Post by Franko10 ™ on Sept 24, 2005 14:55:29 GMT -5
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
Cyber Mark International Corp.
Consolidated Balance Sheets
As at June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
<Table>
<Caption>
June 30,
2001 December 31,
ASSETS (Unaudited) 2000
<S> <C> <C>
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
============= ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
Cyber Mark International Corp.
Consolidated Statements of Operations and Deficit
For the Three and Six Months Ended June 30, 2001 and 2000
(Unaudited)
------------------------------------------------------------------------------
<Table>
<Caption>
Three months ended Six months ended
June 30 June 30
2001 2000 2001 2000
<S> <C> <C> <C> <C>
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)
=========== =========== =========== ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
Cyber Mark International Corp.
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2001 and 2000
(Unaudited)
-------------------------------------------------------------------------------
<Table>
<Caption>
2001 2000
<S> <C> <C>
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
=========== ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
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.
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.
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.
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.
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
Cyber Mark International Corp.
Consolidated Balance Sheets
As at June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
<Table>
<Caption>
June 30,
2001 December 31,
ASSETS (Unaudited) 2000
<S> <C> <C>
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
============= ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
Cyber Mark International Corp.
Consolidated Statements of Operations and Deficit
For the Three and Six Months Ended June 30, 2001 and 2000
(Unaudited)
------------------------------------------------------------------------------
<Table>
<Caption>
Three months ended Six months ended
June 30 June 30
2001 2000 2001 2000
<S> <C> <C> <C> <C>
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)
=========== =========== =========== ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
Cyber Mark International Corp.
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2001 and 2000
(Unaudited)
-------------------------------------------------------------------------------
<Table>
<Caption>
2001 2000
<S> <C> <C>
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
=========== ===========
</Table>
The accompanying notes are an integral part of these consolidated financial
statements.
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.
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.
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.
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.