10QSB/A 1 cyber_10qa1-093003.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 1 to FORM 10-QSB/A Quarterly Report Pursuant to Section 13 or 15(D) of The Securities Act of 1934 For the quarterly period ended: September 30, 2003 Commission file number: 000-32249 CYBER PUBLIC RELATIONS, INC. (Exact name of small business issuer as specified in its charter) Florida 98-0222013 (State or other jurisdiction of (IRS Employee Identification No.) incorporation or organization) 8260 Ryan Road, Richmond, BC, V7A 2E5 (Address of principal executive offices) (604) 277-2816 (Issuer's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 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 -------------- -------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $0.001 par value 2,199,000 (Class) (Outstanding as of November 14, 2003) CYBER PUBLIC RELATIONS, INC. FORM 10-QSB INDEX Page ---- Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets........................................F-3 Condensed Consolidated Statements of Losses..................................F-4 Condensed Consolidated Statement of Deficiency in Stockholders Equity........F-5 Condensed Consolidated Statements of Cash Flows..............................F-7 Notes to Unaudited Condensed Consolidated Financial Information..............F-8 Item 2 Management's Discussion and Analysis or Plan of Operation.............3 Item 3 Controls and Procedures...............................................9 Part II OTHER INFORMATION Item 1 Legal Proceedings......................................................10 Item 2 Changes in Securities..................................................10 Item 3 Defaults Upon Senior Securities........................................10 Item 4 Submission of Matters to a vote of Security holders....................10 Item 5 Other Information......................................................10 Item 6 Exhibits and Reports on Form 8-K.....................................10 Signatures....................................................................10 Certifications................................................................11 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FINANCIAL STATEMENTS SEPTEMBER 30, 2003 FORMING A PART OF QUARTERLY REPORT PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934 CYBER PUBLIC RELATIONS INC. F-1 CYBER PUBLIC RELATIONS INC. INDEX TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- PAGE NO. -------- Condensed Consolidated Balance Sheets at September 30, 2003 and December 31, 2002 F-3 Condensed Consolidated Statement of Losses for the three months September 30, 2003, six months ended September 30, 2003 and the period June 28, 1998 (Date of Inception) through September 30, 2003. F-4 Condensed Consolidated Statement of Deficiency in Stockholders' Equity for the period June 28, 1998 (Date of Inception) through September 30, 2003 F-5 , F-6 Condensed Statement of Cash Flows for the three months ended September 30, 2003, six months ended September 30, 2003 and the period June 28, 1998 (Date of Inception) through September 30, 2003. F-7 Notes to Financial Statements F-8 to F-12 F-2 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2003 2002 ---- ---- (UNAUDITED) (AUDITED) ASSETS Current Assets: Cash and equivalents $ 12,477 $ 12,565 TOTAL CURRENT ASSETS $ 12,477 $ 12,565 TOTAL ASSETS $ 12,477 $ 12,565 ========= ========= LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities $ 13,209 $ 12,029 Officer Advances 9,054 6,726 --------- --------- TOTAL CURRENT LIABILITIES 22,263 18,755 LONG TERM DEBT 35,000 35,000 COMMITMENTS AND CONTINGENCIES DEFICIENCY IN STOCKHOLDERS' EQUITY Preferred Stock, $001 par value per share; 10,000,000 shares authorized, none issued and outstanding at September 30, 2003 and December 31, 2002 -- -- Common Stock, $.001 par value per share, 100,000,000 shares authorized, 2,199,000 shares issued and outstanding at September 30, 2003 and December 31, 2002 respectively 2,199 2,199 Additional paid in capital 19,791 19,791 Deficit accumulated during development stage (66,776) (63,180) --------- --------- Deficiency in stockholder's equity (44,786) (41,190) --------- --------- $ 12,477 $ 12,565 ========= =========
(See accompanying notes to financial statements) F-3 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF LOSSES ( UNAUDITED )
For the period June 28, For three For three For nine For nine 1998 (Date of months ended months ended months ended months ended Inception) to September 30, September 30, September 30, September 30, September 30, 2003 2002 2003 2002 2003 ---- ---- ---- ---- ---- REVENUES: -- -- -- -- 6,336 Costs and expenses: General and administrative -- $ 11,554 1,765 18,668 59,004 Financial expenses 8 -- 1,831 -- 14,108 ------------ ------------ ------------ ------------ ------------ TOTAL COSTS AND EXPENSES 8 11,554 3,596 18,668 66,776 Other income : Exchange Gain -- -- -- -- -- Loss before Taxes (8) (11,554) (3,596) (18,668) (66,776) Loss from operations Income (taxes) benefit -- (2,830) -- (5,952) -- ------------ ------------ ------------ ------------ ------------ Net loss (8) (14,384) (3,596) (24,630) (66,776) ============ ============ ============ ============ ============ Loss per common share (basic and assuming dilution) (0.00) (0.00) (0.00) (0.00) (0.00) ============ ============ ============ ============ ============ Weighted average shares outstanding 2,199,000 2,199,000 2,199,000 2,199,000 2,199,000 ============ ============ ============ ============ ============ (See accompanying notes to financial statements)
F-4 CYBER PUBLIC RELATIONS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY FOR THE PERIOD JUNE 28, 1998 (DATE OF INCEPTION) THROUGH SEPTEMBER 30, 2003
Additional Preferred Preferred Common Paid in Accumulated Stock stock Amount Common shares stock Amount Capital Deficit Total ----- ------------ ------------- ------------ ------- ------- ----- Common shares issued on July 5, 1998 in exchange of services rendered valued at $ 0.01 per share - - 2,000,000 2,000 18,000 - 20,000 Common shares issued on October 20, 1998 in exchange for debt valued at $ 0.01 per share - - 25,000 25 225 - 250 Common shares issued on October 20, 1998 for cash at $ 0.01 per share - - 24,000 24 216 - 240 Net Loss - - - - - (20,659) (20,659) Balance at December 31, 1998 - - 2,049,000 2,049 18,441 (20,659) (79) Net income - - - - - 1,367 1,367 Balance at December 31, 1999 - - 2,049,000 2,049 18,441 (19,202) 1,288 Common shares issued on October 10, 2000 in exchange for services rendered valued at $ 0.01 per share. - - 150,000 150 1,350 - 1,500 Net Loss - - - - - (1,391) (1,391) Balance at December 31, 2000 - - 2,199,000 2,199 19,791 (20,593) 1,397 Net Loss - - - - - (7,813) (7,813) Balance at December 31, 2001 - - 2,199,000 2,199 19,791 (28,406) (6,416) Net Loss - - - - - (34,774) (34,774) Balance at December 31, 2002 - - 2,199,000 2,199 19,791 (63,180) (41,190) Net Loss for nine months ended September 30, 2003 - - - - - (3,596) (3,596) 2,199,000 2,199 19,791 (66,776) (44,786) (See accompanying notes to financial statements)
F-5 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For six For six For the period June months ended months ended 28, 1998 (Date of September 30, September 30, Inception) through 2003 2002 September 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (3,596) $ (24,620) $ (66,776) Adjustments to reconcile Net loss to Net cash provided by Operating activities : Common stock issued for services rendered -- -- 21,500 Common stock issued in exchange for debt -- -- 250 CHANGES IN ASSETS AND LIABILITIES Prepaid expenses and Other assets Accounts payable and accrued liabilities 2,466 6,543 14,495 Officer advances (1,926) (1,926) NET CASH USED IN OPERATING ACTIVITIES (1,130) (18,077) (32,457) CASH PROVIDED (USED) BY FINANCING ACTIVITIES Proceeds from loans -- 115,000 35,000 Issuance of common stock -- -- 240 Advance from officer 1,042 (3,367) 9,694 ---------- ---------- ---------- NET CASH PROVIDED IN FINANCING ACTIVITIES 1,042 111,633 44,934 ---------- ---------- ---------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (88) 93,556 12,477 Cash and cash equivalents, beginning of year / period 12,565 256 -- ---------- ---------- ---------- Cash and cash equivalents, end of the year / period 12,477 93,812 12,477 ========== ========== ========== SUPPLEMENTAL INFORMATION: Cash paid during the period for interest -- -- -- Cash paid during the period for taxes -- -- -- NON CASH DISCLOSURES : Common stock issued for services -- -- 21,500 Common stock converted into notes payable -- -- 250 (See accompanying notes to financial statements)
F-6 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS ( UNAUDITED ) NOTE -SUMMARY OF ACCOUNTING POLICIES GENERAL ------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Accordingly, the results from operations for the six months period ended September 30, 2003, are not necessarily indicative of the results that may expected for the year ending December 31, 2003. The unaudited condensed financial statements should be read in conjunction with the December 31, 2002 financial statements and footnotes thereto included in the Company's SEC Form 10-KSB. BUSINESS AND BASIS OF PRESENTATION ---------------------------------- Cyber Public Relations Inc. ("Company") was formed on June 28, 1998 under the laws of the state of Florida. The Company is a development stage enterprise, as defined by Statement of Financial Accounting Standards No. 7 ("SFAS No. 7") and its efforts have been principally devoted to seeking profitable business opportunities. . From its inception through the date of these financial statements the Company has recognized limited revenues and has incurred significant operating expenses. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception through September 30, 2003, the Company has accumulated losses of $66,776. RECLASSIFICATION ---------------- Certain prior period amounts have been reclassified for comparative purposes. NEW ACCOUNTING PRONOUNCEMENTS ----------------------------- Effective January 1, 2002, the Company adopted SFAS No.142. Under the new rules, the Company will no longer amortize goodwill and other intangible assets with definitive lives, but such assets will be subject to periodic testing for impairment. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets must be tested for impairment, and write downs to be included in results from operations may be necessary. SFAS No.142 also requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. Any goodwill impairment loss recognized as a result of the transitional goodwill impairment test is recorded as a cumulative effect of a change in accounting principle. The adoption of SFAS 142 had no material impact on the Company's condensed financial statements. F-7 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS ( UNAUDITED ) NEW ACCOUNTING PRONOUNCEMENTS ( CONTINUED ) SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS No. 143 is effective in fiscal years beginning after June 15, 2002, with early adoption permitted. The Company expects that the provisions of SFAS No. 143 will not have a material impact on its consolidated results of operations and financial position upon adoption. The Company plans to adopt SFAS No. 143 effective January 1, 2003. SFAS No. 144 establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. SFAS No. 144 superseded Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121), and APB Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". The Company adopted SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144 had no material impact on Company's consolidated financial statements. In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt", and an amendment of that Statement, FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements" and FASB Statement No. 44, "Accounting for Intangible Assets of Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for Leases", to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that a similar to sale-leaseback transactions. The Company does not expect the adoption to have a material impact to the Company's financial position or results of operations. In June 2002, the FASB issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The Company does not expect the adoption to have a material impact to the Company's financial position or results of operations. F-8 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS ( UNAUDITED ) NEW ACCOUNTING PRONOUNCEMENTS ( CONTINUED ) In October 2002, the FASB issued Statement No. 147, "Acquisitions of Certain Financial Institutions-an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9", which removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. In addition, this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets. The requirements relating to acquisitions of financial institutions are effective for acquisitions for which the date of acquisition is on or after October 1, 2002. The provisions related to accounting for the impairment or disposal of certain long-term customer-relationship intangible assets are effective on October 1, 2002. The adoption of this Statement did not have a material impact to the Company's financial position or results of operations as the Company has not engaged in either of these activities. In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure", which amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and annual disclosure provisions of Statement 148 are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The adoption of this statement did not have a material impact on the Company's financial position or results of operations as the Company has not elected to change to the fair value based method of accounting for stock-based employee compensation. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities." Interpretation 46 changes the criteria by which one company includes another entity in its consolidated financial statements. Previously, the criteria were based on control through voting interest. Interpretation 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. A company that consolidates a variable interest entity is called the primary beneficiary of that entity. The consolidation requirements of Interpretation 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company does not expect the adoption to have a material impact to the Company's financial position or results of operations. F-9 CYBER PUBLIC RELATIONS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS ( UNAUDITED ) NEW ACCOUNTING PRONOUNCEMENTS ( CONTINUED ) In April 2003, the FASB issued Statement No.149, " Amendment of Statement of 133 on Derivative Instruments and Hedging Activities ", which amends Statement 133, Accounting for Derivative Instruments and Hedging Activities. The adoption of this statement did not have a material impact on the Company's financial position. In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The adoption of this statement did not have a material impact on the Company's financial position. F-10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The following discussion should be read in conjunction with the Company's Condensed Financial Statements and Notes thereto, included elsewhere within this report. The Company intends to rely on the expertise of its management to research the market for information technology solutions. The Company continues its merchant account agreement with PSIGate which enables it to process credit card transactions via the Internet. The company plans to continue to seek promotional and marketing opportunities for its websites as it moves forward to develop its full e-commerce capabilities. For critical expenditures such as fees to keep SEC filings current and related charges the company relies on advances from officers. It is impossible to predict the amount of these expenditures. However, such amounts are not expected to exceed $25,000 during the next twelve months. It has been clear to the company that past funding has not been sufficient for the launch of its operations, and that it must interest investors in one or more secondary capital formation programs before it can launch operations. As a result, the Company entered into two subordinated convertible notes in return for $115,000. The Company anticipates these funds will be sufficient to complete the product development stage of the Company's operations, and hopes to launch a full marketing and promotion campaign within the next 12 months. Results of Operations --------------------- During the quarterly period covered by this Report, the Company received no revenues from operations and incurred expenses of $1,612 stemming from general, administrative and development expenses relating to the development of additional websites and the expansion of the Company's core business. The Company now owns and operates several fully functional online businesses, including: 1. www.searchcamel.com, a search engine website providing shopping, realtime stock quotes and other services; 2. www.clickshoppingmall.com, a shopping mall website; 3. www.shopcetera.com, a shopping mall website; 4. www.takeofftravels.com, a discount travel agency website; 5. www.faresavertravel.com; a discount travel agency website; 6. www.royaldrugstore.com; a drugstore website; 7. www.cprwebhosting.com; a webhosting services website; and 8. www.galaxyblue.com; a website selling fashion jewellery over the internet. 3 The Company intends to round out its website properties by adding one or more Spy Stores, Book Stores and traffic purchasing websites. In addition, the Company also purchased several domain names (including www.americantravel.us, www.usatravel.us, www.myclicktravel.com, www.shadowspystore.com, and www.order-medicine.com.) from which additional websites will be developed. The Company plans to sell these fully functional turnkey operations via the internet through online auctions. The Company will also offer retail web hosting and traffic to clients. The Company's business model, therefore, gives the client the ability to purchase the website, purchase the hosting, and purchase the traffic, entirely through the Company. By offering all these products and services together, the Company is able to provide the client with the ease and convenience of one stop shopping for e-commerce business solutions; while at the same time, the Company is able to generate a continuing revenue stream from ongoing monthly web hosting services. In addition to offering these complete webstore packages, the Company plans to continue to offer personalized and customizable webpage designs and e-commerce solutions to existing small and medium sized businesses. The Company's homepage is www.cyberpublicrelationsinc.com. Liquidity --------- At September 30, 2003, the Company had total current assets of $12,478 and total liabilities of $22,263. The Company's independent certified public accountants have stated in their report included in the Company's December 31, 2002 Form 10-KSB, that the Company has incurred operating losses in the last two years, and that the Company is dependent upon managements ability to develop profitable operations. These factors among others may raise substantial doubt about the Company's ability to continue as a going concern. As of September 30, 2003, we had a working capital deficit of $9,786. As a result of our operating losses from our inception through September 30, 2003, we generated a cash flow deficit of $32,457 from operating activities. While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development. We are seeking financing in the form of equity in order to provide necessary working capital. We currently have no commitments for financing. There is no guarantee that we will be successful in raising the funds required. 4 By adjusting its operations and development to the level of capitalization, management believes it has sufficient capital resources to meet projected cash flow deficits through the next twelve months. However, if thereafter, we are not successful in generating sufficient liquidity from operations or raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition. Product Research and Development -------------------------------- We do not anticipate incurring any material research and development expenditures during the next 12 months. Acquisition of plant and Equipment and other assets --------------------------------------------------- We do not anticipate the sale of any material property, plant or equipment during the next 12 months. We do not anticipate the acquisition of any material property plant or equipment during the next 12 months. Number of Employees ------------------- From our inception through period ended September 30, 2003, we have relied on the services of outside consultants for services and had no employees. We do not anticipate hiring employees during the next 12 months. Discussion and Analysis of Financial Condition ---------------------------------------------- OPERATIONS AND RESULTS FOR THREE MONTHS ENDED SEPTEMBER 30, 2003. Activity during the past quarter has been confined to testing the viability of the Company's business model, the identification of markets, development of products, and acquisition of complementary businesses. FUTURE PROSPECTS: The Company is unable to predict when it may launch intended operations, or failing to do so, when and if it may elect to participate in a business acquisition opportunity. The reason for this uncertainty arises from its limited resources, and competitive disadvantage to other public or semi-public issuers. The Company expects to develop a capital formation strategy and launch operations during the next twelve to eighteen months. REVERSE ACQUISITION CANDIDATE: The Company is not currently searching for a profitable business opportunity. This contingency is disclosed for the possibility that the Company's intended business might fail. The Company is not presently a reverse acquisition candidate. Should the Company's business fail, management does not believe the Company would be able to effectively, under current laws and regulations, attract capital, and would be required to seek such an acquisition to achieve profitability for shareholders. Factors That May Affect Future Results and Market Price of Stock. ----------------------------------------------------------------- The business of the Company involves a number of risks and uncertainties that could cause actual results to differ materially from results projected in any forward-looking statement, or statements, made in this report. These risks and uncertainties include, but are not necessarily limited to the risks set forth below. The Company's securities are speculative and investment in the Company's securities involves a high degree of risk and the possibility that the investor will suffer the loss of the entire amount invested. 5 NO OPERATING HISTORY; POTENTIAL OF INCREASED EXPENSES. The Company was organized in 1998, and has no operating history upon which an evaluation of its business and prospects can be based. There can be no assurance that the Company will be profitable on a quarterly or annual basis. In addition, as the Company expands its business network and marketing operations it will likely need to increase its operating expenses, broaden its customer support capabilities, and increase its administrative resources. POSSIBLE NEED FOR ADDITIONAL FINANCING. It is possible that revenues from the Company's operations may not be sufficient to finance its initial operating cost to reach breakeven. If this were to occur, the Company would need to raise or find additional capital. While the Company expects to be able to meet its financial obligations for approximately the next twelve months, there is no assurance that, after such period, the Company will be operating profitably. If they are not, there can be no assurance that any required capital will be obtained on terms favorable to the Company. Failure to obtain adequate additional capital on favorable terms could result in significant delays in the expansion of new services and market share and could even result in the substantial curtailment of existing operations and services to clients. UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. As a result of the Company's lack of operating history and the emerging nature of the market in which it competes, the Company is unable to forecast its revenues accurately. The Company's current and future expense levels are based largely on its investment/operating plans and estimates of future revenue and are to a large extent based on the Company's own estimates. Sales and operating results generally depend on the volume of, timing of, and ability to obtain customers, orders for services received, and revenues there from generated. These are, by their nature, difficult at best to forecast. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or delay. Accordingly, any significant shortfall or delay in revenue in relation to the Company's planned expenditures would have an immediate adverse affect on the Company's business, financial condition, and results of operations. Further, in response to changes in the competitive environment, the Company may from time to time make certain pricing, service, or marketing decisions that could have a material adverse effect on the Company's business, financial condition, operating results, and cash flows. 6 DEVELOPING MARKET; ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE JUST NOW BEING PROVEN. The Company's long-term viability is substantially dependent upon the continued widespread acceptance and use of the Internet as a medium for business commerce, in terms of the sales of both products and services to businesses and individuals. The use of the Internet as a means of business sales and commerce is has only recently reached a point where many companies are making reasonable profits from their endeavors therein, and there can be no assurance that this trend will continue. The Internet has experienced, and is expected to continue to experience, significant growth in the number of users and amount of traffic. There can be no assurance that the Internet infrastructure will continue to be able to support the demands placed on it by this continued growth. In addition, delays in the development or adoption of new standards and protocols to handle increased levels of Internet activity or increased governmental regulation could slow or stop the growth of the Internet as a viable medium for business commerce. Moreover, critical issues concerning the commercial use of the Internet (including security, reliability, accessibility and quality of service) remain unresolved and may adversely affect the growth of Internet use or the attractiveness of its use for business commerce. The failure of the necessary infrastructure to further develop in a timely manner, or the failure of the Internet to continue to develop rapidly as a valid medium for business would have a material adverse effect on the Company's business, financial condition, operating results, and cash flows. UNPROVEN ACCEPTANCE OF THE COMPANY'S SERVICES AND/OR PRODUCTS. The Company is still in its development stage. As a result, it does not know with any certainty whether its services and/or products will be accepted within the business marketplace. If the Company's services and/or products prove to be unsuccessful within the marketplace, or if the Company fails to attain market acceptance, it could materially adversely affect the Company's financial condition, operating results, and cash flows. DEPENDENCE ON KEY PERSONNEL. The Company's performance and operating results are substantially dependent on the continued service and performance of its officer and directors. The Company intends to hire additional technical, sales, and other personnel as they move forward with their business model. Competition for such personnel is intense, and there can be no assurance that the Company can retain its key technical employees, or that it will be able to attract or retain highly qualified technical and managerial personnel in the future. The loss of the services of any of the Company's key employees or the inability to attract and retain the necessary technical, sales, and other personnel could have a material adverse effect upon the Company's business, financial condition, operating results, and cash flows. The Company does not currently maintain "key man" insurance for any of its key employees. 7 LIABILITY FOR INFORMATION DISPLAYED ON THE COMPANY'S INTERNET WEB SITES. The Company may be subjected to claims for defamation, negligence, copyright, or trademark infringement and various other claims relating to the nature and content of materials it publishes on its Internet Web site, or those set up for its clients. These types of claims have been brought, sometimes successfully, against online businesses in the past. The Company could also face claims based on the content that is accessible from its own, or its clients', Internet Web sites through links to other Web sites. DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET. The success of the Company's business depends, in part, on continued acceptance and growth in the use of the Internet for business commerce and would suffer if Internet usage does not continue to grow. Internet usage may be inhibited for a number of reasons, such as: o Inadequate network infrastructure. o Security concerns. o Inconsistent quality of service. o Lack of available cost-effective, high-speed service. o The adoption of new standards or protocols for the Internet. o Changes or increases in government regulation. Online companies have experienced interruptions in their services as a result of outages and other delays occurring due to problems with the Internet network infrastructure, disruptions in Internet access provided by third-party providers or failure of third party providers to handle higher volumes of user traffic. If Internet usage grows, the Internet infrastructure or third-party service providers may be unable to support the increased demands which may result in a decline of performance, reliability or ability to access the Internet. If outages or delays frequently occur in the future, Internet usage, as well as usage of the Company's Internet Web-sites, could grow more slowly or decline. RELIANCE ON OTHER THIRD PARTIES. The Company's and its clients' operations may depend, to a significant degree, on a number of other third parties, including but not limited to ISPs. The Company has no effective control over these third parties and no long-term contractual relationships with any of them. From time to time, the Company and/or its clients could experience temporary interruptions in their Internet Web-site connections and related communications access. Continuous or prolonged interruptions in the Internet Web-site connections or communications access would have a material adverse effect on the Company's business, financial condition and results of operations. Most agreements with ISPs place certain limits on a company's ability to obtain damages from the service providers for failure to maintain the company's connection to the Internet. COMPETITION. The E-commerce solutions market in which the Company will operate is very competitive. Many competitors have substantially greater, financial, technical, marketing, and distribution resources than the Company. 8 In the all its markets, the Company competes against a large number of companies of varying sizes and resources. There are an increasing number of competitive services and products offered by a growing number of companies. Increased competition in any service or product area may result in a loss of a client, reduction in sales revenue, or additional price competition, any of which could have a material adverse effect on the Company's operating results. In addition, existing competitors may continue to broaden their service and/or product lines and other potential competitors may enter or increase their presence in the E-commerce, resulting in greater competition for the Company. Most of the Company's current and potential competitors have substantially longer operating histories, larger customer bases, greater name and service recognition, and significantly greater financial, marketing, and other resources than the Company. In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well- established and well-financed companies as the use of the Internet and other online services increases. Many of the Company's competitors may be able to respond more quickly to changes in customer preferences/needs, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to Internet site and systems development than the Company. It is possible that new competitors or alliances among competitors may emerge and rapidly acquire market share. Increased competition may result in reduced operating margins and/or loss of market share, either of which could materially adversely affect the Company's business, results of operations and financial condition. There can be no assurance that the Company will be able to compete successfully against current or future competitors or alliances of such competitors, or that competitive pressures faced by the Company will not materially adversely affect its business, financial condition, operating results and cash flows. RISKS OF POTENTIAL GOVERNMENT REGULATION AND OTHER LEGAL UNCERTAINTIES RELATING TO THE INTERNET. The Company is not currently subject to direct federal, state, or local regulation in the United States and Canada other than regulations applicable to businesses generally or directly applicable to electronic commerce. However, because the Internet is becoming increasingly popular, it is possible that a number of laws and regulations may be adopted with respect to the Internet. These laws may cover issues such as user privacy, freedom of expression, pricing, content, and quality of products and services, taxation, advertising, intellectual property rights and information security. Furthermore, the growth of electronic commerce may prompt calls for more stringent consumer protection laws. The adoption of such consumer protection laws could create uncertainty in Internet usage and reduce the demand for all products and services. In addition, the Company is not certain how its business may be affected by the application of existing laws governing issues such as property ownership, copyrights, encryption, and other intellectual property issues, taxation, libel, obscenity, and export or import matters. It is possible that future applications of these laws to the Company's business could reduce demand for its products and services or increase the cost of doing business as a result of litigation costs or increased service delivery costs. Because the Company's services will likely be available over the Internet in multiple states, and possibly foreign countries, other jurisdictions may claim that the Company is required to qualify to do business and pay taxes in each state or foreign country. The Company's failure to qualify in other jurisdictions when it is required to do so could subject the Company to penalties and could restrict the Company's ability to enforce contracts in those jurisdictions. The application of laws or regulations from jurisdictions whose laws do not currently apply to the Company's business may have a material adverse affect on its business, results of operations and financial condition. INTELLECTUAL PROPERTY RIGHTS. As part of its confidentiality procedures, the Company expects to enter into nondisclosure and confidentiality agreements with its key employees, and any consultants and/or business partners and will limit access to and distribution of its technology, documentation, and other proprietary information. Despite the Company's efforts to protect any intellectual property rights it may have, unauthorized third parties, including competitors, may from time to time copy or reverse-engineer certain portions of the Company's technology and use such information to create competitive services and/or products. It is possible that the scope, validity, and/or enforceability of the Company's intellectual property rights could be challenged by other parties, including competitors. The results of such challenges before administrative bodies or courts depend on many factors which cannot be accurately assessed at this time. Unfavorable decisions by such administrative bodies or courts could have a negative impact on the Company's intellectual property rights. Any such challenges, whether with or without merit, could be time consuming, result in costly litigation and diversion of resources, and cause service or product delays. If such events should occur, the Company's business, operating results and financial condition could be materially adversely affected. ITEM 3. CONTROLS AND PROCEDURES The registrant's Principal executive officers and principal financial officer, based on their evaluation of the registrant's disclosure controls and procedures (as defined in Rules 13a-14 ( c ) of the Securities Exchange Act of 1934) as of September 30, 2003 have concluded that the registrants' disclosure controls and procedures are adequate and effective to ensure that material information relating to the registrants and their consolidated subsidiaries is recorded, processed , summarized and reported within the time periods specified by the SEC' s rules and forms, particularly during the period in which this quarterly report has been prepared. The registrants' principal executive officers and principal financial officer have concluded that there were no significant changes in the registrants' internal controls or in other factors that could significantly affect these controls subsequent to February 28, 2003 the date of their most recent evaluation of such controls, and that there was no significant deficiencies or material weaknesses in the registrant's internal controls. 9 PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Articles of Incorporation of the Registrant* 3.2 By-laws of the Registrant* 99.1 Section 906 Certification of CEO 99.2 Section 906 Certification of CFO --------------- * Previously filed as an exhibit to the Company's Form 10-SB dated January 23, 2001 (b) Reports on Form 8-K filed during the three months ended September 30, 2003. No Current Reports on Form 8-K were filed during the three months ended September 30, 2003 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. Date: November 14, 2003 Cyber Public Relations, Inc. /s/ Maria Trinh ---------------------------- Maria Trinh President 10