-----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, UmsYK5lhIMvUZh5m6z2wdqDsBnoJ0YgfEKUCj7COZNO1uiLvYkNIFwAjhbxzHK+o Q+wqI6Hjts5FoTxZ8oLS5w== /in/edgar/work/0001032210-00-002245/0001032210-00-002245.txt : 20001115 0001032210-00-002245.hdr.sgml : 20001115 ACCESSION NUMBER: 0001032210-00-002245 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYBERECORD INC CENTRAL INDEX KEY: 0001096563 STANDARD INDUSTRIAL CLASSIFICATION: [3861 ] STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-27807 FILM NUMBER: 766757 BUSINESS ADDRESS: STREET 1: 10900 NE 8TH STREET STREET 2: SUITE 900 CITY: BELLEVUE STATE: WA ZIP: 98004 BUSINESS PHONE: 4259905920 MAIL ADDRESS: STREET 1: 10900 NE 8TH STREET STREET 2: SUITE 900 CITY: BELLEVUE STATE: WA ZIP: 98004 10QSB 1 0001.txt FORM 10-QSB U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2000 [ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to _________ CYBERECORD, INC. (Exact name of small business issuer as specified in its charter) Commission file number: 000-24757 FLORIDA 91-1985843 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 800 Bellevue Way NE, 4/th/ Floor Bellevue, WA 98004 (Address of principal executive offices) (425) 990-5593 (Issuer's telephone number) ------------------- 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Not applicable APPLICABLE ONLY TO CORPORATE REGISTRANTS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 10, 2000 the Registrant had 17,173,064 shares of Common Stock outstanding. TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (check one): Yes [_] No [X]
Page Index Number PART I FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets at September 30, 2000 (unaudited) and December 31, 2000 (audited) 3 Statements of Operations For the Three-Months and Nine-Months ended September 30, 2000 (unaudited) and the Period From September 27, 1996 to September 30, 2000 4 Statements of Stockholder's Equity (unaudited) 5 Statements of Cash Flows for the Nine-Months ended September 30, 2000 (unaudited), and the Period From September 27, 1996 to September 30, 1999 6 Notes to Financial Statements 7 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 14 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURE 16
-2- PART I FINANCIAL INFORMATION Item 1. Financial Statements CYBERECORD, INC. (A Development Stage Company) BALANCE SHEETS September 30, 2000 and December 31, 1999
September 30, 2000 December 31, 1999 ASSETS (Unaudited) (Audited) ------------------- ------------------- Current Assets Cash $ 193,944 $ 111,154 Certificate of Deposit 50,000 Prepaid expenses and deposits 35,560 15,194 ----------- ------------- Total current assets 279,504 126,348 Furniture and Equipment, at cost, less accumulated depreciation of $30,940 at September 30, and $3,940 at December 31, 1999 107,814 25,328 Capitalized Development Costs 940,004 ----------- ------------- $ 1,327,322 $ 151,676 =========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 318,063 $ 21,436 Stockholders' Equity Common stock, par value $.01 171,961 154,719 Additional paid-in-capital 7,566,977 4,342,269 Deficit accumulated during the development stage (6,427,729) (4,366,748) ----------- ------------- 1,311,209 130,240 Less: Stock subscriptions receivable (301,950) ----------- ------------- 1,009,259 130,240 ----------- ------------- $ 1,327,322 $ 281,916 =========== =============
See Notes to Financial Statements -3- CYBERECORD, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS-- Unaudited For the Three Months and Nine Months Ended September 30, 2000 and 1999, and the Period From September 27, 1996 to September 30, 2000
Total Accumulated During Development Three Months Ended Nine Months Ended Stage (September 27, ------------------- ------------------ 1996 to September 30, September 30, September 30, September 30, September 30, 2000) 2000 1999 2000 1999 Revenues, Interest income $ 295 $ -- $ 15,072 $ -- $ 15,072 Expenses Write-off of acquired research and development -- 3,000,000 3,000,000 Research and development 18,843 96,699 147,160 272,124 General and administrative 655,196 280,581 1,979,354 355,367 3,170,677 ------------- ----------- ------------- ------------- ------------ 655,196 299,424 2,076,053 3,502,527 6,442,801 ------------- ----------- ------------- ------------- ------------ Net loss $ (654,901) $ (299,424) $ (2,060,981) $ (3,502,527) $ (6,427,729) ============= =========== ============= ============= ============ Basic loss per share of common stock $ (0.04) $ (0.02) $ (0.12) $ (0.25) $ (0.50) ============= =========== ============= ============= ============ Weighted average number of common shares outstanding 16,896,597 15,401,864 16,513,442 14,258,753 12,849,244 ============= =========== ============= ============= ============
See Notes to Financial Statements -4- CYBERECORD, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY - Unaudited For the Nine Months Ended September 30, 2000 and 1999, and the Period From September 27, 1996 to September 30, 2000
Deficit Accumulated During the Common Common Additional Development Receivable for Shares Stock Paid-in-Capital Stage Shares Sold Total ----------- -------- --------------- ------------ -------------- ----------- Balances, September 27, 1996 335,864 $ 3,359 $ 769 $ - $ - $ 4,128 Issuance of common stock (October and November 1996) 8,700,000 8,700 49,410 58,110 Net loss (3,192) (3,192) ----------- -------- ---------- ----------- ----------- ----------- Balances, December 31, 1996 9,035,864 12,059 50,179 (3,192) 59,046 Issuance of common stock, net of effects of exchange of Chrysalis shares for Pillar shares (October 1997) 3,300,000 111,300 128,700 240,000 Additional capital contributed by shareholders 46,700 46,700 Net loss (345,688) (345,688) ----------- -------- ---------- ----------- ----------- ----------- Balances, December 31, 1997 12,335,864 123,359 225,579 (348,880) 58 Additional capital contributed by shareholders 83,500 83,500 Net loss (82,251) (82,251) ----------- -------- ---------- ----------- ----------- ----------- Balances, December 31, 1998 12,335,864 123,359 309,079 (431,131) 1,307 Issuance of common stock in exchange for subscription receivable (March 1999) 1,970,000 19,700 965,300 (985,000) - Issuance of common stock in exchange for services (March 1999) 6,000 60 2,940 3,000 Additional capital contributed by shareholders 8,050 8,050 Contribution of shares back to the corporation by shareholders (April 1999) (5,000,000) (50,000) 50,000 Issuance of common stock in exchange for 90,000 900 36,100 37,000 services (April 1999) Issuance of common stock in exchange for Kristal Group assets (April 1999) 6,000,000 60,000 2,940,000 3,000,000 Collection of subscriptions receivable 500,000 500,000 Net loss (3,502,527) (3,502,527) ----------- -------- ---------- ----------- ----------- ----------- Balances, September 30, 1999 15,401,864 154,019 4,311,469 (3,933,658) (485,000) 46,830 Issuance of common stock in exchange for services (November 1999) 70,000 700 30,800 31,500 Collection of subscriptions receivable 485,000 485,000 Net loss (433,090) (433,090) ----------- -------- ---------- ----------- ---------- ----------- Balances, December 31, 1999 15,471,864 154,719 4,342,269 (4,366,748) - 130,240 Issuance of common stock in exchange for cash (March 2000) 1,275,000 12,750 2,218,500 2,231,250 Issuance of Common stock in exchange for cash and subscriptions receivable (August and September 2000) 449,200 4,492 1,006,208 (301,950) 708,750 Net loss (2,060,981) (2,060,981) ----------- -------- ---------- ----------- ---------- ----------- Balances, September 30, 2000 17,196,064 $171,961 $7,566,977 $(6,427,729) $ (301,950) $ 1,009,259 =========== ======== ========== =========== ========== ===========
See Notes to Financial Statements -5- CYBERECORD, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS -- Unaudited For the Nine Months Ended September 30, 2000 and 1999, and the Period From September 27, 1996 to September 30, 2000
Total Accumulated During Development Stage (September 27, 1996 to September 30, 2000 1999 2000) ----------- ------------ ------------- Cash Flows From Operating Activities Net loss $(2,060,981) $(3,502,527) $(6,427,729) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 27,000 1,943 30,940 Write-off of purchased in-process research and development that had not reached technological feasibility 3,000,000 3,000,000 Professional fees exchanged for common stock 40,000 71,500 Changes in operating assets and liabilities Certificate of Deposit (50,000) (50,000) Prepaid expenses and deposits (20,366) (11,700) (35,560) Accounts payable 296,627 22,932 318,063 ----------- ----------- ----------- Cash used in operating activities (1,807,720) (449,352) (3,092,786) Cash Flows From Investing Activities Purchase of equipment (109,486) (24,953) (138,754) Capitalized Development Costs (940,004) (940,004) ----------- ----------- ----------- Cash used in investing activities (1,049,490) (24,953) (1,078,758) Cash Flows From Financing Activities Issuance of common stock 2,940,000 500,000 4,223,110 Capital contribution 8,050 138,250 ----------- ----------- ----------- Cash provided by financing activities 2,940,000 508,050 4,361,360 ----------- ----------- ----------- Net increase in cash 82,790 33,745 189,816 Cash, beginning of period 111,154 1,307 4,128 ----------- ----------- ----------- Cash, end of period $ 193,944 $ 35,052 $ 193,944 ------------------------------------------------
See Notes to Financial Statements. -6- CYBERECORD, INC. NOTES TO FINANCIAL STATEMENTS September 30, 2000 Note 1. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and therefore do not include all the disclosures necessary for a fair presentation of financial position, results of operations, changes in stockholders' equity, and cash flows in conformity with generally accepted accounting principles. The operating results for interim periods are unaudited and are not necessarily an indication of the results to be expected for the full fiscal year. In the opinion of management, the results of operations as reported for the interim period reflect all adjustments that are necessary for a fair presentation of operating results. Note 2. Per Share Information Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share has not been presented, as inclusion of any such shares would be anti-dilutive to the loss per share. Note 3. Capitalized Development Costs CybeRecord's ScanServer product reached the stage of technological feasibility as defined by Statements of Financial Accounting Standards ("SFAS") 86 on February 16, 2000. Technological feasibility was determined in February 2000 as two prototype units were completed and tested with only insignificant changes required. Pilot production and customer acceptance are important but secondary concerns in determining feasibility as CybeRecord's research has determined a need and demand for the product and the completion of the prototype units with few needed changes validates the basic design for pilot production. Additionally, various governmental and safety approvals were also considered in determining feasibility. The required tests are relatively routine and did not play a significant role in determining feasibility. All product development costs prior to February 15, 2000 have been charged to expense as research and development and all product development costs subsequent to that date have been included in capitalized development costs. CybeRecord expects to lease all ScanServer products. Accordingly, SOP 97-2 and 98-9 related to software revenue recognition are not expected to significantly affect CybeRecord's financial statements. -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Statement of Forward-Looking Information The matters discussed in this report contain forward-looking statements that involve known and unknown risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Words such as "may," "could," "would," "expect," "anticipate," "intend," "plan," "believe," "estimate," and variations of such words and similar expressions are intended to identify such forward-looking statements. You should not place undue reliance on these forward-looking statements, which are based on out current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below) and apply only as the date of this report. Our actual results could differ materially for those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below in "Risk Factors that May Effect Operating Results" as well as those discussed in this section and elsewhere in this report, and the risks discussed in the "Risk Factors" section included in our Form 10-SB and other documents and reports filed with the Securities and Exchange Commission. Overview CybeRecord, Inc. was formed on February 17, 1969 under the laws of the State of Florida. The Company was first named Flexi-Built Modular Housing Corporation. In March 1984, we changed our name to Flexicare, Inc., and then to Pillar Entertainment Group Inc. in September 1996. In November 1997 we acquired all of the outstanding stock of Chrysalis Hotels and Resorts Corp. and changed our name to Chrysalis Hotels and Resorts Corp. In April 1999 we acquired assets from a group of people who were working independently to develop technology relating to microfilm scanning device design. The people from whom we acquired the assets were James J. Lucas, Glenn and Paulette Kimball, Marek Niczyporuk, James L. and Barbara Baker Quinn, Herbert and Patricia Walker, and Alva D. and Kirsten Cravens (the "Kristal Group"). -8- The assets we acquired from the Kristal Group in April 1999 all related to the development, production, and marketing of our key product: a low-cost, high-speed automated microfilm scanning device, which we have named "ScanServer." The assets we acquired included: (a) owned and licensed intellectual property rights for the device's overall design, and all hardware design; (b) computer programming code and all software developed including (but not limited to) all software needed to allow ScanServer to operate reliably and with commercial quality and efficiency; (c) programs software, including all related trademarks and intellectual property, in machine readable or human readable form (or both); (d) rights to, and any rights to apply for and register, patents and patent applications, copyrights, trademarks, trade secrets and all other proprietary rights relating to the intellectual property we acquired; (e) records and files relating to manufacturing, quality control, sales, marketing, customer support, and designs for the intellectual property we acquired; (f) derivative works of intellectual property; and (g) all related documentation. We also acquired hardware patents, rights to hardware patents, customer lists, contracts, agreements, licenses or license agreements, commitments, warranties, claims, and other existing and inchoate rights. We treated the costs of these assets as research and development expenses because we determined that the assets had not, at the time we acquired them, reached technological feasibility. We issued Company common stock to pay for the assets we acquired from the Kristal Group in April 1999. In May 1999 we changed our name to CybeRecord, Inc. Since April 1999 we have continued to conduct our research and development and marketing activities under the name CybeRecord, Inc. As of the filing date of this registration statement, we are in the early stages of manufacturing ScanServers for commercial distribution. Our business is to develop, manufacture, and market a low-cost high-speed automated microfilm scanner. We believe the key drivers for microfilm conversion are the desire to have speedier and more convenient access to records, and the desire to share and transmit images electronically. Our ScanServer technology creates images that can be transmitted across the Internet or placed on a server and made accessible by intranet. Users can select the standard image format they wish to use for their converted microfilm images, which are stored on a computer hard-drive. Among the standard image formats available are "tif," "jpg," and bit map files. The stored images can be cataloged, viewed, and transmitted electronically using standard "off-the-shelf" software. Our ScanServer does not produce a computer file that can be edited as text or other types of data. The digital record is essentially an electronic picture of the original microfilm image. A converted image, if it consists of text, could, if a customer chose, be loaded into an optical character recognition ("OCR") device or program. This step is not part of what ScanServer provides to its users, however. It would require customers to use separate applications with the necessary capabilities. We envision that in the future we may find opportunities to develop alliances with other types of information management businesses, such as in the areas of conversion to word-processible documents or databases that could be edited, sorted, or searched. We do not presently have any alliances of this type in place or under development. We have incorporated nothing into -9- ScanServer's current design to mesh with or enable other conversion processes, except the ability of ScanServer software to improve the clarity and contrast of imperfect or deteriorated microfilm images. We plan to rent our microfilm scanners to customers who can use them to convert their microfilm records to digital form. We currently do not intend to encourage customers to purchase ScanServers. We plan to base the fees we charge our customers on the number of images they convert from microfilm to digital format. We call this per-image fee a "click-charge." THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999. Revenues Revenues for the three and nine months ended September 30, 2000 were $295 and $15,072, respectively, as compared to no revenues for the three and nine months ended September 30, 1999. Through September 30, 2000, our revenues have been derived solely from interest income. Costs and Expenses Write-off of Acquired Research and Development Expenses related to the write-off of acquired research and development for the three and nine months ending September 30, 2000 were both zero, as compared to zero and $3,000,000, respectively, for the three and nine months ended September 30, 1999. The decision to write-off such expenses was based on the fact that at such time The Company's ScanServer product had not reached technological feasibility. Research and Development Research and development expenses include salaries, development materials, equipment lease, electronics, and costs associated with developing the Company's product. Gross research and development expenses for the three months ended September 30, 2000 were zero and $96,699 for the nine-months ended September 30, 2000 and for the same periods in 1999, the Company's gross research and development expenses were $18,843 and $147,160, respectively. The lack of research and development expenses for the three months ended September 30, 2000 is because all product development costs subsequent to February 15, 2000 have been included in capitalized development costs; prior to such date all product development costs prior had been charged to expense as research and development. General and Administrative General and administrative expenses consist principally of salaries and fees for professional services, legal fees incurred in connection with patent filing and related matters, amortization, as well as other marketing and administrative expenses. General -10- and administrative expenses, for the three and nine months ending September 30, 2000 were $655,196 and $1,979,354 respectively, as compared to $280,581 and $355,367, respectively, for the three and nine months ended September 30, 1999. The increase in general and administrative expenses is primarily due to increases in production activity, personnel costs, marketing expenses, professional services, travel and patent filings. Net Loss Net loss for the three and nine months ended September 30, 2000 were $654,901 and $2,060,981, respectively, as compared to net loss of $299,424 and $3,502,527 for the same periods in 1999. Basic loss per share of common stock for the three and nine months ended September 30, 2000 were $0.04 and $0.12, respectively, as compared to $0.02 and $0.25 for the three and nine months ended September 30, 1999, respectively. Liquidity and Capital Resources Since inception we have financed our operations primarily through private placements of equity securities. Net cash used in operating activities was $1,807,720 for the nine months ended September 30, 2000, compared to $449,352 for the nine months ended September 30, 1999. Net cash used in investing activities was $1,049,490 for the nine months ended September 30, 2000. This represented cash used for the purchase of equipment of $109,486 and capitalized development costs of $940,004. Net cash provided by financing activities was $2,940,000 for the nine months ended September 30, 2000, and consisted primarily of proceeds from the issuance of common stock in private placements of common stock. As of September 30, 2000, we had $193,944 in cash and $50,000 in securities. During July 2000, however, unexpected events placed demands on our available cash certain of our consultants had been performing development work and purchasing development services from third party vendors based on oral authorizations that were not approved in writing by management. As a result, the Company incurred costs for such work in excess of budgeted amounts. We subsequently advised vendors and employees that no future invoices would be honored unless the order was placed using a standard purchase order form with proper authorizations. The Company believes that all purchase orders are presently being generated using our accounting software, and following these accounting procedures should enable us to avoid significant unexpected expenses in the future. -11- In addition, during July 2000 the programs used to implement the quality control testing process we had undertaken on our ScanServers revealed the need to re- engineer the ScanServer's camera lens transport mechanism (as described above). This required us to order new parts on short notice, which we needed for repairs to previously shipped ScanServer units and to install into future production units. As a result, we incurred unexpected re-engineering and part replacement costs. The need to modify the ScanServer units we had previously shipped has also delayed the generation of revenues from those units, as they could not be placed into service without the necessary modifications. These items are reflected in capitalized development costs on the Company's balance sheet. In August and September 2000 we raised $708,750 through the private placement of 315,000 shares of our common stock at a price of $2.25 per share. Subsequent to September 30, 2000 we have received an additional $250,200 through the private placement of 111,200 shares of common stock at a price of $2.25 per share (the purchase of such shares was subscribed to prior to September 30, 2000). We have also received subscriptions for an additional 23,000 shares of common stock at a price of $2.25 per share, but have not yet received the subscription price of $51,750. We intend to raise additional capital through future additional sales of equity securities or the incurrence of additional indebtedness. There can be no assurance that we will successfully raise any equity financing or that other sources of debt financing will be available to us if and when needed. The failure to obtain adequate additional capital may require us to postpone some or all of the expansion of our proposed business operations and, potentially, to cease operations. Any additional equity financing may involve substantial dilution to our then-existing shareholders. Risk Factors that May Effect Operating Results You should carefully consider the risks described below and the other information in this quarterly report. While we have attempted to identify the risks that are material to our business, additional risks that we have not yet identified or that we currently think are immaterial may also impair our business operations. The trading price of our common stock could decline due to any of these risks. In assessing these risks, you should also refer to the other information in this quarterly report, including the financial statements and related notes and the risks discussed in the "Risk Factors" section included in our Form 10-SB and other documents and reports filed with the Securities and Exchange Commission. Need for Additional Financing During the next 12 months, our foreseeable cash requirements are expected to be met by a combination of existing cash, revenue generated by our sales, and additional equity financing. We are currently devoting substantial resources to the development of our products and to the establishment of sales and distribution relationships. Substantial additional capital may be required in the future to fund product development and product launch cycles. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to us or our shareholders. If needed capital is unavailable, the Company's ability to continue in -12- business will be jeopardized. To the extent we raise additional capital by issuing equity or securities convertible into equity, ownership dilution to our shareholders will result. History of Losses and Negative Cash Flow; Anticipated Continued Losses Since our inception, we have incurred significant losses and negative operating cash flow. We have not achieved profitability and we expect to continue to incur operating losses for the foreseeable future as we fund operating and capital expenditures in areas such as establishment and expansion of markets, advertising, brand promotion, sales and marketing, research and development and operating infrastructure. We cannot assure investors that we will ever achieve or sustain profitability or that our operating losses will not increase in the future. Competition The market for microfilm scanning devices and services is highly competitive. The competition for our products comes largely from large, well-established companies with longer operating histories, greater name recognition, larger retail bases and significantly greater financial, technical, and marketing resources than us. Competition from these sources could materially adversely affect our business, operating results or financial condition. Competitive factors in the microfilm scanning and services market include innovative products, product quality, marketing and distribution resources and price. While we believe that we have the experience and ability to compete within our identified market, there can be no assurance that we will be able to compete successfully against current or future competitors. Reliance on Key Individuals We are dependent upon the active participation of several key management personnel. We do currently maintain key employee insurance policies on some, but not all, of our key employees. We will likely need to recruit additional qualified personnel in order to expand according to our business plan. There can be no assurance that we will be able to attract such persons or retain any of its key personnel. The failure to attract and retain key personnel could have a material adverse effect on our results of operations and financial performance. Product Liability Our business exposes us to potential product liability claims which are inherent in the manufacture and sale of microfilm scanner devices. Although no such claim has been brought against us to date, and to our knowledge no such claim is threatened or likely, we may face liability to product users for damages resulting from the faulty design or manufacture of products. Although we maintain product liability insurance coverage, there can be no assurance that product liability claims will not exceed coverage limits or that such insurance will continue to be available at commercially reasonable rates, if at -13- all. Consequently, a product liability claim or other claim in excess of insured liabilities or with respect to uninsured liabilities could have a material adverse effect on us. Dependence on New Markets Our future growth, if any, depends in part on its ability to penetrate new markets. There can be no assurance that we will be successful in locating or penetrating any new markets for its products. Share Price Volatility The trading price of the Common Stock could be subject to wide fluctuations in response to quarter to quarter variations in operating results, changes in earnings estimates by analysts, announcements of technological innovations or new products by us or our competitors, general conditions in the personal products industries and other events or factors. In addition, in recent years the stock market in general has experienced extreme price fluctuations. This volatility has had a substantial effect on the market price of securities issued by many companies for reasons unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of the Common Stock. To date, our Common Stock has not traded in sufficient volumes, or for a sufficient length of time, to produce any meaningful evidence of correlation between its price and general market volatility. PART II--OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds Between July 1, 2000 and September 30, 2000 we issued 315,000 shares of common stock in conjunction with private placements. The shares of common stock were sold at a price per share of $2.25, with aggregate proceeds totaling $708,750. Subsequent to September 30, 2000 we have received sold additional 111,200 shares of common stock at a price of $2.25 per share, with additional aggregate proceeds totaling $250,200. No underwriters were engaged in connection with these sales. These securities were issued in transactions exempt from registration under the Securities Act and Regulation D and Regulation S promulgated thereunder. -14- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibit No. Description - -------------- ---------------------------------------------------------- 27.1 Financial Data Schedule. (b) Reports on Form 8-K. None. -15- 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. CYBERECORD, INC. Dated: November 14, 2000 By: /s/ James J. Lucas --------------------------------- James J. Lucas President/Chief Executive Officer -16- EX-27.1 2 0002.txt FINANCIAL DATA SCHEDULE
5 3-MOS 9-MOS DEC-31-2000 DEC-31-2000 JUL-01-2000 JAN-01-2000 SEP-30-2000 SEP-30-2000 193,944 193,944 50,000 50,000 0 0 0 0 0 0 279,504 279,504 138,754 138,754 30,940 30,940 1,327,322 1,327,322 318,063 318,063 0 0 0 0 0 0 171,961 171,961 837,298 837,298 1,327,322 1,327,322 0 0 295 15,072 0 0 0 0 655,196 2,076,053 0 0 0 0 (654,901) (2,060,981) 0 0 (654,901) (2,060,981) 0 0 0 0 0 0 (654,901) (2,060,981) (0.04) (0.12) (0.04) (0.12)
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