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 June 30, 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 GlobalCom Teleservices division
that NetUSA acquired on April 1, 1999. NetUSA will file an amended 10-
QSB containing GlobalCom's figures as soon as possible.)
Balance Sheet
1999 1998
Current Assets
Cash 41.863 (24,309)
A/R 269,444 299,728
Inventory 28,102 35,529
Prepaid Expenses 2,583 16,465
Deferred Income Tax Asset - 48,524
______________ _____________
Total Current Assets 341,992 375,937
Property & Equipment
At Cost 346,870 304,290
Less: Accumulated Depre. (230,487) (204,862)
______________ ______________
Net Property & Equipment 116,385 99,428
Other Assets
Notes Receivable - 80,000
Investment at Cost 266,815 100,000
Other Assets 38,578 805,495
Goodwill 1,290,886 143,125
______________ ______________
Total Other Assets 1,596,277 1,128,620
TOTAL ASSETS 2,054,651 1,603,984
Current Liabilities
Accounts Payable 175,430 247,036
Payroll Payable 9,253 1,808
State Income Tax Payable - 20,151
Lease Obligation - Current 4,148 5,526
Accrued Liabilities 18,727 11,734
Other Liabilities 17,825 5,223
Due to Shareholders 83,552 74,500
______________ ______________
Total Current Liabilities 288,933 365,979
Long-Term Liabilities
Lease Obligation - LT 8,698 13,969
Note Payable 190,235 211,604
______________ ______________
Total Long-Term Liabilities 198,933 225,573
Stockholders' Equity
Common Stock 8,906 4,686
Add. Paid-In Capital 6,466,987 3,925,843
Treasury Stock (14) (10)
Add. Paid-In Cap. (Trea. Stock) 22,047 16,234
Current Deficit (792,602) (164,004)
Retained Deficit (4,138,538) (2,770,317)
______________ ______________
Total Stockholders' Equity 1,566,785 1,012,432
TOTAL S/H AND LIABILITIES 2,054,651 1,603,984
0.00 0.00
Statements of Operations for the Nine Months Ended June 30, 1999 and 1998
Nine Months Ended Nine Months Ended
Jun. 30, 1999 Jun. 30, 1998
Sales 2,100,651 1,149,133
Cost of Sales (1,770,959) (715,457)
______________ ______________
Operating Income 329,692 433,677
Salaries and Wages (344,187) (120,410)
Employee Benefits (130,103) (63,987)
______________ ______________
Total Salary and Benefits (474,290) (184,397)
Administrative
& General Expenses (469,516) (308,766)
Depreciation & Amortization (22,415) (31,511)
Marketing Expense (241,802) (60,094)
Interest Expense (15,028) (18,551)
Financial Expense (1,801) -
______________ ______________
Total Operating Expenses (1,224,852) (603,319)
______________ ______________
Gain/(Loss) from Operations (895,160) (169,643)
Other Income 102,558 5,638
______________ ______________
Gain/(Loss) before Taxes (792,602) (164,004)
Provision for Current
Year's Income Tax - -
______________ ______________
Net Income (Loss) for the
Year after Tax (792,602) (164,404)
Shares Outstanding 10,818,082 4,527,818
Profit (Loss) Per Share (0.07) (0.04)
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. 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. The Company also operates
a telecommunication services division under the name GlobalCom
Teleservices, which offers conventional and Internet telephone and fax
services.
(2) Results of Operations
(Note: as noted above, the figures from the GlobalCom 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 nine months ending June 30, 1999 was
$329,692, a decrease of $103,985 from the nine months ending June 30,
1998. This decrease is mainly due to the increase in the cost of sales
as the Company adjusts to operating the CandyCenter and GlobalCom
divisions.
The operating expenses for the nine months ending June 30, 1999
was $474,290, an increase of $289,893 from the nine months ending June
30, 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 as well as the reflection of assumption of CandyCenter
personnel costs. 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: August 18, 1999 /s/ James Yu,
President and Chairman of the
Board
