance can be given that any strategy will be adopted or result in an improved financial condition for the company. Reorganization On May 23, 2001 the company entered into various agreements with its wholly owned subsidiary CM 300 Corporation ("CM300") and Samuel Singal, the then chairman of the board and sole director and chief operating officer of the company, to restructure the company. Pursuant to a Stock Purchase Agreement between the company and Mr. Singal, the company sold CM300 to Mr. Singal by transferring all the stock it held of CM300 in exchange for all of the right, title and interest in certain intellectual property that Mr. Singal owned but was useful in and could be related to the intellectual property used by CM300 in its virtual reality products. In a separate agreement CM300 assigned to the company all of its right, title and interest in and to all of the intellectual property owned by CM300 and used in its virtual reality products in exchange for the company assuming all responsibility and obligation for repayment of a shareholder loan in the amount of $76,051 made by Mr. Singal to Cm300 ("Indebtedness"). In a related agreement Mr. Singal and the company agreed to convert the Indebtedness into 661,313 shares of Common Stock as of May 23, 2001 based upon the closing price of the Common Stock on May 17, 2001 ($.115). CM300 has not had any operations for approximately two years that have generated any revenues. The fixed assets of CM300 are not considered to have any substantial value and some are pledged to secure prior obligations of CM300. Some of the obligations are guaranteed by Mr. Singal. None of the obligations of CM300 are those of the company or guaranteed by the Company, other than as specifically assumed. By acquiring all the intellectual property used in the business of virtual reality games, the company believes it is retaining the only substantive and marketable assets of the previously consolidated entity. In addition, the company believes the intellectual property and the reorganization to eliminate the loss generating CM300 subsidiary will make it more attractive as a public corporation. By selling CM300 the company no longer has any subsidiaries with which it must consolidate its financial statements. Therefore, it was able to eliminate from its financial statements for the six months ended June 30, 2001, the debt of CM300. Certain other eliminations and adjustments were also made, all of which are reflected on the financial statements in this report. Dividend The company declared a 10 for 1 stock dividend payable on August 16 to holders of record July 19, 2001. Results of Operations The company did not have any meaningful commercial operations because of a lack of capital and funds with which to operate. The company believes it has certain intellectual property assets that continue to have value, but to realize commercial value on them will require substantial additional capital to upgrade and develop them. These assets may be valuable if sold. The company does not have any plans at this time which will result in any continuing operating revenues. Because the company did not have any meaningful commercial operations, it had no revenues for the six month period ended June 30, 2001. 8 The expenses of the company for the six month period ended June 30, 2001 were $1,582,764 as compared to $39,380 for the corresponding period of 2000. Professional fees represented the largest portion of the expenses. Most of the amount are charges taken for the issuance of common stock during the quarter as compensation for services rendered. The net loss for the six month period ended June 30, 2001 was $1,374,335 as compared to $292,940 for the corresponding period of 2000. The loss was the result of no revenues and substantial expenses. The loss was partially offset by a gain on the disposal of CM300 which was $266,599. Liquidity and Capital Requirements The company had no cash or cash equivalents at March 31, 2001. Its assets with a recordable value were only $71,051 at June 30, 2001, which were property and equipment. The company has a working capital deficit. The company has no sources of funds. From time to time, to pay expenses, it may obtain working capital by loans from its principal stockholders and officers and directors. The company needs capital to meet its expenses and fund its operations. In addition, if the company were to develop any of its assets in the area of virtual reality gaming products, the company will need substantial capital for research and development, production, marketing and personnel expenses, among other things. The company has no sources of capital at this time. Management does not expect to develop any sources of capital in the near future. The company has reduced its operations as much as possible. What funding it has obtained has been in the form of insider loans. The company also have issued securities to pay for various obligations of the company. To the extent able, the company will continue to issue securities, most likely common stock, to pay various of our obligations. Any issuances are expected to be substantial and will result in substantial dilution to existing stockholders. As noted above, there is substantial doubt as to the ability of the company to continue as a going concern. Forward-Looking Statements When used in this Form 10-QSB and in future filings by CyberMark with the Securities and Exchange Commission, words or phrases "will likely result", "management expects", "will continue", "is anticipated", "plans", "believes", "estimates", "seeks", variation of such words and similar expressions are intended to identify such forward-looking statements within the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speak only as of the date described below. Actual results may differ materially from historical earnings and those presently anticipated of projected. CyberMark has no obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect anticipated events or circumstances occurring after the date of such statements. 9 PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. Sales of Unregistered Securities On May 2, 2001, the holders of the convertible debentures of our subsidiary CM300 Corporation agreed to convert the aggregate face amount of $200,000 of debt and outstanding interest into an aggregate of 3,202,440 shares of common stock. The shares were issued pursuant to Section 3(a)(9) of the Securities Act of 1933 ("Securities Act"), and the holders were issued restricted securities. On May 7, 2001, the company agreed to issue 349,999 shares of restricted stock as compensation for services to the corporation. The shares were issued to two sophisticated investors pursuant to Section 4(2) of the Securities Act. On May 23, 2001, the company issued 661,313 shares of restricted stock upon conversion of a shareholder loan. The shares were issued to the then officer and director of the company pursuant to Section 4(2) of the Securities Act. On May 24, 2001, the company issued 249,999 shares of restricted stock as compensation for services to the corporation. The share were issued to two sophisticated investors pursuant to Section 4(2) of the Securities Act. Other issuances During the quarter ended June 30,2001, the company issued an aggregate of 8,000,000 shares pursuant to various employment arrangements. All the shares were registered under Form S-8 for issuance. The company declared a 10 for 1 stock dividend payable on August 16, 2001 to holders of record on July 19, 2001. The company issued on August 8, 2001 and August 27, 2001 an aggregate of 20,000,000 shares pursuant to a consulting agreement with Mr. Singal dated July 27, 2001. The shares were registered for issuance on Form S-8. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Reports on Form 8-K: None Exhibits: 10.1 Assignment of Intellectual Property by Samuel Singal to the company dated May 23, 2001 10.2 Stock Purchase Agreement between Samuel Singal and the company dated May 23, 2001 10.3 Assignment of Intellectual Property by CM300 Corporation to the company dated May 23, 2001 10 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. CYBER MARK INTERNATIONAL CORP. Dated: August 28, 2001 /s/ John Jarvis By: ____________________________ Name: John Jarvis Title: President 11 -----END PRIVACY-ENHANCED MESSAGE-----