<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES ACT
OF 1934 FOR THE TRANSITION PERIOD FROM
-------------- TO --------------.
COMMISSION FILE NO. 33-18600-D
QCS CORPORATION
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(Exact name of small business issuer as specified in its charter.)
DELAWARE 98-0132465
- ----------------------- --------------------
(State or other jurisdiction (IRS Employer Identifica-
of incorporation or tion Number)
organization)
650 Castro Street, Suite 210, Mountain View, California 94041, U.S.A.
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(Address of principal executive offices)
(415) 966-1214
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Issuer's telephone number
Former fiscal year: June 30, 1995
New fiscal year: June 30, 1996
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(Former name, address and former fiscal year, if changed since last report)
Check whether registrant (1) filed all reports required to be filed by section
13 or 15 (d) of the Exchange Act of 1934 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
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As of March 31, 1995, 4,368,937 Convertible Preferred Shares and 15,646,000
Shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format: Yes No X
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL INFORMATION
For financial information, please see the Financial Statements on pages F-1
through F-4.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
In the 3rd quarter of fiscal year 1996, the Company continued to implement its
"Retail Partner Program" - enlisting world class retailer clients and providing
incentives for the retailer clients to refer their key suppliers to the
Company. As an example, K-mart was connected to the QCS Network during this
quarter and, through the Retail Partner Program, will be mandating during the
next quarter many of its overseas suppliers to also connect with the QCS retail
network. Quarterly revenue rose 145% from the corresponding quarter in the
last fiscal year and 24% from the last quarter ended December 31, 1995 to reach
$385,549. Gross Margin increased further from last quarter's 75% to reach 80%
in this quarter. Net loss for the quarter decreased to $251,703. In addition,
the Company reorganized its sales force and more closely re-aligned the
Company's sales coverage with differing needs of its clients by type and by
region. Driven by clients' communication and trading needs, the Company's
engineering team continued to add more functionalities to the QCS product and
services offering. In addition to existing electronic cataloging, networking
and trading features, newly developed functionalities include retail specific
news, proforma invoicing, purchase orders, and electronic quality inspection
reports. A web-site was created on the Internet to reach a broader audience
among various sectors in the global retail industry.
At the end of the quarter, the Company has an order backlog of $55,075 waiting
for installation at customer site. A self-install CD-ROM version of the
Company's product is currently being developed which, when available, will
expedite installation and customer connection, shorten the sales cycle, and
enable the Company to earn installation and recurring revenue sooner and reduce
or totally eliminate its order backlog.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings and the Company is not aware of any threatened
legal proceedings to which the Company is a party or to which its property is
subject.
2
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ITEM 2 CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
EXHIBITS
Not applicable.
REPORT ON FORM 8-K
Not applicable.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
May 10, 1996 QCS CORPORATION
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(REGISTRANT)
--------------------------------
(DABING LI)
CHIEF FINANCIAL OFFICER
3
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QCS CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE THREE-MONTHS PERIOD ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED
MAR. 31, 1996 MAR. 31, 1995
<S> <C> <C>
SERVICES REVENUE $ 385,549 $ 157,515
COSTS OF SERVICES RENDERED 78,403 92,131
GROSS PROFIT 307,146 65,384
GENERAL, ADMINISTRATION AND SELLING 568,760 421,662
EXPENSES
DEPRECIATION & AMORTIZATION 3,457 1,752
NET INCOME (LOSS) FROM OPERATIONS (265,071) (358,030)
INTEREST INCOME (EXPENSE) 13,368 15,545
PROFIT (LOSS) BEFORE INCOME TAXES (251,703) (342,485)
PROVISIONS FOR INCOME TAXES 0 0
NET PROFIT (LOSS) FOR PERIOD $ (251,703) $ (342,485)
FULLY DILUTED NUMBER OF SHARES 20,014,937 19,904,937
OUTSTANDING
NET PROFIT (LOSS) PER SHARE $ (0.01) $ (0.02)
</TABLE>
F-1
<PAGE>
QCS CORPORATION
CONSOLITATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
MAR. 31, 1996 MAR. 31, 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS
CASH 625,457 2,070,200
STOCK SUBSCRIPTIONS RECEIVABLE 0 466,820
TRADE ACCOUNT RECEIVABLE 523,060 208,694
PREPAID EXPENSES 0 32,160
OTHER CURRENT ASSETS 106,852 68,277
TOTAL CURRENT ASSETS 1,255,369 2,846,151
OFFICE EQUIPMENT, NET OF ACC. DEP. 314,303 63,468
TOTAL ASSETS $ 1,569,672 $ 2,909,619
LIABILITIES&STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
BANK BORROWINGS 0 0
OTHER LIABILITIES 0 0
ACCOUNTS PAYABLE 134,935 186,283
ACCRUED LIABILITIES 163,675 41,574
TOTAL CURRENT LIABILITIES 298,610 227,857
STOCKHOLDERS' EQUITY
COMMON STOCK, PAR VALUE $0.001 PER
SHARE, OUTSTANDING 15,536,000 SHARES
CAPITAL STOCK (SEE TABLE) 6,165,483 6,055,583
DEFICIT (4,927,294) (3,322,743)
CURRENCY TRANSL. ADJUSTMENTS 32,873 (51,078)
TOTAL STOCKHOLDERS' EQUITY 1,271,062 2,681,762
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,569,672 $ 2,909,619
</TABLE>
F-2
<PAGE>
QCS CORPORATION
CONSOLIDATED CAPITALIZATION TABLE
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
MAR. 31 1996 MAR. 31 1995
<S> <C> <C>
SERIES 'A', 5 % CONVERTIBLE PREFERENCE STOCK $ 4,369 $ 4,369
$0.001 PAR VALUE, AUTHORIZED 5,000,000
SHARES, OUTSTANDING 4,368,937 SHARES
COMMON STOCK, $0.001 PAR VALUE, 15,646 15,536
AUTHORIZED 40,000,000 SHARES,
OUTSTANDING 15,646,000 SHARES
EXCESS CAPITAL PAID-IN OVER PAR VALUE 6,145,468 6,035,678
TOTAL $ 6,165,483 $ 6,055,583
</TABLE>
F-3
<PAGE>
QCS CORPORATION
STATEMENT OF CASH-FLOWS
FOR THE THREE-MONTHS PERIOD ENDED
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
3 MONTHS 3 MONTHS
ENDED ENDED
MAR. 31, 1996 MAR. 31, 1995
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $ (251,703) $ (342,485)
ADJUSTMENTS TO RECONCILE LOSS FROM
OPERATIONS TO NET CASH CONSUMED
DEPRECIATION AND AMORTIZATION 3,457 1,752
(INCREASE) OR DECREASE IN ACCOUNTS (72,790) (82,647)
RECEIVABLE
(INCREASE) OR DECREASE IN PREPAID 75,361 (11,979)
EXPENSES AND OTHER CURRENT ASSETS
INCREASE OR (DECREASE) IN ACCOUNTS (122,005) (160,714)
PAYABLE
INCREASE OR (DECREASE) IN OTHER LIABILITIES (76,083) (115,410)
NET CASH GENERATED (USED) IN OPERATIONS (443,763) (390,055)
CASH FLOWS FROM INVESTMENT ACTIVITIES
(PURCHASE) DISPOSAL OF OFFICE EQUIPMENT (13,873) 0
STOCK SUBSCRIPTIONS RECEIVABLE 0 1,200,000
NET CASH GENERATED (USED) IN INVESTMENT (13,873) 1,200,000
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS (REPAYMENT)OF BANK BORROWINGS 0 0
PROCEEDS FROM ISSUE OF CAPITAL STOCK 110 0
NET CASH PROVIDED (USED) BY FINANCING 110 0
ACTIVITIES
NET INCREASE (DEREASE) IN CASH (457,526) 809,945
CASH AT BEGINNING OF PERIOD 1,104,173 1,256,071
EFFECT OF EXCHANGE RATES ON CASH (21,190) 4,184
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 625,457 $ 2,070,200
</TABLE>
F-4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 625,457 2,070,200
<SECURITIES> 0 0
<RECEIVABLES> 587,248 208,694
<ALLOWANCES> 64,188 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,255,869 2,846,151
<PP&E> 407,388 63,468
<DEPRECIATION> 93,085 0
<TOTAL-ASSETS> 1,569,672 2,909,619
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
4,369 4,369
<COMMON> 15,646 15,536
<OTHER-SE> 1,251,047 2,661,875
<TOTAL-LIABILITY-AND-EQUITY> 1,569,672 2,909,619
<SALES> 385,549 157,515
<TOTAL-REVENUES> 385,549 157,515
<CGS> 78,403 92,131
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 568,760 421,662
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (251,703) (342,485)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (251,703) (342,485)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (251,703) (342,485)
<EPS-PRIMARY> 0.016 0.022
<EPS-DILUTED> 0.013 0.017
</TABLE>
