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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(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, 2000
--------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
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 March 31,
2000 was 15,194,800. In addition, the company has commitments to issue an
additional 965,000 shares through its 1999 Stock Award Program and 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)
MARCH 31, 2000
CONTENTS
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders Equity
Notes to the 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>
March 31 December 31
2000 1999
-------------- --------------
<S> <C> <C>
Assets
Current
Cash $ 325,181 $ 114,422
Receivables 49,523 22,163
Prepaids 40,442 6,495
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415,146 143,080
Due from company controlled by a shareholder 17,182 17,208
Capital assets 131,840 138,441
Goodwill (net of amortization of $56,467;
1999: $44,367) 185,535 197,635
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$ 749,703 $ 496,364
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Liabilities
Current
Accounts payable and accruals $ 36,478 $ 69,655
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Shareholders Equity
Capital stock
Authorized:
100,000,000 $0.001 par value common shares
Issued:
15,194,800 (1999: 15,194,800) common shares 15,195 15,195
Additional paid-in capital 2,398,355 1,770,755
Deficit (1,700,325) (1,359,241)
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NET SHAREHOLDERS EQUITY 713,225 426,709
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$ 749,703 $ 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
Period from Three Months Three Months
Inception to Ended Ended
March 31 March 31 March 31
2000 2000 1999
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<S> <C> <C> <C>
Revenue
Interest $ 18,009 $ 2,782 $ 2,825
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Expenses
Marketing
Advertising 1,497 - -
Consulting fees 49,442 - -
Investor relations 1,860 1,860 -
Salaries and benefits 86,483 33,407 15,061
Travel 22,281 5,951 1,613
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161,563 41,218 16,674
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Product development
Consulting fees 54,907 - -
Salaries and benefits 248,941 69,809 28,583
Travel 6,019 187 1,208
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309,867 69,996 29,791
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General and administrative
Bank charges and interest 2,813 2,339 -
Communication 23,178 1,936 1,251
Computer and office supplies 85,031 10,503 22,616
Consulting fees 195,688 - -
Depreciation and amortization 92,813 22,454 7,773
Employee relocation 9,080 - 7,203
Professional fees 156,815 18,854 35,566
Public company reporting 12,000 12,000 -
Rent 42,478 14,232 1,336
Salaries and benefits 98,187 21,091 20,674
Stock award compensation 515,265 127,600 -
Travel 13,556 1,643 2,733
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1,246,904 232,652 99,152
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Total expenses 1,718,334 343,866 145,617
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Net loss $ (1,700,325) $ (341,084) $ (142,792)
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Weighted average number of shares
outstanding 15,194,800 12,663,487
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Loss per share - basic and diluted $ (0.02) $ (0.01)
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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 Three Months Three Months
Inception to Ended Ended
March 31 March 31 March 31
2000 2000 1999
------------- ------------- -------------
<S> <C> <C> <C>
Cash derived from (applied to)
OPERATING
Net loss $ (1,700,325) $ (341,084) $ (142,792)
Depreciation and amortization 92,813 22,454 7,773
Stock award compensation expense 515,265 127,600 -
Shares issued for services rendered 111,938 - -
Change in non-cash operating
working capital
Receivables (31,214) (27,360) 2,447
Prepaids (40,442) (33,947) (10,000)
Accounts payable and accruals (1,413) (33,177) 6,266
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(1,053,378) (285,514) (136,306)
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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
Acquisition of capital assets (144,690) (3,753) (44,155)
Advances to company controlled
by a shareholder (17,182) 26 -
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(161,872) (3,727) (44,155)
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Net increase in cash 325,181 210,759 759,970
Cash
Beginning of period - 114,422 -
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End of period $ 325,181 $ 325,181 $ 759,970
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NON-CASH ITEMS NOT INCLUDED IN CASH FLOWS
Stock award compensation expense $ 515,265 $ 127,600 $ -
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)
March 31, 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 exploit
technologies that improve 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. The company
intends to release its first product (code named ProbeNET) commercially during
the second quarter of 2000. Management has been successful in obtaining the
required funding to launch the product commercially and intends to obtain
additional equity financing to accelerate the development of its ProbeNET
technology. 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)
March 31, 2000
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3. INCOME TAXES
At March 31, 2000, the company has net operating losses carried forward of
approximately $1,200,000 that may be offset against future taxable income until
2006 for $880,000 and until 2014 for $320,000. 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.
4. SHARES ISSUED AND OUTSTANDING
At March 31, 2000, the company had 15,194,800 shares issued and outstanding. In
addition, the company has commitments to issue an additional 965,000 shares
through its 1999 Stock Award Program and 250,000 shares for financing received.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The independent unaudited financial statements note that Management has been
successful in obtaining the required funding to launch its first product
commercially and intends to obtain additional equity financing to accelerate the
development and marketing of its ProbeNET technology. There is no guarantee that
management will be successful in obtaining this additional equity financing. The
ability of the Company to continue to develop the technologies into marketable
products is dependent on management's ability to also develop commercially
saleable products and achieve profitable operations. There can be no assurance
that any of these objectives will be realized.
PLAN OF OPERATION
The Company has not had revenues from operations since inception. With the
acquisition of NetMeasure (Canada), NetMeasure's plan of operation contemplates
utilizing the $1 million additional financing to be obtained in an on-going
private offering during the next six (6) months for the continued development
and marketing of its technologies in order to achieve profitable operations.
Management currently is actively seeking this funding. Approximately, $500,000
was obtained during the fiscal quarter ending March 31, 2000 for operations
through the end of July 2000, when customer field trials of ProbeNET are
expected to be completed and ProbeNET is launched. The Company expects to begin
generating revenues early in the third quarter of fiscal 2000. 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,
provided a trading market is established for the registrant's shares in the
immediate future. A merger or the sale of technologies likely would result if
the Company is unsuccessful in obtaining financing.
Attracting additional members to a team of highly skilled experienced technical
professionals, including programmers and marketing engineers, also is
contemplated. With
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the additional financing and staff, the Company expects to continue development
of and to launch ProbeNET and other innovative products during the next several
years, including:
-ProbeNET Version 2 - will include an architecture for consultants and
customers to develop their own customized measurements and will include
more data exchange between the distributed ProbeNET software "probes"
in the network, to provide more detailed network performance
measurements; estimated release in the first quarter of 2001.
-TestBOT -is a handheld portable network tester designed for use by
system and network administration professionals. It is envisioned with
a processor speed of 270 MIPS (millions of instructions per second),
32MB (megabytes of random access memory) 100 base T (network jack
interface type and speed, which is 100 megabits per second), handheld,
battery-operated console and test tool about the size and weight of a
35mm camera.
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 END MARCH 31, 1999 and MARCH 31, 2000.
During the fiscal quarter ending March 31, 1999, the Company had no revenues and
incurred a net loss of $142,742. The Company's activities during this period of
time were related to completing a financing, securing operating facilities,
hiring staff and purchasing and installing appropriate development tools and
supporting infrastructure. Most of the expenses were related to salaries and
benefits ($64,318), professional fees ($35,566) and computer and office supplies
($22,616).
During the fiscal quarter ending March 31, 2000 the Company had revenues
(interest income) of $2,782 and incurred a net loss of $343,866. The Company's
primary activities during this quarter were related to business operations, i.e.
product development and customer demonstrations of its prototype technology.
Most of the expenses were related to salaries and benefits ($251,907), which
included non-cash stock award compensation of $127,600.
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
All items are inapplicable or the answer is negative.
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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
----------------------------------------------
RANDY VOLDENG, PRESIDENT
Date May 11 , 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
-----------------------------------------------
RANDY VOLDENG, DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(Principal Executive Officer and Principal Financial Officer)
Date May 11 , 2000
---------------------------
By /S/ JEFF PLATO
-----------------------------------------------
JEFF PLATO, DIRECTOR AND VICE PRESIDENT
Date May 11 , 2000
----------------------------
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 325,181
<SECURITIES> 0
<RECEIVABLES> 49,523
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 415,146
<PP&E> 131,840
<DEPRECIATION> 92,813
<TOTAL-ASSETS> 749,703
<CURRENT-LIABILITIES> 36,478
<BONDS> 0
0
0
<COMMON> 2,398,855
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 749,703
<SALES> 0
<TOTAL-REVENUES> 2,782
<CGS> 0
<TOTAL-COSTS> 41,218
<OTHER-EXPENSES> 302,648
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (341,084)
<INCOME-TAX> 0
<INCOME-CONTINUING> (341,084)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (341,084)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
