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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(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, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-27675
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NetMeasure Technology Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 86-0914695
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1122 Mainland Street, Suite 370, Vancouver, British Columbia
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(Address of principal executive offices)
(604) 669-2255
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not Applicable
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APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the issuer's common stock, as of June 30,
2000 was 15,194,800. In addition, the company has commitments to issue an
additional 985,000 shares through its 1999 Stock Award Program and an additional
250,000 shares for financing received.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x]
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
FINANCIAL STATEMENTS
UNAUDITED
(EXPRESSED IN U.S. DOLLARS)
JUNE 30, 2000
CONTENTS
Consolidated Balance Sheet - Unaudited
Consolidated Statement of Operations - Unaudited
Consolidated Statement of Cash Flows - Unaudited
Notes to the Unaudited Consolidated Financial Statements
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NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET - UNAUDITED
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
June 30 December 31
2000 1999
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<S> <C> <C>
ASSETS
Current
Cash $ 106,202 $ 114,422
Receivables 27,098 22,163
Prepaids 27,813 6,495
----------- -----------
161,113 143,080
Due from company controlled by a shareholder 16,912 17,208
Capital assets 151,498 138,441
Goodwill 173,435 197,635
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$ 502,958 $ 496,364
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LIABILITIES
Current
Accounts payable and accruals $ 74,382 $ 69,655
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SHAREHOLDERS EQUITY
Capital stock (Note 3)
Authorized:
100,000,000 $0.001 par value common shares
Issued:
15,194,800 (1999: 15,194,800) common shares 15,195 15,195
Additional paid-in capital 1,383,090 1,383,090
Unearned employee benefits under 1999 Stock Awards Program 641,824 387,665
Share subscriptions received 500,000 --
Deficit (2,111,533) (1,359,241)
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NET SHAREHOLDERS EQUITY 428,576 426,709
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$ 502,958 $ 496,364
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</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the For the For the For the
Period from Three Months Three Months Six Months Six Months
Inception to Ended Ended Ended Ended
June 30 June 30 June 30 June 30 June 30
2000 2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C>
Revenue
Interest $ 21,255 $ 3,246 $ 4,905 $ 6,028 $ 7,730
----------- ------------ ------------ ------------ ------------
Expenses
Marketing
Advertising 3,144 1,647 1,108 1,647 1,108
Consulting fees 49,442 -- -- -- --
Salaries and benefits 139,166 52,683 29,087 86,090 44,148
Travel 42,572 20,291 7,152 26,242 8,765
----------- ------------ ------------ ------------ ------------
234,324 74,621 37,347 113,979 54,021
----------- ------------ ------------ ------------ ------------
Product development
Consulting fees 54,907 -- -- -- --
Salaries and benefits 344,934 95,993 50,181 165,802 79,492
Travel 8,172 2,153 -- 2,340 480
----------- ------------ ------------ ------------ ------------
408,013 98,146 50,181 168,142 79,972
----------- ------------ ------------ ------------ ------------
General and administrative
Bank charges and interest 2,958 145 203 2,484 203
Communication 23,178 -- 10,222 1,936 11,473
Computer and office supplies 86,654 1,623 6,147 12,126 28,763
Consulting fees 195,688 -- -- -- --
Depreciation and amortization 115,171 22,358 18,187 44,812 25,960
Employee relocation 9,080 -- -- -- 1,872
Professional fees 192,291 35,476 33,944 54,330 69,510
Public company reporting 20,853 6,993 -- 20,853 --
Rent 53,098 10,620 5,303 24,852 6,639
Salaries and benefits 126,804 28,617 16,235 49,708 42,240
Stock award compensation 641,824 126,559 -- 254,159 --
Technical advisory board 2,747 2,747 -- 2,747 --
Travel 20,105 6,549 450 8,192 3,183
----------- ------------ ------------ ------------ ------------
1,490,451 241,687 90,691 476,199 189,843
----------- ------------ ------------ ------------ ------------
Total expenses 2,132,788 414,454 178,219 758,320 323,836
----------- ------------ ------------ ------------ ------------
Net loss $(2,111,533) $ (411,208) $ (173,314) $ (752,292) $ (316,106)
=========== ============ ============ ============ ============
Weighted average number of
shares outstanding 15,194,800 15,194,800 15,194,800 13,963,136
============ ============ ============ ============
Loss per share - basic and diluted $ (0.03) $ (0.01) $ (0.05) $ (0.02)
============ ============ ============ ============
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</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the For the
Period from Six Months Six Months
Inception to Ended Ended
June 30 June 30 June 30
2000 2000 1999
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<S> <C> <C> <C>
Cash derived from (applied to)
OPERATING
Net loss $(2,111,533) $(752,292) $(316,106)
Depreciation and amortization 115,171 44,812 25,960
Stock award compensation expense 641,824 254,159 --
Shares issued for services rendered 111,938 -- --
Change in non-cash operating working capital
Receivables (8,789) (4,935) (2,314)
Prepaids (27,813) (21,318) (6,088)
Accounts payable and accruals 36,491 4,727 15,814
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(1,242,711) (474,847) (282,734)
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FINANCING
Shares issued for cash 1,079,003 -- 979,003
Share subscriptions received 554,688 500,000 54,688
Payment of promissory notes payable by subsidiary
company (127,373) -- (127,373)
Cash assumed on acquisition of subsidiary 34,113 -- 34,113
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1,540,431 500,000 940,431
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INVESTING
Bank overdraft -- -- (1,841)
Short term note -- -- (250,182)
Acquisition of capital assets (174,606) (33,669) (107,176)
Advances to company controlled by a shareholder (16,912) 296 (16,463)
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(191,518) (33,373) (375,662)
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Net increase (decrease) in cash 106,202 (8,220) 282,035
Cash
Beginning of period -- 114,422 --
----------- --------- ---------
End of period $ 106,202 $ 106,202 $ 282,035
=========== ========= =========
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NON-CASH ITEMS NOT INCLUDED IN CASH FLOWS
Stock award compensation expense $ 641,824 $ 254,159 $ --
Shares issued for services $ 111,938 $ -- $ --
Shares issued to acquire subsidiary $ 152,656 $ -- $ 152,656
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</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 2000
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1. OPERATIONS AND GOING CONCERN
The company was incorporated as Powertech, Inc. under the laws of the State of
Nevada on May 4, 1998 to engage in the business of internet software and
hardware development. On January 4, 2000, the company changed its name to
NetMeasure Technology Inc.
On February 12, 1999, the company acquired all the issued and outstanding common
shares of NetMeasure Technology (Canada) Inc. (formerly NETSentry Technology
Inc.), a Vancouver, Canada based company in business to develop and market
technologies that assist network administrators in improving the efficiency,
reliability and recoverability of Internet Protocol networks.
The company has commenced its planned principal operations through its newly
acquired subsidiary, however, it has not yet earned any revenue as its first
product (code name ProbeNET) is still in the development stage. The company
intends to release ProbeNET commercially during the third quarter of 2000.
However, the company will require additional funding to complete the final
stages of Quality Assurance testing and commence marketing of the product. There
is no guarantee that management will be successful in obtaining this additional
equity financing.
The company's current operational focus is to ensure that ProbeNET is able to be
commercially exploited. To that end, management is devoting substantially all of
the company's resources to the development of the technology and is negotiating
with various potential sales channel partners to support the marketing of the
technology once its development is complete.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These unaudited consolidated financial statements are presented in accordance
with accounting principles generally accepted in the United States and have been
prepared on the same basis as the annual audited consolidated financial
statements. In the opinion of management, these unaudited consolidated financial
statements reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation for each of the periods presented. The results
of operations for interim periods are not necessarily indicative of results to
be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying consolidated financial statements and
related footnotes have been condensed and do not contain certain information
that will be included in the company's annual consolidated financial statements
and footnotes. For further information, refer to the consolidated financial
statements and related footnotes for the year ended December 31, 1999 included
in the company's Annual Report on Form 10-KSB.
CONSOLIDATION
These financial statements include the accounts of the company and its
wholly-owned subsidiary, NetMeasure Technology (Canada) Inc.
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NETMEASURE TECHNOLOGY INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Unaudited Consolidated Financial Statements
(expressed in U.S. dollars)
June 30, 2000
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3. CAPITAL STOCK
At June 30, 2000, the company had 15,194,800 shares issued and outstanding. In
addition, the company has commitments to issue an additional 985,000 common
shares through its 1999 Stock Awards Program.
The company is also committed to issue 250,000 shares for share subscriptions
that have been received.
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1999 STOCK AWARDS PROGRAM
The company has made restricted stock awards to nine employees aggregating
985,000 shares, at a weighted average price of $1.25. Expense is being
recognized over the anticipated vesting period of the awards. The unvested
portion of these awards has been recorded as a separate component of
shareholders equity.
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SHARE SUBSCRIPTIONS RECEIVED
The company has committed to issue 250,000 shares for share subscriptions that
were received in January 2000.
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4. INCOME TAXES
At June 30, 2000, the company has net operating losses carried forward of
approximately $1,430,000 that may be offset against future taxable income until
2006 for $1,100,000 and until 2014 for $330,000. The deferred tax asset arising
from these net operating losses has been reduced to $Nil by a valuation
allowance due to uncertainties regarding the utilization of the losses.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The independent unaudited financial statements note that Management needs to
obtain additional equity financing to complete the development and marketing of
its ProbeNET technology. There is no guarantee that management will be
successful in obtaining this additional financing. In addition, the Company's
success will be dependent on management's ability to attract and retain highly
skilled technical staff.
PLAN OF OPERATION
The Company has not had revenues from operations since inception, however it
hopes to begin generating revenues from product sales, beginning late in the
third quarter of 2000. The core functionality and key features of its ProbeNET
software product are nearly complete and, to this point, management has been
pleased with the software's performance during Quality Assurance testing.
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NetMeasure's plan of operation contemplates raising an additional $1 million
financing in an on-going private offering during the next three (3) months for
the continued development and marketing of its technologies, in order to achieve
profitable operations. Management is actively seeking this funding. The Company
presently has no contingency plan in the event it does not obtain all the
additional financing, although it is cautiously optimistic that it will do so. A
merger or the sale of technologies likely would result if the Company were
unsuccessful in obtaining financing.
There can be no assurance that any of the products under development will be
successfully developed or will be commercially successful.
COMPARISON OF FISCAL QUARTERS ENDING JUNE 30, 1999 and JUNE 30, 2000.
During the fiscal quarter ending June 30, 1999 the Company had revenues
(interest income) of $4,905 and incurred a net loss of $173,314. The Company's
activities during this period of time were related to early-stage product
prototyping, hiring staff, completing facility renovations and purchasing and
installing appropriate development tools and supporting infrastructure. Most of
the expenses were related to salaries and benefits ($95,503), professional fees
($33,944) and depreciation and amortization ($18,187).
During the fiscal quarter ending June 30, 2000 the Company had revenues
(interest income) of $3,241 and incurred a net loss of $411,208, which was in
line with management's expectations. The Company's primary activities during
this quarter were related to continued product development and customer
demonstrations of its technology. Most of the expenses were related to salaries
and benefits ($303,852), which included non-cash stock award compensation of
$126,559; professional fees ($35,476); travel ($28,993); and, depreciation and
amortization ($22,358).
YEAR 2000/Y2K ISSUES
Because many computer and computer applications define date by the last two
digits of the year, "00" may not be properly identified as the year 2000. This
error could have resulted in miscalculations or systems failure in computer
systems, network elements, software applications and other business systems that
have time-sensitive programs.
The Company has been unaffected by the Year 2000/Y2K issues and management does
not believe there will be any Year 2000/Y2K issues in the future that will
impact its operations.
PART II -- OTHER INFORMATION
Other than Item 5, all other items are inapplicable or the answer is
negative.
ITEM 5. OTHER EVENTS
On June 5, 2000, in a letter to shareholders, NetMeasure Technology, Inc. (the
"Company") announced that the release of its ProbeNET software will not occur
until the third quarter of 2000. Although the core functionality and key
features of the software are nearly complete and the Company has been pleased
with the software's initial performance results, the Company believes that
additional testing is desirable to ensure the software's integrity before it is
made available for sale.
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The Company also announced that its Technical Advisory Board (the "TAB") had its
first meeting on May 5, 2000. The TAB was formed to provide feedback and
guidance to the Company's management on a number of issues, including product
development, network operations, and marketing and sales. The members of the TAB
are:
- William Norton - Co-Founder and the Chief Technical Liaison of Equinix, Inc.
Equinix, based in Redwood, California, is a creator and operator of Internet
Business Exchange centers.
- Michael Hrybyk - President and CEO of BCNET, an advanced network serving
education, research and development, government and industry in the province
of British Columbia, Canada.
- Tsugio Kataoka - former head of Hewlett Packard's (now Agilent
Technologies') Test and Measurement Sales Group in Japan and the current
President of MSK Inc., a management consulting firm based in Tokyo, Japan.
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.
NETMEASURE TECHNOLOGY INC.
By /s/ RANDY VOLDENG
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RANDY VOLDENG, PRESIDENT
Date August 16, 2000
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
NETMEASURE TECHNOLOGY INC.
By /s/ RANDY VOLDENG
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RANDY VOLDENG, DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(Principal Executive Officer and Principal Financial Officer)
Date August 16, 2000
By /s/ JEFF PLATO
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JEFF PLATO, DIRECTOR AND VICE PRESIDENT
Date August 16, 2000
