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, 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 are preliminary figures; the Company may make revisions to these figures if warranted.) Balance Sheet 1999 1998 Current Assets Cash 112,149 309,035 A/R 563,082 157,202 Inventory 60,396 9,035 Prepaid Expenses - 2,666 Deferred Income Tax Asset - - ______________ _____________ Total Current Assets 735,627 477,937 Property & Equipment At Cost 659,168 303,666 Less: Accumulated Depre. (427,518) (218,897) ______________ ______________ Net Property & Equipment 231,650 84,769 Other Assets Investment at Cost 1,137,000 14,576 Other Assets 43,556 10,391 Goodwill/Intangible 1,669,526 143,125 ______________ ______________ Total Other Assets 2,850,082 168,091 TOTAL ASSETS 3,817,359 730,798 Current Liabilities Accounts Payable 432,013 270,282 Payroll Payable - 859 State Income Tax Payable 7,846 - Lease Obligation - Current 4,146 5,272 Accrued Liabilities 58,860 40,135 Other Liabilities 91,788 5,223 Notes Payable 616,257 361,778 ______________ ______________ Total Current Liabilities 1,210,910 683,549 Long-Term Liabilities Lease Obligation - LT 8,698 8,698 ______________ ______________ Total Long-Term Liabilities 8,698 8,698 Stockholders' Equity Common Stock 10,365 5.979 Add. Paid-In Capital 9,044,148 4,245,580 Treasury Stock (14) (14) Add. Paid-In Cap. (Trea. Stock) (12,064) 22,047 Current Deficit (215,900) (126,551) Retained Deficit (6,228,784) (4,138,538) ______________ ______________ Total Stockholders' Equity 2,597,751 6,504 TOTAL S/H AND LIABILITIES 3,817,359 730,798 0.00 0.00 Statements of Operations for the Three Months Ended December 31, 1999 and 1998 Three Months Ended Three Months Ended Dec. 31, 1999 Dec. 31, 1998 Sales 520,107 817,850 Cost of Sales (278,416) (726,409) ______________ ______________ Operating Income 241,691 91,441 Salaries/Wages/Benefits (237,076) (125,929) Administrative, Depreciation, Amortization, Marketing, Interest, and Financial Expenses (220,514) (169,175) ______________ ______________ Total Operating Expenses (457,590) (295,104) ______________ ______________ Gain/(Loss) from Operations (215,899) (203,663) Other Income - 75,113 ______________ ______________ Gain/(Loss) before Taxes (215,899) (128,551) Provision for Current Year's Income Tax - - ______________ ______________ Net Income (Loss) for the Year after Tax (215,899) (128,551) Shares Outstanding 9,270,082 6,222,048 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. 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 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 also operates a telecommunication services division under the name GlobalCom Teleservices, which offers conventional and Internet telephone and fax services. (2) Results of Operations The operating income for the three months ending December 30, 1999 was $241,691, an increase of $150,250 from the three months ending December 30, 1998. This increase is mainly due to increases in advertising revenue from the operation of Silicon Valley High Tech Magazine and other advertising venues. The operating expenses for the three months ending December 30, 1999 was $457,591, an increase of $162,487 from the three months ending December 30, 1998. The increase is mainly due to the Company's recent hiring of new personnel and purchase of new equipment to start the operation of Silicon Valley High Tech Magazine and BizNet Business Directories. The Company believes that as the income figures indicate, these new business ventures have great potential, and the spending will be recaptured quickly. Part II: Other Information Item 1: Legal Proceedings NetUSA, Inc. and its relevant affiliates were not involved in any legal proceedings that the company considers reportable during this quarter. However, there is one litigation of note which may become reportable - a breach of contract proceeding in which DoubleClick, Inc., of New York is the plaintiff and NetUSA and CandyCenter.com, Inc., of North Carolina are co-defendants. The litigation may cost the company up to $100,000 in fees and costs. 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 22, 2000 /s/ James Yu, President and Chairman of the Board