Cytation Corporation 10QSB 6/30/02

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended June 30, 2002

Commission file Number 0 5388

CYTATION CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware

16-0961436

(State or Other Jurisdiction of Incorporation)

(I.R.S. Employer Identification Number)

251 Thames Street, No. 8, Bristol, RI 02809
(Address of Principal Executive Offices) (Zip Code)

(401) 254-8800
(Registrant's Telephone Number, Including Area Code)

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 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 practical date:

Common Stock, $.001 Par Value - 37,361,857 shares as of June 30, 2002.

FORWARD-LOOKING INFORMATION

THIS FORM 10-QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY CYTATION CORPORATION OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF CYTATION CORPORATION AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.

 

PART 1 FINANCIAL INFORMATION

Item 1. Financial Statements.

Cytation Corporation (Formerly CollegeLink.com Incorporated)

CONTENTS

UNAUDITED FINANCIAL STATEMENTS

Balance Sheets as of June 30, 2002 and December 31, 2001

Statement of Operations for the Three Months Ended June 30, 2002 and 2000

 Statement of Operations for the Six Months Ended June 30, 2002 and 2001

Statement of Cash Flows for the Six Months Ended June 30, 2002 and 2001

Notes to Financial Stattements

Cytation Corporation (Formerly CollegeLink.com Incorporated)

Balance Sheets
 
 

ASSETS

June 30,

December 31,

         2002       

        2001      

(Unaudited)

(Audited)
CURRENT ASSETS:
     Cash $

  6,857

   $

79,861
     Cash in escrow account

429,093

424,781
     Notes receivable, stockholders

21,598

21,598
     Notes receivable, others

160,551

180,405
     Prepaid expenses and other current assets

               30,202

            154,637
          Total Current Assets

648,301

            861,282
PROPERTY AND EQUIPMENT, Net

              18,504

             31,687
          TOTAL ASSETS

$

666,805

  $

892,969
==========

==========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable and accrued expenses

$

             368,579

   $

            211,273
COMMITMENTS AND CONTINGENCIES

-

                      -
STOCKHOLDERS' EQUITY:
     Series A convertible preferred stock, $4.00 stated value, $0.01 par value;
         2,500,000 shares authorized, 1,140,000 shares issued and outstanding

         (Liquidation value of $4,560,000) 4,584,980 4,584,980
     Series B convertible preferred stock, $7.625 stated value, $0.01 par value;
         300,000 shares authorized, -0- shares issued and outstanding

  -

   -
     Series C convertible preferred stock, $4.00 stated value, $0.01 par value;

       1,000,000 shares authorized, -0- shares issued and outstanding

 -

-
     Common stock, $0.001 par value, 100,000,000 shares authorized,
         37,361,857 shares issued and outstanding

37,361

37,361
     Additional paid-in capital

28,467,440

28,467,440
     Deferred compensation

(120,000)

(410,000)
     Accumulated deficit

     (32,671,555)

(31,998,085)
          TOTAL STOCKHOLDERS' EQUITY

           298,226

            681,696
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

 666,805

  $

892,969

=========

=========
See notes to financial statements.

 
Cytation Corporation (Formerly CollegeLink.com Incorporated)
Statement of Operations
For The Three Months Ended June 30, 2002 and 2001
(Unaudited)
 
             2002             2001  
 
REVENUES:          
     College and high school programs $ - $ 1,626,415
     Web site hosting and web services - 59,627
     Other revenues                        -                  28,530
    -   1,714,572
COST OF GOODS SOLD                          -               1,636,730
         
          GROSS PROFIT                        -               77,842
         
OPERATING EXPENSES:          
     Technology   -   56,214
     Depreciation and amortization   6,960   141,855
     Sales and marketing   -   370,324
     General and administrative             283,434             442,546
         
          TOTAL OPERATING EXPENSES             290,394          1,010,939
         
          OPERATING LOSS   (290,394)   (933,097)
         
OTHER INCOME (EXPENSES):          
     Interest income (expense), net                 1,594               (20,998)
     Gain on sale of business units                         -             778,005
         
          TOTAL OTHER INCOME (EXPENSES)                   1,594               757,007
          LOSS BEFORE INCOME TAXES (288,800) (176,090)
         
INCOME TAXES                           -                            -
         
          NET LOSS   (288,800)   (176,090)
         
PREFERRED STOCK DIVIDEND EARNED                 68,775                128,775
         
          NET LOSS ATTRIBUTABLE TO COMMON SHARES $ (357,575) $ (304,865)
    =========   =========
Net Loss Per Share (Basis and Diluted)   $ (0.01) $ (0.02)
    =========   =========
Weighted Average Common Shares Outstanding     37,361,857   15,196,564
    =========   =========

  See notes to financial statements. 

 

Cytation Corporation (Formerly CollegeLink.com Incorporated)
Statement of Operations
For The Six Months Ended June 30, 2002 and 2001
(Unaudited)
 
     2002   2001
 
REVENUES:          
     College and high school programs $ - $ 2,927,597
     Web site hosting and web services - 59,627
     Other revenues                        -                  72,856
    -   3,060,080
COST OF GOODS SOLD                          -               2,541,768
         
          GROSS PROFIT                        -               518,312
         
OPERATING EXPENSES:          
     Technology   -   87,477
     Depreciation and amortization   13,920   303,681
     Sales and marketing   -   509,691
     General and administrative             662,850             1,780,380
         
          TOTAL OPERATING EXPENSES             676,770            2,681,229
         
          OPERATING LOSS          (676,770)          (2,162,917)
         
OTHER INCOME (EXPENSES):          
     Interest income (expense), net                 3,300               (37,552)
     Gain on sale of business units                         -              778,005
         
          TOTAL OTHER INCOME (EXPENSES)                   3,300               740,453
          LOSS BEFORE INCOME TAXES (673,470) (1,422,464)
         
INCOME TAXES                           -                            -
         
          NET INCOME LOSS   (673,470)   (1,422,464)
         
PREFERRED STOCK DIVIDEND EARNED                137,549                257,549
         
          NET LOSS ATTRIBUTABLE TO COMMON SHARES $ (811,019) $ (1,680,013)
    =========   =========
Net Loss Per Share (Basis and Diluted)   $ (0.02) $ (0.11)
    =========   =========
Weighted Average Common Shares Outstanding     37,361,857   15,284,770
    =========   =========

  See notes to financial statements. 

 

Cytation Corporation (Formerly CollegeLink.com Incorporated)
Statement of Cash Flows
For the Six Months Ended June 30, 2002 and 2001
(Unaudited)
 
         

                2002       

  

           2001    
 
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss $ (673,470) $ (1,422,464)
     Adjustments to reconcile net loss to net cash        
        used in operating activities:        
            Depreciation and amoritzation   13,920   303,681
            Amortization of deferred compensation   290,000   214,422
            Accrued interest on note payable   -   37,735
            Gain on sale of business units - (778,005)
     Changes in operating assets and liabilities:        
            Accounts receivable   -   (52,271)
            Prepaid expenses and others   124,435   272,001
            Cash in escrow account   (4,312)   -
            Accounts payable and accrued expenses   157,306   1,335,664
            Unearned revenue  

                          -

  

          566,302
 
               NET CASH USED IN OPERATING ACTIVITIES              (92,121)          (655,539)
         
CASH FLOWS FROM INVESTING ACTIVITIES:                
     Purchases of property and equipment   (737)   (30,194)
     Collection on notes receivable   19,854   25,000
     Capitalization of software development costs                          -              (6,811)
 
               NET CASH USED IN INVESTING ACTIVITIES                19,117            (12,005)
         
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from (payments of) note payable and debt   -   500,000
     Purchase of treasury stock                           -           (600,000)
     Proceeds from sale of business units 3,353,421
      Proceeds from issuance of common stock                        -                 641
         
               NET CASH PROVIDED BY FINANCING ACTIVITIES                           -            3,254,062
         
               NET INCREASE (DECREASE) IN CASH   (73,004)   2,586,518
         
CASH, Beginning                 79,861            161,481
         
CASH, Ending         $ 6,857 $ 2,747,999
    =========   =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW: 
 
     Cash paid during the periods for:        
            Interest $ - $ -
========= =========
            Taxes $ - $ -
    =========   =========
     Non-cash investing and financing activities:        
            Offset note receivable with accrued expenses $ - $ 10,000
            =========   =========
See notes to financial statements.

Notes To Financial Statements

1.  Basis of Presentation:

The accompanying unaudited financial statements of Cytation Corporation (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to prepare them for inclusion as part of the Form 10QSB.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  The financial statements for the periods ended June 30, 2002 and 2001 are unaudited and include all adjustments which in the opinion of management are necessary, in order to make the financial statements not misleading.  All such adjustments are of a normal recurring nature.  The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for a full fiscal year.  For further information, refer to the financial statements and footnotes thereto included in the Company's Form 10KSB filed with the Securities and Exchange Commission for the period ended December 31, 2001.

2.  The Company:

Until June 20, 2001, the Company provided an extensive range of in-school and online services directed at high school students and their parents, high school counselors, college admissions officers and corporations which target the teen marketplace.  On June 20, 2001, the Company sold all of its assets associated with these activities to TMP Worldwide Inc.

3.   Deferred Compensation:

On July 2, 2001, the Company's board of directors authorized advances to two officers of the Company in the aggregate amount of $600,000. These advances are repayable by either officer if the officer leaves the employment of the Company before January 2003, unless certain events occur before such date. These advances have been booked as deferred compensation and amortized over fifteen months. In addition, the Company also advanced $50,000 to one of the officers in lieu of his participation in the Company's retirement plans, which amount has been recorded as compensation expense in the quarter ended March 31, 2002.

4.  Legal Proceedings:

On February 7, 2002, Gerald Paxton, a former consultant to the Company, filed a demand for arbitration arising under his consulting agreement with the Company. The Company and Mr. Paxton have tentatively agreed to resolve this matter.

Item 2. Management's Discussion and Analysis or Plan of Operation

The Company sold all of its revenue producing assets on June 20, 2001. Accordingly, the following should be read in conjunction with Item 5 hereof.

Results of Operations

As a result of the sale in June 2001 by the Company of substantially all of its assets (including all of its revenue generating assets) to TMP and the prior sales of the Company's Internet services businesses, the Company no longer is engaged in any business in which it was engaged during its three fiscal years ended June 30, 1998, 1999 and 2000, its six-month transition period ending December 31, 2000 or its fiscal year ended December 31, 2001. Accordingly, management does not believe that it is informative or useful to compare the results of operations of the principal business which it conducted until June 20, 2001 but which it no longer owns with the results of operations of this business and other discontinued businesses for prior periods, including the three month period ended June 30, 2001.

Liquidity and Capital Resources

Net cash used in operating activities was $92,121 for the six month period ended June 30, 2002 compared to $655,539 for the six month period ended June 30, 2001, shortly after the Company discontinued its former business and sold its operating assets.  See Item 5. As of June 30, 2002, the Company had working capital of $279,722 compared to working capital of $2,293,618 as of June 30, 2001.

PART II OTHER INFORMATION

Item 1. Legal Proceedings.

On February 7, 2002, Gerald Paxton, a former consultant to the Company, filed a demand for arbitration arising under his consulting agreement with the Company. The Company and Mr. Paxton have tentatively agreed to resolve this matter.

Item 2. Change 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.

Certification under Sarbanes-Oxley Act.  Our president and acting chief financial officer has furnished to the SEC the certification with respect to this Report that is required by Section 906 of the Sarbanes-Oxley Act of 2002.

Sale of assets. On June 20, 2001, Cytation Corporation (then known as CollegeLink.com Incorporated) and its wholly owned subsidiary Cytation Bristol Corporation (then known as CollegeLink Corporation) sold substantially all of their respective assets, including all of their respective operating assets, to TMP. TMP is the parent corporation of TMP Interactive Inc. d/b/a Monster.com. As consideration for the sale, TMP paid Cytation Corporation approximately $4,202,000 in cash and assumed approximately $3,062,000 of Cytation's liabilities. Among the liabilities that TMP assumed were notes issued by Cytation to TMP in the aggregate principal amount of $1,000,000.

Trading of securities. On May 22, 2001, the Company's common stock stopped trading on the American Stock Exchange where it had traded under the symbol "APS". From May 22, 2001 through June 21, 2001, the Company's common stock traded on the Nasdaq Over the Counter Bulletin Board under the symbol "CLGK". Since June 21, 2001, the Company's common stock has traded on the Nasdaq Over the Counter Bulletin Board under the symbol "CYTY".

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits:

The following exhibits are filed as part of or incorporated by reference into this Report:

Exhibit

Description

3.1

Amended and Restated Certificate of Incorporation of the Company(2)

3.2

Articles of Merger between the Company and Cytation Corporation, dated February 11, 1999(1)

3.3

Articles of Merger between CollegeLink.com Incorporated and ECI, Inc., dated August 10, 1999(2)

3.4

Certificate of Merger of CollegeLink.com Incorporated and ECI, Inc., dated August 10, 1999(2)

3.5

Certificate of Ownership and Merger between the Company and CollegeLink.com Incorporated, dated November 15, 1999(2)

3.6

By-Laws of the Company(2)

4.1

Please see Exhibits 3.1 and 3.6 for provisions of the Amended and Restated Certificate of Incorporation and By-Laws of the Company defining the rights of holders of the common stock of the Company

10.1

Consulting Agreement by and among CollegeLink.com Incorporated and Gerald A. Paxton, dated August 10, 1999(2)

10.2

Amended and Restated Asset Purchase Agreement by and among TMP Worldwide, Inc., CollegeLink.com Incorporated and CollegeLink Corporation, dated May 2, 2001(3)

10.3

Escrow Agreement by and among the Company, TMP Worldwide, Inc, and Eastern Bank and Trust Company, dated June 20, 2001 

10.4

Bill of Sale and Assignment, by and among TMP Worldwide, Inc., CollegeLink.com Incorporated and CollegeLink Corporation, dated June 20, 2001

10.5

Non-Competition and Non-Solicitation Agreement between TMP Worldwide and Richard A. Fisher, dated June 20, 2001

10.6

Non-Competition and Non-Solicitation Agreement between TMP Worldwide and Kevin J. High, dated June 20, 2001

10.7

Employment Agreement, dated October 15, 2001, between the Company and Richard A. Fisher

10.8

Employment Agreement, dated October 15, 2001, between the Company and Kevin High

10.9

Lease dated September 22, 1999 between the Company and Midview, LLC

24.1

Power of Attorney (contained on the signature page of this Form 10-KSB)
99.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (4)

                                                                       
(1)  Incorporated by reference from the Company's Form 8-K, Current Report, filed March 18, 1999, and later amended on April 2, 1999.

(2)  Filed as Exhibit to the Company's Registration Statement No. 333-85079 on Form SB-2 and incorporated herein by reference.

(3)  Filed as an Exhibit to the Company's Proxy Statement filed May 25, 2001 and incorporated herein by reference.

(4)  Filed herewith.

(b)   Reports on Form 8-K

            None

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                                    CYTATION CORPORATION

 

                                                                   By: /s/ Kevin J. High
                                                                   -------------------------------
                                                                   Name: Kevin J. High
                                                                   Title: President
                                                                   Date: August 5, 2002