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 June 30, 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
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 2917728
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2500 Silverstar Road, Suite 500, Orlando, Florida 32804
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(Address of Principal Executive Offices)
866-777-7777
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(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 Aug 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]
Item 1. Financial Statements.
CORDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2003 2002
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ASSETS
Current Assets
Cash $ 55,521 $ 234,770
Accounts receivable, less allowance for doubtful accounts of
$43,357 (2003) and $65,000 (2002) 404,440 507,920
Investments - 3,685
Prepaid expenses and other current assets 114,352 64,817
Other loans receivable - 33,649
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TOTAL CURRENT ASSETS 574,313 844,841
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Property and equipment
Cost of property and equipment 16,358 404,346
Less: Accumulated depreciation 5,413 141,140
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NET PROPERTY AND EQUIPMENT 10,945 263,206
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Other Assets
Notes Receivable 750,000 -
Security Deposits 61,937 60,904
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TOTAL OTHER ASSETS 811,937 60,904
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TOTAL ASSETS $ 1,397,195 $ 1,168,951
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Book Overdraft $ - $ 90,946
Accounts payable and accrued expenses 883,433 1,782,184
Obligation under capital lease, current portion - 25,672
Unearned income 140,867 93,237
Loans payable to affiliates 9,000 9,744
Loans payable-other 62,281 36,103
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TOTAL CURRENT LIABILITIES 1,095,581 2,037,886
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Noncurrent Liabilities
Obligation under capital lease, less current portion - 7,404
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TOTAL NONCURRENT LIABILITIES - 7,404
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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,
5,821,211 (2003) and 5,701,211 (2002) shares issued and outstanding 5,821 5,701
Additional paid-in capital 4,163,536 3,956,739
Common stock subscribed - 60,000
Accumulated deficit (3,842,743) (4,873,779)
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326,614 (851,339)
Less Treasury stock, 10,000 common shares at cost (25,000) (25,000)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 301,614 (876,339)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,397,195 $ 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 Six Months Ended For the Three Months Ended
June 30, June 30,
2003 2002 2003 2002
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Revenues
Telecommunications Revenue $ 1,380,817 $ 5,884 $ 776,243 $ 5,884
Other 58,593 169,184 40,575 92,775
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1,439,410 175,068 816,818 98,659
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Operating Expenses
Resale and wholesale line charges 664,141 2,731 366,950 2,731
Payroll and payroll taxes 346,509 200,638 185,393 91,887
Advertising and promotion 310,506 28,723 239,342 20,866
Professional and consulting fees 183,061 304,525 70,299 131,962
Depreciation 2,779 992 1,531 555
Insurance 34,331 9,542 16,265 4,458
Office expense 20,427 5,272 11,849 2,507
Telephone 29,834 6,150 16,065 4,415
Rent and building maintenance 27,883 9,274 14,113 3,274
Other selling, general and administrative 212,999 28,021 118,295 20,527
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1,832,470 595,868 1,040,102 283,182
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Operating Loss (393,060) (420,800) (223,284) (184,523)
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Other Income (Expenses)
Income (loss) on investments 3,750 (32,943) 950 (1,600)
Interest income (expense) 6,767 (1,278) 3,471 (550)
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10,517 (34,221) 4,421 (2,150)
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Loss From Continuing Operations (382,543) (455,020) (218,863) (186,673)
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Income (Loss) from Discontinued Operations
Gain on Disposal of subsidiary $ 1,554,306 $ 322,796 $ -- $ 322,796
Loss from operations of discontinued
Segments (140,726) (523,383) -- (184,209)
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1,413,580 (200,587) -- 138,587
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Net Income (Loss) $ 1,031,037 $ (655,608) $ (218,863) $ (48,086)
============= =========== =========== ===========
Income (Loss) per Share $ 0.18 $ (0.12) $ (0.04) $ (0.01)
============ =========== =========== ===========
Weighted Average Shares Outstanding 5,792,747 5,516,261 5,811,973 5,566,033
============ =========== =========== ===========
See notes to condensed consolidated financial statements.
CORDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended
June 30,
2003 2002
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Cash Flows From Operating Activities
Net income (loss) $1,031,037 $ (655,608)
(Gain) on disposal of subsidiaries (1,554,308) (322,796)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operations
(Gain) loss on investments (3,750) 54,456
Consulting expense 108,417 142,600
Depreciation expense 2,780 43,784
Noncash expenses of discontinued business segments 13,919 --
(Increase) decrease in assets
Accounts receivable (64,126) (64,211)
Prepaid expenses and other current assets (106,264) (93,000)
Security deposits (28,172) --
Increase (decrease) in liabilities
Book overdraft 182,236 --
Accounts payable and accrued expenses 211,299 680,394
Unearned income 214,296 39,649
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 7,364 (174,732)
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Cash Flows From Investing Activities
Decrease in loans receivable from affiliates -- 15,070
(Increase) in other loans receivable (9,104) (100,250)
Decrease in other loans receivable 1,750 --
Decrease in cash of sold subsidiaries (241,055) --
Proceeds from sale of investments 6,550 26,547
Purchase of investments -- (66,790)
Purchase of property and equipment (8,549) (89,299)
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NET CASH (USED) BY INVESTING ACTIVITIES (250,408) (214,722)
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Cash Flows From Financing Activities
Net Proceeds from issuance and subscription of common stock 38,500 387,500
Payment of notes payable -- (1,650)
Payments of obligations under capital lease (9,884) (7,615)
Proceeds from loans payable to affiliates 9,000 14,446
Payment of loans payable to affiliates - (8,296)
Proceeds from loans payable other 67,468 277,006
Payments of other loans payable (41,289) (130,000)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 63,795 531,391
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Increase (Decrease) in Cash (179,249) 141,937
Cash, Beginning 234,770 185,348
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Cash, Ending $ 55,521 $ 327,285
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See notes to condensed consolidated financial statements.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 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- and six-month periods ended June 30, 2003 are not necessarily indicative of the results to be expected for the full year.
The consolidated financial statements include the accounts of Cordia Corporation ("Cordia"), and Cordia Communications Corp. ("CCC") for the six months and three months ended June 30, 2003 and 2002. The consolidated financial statements also include the accounts of Cordia's discontinued business ISG Group, Inc ("ISG") and its subsidiaries (Universal Recoveries, Inc. and U.L.A.E., Inc., both wholly-owned) for the period January 1, 2003 through March 3, 2003 (date of disposal) and for the six and three months ended June 30, 2002. The consolidated financial statements also include the accounts of Cordia's discontinued business segment RiderPoint and subsidiary, for the six months and three months ended June 30, 2002. Cordia Corporation and its subsidiaries are collectively referred to herein as the "Company." All material intercompany balances and transactions have been eliminated.
Note 2: Investments
Trading Securities
At 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. All remaining shares of eLEC were sold during the second quarter
of 2003.
During June 2002, we sold all of our common shares of RiderPoint Inc. and its subsidiary, RP Insurance Agency Inc., and our entire membership interest in Webquill Internet Services, LLC for $1,000. We recognized a gain of $322,796 in connection with such sale. The results of operations of RiderPoint Inc, RP Insurance Agency Inc, and Webquill are presented as losses from operations of discontinued segments in the accompanying condensed consolidated statements of operations.
On March 3, 2003, Cordia sold its equity interests in ISG to West Lane Group Inc., 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 Cordia's common stock owned by WestLane Group, Inc.
NOTE 3 - SALE OF BUSINESS SEGMENTS
Sale of RiderPoint, Inc., and its subsidiary, and Webquill Internet Services,
LLC:
On June 27, 2002, the Company sold for $1,000 in cash, (a) its common stock equity interests in RiderPoint, Inc. and its subsidiary, RP Insurance Agency, Inc., and (b) its 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. The Company recognized a gain of $337,793 on the
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2003
NOTE 3 - SALE OF BUSINESS SEGMENTS (cont'd)
sale of these interests. As a result of the sale of these business segments, the Company's net operating loss for Federal income tax reporting purposes decreased by approximately $1,940,000.
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)
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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)
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Gain on sale, before income taxes $1,554,306
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The Company's 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
common shares of the Company at $7.50 per share expired, and (b) the
Company's 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 CONDENSED FINANCIAL STATEMENTS
June 30, 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 discontinued business segments ISG:
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
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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
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Other assets
Security deposits 27,139
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Total assets $ 872,726
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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*
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Total current liabilities 1,604,984
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Obligation under capital lease, less current potion 7,404
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Accumulated deficit (739,662)
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Total liabilities and accumulated deficit $ 872,726
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*Eliminated in consolidation.
CORDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2003
NOTE 3 - SALE OF BUSINESS SEGMENTS (cont'd)
License Agreement
On March 3, 2003, Cordia entered into a licensing agreement with ISG whereby ISG
purchased an unlimited license to certain software owned by Cordia. The license
agreement provides for ISG to pay Cordia $100,000 on execution of license
agreement, plus $6,000 per month (including interest) for a period of
twenty-five months. Cordia shall provide software updates and maintenance as
necessary, during this twenty-five month period.
Loss from operations of discontinued business segments includes the following:
Six months ended June 30,
----------------------------
2003 2002
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Revenues:
Subrogation Service Revenue, net $ 631,361 $1,213,823
Claims Administration income 197,667 1,211,713
Other - 1,254
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Total Revenues: $ 829,028 $2,426,790
Loss before income taxes $ 140,726 $ 523,383
The 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 CONDENSED FINANCIAL STATEMENTS
June 30, 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
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Balance, December 31, 2002 146,000 $ 7.50 to 11.25
Granted: 615,000 $ .60
Exercised - $
Expired (83,000) $ 7.50
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Balance, June 30, 2003 678,000 $ .60 to 11.25
Note 5: Commitments
We have no commitments for annual rentals under noncancelable operating leases.