UNITED STATES
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 December 31, 1999
TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _____________
Commission file number 000-13337
Buy It Cheap.com, 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)
Northeast (USA) Corp. (name change only)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to tbe 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) had been subject to such filing
requirements for the past 90 days. __ Yes X No
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: 8,408,187 shares of Common
Stock, $.001 par value per share, at January 27, 2000.
Transitional Small Business Disclosure Format (check one): Yes ___ No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Buy It Cheap.com, Inc. (unaudited)
Balance Sheet as of December 31, 1999
Statements of Loss for the three and six months ended December 31,
1999 and 1998
Statements of Cash Flows for the three and six months ended December
31, 1999
Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
BUY IT CHEAP.COM, INC.
Balance Sheets
As of
December 31, 1999 June 30, 1999
Assets
Current assets:
<S> <C> <C>
Cash 7,476 1,031
Notes receivable 48,790 --
Other 1,000 --
------- ------
Total current assets 57,266 1,031
-------- ------
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)
Computer equipment 3,515 --
Investment in website 19,400 --
Goodwill 179,377 --
--------- ----------
Total assets 259,558 1,031
========= ==========
Liabilities and Equity
Current liabilities:
Accounts payable 192,953 184,627
Due to officers and directors 5,559 5,559
-------- --------
Total current liabilities 198,512 190,186
-------- --------
Stockholders' equity:
Preferred stock - Series C, $.001 par 10 10
Common stock - $.001 par 8,558 7,158
Paid in capital 2,847,345 2,566,856
Treasury stock (751,100) (751,100)
Deficit (2,043,767) (2,012,079)
----------- -----------
Total stockholders' equity 61,046 (189,155)
----------- -----------
Total Liabilities and Equity $ 259,558 $ 1,031
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BUY IT CHEAP.COM, INC.
Statements of Loss
For the three months ended For the six months ended
December 31, December 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales Revenues $ -- $ -- $ -- $ --
-------- -------- ------ -------
General and administrative expenses 15,567 -- 31,688 --
-------- -------- ------ -------
Net loss before discontinued operations (15,567) -- (31,688) --
---------- --------- -------- --------
Net loss from discontinued operations -- (162) -- (483)
Net loss $(15,567) $ (162) $(31,688) (483)
========= ======== ========= =========
Net loss per share $ -- $ -- $ -- $ --
========= ======== ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BUY IT CHEAP.COM,INC.
Statements of Cash Flows
For the three months ended December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss (31,688) (483)
Adjustments to reconcile net loss to
net cash used by operating activities:
Changes in assets and liabilities
Accounts payable 8,326 --
Other (1,000) --
--------- ----------
Net cash used by operating activities (24,362) (483)
--------- ----------
Cash flows from investing activities:
Issuance of notes receivable (48,790) --
Investment in website (19,400) --
Investment in computer equipment (3,515) --
Purchase of goodwill from acquisition (179,577) --
--------- ----------
(251,082) --
--------- ----------
Cash flows from financing activities:
Issuance of common stock 281,889 --
--------- ----------
Net increase (decrease) in cash 6,445 (483)
Cash at beginning of period 1,031 1,102
-------- ----------
Cash at end of period $ 7,476 $ 619
======== =========
</TABLE>
<PAGE>
Northeast (USA) Corp.
Notes to Financial Statements
Financial Statements
The Balance Sheets, Statements of Loss, and Statements of Cash Flows for all
periods reported herein have been prepared by Buy It Cheap.com, Inc., formerly
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.
Nature of Business
The Company is a Delaware corporation. The Company has had limited business
operations for the past 30 months. Its current business plan includes Internet
retailing. All operations prior to June 30, 1999 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 December 31, 1999. In addition, the Company, as a result of its
acquisition of Buy It Cheap.com, Inc. (See Note on Acquisition) 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 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
contributed, the Company owned 56.52% of the joint venture and NEGPF owned
43.48%. To date, the Company has contributed $1 milliom in cash and the
technology. NEGPF has contributed $750,000 in cash, but has not contributed the
land-use right. The joint venture had only limited start-up operations and
operations effiectively ceased in 1997 due to a lack of funding. The Company has
communicated to 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.
<PAGE>
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 7,502,752 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. As of the last fiscal
year ended June 30, 1999, the Company had 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 the 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 such preferred shares had been
converted accordingly to their terms prior to July 1, 1998. The Ccompany 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 common stock in lieu of cash dividends. Those preferred
shareholders who did not accept shares of the Company's common stock for
dividends and those preferred shareholders who did not covert their preferred
shares are owed a total of $106,400 of dividend arrearages at December 31, 1999.
Acquisition
On August 5, 1990, 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 was a
start-up company formed by two directors of the Company that planned to 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 consumatted
on October 27, 1999 and became effective on November 3, 1999. The Company
recorded the acquisition at a purchase price of approximately $282,000 (the
market value of the Company's common stock at the date of the Board's approval
of the acquisition) and recorded goodwill from the transaction in the amount of
$179,377.
<PAGE>
Item 2. Management's Discussion and Analysis of Plan of Operation
Management's Plan of Operations During the Next 12 Months
Buy It Cheap.com, Inc. formerly Northeast (USA) Corp., (the "Company") has had
virtually no operations during its past two fiscal years, ended June 30, 1998
and 1999, respectively. 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 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. Thereafter, the Company filed
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)
recommence 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
January 15, 2000, approximately $50,000 in liquid assets available for future
operations.
Over the next several months, the Company plans to continue 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's 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
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 wedsite.
<PAGE>
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 seek a private placement of its stock, seeking to raise
between $1 and $2 million in new capital. This will permit the Company to
modestly 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 buisness expands. Once the Company has shown the
viability of its business model, it will seek a secondary offering in the $10
and $20 million range to launch growth. There can, however, be no assurances
that the Company will be successful in raising capital through a private
placement and/or accomplishing a secondary offering.
Certain of the informations set forth in this quarterly report on Form 10-QSB
may constitute "forward-looking statements" with the meaning of the Private
Securities Litigation Reform Act of 1995 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
in Northeast'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(a) Certificate of Incorporation, as amended, of the Company
(1)(2)(4)(7)
3.1(b) Certificate of Amendment of the Certificate of Incorporation of
the Company
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.(7)
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).
<PAGE>
(4) Incorporated by reference to the Company's Registration
Statement on Form S-1, No. 3312084.
(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 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 November 12, 1999 which included
Items 2 and 7. The financial statements required by Item 7(b) thereof were filed
via an amendment to the current report a Form 8-K on January 10, 2000.
<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.
BUY IT CHEAP.COM, INC.
Date February 14, 2000 /s/Stephen E. Roman, Jr.
____________________________
Signature
Stephen E. Roman, Jr.
President
EXHIBIT 3.1(b)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
NORTHEAST (USA) Corp.
================================================================================
NORTHEAST (USA) CORP., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is Northeast (USA) Corp.
2. The board of directors of the Corporation, at a meeting held on August
5, 1999, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of Incorporation of Northeast
(USA) Corp. be amended by changing the FIRST Article thereof so that,
as amended, said Article shall be and read as follows:
"FIRST: The name of the corporation is Buy It Cheap.com, Inc."
3. In lieu of a meeting, a majority of the shareholders of the Corporation
entitled to vote thereon consented in writing to the foregoing amendment,
as of December 1, 1999, in accordance with the provisions of Section 228 of
the General Corporation Law of the State of Delaware.
4. The foregoing amendment was duly adopted in accordance with the applicable
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed
on its behalf by its duly authorized officer this 1st day of December, 1999.
NORTHEAST (USA) CORP.
By: /s/Stephen E. Roman
________________________________
Stephen E. Roman, Jr., President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000745651
<NAME> BUY IT CHEAP.COM, INC.
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 7,476
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,266
<PP&E> 3,515
<DEPRECIATION> 0
<TOTAL-ASSETS> 259,558
<CURRENT-LIABILITIES> 198,512
<BONDS> 0
0
10
<COMMON> 8,558
<OTHER-SE> 52,478
<TOTAL-LIABILITY-AND-EQUITY> 259,558
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (31,688)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,688)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,688)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
