U.S. Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal quarter ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 33-11324-LA
NetUSA, Inc.
(Name of small business issuer in its charter)
Colorado 84-1035751
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
201 San Antonio Cir., C250, Mountain View, CA 94040
(Address of principal executive offices)
Issuer's telephone number: (650) 948-6200
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
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. __X
Part I - Financial Information
Item 1: Financial Statements
(Note: unaudited, as permissible under Item 310(b) of Regulation S-B.)
Balance Sheet
1998 1997
Current Assets
Cash 18,226 696,144
A/R 309,765 442,678
Inventory 4,052 7,073
Prepaid Expenses 17,158 17,040
Deferred Income Tax Asset 14,679 -
______________ _____________
Total Current Assets 363,880 1,164,937
Property & Equipment
At Cost 276,790 241,936
Less: Accumulated Depre. (197,714) (157,850)
______________ ______________
Net Property & Equipment 79,076 84,086
Long-Term Assets
Def. IX Assets - LT 918,173 -
Other Assets
Notes Receivable 80,000 130,675
Investment at Cost 100,000 200,000
R&D Cost and Other 786,756 10,046
______________ ______________
Total Other Assets 966,756 340,721
TOTAL ASSETS 2,327,885 1,589,745
Current Liabilities
Accounts Payable 208,292 (14,697)
Payroll Payable 11,147 4,656
Lease Obligation - Current 5,526 -
Accrued Liabilities 11,791 -
______________ ______________
Total Current Liabilities 236,756 (10,041)
Long-Term Liabilities
Lease Obligation - LT 13,969 -
Note Payable 209,099 229,676
______________ ______________
Total Long-Term Liabilities 223,068 234,633.21
Stockholders' Equity
Common Stock 4,468 4,231,335
Add. Paid-In Capital 3,773,020 -
Treasury Stock (9) -
Add. Paid-In Cap. (Trea. Stock) 14,712 -
Current Deficit - (38,376)
Retained Deficit (1,924,130) (2,822,850)
______________ ______________
Total Stockholders' Equity 1,868,061 1,370,110
TOTAL S/H AND LIABILITIES 2,327,885 1,589,745
0.00 0.00
Statements of Operations for the Six Months Ended Mar. 31, 1998 and 1997
Six Months Ended Six Months Ended
Mar. 31, 1998 Mar. 31, 1997
Sales 469,714 965,879
Cost of Sales (155,792) (297,740)
______________ ______________
Operating Income 313,922 688,139
Other Income 4,610 41,122
______________ ______________
Total Revenue 318,532 709,261
Salaries and Wages (76,122) (188,628)
Employee Benefits (37,726) (11,550)
______________ ______________
Total Salary and Benefits (113,848) (200,178)
Administrative
& General Expenses (202,063) (347,105)
Depreciation & Amortization (12,014) -
Marketing Expense (36,223) (181,458)
Interest Expense (12,676) (13,096)
Financial Expense - -
______________ ______________
Total Operating Expenses (376,824) (741,837)
______________ ______________
Income (Loss) before Taxes (58,292) (32,576)
Provision for Current
Year's Income Tax - (800)
______________ ______________
Net Income (Loss) for the
Year after Tax (58,292) (33,376)
Weighted Average of Shares
Outstanding 4,458,468 4,458,468
Loss Per Common Share (0.01) (0.01)
Item 2: Management's Discussion and Analysis or Plan of Operation
(1) The Company
NetUSA, Inc., previously named Technology Management and
Marketing, Inc., was incorporated under the laws of the State of
Colorado on Dec. 31, 1985. The Company was engaged principally in
organizational activities until its public offering of securities in
1987. The Company was the exclusive licensee of Temple University for a
diagnostic test for the detection of gonorrhea, known as the GONOSTAT.
During the period May 1990 to December 31, 1995 the Company was
inactive. The Company did not file any SEC reports, Federal or State
income tax returns.
On February 26, 1996, the Company acquired 100% of the issued and
outstanding shares of Pacific Microelectronics, Inc., a company
incorporated in the State of California on July 1, 1987.
The Company's main business in recent years is merchandising
software products primarily through distributors and direct sales to
consumers. The Company also provides a newly developed
telecommunications system for offering Internet web site services and
facilitating fax and telephone service worldwide.
(2) Results of Operations
Revenues for the six months ended March 31, 1998, were $318,532,
compared to $709,261 for the same period ended March 31, 1997. The
$390,729 decrease was due primarily to Internet fax traffic decrease and
due to higher cost of telephone service. NetUSA has since then changed
its long distance telephone carrier and expect to see the traffic
increase and the cost decrease.
Operating expenses were $376,824 for the three months ended March
31, 1998, compared to $741,837 for the same period ended March 31, 1996,
a decrease of $365,013 because of overall reduction of business volume.
Marketing expenses decreased $145,235 due to termination and
reduction of advertising that is not cost effective.
During this period, substantial expenditures were made to test and
improve the company's experimental Internet phone service between the
United States, Japan, Hong Kong, and Taiwan. The company is continuing
the testing, and this will require additional expenditures in the coming
two quarters. The company believes that the service will become
commercially launchable within the year.
Part II: Other Information
Item 1: Legal Proceedings
NetUSA, Inc. and its relevant affiliates were not involved in any
reportable legal proceedings during this quarter.
Item 2: Changes in Securities
There were no changes in the relevant security instruments during
this quarter.
Item 3: Defaults Upon Senior Securities
There were no defaults upon senior securities during this quarter.
Item 4: Submission of Matters to a Vote of Security Holders
There was no matter submitted to a vote of security holders during
this quarter.
Item 5: Other Information
There is no relevant other information to be reported for this
quarter.
Item 6: Exhibits and Reports on Form 8-K
There are no exhibits to be attached for this form, and no Form 8-
K was filed during this quarter.
SIGNATURES
In accordance with the requirements of the Exchange Act, Registrant has
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NetUSA, Inc.
Dated: May 12, 1998 /s/ Wun C. Chiou, President
and Chairman of the Board
