UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities exchange Act of
1934
For the quarterly period ended March 31, 2003
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ___________ to ___________.
Commission File Number: 33-23473
CORDIA CORPORATION
-----------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 2917728
------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2500 Silverstar Road, Suite 500, Orlando, Florida 32804
----------------------------------------------------------------------
(Address of Principal Executive Offices)
866-777-7777
---------------------------
(Issuer's Telephone Number, Including Area Code)
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 10, 2003, there were 5,821,211 shares of the issuer's common stock
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
CORDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
2003 2002
----------- -----------
ASSETS
Current Assets
Cash $ 18,757 $ 234,770
Accounts receivable, less allowance for doubtful accounts of
$56,390 (2003) and $65,000 (2002) 303,905 507,920
Investments 5,600 3,685
Prepaid expenses and other current assets 29,200 64,817
Other loans receivable - 33,649
----------- -----------
TOTAL CURRENT ASSETS 357,462 844,841
----------- -----------
Property and equipment, at cost
Office equipment 13,228 230,660
Equipment - capital leases - 58,567
Vehicles - 16,743
Furniture and fixtures - 98,376
----------- -----------
13,228 404,346
Less: Accumulated depreciation 3,882 141,140
----------- -----------
NET PROPERTY AND EQUIPMENT 9,346 263,206
----------- -----------
Other Assets
Notes Receivable 750,000 -
Security Deposits 61,850 60,904
----------- -----------
TOTAL OTHER ASSETS 811,850 60,904
----------- -----------
TOTAL ASSETS $ 1,178,658 $ 1,168,951
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Book Overdraft $ - $ 90,946
Accounts payable and accrued expenses 576,746 1,782,184
Obligation under capital lease, current portion - 25,672
Unearned income 105,861 93,237
Loans payable to affiliates - 9,744
Loans payable-other 23,491 36,103
----------- -----------
TOTAL CURRENT LIABILITIES 706,098 2,037,886
----------- -----------
Noncurrent Liabilities
Obligation under capital lease, less current portion - 7,404
----------- -----------
TOTAL NONCURRENT LIABILITIES - 7,404
----------- -----------
Stockholders' Equity (Deficit)
Preferred stock, $.001 par value; 5,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value;<R> 100,000,000 </R> shares authorized,
5,761,211 (2003) and 5,701,211 (2002) shares issued and outstanding 5,761 5,701
Additional paid-in capital 4,071,079 3,956,739
Common stock subscribed 44,500 60,000
Accumulated deficit (3,623,780) (4,873,779)
------------ -----------
497,560 (851,339)
Less Treasury stock, 10,000 common shares at cost (25,000) (25,000)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 472,560 (876,339)
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,178,658 $ 1,168,951
=========== ===========
Note: The balance sheet at December 31, 2002 has been derived from audited
financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles in the United States.
See notes to consolidated financial statements.
CORDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
March 31,
-----------------------------
2003 2002
----------- -----------
Revenues
Telecommunications revenue $ 612,592 -
Other 10,000 76,409
----------- -----------
622,592 76,409
----------- -----------
Operating Expenses
Resale and wholesale line charges 297,191 -
Payroll and payroll taxes 161,117 108,751
Advertising and promotion 71,164 7,857
Professional and consulting fees 112,762 172,563
Depreciation 1,248 437
Insurance 18,066 5,084
Office expense 8,578 2,166
Telephone 13,769 1,606
Rent and building maintenance 13,771 6,000
Other selling, general and administrative 94,603 8,222
----------- -----------
792,269 312,686
----------- -----------
Operating Loss (169,677) (236,277)
----------- -----------
Other Income (Expenses)
Income (loss) on investments 2,800 (31,343)
Other income 3,633 -
Interest expense (337) (727)
----------- -----------
6,096 (32,070)
----------- -----------
Loss From Continuing Operations (163,581) (268,347)
----------- -----------
Income (Loss) from Discontinued Operations
Loss from operations of discontinued segments (140,726) (339,175)
Gain on disposal 1,554,306 -
----------- -----------
1,413,580 (339,175)
----------- -----------
Net Income (Loss) $ 1,249,999 $ (607,522)
=========== ===========
Income (Loss) per Share $ 0.22 $ (0.11)
=========== ===========
Weighted Average Shares Outstanding 5,722,537 5,461,713
=========== ===========
See notes to consolidated financial statements.
CORDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
March 31,
2003 2002
----------- ---------
Cash Flows From Operating Activities
Net income (loss) $ 1,249,999 $(607,522)
Adjustments to reconcile net loss to net cash
used by operations
(Gain) on disposal of subsidiaries (1,554,308) -
(Gain) loss on investments (2,800) 52,349
Consulting expense 60,400 136,509
Professional fees - 11,000
Depreciation expense 1,249 24,941
Non cash expenses of discontinued business segments 13,919 -
(Increase) decrease in assets
Accounts receivable 36,409 (110,398)
Prepaid expenses and other current assets (21,111) (36,698)
Security deposits (28,085) -
Increase (decrease) in liabilities
Book overdraft 182,236 -
Accounts payable and accrued expenses (95,388) 526,253
Unearned income 179,290 259,451
----------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,810 255,885
----------- ---------
Cash Flows From Investing Activities
(Increase) in loans receivable from affiliates (9,104) (157,334)
Decrease in loans receivable from affiliates 1,750 128,500
Decrease in cash of sold subsidiaries (241,055) -
Proceeds from sale of investments - 26,546
Decrease in securities sold but not purchased - (66,790)
Purchase of property and equipment (5,419) (66,336)
----------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES (253,828) (135,414)
----------- ---------
Cash Flows From Financing Activities
Proceeds from issuance and subscription of common stock 38,500 35,000
Payment of capital lease obligation (9,884) (4,531)
Payment of notes payable - (993)
Proceeds from loans payable to affiliates - 9,000
Payment of loans payable to affiliates - -
Proceeds from other loans payable 25,468 10,599
Payment of loans payable other (38,079) -
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,005 49,075
----------- ---------
Increase (Decrease) in Cash (216,013) 169,546
Cash, Beginning 234,770 185,348
----------- ---------
Cash, Ending $ 18,757 $ 354,894
=========== =========
See notes to condensed consolidated financial statements.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note 1: Basis of Presentation
Our unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and disclosures required by generally accepted accounting principles. Therefore, these financial statements should be read in conjunction with the financial statements and related footnotes included in our Annual Report on Form 10-KSB for the most recent year-end. These financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly state the results for the interim periods reported. The results of operations for the three-month period ended March 31, 2003 are not necessarily indicative of the results to be expected for the full year.
The consolidated financial statements include our accounts and the accounts of Cordia Communications Corp. for the years ended December 31, 2002 and for the three months ended March 31, 2003 and 2002. The consolidated financial statements also include the accounts of its discontinued business ISG Group, Inc. ("ISG") and its subsidiaries (Universal Recoveries, Inc. and U.L.A.E., Inc., both wholly-owned) as of December 31, 2002, and for the three months ended March 31, 2002 and the period January 1, 2003 through March 3, 2003 (date of disposal). The consolidated financial statements also include the accounts of our discontinued business segment, RiderPoint, Inc. ("RiderPoint") and subsidiary, for the three months ended March 31, 2002. All material intercompany balances and transactions have been eliminated.
Note 2: Investments
At March 31, 2003 and December 31, 2002, investments included common shares of eLEC Communications Corp. ("eLEC"). All investments are classified as trading securities and accordingly, stated at fair value, which is based on market quotes. Adjustments to fair value of the equity securities are recorded as an increase or decrease in investment income in the accompanying statements of operations.
During June 2002, we sold all of our common shares of RiderPoint and its subsidiary, RP Insurance Agency Inc. ("RP Insurance Agency"), and our entire membership interest in Webquill Internet Services, LLC ("Webquill") for $1,000. We recognized a gain of $322,796 in connection with such sale. The results of operations of RiderPoint, RP Insurance Agency and Webquill are presented as losses from operations of discontinued segments in the accompanying condensed consolidated statements of operations.
On March 3, 2003, we sold our equity interests in ISG to West Lane Group Inc. ("West Lane Group"), a company owned by the then-current management of ISG. The $750,000 selling price of ISG is evidenced by a promissory note bearing interest at the rate of 6% per annum. The principal obligation of $750,000 under the note is payable on or before March 3, 2005, and is secured by 700,000 shares of our common stock owned by West Lane Group.
NOTE 3: Sale of Business Segments
Sale of RiderPoint, Inc. and its subsidiary:
On June 27, 2002, we sold for $1,000 in cash, (a) our common stock equity interests in RiderPoint, and its subsidiary, RP Insurance Agency, and (b) our entire membership interest in Webquill. RiderPoint had focused on the development of technological systems, solutions and processes that would allow it to become a nationwide distributor of insurance products through the internet and traditional insurance agents. RP Insurance Agency, Inc. acted as an insurance broker for individuals purchasing property and liability insurance for power sports vehicles. Webquill provided internet hosting services to businesses and individuals. We recognized a gain of $337,793 on the sale of these interests. As a result of the sale of these business segments, our net operating loss for Federal income tax reporting purposes decreased by approximately $1,940,000.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note 3: Sale of Business Segments (cont'd)
The following is a summary of the sale transaction:
RiderPoint,
and subsidiary Webquill Total
-------------- -------- -----
Assets sold $(25,189) $(2,763) $(27,952)
Liabilities sold 412,917 15,701 428,618
Cash payment received 500 500 1,000
Write-off of inter-company
receivables and payables (63,873) -0- (63,873)
-------- ------- --------
Gain on sale $324,355 $13,438 $337,793
======== ======= ========
Sale of ISG:
The following is a summary of the sale transaction of ISG (unaudited):
Assets sold $ (778,529)
Liabilities sold 1,658,917
Note received 750,000
Write-off of inter-company receivables and payables (76,082)
---------
Gain on sale, before income taxes $1,554,306
==========
Our net operating losses are expected to offset the gain on the sale of ISG.
As a result of the sale of ISG, (a) employee stock options to purchase 83,000 of our common shares at $7.50 per share expired, and (b) our net operating loss carry-forward for Federal income tax reporting purposes, on a pro-forma basis giving retroactive effect to the sale of ISG as of December 31, 2002, would have been approximately $2,220,000.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note 3: Sale of Business Segments (cont'd)
The accompanying consolidated balance sheet at December 31, 2002 include the
following assets and liabilities of the ISG discontinued business segments:
2002
----
Current Assets
Cash $ 164,527
Accounts receivable, net 377,568
Investments 886
Prepaid expenses and other current assets 17,512
Loans receivable from affiliates 31,899
Loans receivable from parent and subsidiaries* -
----------
Total current assets 592,392
----------
Property and equipment
Office equipment 218,015
Equipment - capital leases 58,567
Vehicles 16,743
Furniture and fixtures 98,376
----------
391,701
Less: Accumulated depreciation 138,506
----------
253,195
----------
Other assets
Security deposits 27,139
----------
Total assets $ 872,726
==========
Current Liabilities
Book overdraft $ 90,946
Accounts payable and accrued expenses 1,319,207
Obligation under capital lease, current portion 25,672
Unearned income 83,333
Loans payable to affiliates 9,744
Loans payable to parent and subsidiaries* 76,082
----------
Total current liabilities 1,604,984
----------
Obligation under capital lease, less current potion 7,404
----------
Accumulated deficit (739,662)
----------
Total liabilities and accumulated deficit $ 872,726
==========
*Eliminated in consolidation.
License Agreement
On March 3, 2003, we entered into a licensing agreement with ISG whereby ISG purchased an unlimited license to certain of our software. The license agreement provides for ISG to pay us $100,000 on execution of the license agreement, plus $6,000 per month (including interest) for a period of twenty-five months. We agreed to provide software updates and maintenance as necessary, during this twenty-five month period.
Loss from operations of discontinued business segments includes the following:
Three months ended March 31,
----------------------------
2003 2002
--------- ----------
Revenues:
Subrogation Service Revenue, net $ 631,361 $ 559,695
Claims Administration income 197,667 667,374
Other - (761)
--------- ----------
Total Revenues: $ 829,028 $1,226,308
========= ==========
Loss before income taxes $ 140,726 $ 339,175
========= ==========
The accompanying 2002 statement of operations was reclassified to show the results of operations for the RiderPoint and ISG business segments as discontinued.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
Note 4: Stockholders' Equity
During June 2002, we approved a 5-for-1 reverse split of our common stock with no change in its par value of $.001. All references in the consolidated financial statements and in the notes to consolidated financial statements with respect to the number of common shares and per share amounts have been restated to reflect the stock split.
During September 2000, we issued warrants to purchase 22,400 shares of our common stock. The warrants had an exercise price of $12.50 per share and expired during the period from July through September 2002. No warrants were exercised prior to expiration.
Effective January 5, 2001, we established our 2001 Equity Incentive Plan (the "Plan"). The total number of shares of our common stock issuable under the Plan is 1,000,000, subject to adjustment for events such as stock dividends and stock splits. The Plan is administered by a committee of the Board of Directors having full and final authority and discretion to determine when and to whom awards should be granted. The committee will also determine the terms, conditions and restrictions applicable to each award.
Transactions under the Plan are summarized as follows giving retroactive effect
to the reverse stock split:
Stock Options Exercise Price
------------- --------------
Balance, December 31, 2002 146,000 $ 7.50 to 11.25
Granted: 615,000 $ .60
Exercised - $
Expired (83,000) $ 7.50
----------- ---------------
Balance, March 31, 2003 678,000 $ .60 to 11.25
Note 5: Commitments
We have no commitments for annual rentals under noncancelable operating leases.