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 December 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 309,035 48,617
A/R 157,202 415,986
Inventory 9,035 4,052
Prepaid Expenses 2,666 17,852
Deferred Income Tax Asset - 14,679
______________ _____________
Total Current Assets 477,937 501,185
Property & Equipment
At Cost 303,666 276,790
Less: Accumulated Depre. (218,897) (191,827)
______________ ______________
Net Property & Equipment 84,769 84,963
Long-Term Assets
Def. IX Assets - LT - 918,173
Other Assets
Notes Receivable - 80,000
Investment at Cost 14,576 100,000
Other Assets 10,391 779,338
Goodwill 143,125 -
______________ ______________
Total Other Assets 168,091 959,338
TOTAL ASSETS 730,798 2,463,659
Current Liabilities
Accounts Payable 270,282 373,419
Payroll Payable 859 513
State Income Tax Payable - -
Lease Obligation - Current 5,272 7,556
Accrued Liabilities 40,135 8,194
Other Liabilities 37,611 -
Due to Shareholders 25,372 -
______________ ______________
Total Current Liabilities 379,530 389,682
Long-Term Liabilities
Lease Obligation - LT 8,698 13,969
Note Payable 204,976 214,567
Due to Shareholders 131,070 -
______________ ______________
Total Long-Term Liabilities 344,764 228,537
Stockholders' Equity
Common Stock 5,979 4,468
Add. Paid-In Capital 4,245,580 3,796,551
Treasury Stock (14) -
Add. Paid-In Cap. (Trea. Stock) 22,047 -
Current Deficit (126,551) (89,741)
Retained Deficit (4,138,538) (1,865,838)
______________ ______________
Total Stockholders' Equity 6,504 1,845,440
TOTAL S/H AND LIABILITIES 730,798 2,463,659
0.00 0.00
Statements of Operations for the Three Months Ended Dec. 31, 1998 and 1997
Three Months Ended Three Months Ended
Dec. 31, 1998 Dec. 31, 1997
Sales 817,850 262,087
Cost of Sales (726,409) (117,281)
______________ ______________
Operating Income 91,441 144,806
Salaries and Wages (101,197) (53,022)
Employee Benefits (24,732) (21,530)
______________ ______________
Total Salary and Benefits (125,929) (74,552)
Administrative
& General Expenses (138,690) (138,781)
Depreciation & Amortization (7,351) (6,006)
Marketing Expense (17,720) (14,644)
Interest Expense (5,373) (6,229)
Financial Expense (41) -
______________ ______________
Total Operating Expenses (295,104) (238,213)
______________ ______________
Gain/(Loss) from Operations (203,663) (93,406)
Other Income 75,113 3,665
______________ ______________
Gain/(Loss) before Taxes (128,551) (89,741)
Provision for Current
Year's Income Tax - -
______________ ______________
Net Income (Loss) for the
Year after Tax (128,551) (89,741)
Shares Outstanding 6,222,048 4,527,818
Profit (Loss) Per Share (0.02) (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, in addition, 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. The Company is also,
in cooperation with Eden, N. C.-based The Candy Professionals,
planning to launch a web confection retail site named CandyCenter.
(2) Results of Operations
The operating income for the quarter ending Dec. 31, 1998 was
$91,441, a decrease of $53,365 from the quarter ending Dec. 31, 1997.
This decrease is mainly due to the increase in the cost of sales from
the Recomex division.
The operating expenses for the quarter ending Dec. 31, 1998 was
$295,104, an increase of $56,892 from the quarter ending Dec. 31,
1997. The increase is mainly due to the Company's recent hiring of
new personnel to enhance the Company's web services, and also due to
the assumption of Recomex's payroll. 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: February 19, 1999 /s/ Wun C. Chiou, President
and Chairman of the Board
