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 nine months ended June 30, 2000
[ ] 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) 438-9955
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 X No
---
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
6/30/2000 9/30/1999
ASSETS
CURRENT ASSETS [C] [C]
--------------
Cash 95,554 71,125
A/R 652,362 495,318
Inventory 78,495 56,256
Prepaid Expenses 2,132 1,990
Deferred Income Tax Asset --- ---
______________ _____________
Total Current Assets 828,543 624,689
NON-CURRENT ASSETS
------------------
Property & Equipment
At Cost 611,057 609,168
Less: Accumulated Depre. (464,059) (417,514)
______________ ______________
Net Property & Equipment 146,998 191,654
Other Assets
Investment at Cost --- 1,137,000
Security Deposits 44,556 43,556
Intangible Assets
(At Cost) 1,717,097 1,716,998
Less: Accum. Amort. (22,626) (19,175)
______________ ______________
Total Other Assets 1,739,027 2,878,379
-------------- --------------
TOTAL ASSETS $ 2,714,568 $ 3,694,722
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
-------------------
Bank Overdraft 120,394 ---
Accounts Payable 612,821 479,613
Tax Payable 23,887 7,846
Lease Obligation - Current 4,146 4,146
Accrued Liabilities 58,859 58,860
Unearned Phone Revenue --- 73,996
Customer Deposits 52,951 29,664
Notes Payable 383,524 616,257
Stock Subscription in adv. 434,000 ---
______________ _____________
Total Current
Liabilities 1,690,582 1,270,382
Long-Term Liabilities
Lease Obligation - LT 8,698 8,698
Note Payable --- ---
Loan From Shareholders 641,053 ---
______________ ______________
Total Long-Term
Liabilities 649,751 8,698
-------------- --------------
TOTAL LIABILITES 2,340,333 1,279,080
Stockholders' Equity
Common Stock 10,965 10,915
Add. Paid-In Capital 8,078,490 8,650,539
Treasury Stock (14) (14)
Add. Paid-In Cap. -
(Treasury Stock) (12,064) (12,064)
Retained Deficit (7,703,142) (6,233,734)
______________ ______________
Total Stockholders'
Equity 374,235 2,415,642
-------------- --------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 2,714,568 $ 3,694,722
============== ==============
NetUSA, Inc.
Consolidated Statement of Stockholders' Equity
For the three months ended June 30, 2000
Common Stock Additional
Number of Paid-In Retained
Shares Amount Capital Deficit Total
Balances at
4/1/2000 9,696,732 $11,478 $8,881,476 ($6,881,988) $2,010,966
Prior Period
Adjustment (71,964) (71,964)
Issuance of
Common Stock 549,500 550 220,951 --- 221,501
Retirement of
Common Stock(1,062,500) (1,063) (1,023,937) --- (1,025,000)
Treasury
Stock (13,650) (14) (12,064) --- (12,078)
Net Loss
After Tax --- --- --- (749,190) (749,190)
__________ _______ ___________ __________ _________
Balances at
June 30, 2000 9,170,082 $10,951 $8,066,426 ($7,703,142) $374,235
Statements of Operations for the
Quarter Ended June 30, 2000 and
the Nine Months Ended June 30, 2000
Quarter Ended Nine Months Ended
June 30, 2000 June 30, 2000
[C] [C]
REVENUES
--------
Sales $ 408,284 $ 1,351,556
Cost of Sales (389,802) (1,072,058)
______________ ______________
Operating Income 18,482 279,498
OPERATING EXPENSES
------------------
Salaries/Wages/Benefits 185,721 578,316
Administrative &
General Expenses 474,806 967,605
Depreciation &
Amortization Expenses (9,155) 49,996
Marketing Expenses 9,005 35,621
Interest Expenses 7,214 16,451
______________ ______________
Total Operating
Expenses 667,591 1647,989
______________ ______________
Gain/(Loss)
from Operations (649,109) (1,368,491)
Other Income 11,960 11,960
Interest Income 309 345
Loss on Investment (112,000) (112,000)
______________ ______________
Gain/(Loss)
before Taxes (748,840) (1,468,186)
Provision for Current
Year's Income Tax (350) (1,220)
______________ ______________
Net Income/(Loss) for the
Year after Tax $ (749,190) $ (1,469,406)
============== ==============
Per Share Data
--------------
Shares Outstanding 9,170,082 9,170,082
Profit (Loss)
Per Share (0.0817) (0.1602)
NetUSA, Inc.
Consolidated Statement of Cash Flows
For the three months ended June 30, 2000
Increase (Decrease) in Cash and Cash Equivalents
Current Period Year-to-Date
4/1/00-6/30/00 10/1/99-6/30/00
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $356,620 $1,194,512
Cash Paid to Suppliers and Employees (413,148) (1,958,056)
Deposit Paid --- (1,000)
Miscellaneous Income 11,960 11,960
Interest Received from Banks 309 345
Interest Paid (7,214) (16,451)
Income Tax Paid (350) (1,765)
_________ __________
Net cash (used in)
operating activities (51,823) (770,455)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment 1,025,000 1,025,000
Purchase of equipment (244) (1,889)
Note receivable servicing --- (100)
_________ _________
Net cash (used in)
investing activities 1,024,756 1,023,011
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from and Repayment
of Note Payable (Net) (13,430) 38,570
Repayment of Loan (235,097) 184,909
Common Stock/Additional
Paid-in Capital Contribution (803,500) (572,000)
__________ _________
Net cash provided by
financing activities (1,052,027) (348,521)
__________ _________
Net decrease in Cash and
Cash Equivalents at end of period (79,094) (95,965)
Cash and Cash Equivalents
at beginning of period 54,254 71,125
__________ _________
Cash and Cash Equivalents
at end of period $ (24,840) $ (24,840)
========== =========
Analysis of Cash and Cash Equivalents at end of period
Cash $ 95,554 $ 95,554
Bank Overdraft (120,394) (120,394)
___________ __________
$ 24,840 $ 24,840
=========== ==========
NetUSA, Inc.
Reconciliation of Consolidated Statement
of Net Loss to Net Cash
(Used In)/Provided by Operating Activities
For the three months ended June 30, 2000
Current Period Year-to-Date
4/1/00-6/30/00 10/1/99-3/31/00
Net Loss for the period ($749,190) ($1,469,407)
Adjustments to reconcile net loss to
Net cash provided by (used in) operating
activities:
Depreciation and
Amortization (9,155) 49,996
Loss on Investment 112,000 112,000
Increase in
Accounts Receivable (24,009) (157,044)
(Increase)/Decrease
in Inventory (28,912) (22,239)
Increase in
Prepaid Expenses --- (1,142)
Increase/(Decrease) in
Accounts Payable 372,543 212,352
Increase/(Decrease)
in Tax Payable 3,834 3,034
Increase in
Other Liabilities --- 46,649
(Decrease) in
Other Liabilities (97,804) ---
Decrease in
Accrued Liabilities 36 14,548
Decrease in Due
to shareholders 6,798 6,798
Prior Period Adjustment (71,964) ---
Stock Subscription in advance
Ming Jian Shi 434,000 434,000
__________ _________
Net cash (used in)
operating activities ($51,823) ($770,455)
========== =========
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. In the recent
months, the Company has expanded itself into print and
electronic media and is receiving substantial revenue from
advertising in those media. 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 year, 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 also operates a
telecommunication services division under the name of
GlobalCom Teleservices, which offers conventional and
Internet telephone and fax services.
The company has made major changes to its Board of Directors,
Management and Operations. The Company has elected a new
Board of Directors, and they are:-
1) Mr. Ming Jian Shi, Chairman
2) Mr. Ming Xin Shi, Director
3) Mr. Wei Ling Soong, Director
This Board of Directors has resolved to develop new lines
of business to compliment their current operations. They
have made efforts to obtain further capital financing to
bolster the company during this time of change. The Board
has also made changes to the key Executive positions, and
they are as follows:-
1) Mr. Ming Jian Shi, Chief Executive Officer
2) Mr. James Yu Chun-YU, President
3) Mr. John Chang, Chief Operating Officer
4) Mr. Wei Ling Soong, Secretary
Due to increased competition, the company has directed its
focus towards printing, leveraging its strength in advertising
and internet expertise. The company has brought aboard a new
Chief Operating Officer to head this business. His name is
Mr. John Chang and he has many years of experience in the
printing business. Over the years he has developed an enviable
clientele in the Silicon Valley and the Greater San Francisco
Bay Area.
The company believes that its expertise in high tech
marketing and advertising will be a catalyst and strategic
advantage in building a successful printing enterprise.
(2) Results of Operations
The operating income for the nine months ending June
30, 2000 was $279,498, a decrease of $50,193 as compared
with that of the nine months ending June 30, 1999. This
decrease is mainly due to falling sales. For its Globalcom
telecommuncations business, the greatest factor is discounted
phone rates from competitors, such as "10-10-220". These
companies have taken a huge cut in market, taking away the
many customers from Globalcom's primary market, long
distance service to the Pacific Rim.
The company does not foresee that Globalcom's business will
recover, and will therefore shift its focus to other business.
Hardware sales for its Recomex division have fallen from
$1,412,697 to $846,990, due to a difficult consumer market and
very low pricing practices. The division is in a stagnant market
and will continue to struggle in the near future until such time
that significant technological advancements will drive consumer
spending and boost their sales. However, Recomex has weathered
this market before and has survived other similar firms in the
area that have failed.
The operating expenses for the nine months ending June
30, 2000 was $1,647,989, an increase of $423,138 as compared
with those of the nine months ending June 30, 1999. The
increase is mainly due to the Company's recent hiring of
new personnel to compliment the new business and purchase of new
equipment. NetUSA has slashed its marketing expenses, but has
increased in administrative and personnel expenses. These changes
are indicative of the company's effort to hire and retain
talent and to take advantage of strategic partnerships with
other businesses and entrepreneurs in Silicon Valley and in
the Pacific Rim to realize marketing savings. Other costs
associated with the printing business has also contributed to
operating overhead.
The Company believes that there will be a significant turn around
over the next fiscal year.
Part II: Other Information
Item 1: Legal Proceedings
NetUSA, Inc. and its relevant affiliates were involved
in a legal dispute which was settled for 1,062,500 shares
of common stock in lieu of an agreed upon amount of $100,000.
Otherwise there are no other proceedings that the company
considers reportable during this quarter.
Item 2: Changes in Securities
The company issued 549,500 shares of common stock for
cash to related parties at a total consideration of
$221,501 during the three months ended June 30, 2000.
The Company also retired 1,062,500 shares and 13,650
shares from the treasury. All transactions were for
cash and/or other valuable consideration.
The related party transactions are listed below:-
Beginning Balance
4/1/2000 9,696,732
Name No. of Shares Issued/(Retired)
Wei-Ling Soong 100,000
Joseph Lee 99,500
Chen Tung Shih 100,000
William Pedersen 25,000
William Yuan 75,000
Ben Hsu 50,000
James Yu 50,000
Michael Morrison 50,000
C.E. Armstrong (500,000)
William Shell (500,000)
Frank G. Gallagher (62,500)
----------
(513,000)
Treasury Stock (13,650)
Ending Balance
6/30/00 9,170,082
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 nine months period.
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 21, 2000
/s/ Mr. Ming Jian Shi
Chairman of the Board
and Chief Executive Officer