U.S. Securities and Exchange Commission
Washington, DC 20549
Form 1O-KSB
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996
[ I TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1933
Commission File Number: 33-11324-LA
NETUSA, INC.
(Formerly Known As Technology Management and Marketing Inc.)
(Name of small business issuer in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
201 San Antonio Cir., C250, Mountain View, CA 94040
(Address of principal executive offices)
Issuer's telephone number: (650) 948-6200
84-1035751
(I.R.S. Employer Identification Number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
---------------------- ---------------------------------------------
Common Over the Counter Bulletin Board (OTCBB)
Securities registered under Section 12(g) of the Exchange Act: None
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
<PAGE>
PART I
======
Item 1: Description of Business
(A) Business Development
NetUSA, Inc. (hereinafter NetUSA or the Company) was formed when
Technology Management and Marketing, Inc. (hereinafter TMMI) acquired the
Mountain View, Calif.-based Pacific Microelectronics, Inc. (hereinafter
Pacific Micro) in February, 1996, wherein the shareholders of Pacific Micro
relinquished control of the company in exchange for NetUSA stock. NetUSA thus
is a successor of TMMI. TMMI was formed in 1985, and subsequently transferred
all its assets and liabilities to GeoTrans Technology, Inc. of Delaware in
1990, and ceased operations; at the time of TMMI's merger with Pacific Micro,
TMMI had been out of operation for 6 years.
NetUSA has never been involved in any bankruptcy, receivership or similar
proceedings, and to the best knowledge of the drafter of this document,
neither has its predecessor TMMI.
(B) Business of Issuer
NetUSA has three principal divisions: Telecommunications, Web Services,
and Software.
(1) In General
NetUSA currently serves as its own distributor for most services and
directly deal with customers. The software division has additional methods of
distribution (see below)
Due to the nature of NetUSA's business, the company is not dependent on
major customers. NetUSA pursues its intellectual property rights mostly
through copyrighting and registering trademarks. NetUSA currently has 21
employees, 19 of whom are full-time employees.
(2) Telecommunications
The Telecommunications Division of NetUSA currently markets two main
services: Internet dial-up service, and Internet fax service (hereinafter
Interfax) . The Internet
<PAGE>
dial-up service allows users to connect to the Internet using their personal
computers and modems, to receive and send electronic mail, and to access the
World Wide Web. Interfax allows users to send facsimiles through the Internet
at cost that is significantly lower than the phone rate the users would
otherwise have needed to pay, particularly if the faxes were to be sent to
international destinations.
As is common knowledge, Internet dial-up service is a highly
competitive area of business. NetUSA plans to compete by offering friendly
service with easy-to-reach customer service, but does not foresee the dial-up
service to be a substantial source of revenue. Rather, the telecommunications
division will derive most of its revenue from Interfax. NetUSA is not aware
of any currently significant competitors for Interfax.
There are no current or expected governmental regulations that should
significantly affect most of NetUSA's telecommunications services.
(3) Web Services
The web services division of NetUSA has two main services:
Software Center and web design/hosting. Software Center is a World Wide Web
database maintained by NetUSA of major commercial software and hardware
products. Users access the database freely and may search for the products
that they require. They can then order the products through NetUSA, which
requires a surcharge on the orders Web design/hosting includes customized
services ranging from designing World Wide Web documents for clients to
hosting the clients' documents on NetUSA's computers to allow World Wide Web
users to access the clients' documents. NetUSA charges the client based on
its need.
NetUSA is aware of some web sites that indirectly compete with Software
Center. Software Center emphasizes commercial products and orders the
products for the customers, while most similar web sites concentrate on
Shareware (software that is downloadable for free but which requires
registration afterwards if the customer is satisfied), and therefore NetUSA do
not see those sites as true competitors. There are large numbers of companies
offering similar services to NetUSA's web design/hosting services. NetUSA
plans to compete by offering personalized services that allow the client to
fit the service as he or she wishes and by tendering high-quality service
difficult to find elsewhere.
(4) Software
NetUSA's software division, using the trade name Pacific Micro, currently
offers a number of utility software programs NetUSA's flagship software
product, Mac-In-DOS, allows users to exchange files between Apple Computers,
Inc.'s MacOS file system and Microsoft's Windows 95 and NT ("Windows") file
systems. Other major NetUSA software products include Common-Link, which
allows users to exchange files between MacOS Windows, and UNIX file systems
and SuperCut, which allows users to capture screen displays for publication
purposes.
<PAGE>
Other than the direct distribution mentioned above, NetUSA also
distributes its software through retail vendors and catalogues.
All of NetUSA's software products have competing products on the market.
NetUSA plans to compete with these products by offering programs that are
superior in ease of use and provide greater capabilities than competing
products, by frequently updating the software to take advantage of new
advances in software and hardware technology, as well as strategically pricing
the products.
Item 2: Description of Property
NetUSA does not own any real property.
Item 3: Legal Proceedings
NetUSA is not currently involved in any legal proceedings, either as
plaintiff or defendant, and is not aware of any pending actions on its behalf
or against it.
Item 4: Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year, there were no matter
submitted to a vote by the security holders.
PART II
=======
Item 5: Market for Common Equity and Related Shareholder Matters
During the fiscal year covered by this report, NetUSA did not sell any
unregistered securities which were made in reliance on Regulation S.
Item 6: Management's Discussion and Analysis or Plan of Operation
In general, NetUSA's cash supply has been steadily used for research and
development purposes, to build the telecommunications and software divisions,
within the past fiscal year. However, the company still has a sizable cash
reserve (see below, Item 7). At the same time, the revenues from the three
divisions have been fairly consistent through the quarters of this fiscal
year, so the company does not foresee significant financial difficulties
within the coming year.
NetUSA's liquidity will at least partially depend on the success of VON
(see above, Item 1). Due to the lack of competition and the desire of the
test market to see lower international long distance rates, NetUSA believes
that when VON is launched, it will receive a substantial cash infusion from
users. Further, for the first 3-6 months of VON service, NetUSA does not
foresee substantial expenditures necessary to add to its VON capacity.
However, such liquidity might not surface if international long distance phone
companies reduce their phone rates to make VON less attractive, but NetUSA
believes those actions are unlikely.
<PAGE>
NetUSA is also currently undergoing a major overhauling of Software
Center (see above, Item 1) that the company hopes will attract large amounts
of advertisement revenue. If that comes to fruition, NetUSA will have much
more liquidity than before, and even if does not, since this renovation of
Software Center does not require significant additional expenditure, the
company's financial situation should not be adversely impacted.
One event that may decrease the company's liquidity would be involve
changes in Macintosh users' operating system. Currently, NetUSA estimates
that 5%-10% of MacOS users would switch to Rhapsody, Apple Computers' new
high-end operating system. If this estimate is correct, Mac-In-DOS sales will
not be significantly impacted. However, if in actually 50% or more of MacOS
users switch to Rhapsody, Mac-In-DOS sales may suffer a setback until
Mac-In-DOS is revised to account for Rhapsody. NetUSA does not foresee a high
likelihood for that event to happen, though.
Item 7: Financial Statements
<TABLE>
<CAPTION>
NetUSA, Inc.
Condensed Consolidated Financial Statements
as of September 30,1996
(Unaudited)
<S> <C>
ASSETS. . . . . . . . . . . . . . 9/30/96
====== =======
Current Assets
Cash. . . . . . . . . . . . . . $ 772,088.71
Accounts Receivable . . . . . . 424,123.50
Inventory ..................... 7,073.00
Prepaid Exp . . . . . . . . . . 17,040.00
-----------
Total Current Assets. . . . . . $1,220,325.21
Property & Equipment, Net . . . $ 70,611.07
Other Assets
-------------
Investment at cost. . . . . . . $ 50,000.00
R&D Cost and Other. . . . . . . 15,965.97
----------------
Total Other Assets. . . . . . . $ 65,965.97
TOTAL ASSETS $1,356,902.25
==========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
====================================
Current Liabilities
----------------------
Accounts Payable $51,169.87
Payroll Payable 7,826.25
Lease Obligations-Current 25,080.00
----------------
Total Current Liabilities $84,076.12
Long-Term Liabilities
---------------------------
Note Payable $ 191,893.52
Note due Shareholder 1,947.66
-----------------
Total Long-Term Liabilities $ 193,841.18
Stockholders' Equity
-------------------------
Common Stock $ 4,227.92
Additional Paid-In Capital 3,897,606.71
Current Deficit (400,783.85)
Retained Deficit (2,422,065.83)
------------------
Total Shareholders' Equity 1,078,984.95
Total Liabilities and
Shareholders' Equity $ 1,356,902.25
================
REVENUE AND EXPENSES
======================
Revenues
------------
Sales $ 1,000,964.18
Less:Cost of Sales (374,653.96)
------------------
Total Operating Income $ 626,310.22
Other Income 26,009.96
------------------
Total Revenues $ 652,320.18
<PAGE>
Expenses
-----------
Salaries and Wages $ 205,600.67
Employee Benefits 59,076.18
Administrative/General Expenses 328,531.85
Marketing Expenses 113,574.39
Interest Expense 18,766.85
Financial Expense 354.47
-----------------
Total Operating Expenses $ 725,904.41
Net Profit (Loss) $73,584.23
Note: Audited financial statements for Sep. 30, 1996 were not prepared.
----
Please see the Form 10-KSB for September 30, 1997, filed concurrently with
this Form 10-KSB, which contains audited financial statements since the
acquisition of the dormant TMMI corporation by NetUSA (March 1, 1996 through
September 30, 1997).
Item 8: Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
In the past two fiscal years, NetUSA's accountant has neither resigned
nor been dismissed.
PART III
========
Item 9: Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act
(A) Directors/Executive Officers
Dr. Wun C. Chiou, Chief Executive Officer/Sole Director:
Dr. Chiou has been CEO and Director ever since the TMMI/ Pacific
Micro merger in February, 1996. From the time 5 years before this form's
filing up to February, 1996, he had been the CEO and sole Director of Pacific
Micro and held all actual and nominal responsibilities associated with those
offices. He does not hold a director position in any other reporting company.
(B) Significant Employees
<PAGE>
Mr. Bill Feeley, Director of Marketing:
Mr. Feeley has served as the chief of NetUSA's marketing since the merger
between Pacific Micro and TMMI, and for Pacific Micro before that from Dec.
1995. For the five years before this report, he has served in similar
capacities in several software firms.
Mr. Leo Xia, Chief Engineer:
Mr. Xia has served as the chief engineer for NetUSA since February, 1996.
Prior to that, he had been working as an electrical engineer. He is the key
architect behind NetUSA's utility software projects.
(C) Family Relationships
There are no family relationships among the directors, officers, and
employees disclosed above.
(D) Involvement in Certain Legal Proceedings
To the best knowledge of the drafter of this document, there are no
outstanding legal proceedings that are required to be disclosed under this
item against any person listed above.
Item 10: Executive Compensation
</TABLE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C>
Annual Long-Term Compensation All Other
Compensation Awards Payouts Compensation
(a) (b) (c) (d) (e) (f) (g) (h) (i)
(1) CEO '96 56 0 0 0 0 0 0
'95 0 0 0 0 0 0 0
(All figures are in thousands of US$.)
</TABLE>
<PAGE>
Key:
-----
(1) Dr. Wun Chiou
(a) Position held in company
(b) Fiscal year; '96 is October, 1995, through September, 1996; '95 is
October 1994 through September, 1995.
(c) Salary
(d) Bonus
(e) Other annual compensation
(f) Restricted stock awards
(g) Securities underlying options/SARs
(h) LTIP payouts
(i) All other compensation
Item 11: Security Ownership of Certain Beneficial Owners
(A) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------
Title of Class Name/Address of Amount and % of Class
Beneficial Owner Nature of
Beneficial
Ownership
- ---------------------------------------------------------------------
Common Stock Dr. Wun C. Chiou 3,000,000 69%
(Direct)
</TABLE>
(B) Security Ownership of Management
Same as (A) above.
(C) Changes in Control
There is no arrangement currently outstanding which may result in a
change of control.
Item 12: Certain Relationships and Related Transactions
None.
Item 13: Exhibits and Reports on Form 8-K
(A) Exhibits
There are no exhibits to be attached to this form.
(B) Reports on Form 8-K
Registrant filed a Form 8-K on January 8, 1998, which is incorporated
herein by reference, detailing the acquisition of Pacific Microelectronics,
Inc. and the change in the control of the company on Feb. 17, 1996.
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 4, 1998 /s/ Wun C. Chiou, President
and Chairman of the Board
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 772,089
<SECURITIES> 0
<RECEIVABLES> 424,123
<ALLOWANCES> 0
<INVENTORY> 7,073
<CURRENT-ASSETS> 1,220,325
<PP&E> 70,611
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,356,902
<CURRENT-LIABILITIES> 84,076
<BONDS> 193,841
0
0
<COMMON> 4,228
<OTHER-SE> 3,897,607
<TOTAL-LIABILITY-AND-EQUITY> 1,356,902
<SALES> 1,000,964
<TOTAL-REVENUES> 652,320
<CGS> 374,654
<TOTAL-COSTS> 374,654
<OTHER-EXPENSES> 725,904
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,766
<INCOME-PRETAX> 73,584
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,584
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
