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, 1999
[ ] 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)
103 Hammond Ave., Fremont, CA 94539
(Address of principal executive offices)
Issuer's telephone number: (510) 580-9800
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.)
(Note: these figures do not include the Candy Professionals division
that NetUSA acquired on March 1, 1999. NetUSA will file an amended
10-QSB containing the Candy Professionals' figures as soon as
possible.)
Balance Sheet
1999 1998
Current Assets
Cash 222,296 18,226
A/R 253,626 309,765
Inventory 20,164 4,052
Prepaid Expenses 1,701 17,158
Deferred Income Tax Asset - 14,679
______________ _____________
Total Current Assets 497,986 363,880
Property & Equipment
At Cost 306,372 276,790
Less: Accumulated Depre. (226,076) (197,714)
______________ ______________
Net Property & Equipment 80,295 79,076
Long-Term Assets
Def. IX Assets - LT - 918,173
Other Assets
Notes Receivable - 80,000
Investment at Cost 14,576 100,000
Other Assets 110,270 786,756
Goodwill 143,125 -
______________ ______________
Total Other Assets 267,970 966,756
TOTAL ASSETS 846,252 2,327,885
Current Liabilities
Accounts Payable 169,004 208,292
Payroll Payable 3,603 11,147
State Income Tax Payable - -
Lease Obligation - Current 5,272 5,526
Accrued Liabilities 78,471 11,791
Other Liabilities 27,933 -
Due to Shareholders 8,975 -
______________ ______________
Total Current Liabilities 293,257 236,756
Long-Term Liabilities
Lease Obligation - LT 8,698 13,969
Note Payable 196,646 209,099
Due to Shareholders 36,090 -
______________ ______________
Total Long-Term Liabilities 241,434 223,069
Stockholders' Equity
Common Stock 7,006 4,468
Add. Paid-In Capital 4,843,887 3,773,020
Treasury Stock (14) (9)
Add. Paid-In Cap. (Trea. Stock) 22,047 14,712
Current Deficit (422,827) (58,292)
Retained Deficit (4,138,538) (1,865,838)
______________ ______________
Total Stockholders' Equity 311,560 1,868,061
TOTAL S/H AND LIABILITIES 846,252 2,327,885
0.00 0.00
Statements of Operations for the Six Months Ended March 31, 1999 and 1998
Six Months Ended Six Months Ended
Mar. 31, 1999 Mar. 31, 1998
Sales 1,594,527 469,714
Cost of Sales (1,309,824) (155,792)
______________ ______________
Operating Income 284,704 313,922
Salaries and Wages (218,728) (76,122)
Employee Benefits (100,319) (37,726)
______________ ______________
Total Salary and Benefits (319,046) (113,848)
Administrative
& General Expenses (296,148) (202,063)
Depreciation & Amortization (14,744) (12,014)
Marketing Expense (162,245) (36,223)
Interest Expense (10,291) (12,677)
Financial Expense (41) -
______________ ______________
Total Operating Expenses (802,515) (376,824)
______________ ______________
Gain/(Loss) from Operations (517,811) (62,902)
Other Income 94,984 4,610
______________ ______________
Gain/(Loss) before Taxes (422,827) (58,292)
Provision for Current
Year's Income Tax - -
______________ ______________
Net Income (Loss) for the
Year after Tax (422,827) (58,292)
Shares Outstanding 10,068,082 4,527,818
Profit (Loss) Per Share (0.04) (0.02)
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. During the period May 1990 to December 31,
1995 the Company was inactive. 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 operates a division with the trade name
Recomex located in San Diego, Calif., that distributes various kinds
of computer peripherals. The Company also provides a newly developed
telecommunications system for offering Internet web site services and
facilitating fax and telephone service worldwide. Over the past
quarter, the Company has been working to expand its web services, in
the form of its SoftwareCenter website, which retails software
products from many software companies, and CandyCenter website, which
retails candies and other confections. The Company, in order to
further develop CandyCenter, purchased Eden, N.C.-based The Candy
Professionals (hereinafter TCP), a candy distribution service, on
March 1, 1999, and is operating TCP as an autonomous division,
coordinating with the Company proper on CandyCenter and also still
maintaining its distribution services.
(2) Results of Operations
(Note: as noted above, the figures from the Candy Professionals
division have not been included. They can significantly alter the
discussion below. If they do, NetUSA will revise this section in the
amended report.)
The operating income for the six months ending Mar. 31, 1999 was
$284,704, a decrease of $29,218 from the six months ending Mar. 31,
1998. This decrease is mainly due to the increase in the cost of
sales from the Recomex division.
The operating expenses for the six months ending Mar. 31, 1999
was $802,515, an increase of $425,691 from the six months ending Mar.
31, 1998. The increase is mainly due to the Company's recent hiring
of new personnel to enhance the Company's web services and purchase of
new equipment. The Company believes that the expenditures on
personnel will help the Company to accomplish its goals of
popularizing its SoftwareCenter and CandyCenter websites, thus in the
long run bringing in a significant increase in revenue.
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 21, 1999 /s/ James Yu, Acting
President and Chairman of the
Board
