SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 1999
TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _____________
Commission file number 000-13337
Northeast (USA) Corp. (formerly Celcor, Inc.)
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 22-2497491
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1800 Bloomsbury Avenue, Ocean, NJ 07712
(Address of principal executive offices)
732-922-3609
(Issuer's telephone number)
----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] No [X]
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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 7,008,187 shares of Common
Stock, $.001 par value per share, at October 13, 1999
Transitional Small Business Disclosure Format (check one) Yes ___ No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Proforma Consolidated Balance Sheet as of September 30, 1999
Proforma Consolidated Statements of Loss for the three months ended
September 30, 1999 and 1998
Proforma Consolidated Statements of Cash Flows for the three months
ended September 30, 1999
Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST (USA) CORP.
Proforma Consolidated Balance Sheets
As of September 30, 1999
Northeast Buy It
(USA) Corp. Cheap.com, Inc. Adjustments Proforma
Assets
Current assets:
<S> <C> <C> <C>
Cash $ 708 $ 23,566 - $ 24,274
Notes receivable - 21,751 $ (21,751) -
Other - 125 - 125
---------- ----------- ---------- --------
Total current assets 708 45,442 (21,751) 24,399
---------- ----------- --------- --------
Investment in and net advances
to joint venture 620,535 - - 620,535
Reserve against investment in
and net advances to joint
venture (620,535) - - (620,535)
Investment in website - 16,500 - 16,500
Goodwill - - 114,820 114,820
----------- ----------- ---------- ---------
Total assets $ 708 $ 61,942 $ 93,069 $ 155,719
=========== =========== ========== ========
Liabilities and Equity
Current liabilities:
Accounts payable $175,713 - - $ 175,712
Due to officers and directors 4,962 - - 4,962
Notes payable 21,751 - $ (21,751) -
Loan payable 3,559 - - 3,559
----------- ----------- ---------- --------
Total current liabilities 205,985 - (21,751) 184,233
----------- ----------- ---------- --------
Stockholders' equity:
Preferred stock - Series C, $.001 par 10 - - 10
Common stock - $.001 par 7,158 $ 62,125 (61,255) 8,028
Paid in capital 2,566,856 - 175,892 2,742,748
Treasury stock (751,100) - - (751,100)
Deficit (2,028,201) (183) 183 (2,028,201)
------------ --------- ---------- ----------
Total stockholders' equity (205,277) 61,942 114,820 (28,515)
------------ --------- ---------- ----------
Total Liabilities and Equity $ 708 $ 61,942 $ 93,069 $ 155,719
=========== ========= ========= =========
</TABLE>
<PAGE>
NORTHEAST (USA) CORP.
Proforma Consolidated Statements of Loss
For the three months ended
September 30,
1999 1998
Sales Revenues $ --- $ ---
---------- ---------
General and administrative expenses (1) 20,654 ---
---------- ---------
Net loss before discontinued operations (20,654) ---
---------- ---------
Net loss from discontinued operations --- (321)
---------- ---------
Net loss $(20,654) $ (321)
========== ========
Net loss per share $ --- $ ---
========== ========
(1) For the 1999 period includes $183 of loss from Buy It Cheap.com, Inc.
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST (USA) CORP.
Proforma Consolidated Statements of Cash Flows
For the three months ended September 30,
Northeast Buy It
(USA) Corp. Cheap.com, Inc. Adjustments Proforma
1999 1999 1999 1998
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net loss (20,471) (183) - $ (20,654) $ (321)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Changes in assets and liabilities
Notes payable 21,751 (21,751) - -
Accounts payable (1,652) - (1,652) -
------------ ---------- ----------- --------- -------
Net cash used by operating activities (372) (183) (21,751) (22,306) (321)
------------ ---------- ----------- --------- -------
Cash flows from investing activities
Issuance of notes receivable - (21,751) 21,751 - -
Investment in website - (16,500) - (16,500) -
------------ ---------- ---------- --------- -------
- (38,251) 21,751 (16,500) -
------------ ---------- ---------- --------- -------
Cash flows from financing activities:
Sale of common stock - 62,000 - 62,000 -
------------ ---------- ---------- ---------- -------
Net increase (decrease) in cash (372) 23,566 - 23,194 (321)
Cash at beginning of period 1,080 - - 1,080 1,102
----------- ---------- ---------- ---------- -------
Cash at end of period 708 $ 23,566 $ - $ 24,274 $ 781
============ ========== ========== ========== =======
</TABLE>
<PAGE>
Northeast (USA) Corp.
Notes to Financial Statements
Financial Statements
The proforma consolidated balance sheets, proforma consolidated statements of
loss, and proforma consolidated statements of cash flows for all periods
reported herein have been prepared by Northeast (USA) Corp. (the "Company")
without audit. In the opinion of the Company, all adjustments necessary to
present fairly these financial statements have been made. The proforma format of
the financial statements give effect to the merger between the Company and Buy
It Cheap.com, Inc. as though it was consummated at September 30, 1999. Buy It
Cheap.com, Inc., a Delaware corporation, was incorporated in July, 1999 (See
Note on Subsequent Event).
Nature of Business
The Company is a Delaware corporation. The Company has had limited business
operations for the past 27 months. Its current business plans include the
seeking of business opportunities through acquisitions, mergers, joint ventures
and/or the formation of operating subsidiaries. All prior operations have been
classified as discontinued.
Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred losses
and has no current source of revenues or funds and has a working capital deficit
as of September 30, 1999. In addition, the Company, as a result of its
acquisition of Buy It Cheap.com, Inc. (see Note on Subsequent Event) will
require additional funds to finance the combined operations. The Company's
continued existence is dependent upon its ability to secure adequate financing.
The Company plans to raise capital for the combined entity in the future;
however, there are no assurances that such plan will be successful. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
Joint Venture
The Company, in 1992 formed a joint venture agreement with the Northeast General
Pharmaceutical Factory ("NEGPF"), a government owned pharmaceutical concern in
Shenyang, China, whereby both companies established a joint venture company in
China. Each of the Company and NEGPF were to have contributed certain assets to
the joint venture. The Company was to have contributed $2.1 million in cash and
$1.15 million in technology for a total capital contribution of $3.25 million.
NEGPF was to have contributed $750,000 in cash and a land-use right valued at
$1.75 million for a total contribution of $2.5 million. Based upon the amount of
contribution, the Company owned 56.52% of the joint venture and NEGPF owned
43.48%. To date, the Company has contributed $1 million of cash and has
contributed the technology. NEGPF has contributed $750,000 of cash but has not
<PAGE>
contributed the land-use right. The joint venture had only limited start-up
operations and operations effectively ceased in 1997 due to lack of funding. The
Company has communicated with NEGPF that it no longer has any interest in the
joint venture. As such the Company has reserved $620,535 against the investment
in and net advances from the joint venture.
Net Loss Per Common Share
The weighted average number of common shares outstanding used in computing net
loss per common share was 7,008,187 in the 1998 period and 7,878,187 in the 1999
period. The weighted average number of common shares used in computing the net
loss per common share does not include any shares issuable upon the assumed
conversion of the preferred stock (see Note on Preferred Stock), since the
effect would have been to decrease net loss per common share for the period.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of assets and liabilities for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets or liabilities are recovered or
settled. Deferred taxes also are recognized for operating losses that are
available to offset future federal and state income taxes. The Company has a net
operating loss carryforward of $373,614 which expires in years through 2018.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Preferred Stock
In May, 1994, the Company sold 275,000 shares of its newly designated Series C
convertible preferred stock, $.001 par value, for an aggregate amount of
$825,000 to a group of private investors. Except for $10,000 (representing
30,000 shares) of the preferred stock, all had been converted according to their
terms prior to July 1, 1998. The Company has the right to redeem the shares at
$4.50 per share. The shares carry a stated dividend rate of 8% per annum.
Dividends are cumulative and are payable quarterly. No cash dividends have ever
been paid. Some former preferred shareholders (prior to or simultaneous with
their conversion) have accepted shares of the Company's stock in lieu of cash
dividends. Those that did not accept shares of stock for dividends and those
that did not covert their preferred shares are owed a total of $105,000 of
dividend arrearages at September 30, 1999.
<PAGE>
Subsequent Event
On August 5, 1999, the Company's Board of Directors duly adopted a resolution
approving the acquisition of Buy It Cheap.com, Inc. ("BUY"). Approval of the
merger by the Company's shareholders was not required. The directors and
shareholders of BUY approved the merger on September 16, 1999. BUY is a start-up
company formed by two directors of the Company that will operate a discount
Internet retailing business. Based upon the final pre-merger asset value of BUY,
BUY stockholders received 1,400,000 shares of the Company's common stock in
accordance with the terms of the Agreement and Plan of Merger, dated October 27,
1999, by and between the Company and BUY. The merger was consummated on October
27, 1999 and became effective on November 3, 1999.
Item 2. Management's Discussion and Analysis or Plan of Operation
Management's Plan of Operation During the Next 12 Months
Northeast (USA) Corp. (the "Company") has had virtually no operations
during its past two fiscal years ended June 30, 1998 and 1999. The minimal
operations during these periods have all been classified as discontinued for
financial statement purposes. During the latter part of the 1999 fiscal year,
the Company's management made the decision to enter the Internet retailing
business. The Company believed that it could raise some seed investment capital
by the formation of a start-up Internet retailing company that would later merge
into the Company. An officer and director and a director of the Company formed
Buy It Cheap.com, Inc., a Delaware corporation ("BUY"), for the purpose of
raising seed capital and starting an Internet retailing business, then merging
BUY into the Company. On August 5, 1999, the Company's Board of Directors
approved a merger with BUY. The approval of the Company's shareholders was not
required. The directors and shareholders of BUY approved the merger on September
16, 1999. The merger was consummated on October 27, 1999 and became effective on
November 3, 1999. Pursuant to the terms of the merger, the Company issued
1,400,000 shares of its common stock in exchange for all of the issued and
outstanding shares of BUY. The Company plans in the future to file an amendment
to its Certificate of Incorporation to change its name to Buy It Cheap.com, Inc.
The Company has expended approximately $30,000 in funds necessary to (1)
re-commence filing its required periodic reports under the Securities Exchange
Act of 1934, as amended, (2) reinstate its corporate charter and pay back
franchise taxes in Delaware, (3) file federal and state tax returns up to date,
(4) reinstate its stock transfer agent and (5) permit its website to become
operational. The Company, after expending funds for these purposes, has at
November 3, 1999, approximately $70,000 in liquid assets available for future
operations.
The Company plans to continue over the next several months developing its
Internet retailing business on its website Buyitcheap.com. While the website
became functional on approximately November 3, 1999, the further development of
this website will consist of obtaining additional suppliers for merchandise to
be offered for sale. The Company, as of November 3, 1999, has obtained 5
suppliers with merchandise in the electronics, luggage, giftware and
telecommunications lines. The Company's objective is to offer name brand
merchandise at prices lower than commonly available. In many cases, this will
involve discontinued and closeout merchandise. The Company does not plan to
purchase or inventory any merchandise itself. Customers will typically order
from the Company's website and have their credit card charged by the Company.
The Company then directs the order to the applicable supplier who ships directly
to the customer. A transfer of funds is made from the Company to the supplier
<PAGE>
for the merchandise. The Company earns a profit on the amount that it has marked
up the merchandise. The Company currently does not charge suppliers for the
placement of merchandise on the Company's website.
During this period of initial development of its website, the Company will
keep its operating overhead at minimal levels. Two members of the Company's
management have agreed to perform services without further compensation until
such time as cash flow from sales permits or the Company is able to obtain
additional financing. The Company will temporarily operate from the offices of
these individuals without rental charge. As such, the Company believes that its
current cash balance will be sufficient for this first phase of its business
development.
By the end of its third quarter, March 31, 2000, the Company's objective
will be to have proven the viability of its website in both concept and
functionality. With the Company's limited resources for promotion to that date,
it is expected that only limited traffic to its website will have been achieved.
At this time, the Company plans to make a secondary public offering of its
stock, seeking to raise between $10 and $20 million in new capital. This will
permit the Company to expand its business by: (1) promoting its website, (2)
hiring personnel experienced in merchandising and Internet retailing, and (3)
funding increased operating overhead as the business expands. There can,
however, be no assurances that the Company will be successful in accomplishing a
secondary offering, or be able to raise additional capital to operate or expand
its business.
Certain of the information set forth in this quarterly report on Form
10-QSB may constitute "forward-looking statements" and are subject to risks,
uncertainties and other factors which could cause actual results to differ
maternally from those projected or implied. Such statements may be identified by
the use of forward-looking language such as "may," "will," "should," "expect,"
"anticipate," "estimate," or "contrive" or the negatives or variations thereof
or similar terminology. Such risks and uncertainties include the risks described
herein, in the Company's annual report on Form 10-KSB for the year ended June
30, 1999 and in other reports and exhibits filed with the Securities and
Exchange Commission.
<PAGE>
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits
2.1(a) Agreement and Plan of Merger among Celcor, Inc., Northeast (USA)
Corp., and the Stockholders of Northeast (USA) Corp.(5)
2.1(b) Agreement and Plan of Merger between Northeast (USA) Corp. and Buy
It Cheap.com, Inc. (6).
3.1 Certificate of Incorporation, as amended, of the Company(1)(2)(4)(7)
3.2 By-laws of the Company (1) (3)
4.1 Certificate of Designations, Preferences and Rights of Series C 8%
Convertible Preferred Stock of Celcor, Inc. (5)
10.1 Promissory Notes between the Company and Buy It Cheap.com, Inc. (5)
10.2 Joint Venture Contract between China Northeast Pharmaceutical Company
and U.S. Lyncroft Company (translated from the Chinese) creating
United Vitatech. (5)
10.3 Contract of Shenyang United Vitatech Pharmaceutical Ltd. (translated
from the Chinese) (5)
10.4 Regulations of Shenyang United Vitatech Pharmaceutical Ltd.
(translated from the Chinese) (5)
10.5 Agreement dated December 26, 1993 between Mannion Consultants Ltd and
Northeast (USA) Corp. (5)
27 Financial Data Schedule
(1) Incorporated by reference to the Company's Registration Statement
on Form S-1, No. 294663.
(2) Incorporated by reference to the Company's Form 10-K for the year
ended June 30, 1986. ( File No. 000-13337).
(3) Incorporated by reference to the Company's 1986 Proxy Statement
dated November 7, 1986. (File No. 000-13337).
(4) Incorporated by reference to the Company's Registration Statement
on Form S-1, No. 3312084.
<PAGE>
(5) Incorporated by reference to the Company's Form 10-KSB for the
year ended June 30, 1995. (File No. 000-13337)
(6) Incorporated by reference to the Company's Form 8-KSB dated
November 11, 1999.
(7) Incorporated by reference to the Company's 10-KSB for the fiscal
year ended June 30, 1999.
(b) A current report on Form 8-K was filed on September 17, 1999 which included
Items 4 and 5, but did not include any financial statements.
<PAGE>
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.
NORTHEAST (USA) CORP.
Date November 15, 1999 /s/Stephen E. Roman, Jr.
----------------------------
Signature
Stephen E. Roman, Jr.
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000745651
<NAME> Northeast (USA) Corp. (formerly Celcor, Inc.)
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 708
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 708
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 708
<CURRENT-LIABILITIES> 205,985
<BONDS> 0
0
10
<COMMON> 7,158
<OTHER-SE> (212,445)
<TOTAL-LIABILITY-AND-EQUITY> 708
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (20,654)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,654)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,654)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
