Form 10QSB NEWCOM INTERNATIONAL INC

Quarterly report pursuant to section 13 and 15(d) for small business issuers

What is Form 10QSB?
  • Accession No.: 0001019687-02-001245 Act: 34 File No.: 000-30727 Film No.: 02689939
  • CIK: 0001058553
  • Submitted: 2002-06-28
  • Period of Report: 2002-03-31

10QSB TXT

newcom_10q-033102.txt

                                      <PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2002                     Commission File No. 0-30727
                                                                         -------

                           NEWCOM INTERNATIONAL, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          NEVADA                                       86-0907027
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

 515 WEST PENDER STREET, VANCOUVER, BRITISH COLUMBIA            V6B 6H5
------------------------------------------------------       ------------
      (Address of principal executive offices)                (Zip Code)

                                 (604) 681-5678
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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
                                     -------         ------


                      APPLICABLE ONLY TO CORPORATE ISSUERS:


         As of June 25, 2002, there were 15,500,000 shares of the Registrant's $
..01 par value common stock issued and outstanding.


<PAGE>

                           NEWCOM INTERNATIONAL, INC.
                                      INDEX



                                                                            Page
                                                                            ----
                                     PART I

Item 1.   Financial Statements

          Balance Sheet - March 31, 2002 (unaudited).......................... 1

          Statements of Operations - Three Months Ended
             March 31, 2002 and 2001 (unaudited) and the period from
             September 12, 1996 (inception) to March 31, 2002 (unaudited)..... 2

          Statements of Cash Flows - Three Months Ended
             March 30, 2002 and 2001 (unaudited) and the period from
             September 12, 1996 (inception) to March 31, 2002 (unaudited)..... 3

          Notes to Financial Statements....................................... 4

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations....................... 7

                                     PART II

Item 1.   Legal Proceedings................................................... 9

Item 2.   Changes In Securities............................................... 9

Item 3.   Defaults Upon Senior Securities..................................... 9

Item 4.   Submission of Matters to a Vote of Security Holders................. 9

Item 5.   Other Information................................................... 9

Item 6.   Exhibits and Reports on Form 8-K.................................... 9
          Signatures..........................................................10

                                        I

<PAGE>

                            NEWCOM INTERNATIONAL INC.
                             (A BLANK-CHECK COMPANY)
                                  BALANCE SHEET




                                                                      MARCH 31,
ASSETS                                                                  2002
                                                                    ------------
                                                                     (UNAUDITED)
CURRENT ASSETS:
   Cash                                                             $       705
   Prepaid expenses                                                           -
                                                                    ------------
TOTAL CURRENT ASSETS                                                        705

Notes receivable, net of allowance of $218,802 (Note 3)                       -
                                                                    ------------
                                                                    $       705
                                                                    ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
   Accounts payable                                                 $    60,421
   Note payable to related party                                         75,832
                                                                    ------------
TOTAL CURRENT LIABILITIES                                               136,253
                                                                    ------------
STOCKHOLDERS' DEFICIT:
   Common stock, $.001 par value;
      100,000,000 shares authorized;
      15,500,000 shares issued and outstanding                           15,500
   Additional paid-in capital                                         1,275,611
   Deficit accumulated as a blank-check company                      (1,426,659)
                                                                    ------------
TOTAL STOCKHOLDERS' DEFICIT                                            (135,548)
                                                                    ------------
                                                                    $       705
                                                                    ============



                 See accompanying notes to financial statements.

                                        1

<PAGE>
<TABLE>

                                NEWCOM INTERNATIONAL INC.
                                 (A BLANK-CHECK COMPANY)
                                STATEMENTS OF OPERATIONS

<CAPTION>

                                                                         FOR THE PERIOD
                                                                         FROM INCEPTION,
                                               FOR THE THREE MONTHS       SEPTEMBER 12,
                                                   MONTHS ENDED           1996, THROUGH
                                                     MARCH 31,              MARCH 31,
                                               2002            2001            2002
                                          -------------   -------------   -------------
                                                   (UNAUDITED)              (UNAUDITED)
<S>                                       <C>             <C>             <C>
Operating expenses:
    Management and consulting fees        $     10,500    $     10,500    $    464,000
    General and administrative expenses          2,944          11,147         277,924
    Impairment of notes receivable                   -               -         218,802
    Impairment of acquisition costs                  -               -         461,000
                                          -------------   -------------   -------------
      Total operating expenses                  13,444          21,647       1,421,726
                                          -------------   -------------   -------------
Operating loss                                 (13,444)        (21,647)     (1,421,726)
Other expenses (income):
    Interest expense                             1,405           1,405          28,262
    Interest income                                  -          (1,140)        (21,829)
    Other income                                     -               -          (1,500)
                                          -------------   -------------   -------------
      Total other expenses (income)              1,405             265           4,933
                                          -------------   -------------   -------------
Net loss                                  $    (14,849)   $    (21,912)   $ (1,426,659)
                                          =============   =============   =============
Basic and diluted weighted average
    shares outstanding                      15,500,000      15,500,000
                                          =============   =============
Basic and diluted loss per common share
                                          $          -    $          -
                                          =============   =============




                     See accompanying notes to financial statements

                                           2
</TABLE>

<PAGE>
<TABLE>

                                   NEWCOM INTERNATIONAL INC.
                                    (A BLANK-CHECK COMPANY)
                                    STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                 FOR THE PERIOD
                                                                                 FROM INCEPTION,
                                                       FOR THE THREE MONTHS       SEPTEMBER 12,
                                                           MONTHS ENDED           1996, THROUGH
                                                            MARCH 31,               MARCH 31,
                                                       2002            2001           2002
                                                    ------------   ------------   ------------
                                                           (UNAUDITED)            (UNAUDITED)
<S>                                                 <C>            <C>            <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
    Net loss                                        $   (14,849)   $   (21,912)   $(1,426,659)
Adjustment to reconcile net loss to net cash used
in operating activities:
    Impairment of notes receivable                            -              -        220,686
    Value of stock options granted below
    fair value                                                -              -        233,000
    Write-off of acquisition costs                            -              -        461,000
    Changes in operating assets and liabilities:
      Prepaid expenses                                    9,835         18,500              -
      Accounts payable and accrued expenses               3,566          2,650        107,032
                                                    ------------   ------------   ------------
Net cash used in operating activities                    (1,448)          (762)      (404,941)
                                                    ------------   ------------   ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
    Increase in notes receivable                              -         (1,140)      (481,243)
    Payments on notes receivable                              -              -        260,557
    Fees paid on fibre-optic cable network
    investment                                                -              -       (461,000)
    Redemption (Purchase) of certificate of
    deposit                                                   -              -              -
                                                    ------------   ------------   ------------
Net cash used in investing activities                         -         (1,140)      (681,686)
                                                    ------------   ------------   ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
    Initial capitalization                                    -              -         51,000
    Issuance of common stock                                  -              -        950,000
    Advances from related party                           1,405          1,405         86,332
                                                    ------------   ------------   ------------
Net cash provided by financing activities                 1,405          1,405      1,087,332
                                                    ------------   ------------   ------------
   Net increase (decrease) in cash                          (43)          (497)           705
Cash, beginning of period                                   748          1,340              -
                                                    ------------   ------------   ------------
Cash, end of period                                 $       705    $       843    $       705
                                                    ============   ============   ============

Cash paid during the period for:
   Interest                                         $         -    $     4,108    $    16,046

Non-cash investing and financing activities:
   Settlement of debt by stockholders               $         -    $         -    $    57,111

                        See accompanying notes to financial statements.

                                               3
</TABLE>

<PAGE>

                            NEWCOM INTERNATIONAL INC.
                             (A BLANK-CHECK COMPANY)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

NewCom International Inc. (the "Company") was incorporated in Nevada in
September 1996 under the name of AgriNet, Inc. In October 1996, NewCom amended
its Articles of Incorporation to change its name to NewCom International Inc.
Since its incorporation, NewCom has not conducted any significant operations.

NewCom's activities to date have focused primarily on incorporation activities
and the identification of potential operating opportunities or acquisitions
targets. Since NewCom has not yet commenced any principal operations and has not
yet earned significant revenues, NewCom is considered to be a blank-check
company.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant
estimates made by management during the periods presented relate to realization
of notes receivable and acquisition costs.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim financial data as of March 31, 2002, and for the three months ended
March 31, 2002 and 2001, is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly and Company's financial position as of
March 31, 2002, and the results of its operations and cash flows for the three
months ended March 31, 2002 and 2001.

GOING CONCERN AND MANAGEMENT'S PLANS

NewCom has a history of losses, has not commenced significant operations, and
has limited liquid resources. Such matters raise substantial doubt about
NewCom's ability to continue as a going concern. Management's plans with respect
to these conditions are to continue searching for additional sources of capital
and new operating opportunities. There are no assurances that management will be
successful. In the interim, NewCom will continue operating with minimal
overhead, and key administrative and management functions which will be provided
by consultants. Accordingly, the accompanying financial statements have been
presented under the assumption NewCom will continue as a going concern. No
adjustments have been made to the accompanying financial statements as a result
of this uncertainty.



                                        4

<PAGE>

                            NEWCOM INTERNATIONAL INC.
                             (A BLANK-CHECK COMPANY)


NOTE 2. PREPAID EXPENSES

In May 2000, the Company paid NewBridge $258,000, of which $75,000 was for
services rendered in preparation of its Form 10-SB and amendments with the
Securities and Exchange Commission, among other services, and amounts due from
NuVen and Newbridge totaling $82,200 for advisory fees and out of pocket
expenses. Of such amount paid to Newbridge, $100,800 was accounted for as a
prepaid expense at December 31, 2000 to be used for future fees and expenses.
During the current quarter and fiscal 2001, $9,835 and $90,965, respectively, of
fees and expenses were recorded against the prepaid expenses. At March 31, 2002
no balance remained in the prepaid fee account.

NOTE 3. NOTES RECEIVABLE

In September 1999, NewCom entered into an agreement with an unaffiliated company
to acquire an 8%, note receivable of an unrelated party with a face value of
$500,000, originally due March 1, 1999 for $472,000 cash. The note was secured
by 500,000 shares of common stock of Oasis Resorts International, Inc.
("Oasis"). The issuer of the note subsequently filed for bankruptcy. NewCom
entered into an agreement with NewBridge in November 1999 to exchange the note
for $472,000 in receivables due from nine (9) unrelated corporations and four
(4) individuals. Additionally, NewBridge and NewCom agreed to cross guarantees
whereby NewBridge has agreed to guarantee that NewCom will collect a minimum of
$472,000 on the substituted receivables or from liquidation of the collateral.
The Oasis shares subsequently became worthless. In November 2001, NewCom entered
into an agreement with NewBridge whereby NewBridge pledged as collateral for
these notes 500,000 shares of BioSecure Corp. ("BioSecure") (formerly Yes
Clothing Company) to satisfy its guarantee obligation. Management did not place
a value on such pledge since the pledge was not an absolute transfer of such
shares and the shares rapidly declined in value. NewBridge currently lacks
sufficient liquid assets to satisfy these notes. Management has evaluated the
realizability of these notes receivable and has written off $218,802 as an
impairment of such notes. Management intends to seek recovery of such amounts
from NewBridge when, and if, NewBridge has the ability to pay the obligation to
NewCom. There are no assurances that management will receive any of the amounts
due to NewCom.

NOTE 4. COMMITMENTS

Effective October 1, 1999, NewCom entered into an Advisory and Management
Agreement (the "Agreement") with NuVen Advisors Limited Partnership ("NuVen" or
the "Advisor"). In April 2000, the Agreement, and the amount due was assigned to
NewBridge Capital, Inc. ("NewBridge") by NuVen. Pursuant to the terms of this
agreement, NewCom is required to pay $3,500 per month, plus expenses, in
exchange for Advisor's assistance in the formulation of possible acquisition
strategies, and the management of financial and general and administrative
matters. In addition, NewCom is required to pay a fee equal to 10% of the asset
value or investment made in NewCom resulting from Advisor's efforts, and a
transaction fee (as defined) equal to 5% of the proceeds received by NewCom in
connection with a sale of its assets. In addition, NewCom granted a fully vested
option to NuVen to purchase 500,000 shares of NewCom's common stock at $0.50 per
share. In addition, NewCom granted a fully vested option to NuVen to purchase
500,000 shares of NewCom's common stock at $0.50 per share. Using the
Black-Scholes model to value these options, using a volatility of 50%, an
expected term of 5 years and a risk-free interest rate of 6.0%, NewCom valued
these options at $233,000. Since these options are fully vested, such value was
charged to operations for the year ended December 31, 1999. The Agreement has an
initial term of five years, but shall be automatically extended on an annual
basis, unless terminated by either party. At March 31, 2002, $665 was due to
NewBridge.


                                        5
<PAGE>

                            NEWCOM INTERNATIONAL INC.
                             (A BLANK-CHECK COMPANY)


NOTE 5. RELATED PARTY TRANSACTIONS

Effective October 6, 1999, NewCom entered into a note payable with an officer of
NewCom in exchange for advances made to NewCom. The note bears interest at 9.0%
per annuum, expires August 13, 2002, and is due on demand. In connection with
this note, accrued interest of $5,698 has been recorded in the accompanying
balance sheet.






                                        6

<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

PLAN OF OPERATION

NewCom's activities to date have focused on incorporation activities and the
identification of potential operating opportunities or acquisitions targets.
Since NewCom has not yet commenced any principal operations and has not yet
earned revenues, NewCom is considered to be a blank-check company. The plan of
operation over the next twelve (12) months is to identify and successfully enter
into suitable joint venture agreements or other business combinations.

In October 1999, NewCom entered into an Advisory and Management Agreement with
NuVen. NuVen is primarily an advisory company with interests in companies under
management and is not a broker dealer. The Advisory Agreement was assigned to
NewBridge in April 2000. As part of the Agreement, NewBridge is to attempt to
seek potential operating businesses and business opportunities with the intent
to acquire or merge with such businesses with NewCom. As of this date, these
attempts have been unsuccessful.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
-------------------------------------------------------------------------------

There were no operating revenues recorded during the three months ended March
31, 2002 or 2001.

The Registrant's general and administrative expenses were $13,000 for the three
months ended March 31, 2002, as compared to $22,000 for the same period last
year. The change is primarily attributable costs and expenses accrued or
amortized.

LIQUIDITY AND CAPITAL RESOURCES

NewCom has not commenced significant operations, and has limited liquid
resources. Such matters raise substantial doubt about NewCom's ability to
continue as a going concern. Management's recent efforts and future plans are
summarized below:

During fiscal 2000, NewCom collected $261,000 of the original $472,000 balance
of notes receivable. Management accrued interest of $6,000 and wrote-off as
uncollectible $2,000. The balance due at December 31, 2000 was $215,000.
Management used the monies to prepay NewBridge for future services and expenses
in the amount of $258,000. During 2000 and 2001, NewBridge has billed or
expended substantially all amounts. NewCom has unsuccessfully attempted to seek
recovery of amounts due under the NewBridge guarantee. Management sent a demand
letter in November 2001 to NewBridge requesting payment or collateral on its
guarantee of these notes as no payments were received during the year 2001. As a
result of this demand, NewCom entered into an agreement with NewBridge whereby
NewBridge pledged collateral for these notes, 500,000 shares of BioSecure Corp.
("BioSecure") (formerly Yes Clothing Company) to satisfy its guarantee
obligation. The market value of the shares at the time of the agreement was $.55
per share; however, subsequent to the pledge, the market value declined to $0.03
per share. NewBridge currently lacks sufficient liquid assets to satisfy these
notes. An allowance for this amount has been made based largely on the current
inability of NewBridge to satisfy its obligation to guarantee the receivables.
Management evaluated the realizability of the collection of these receivables
and wrote-off as uncollectible $219,000. The lack of collections of these
receivables has caused NewCom to delay in

                                        7

<PAGE>



pursuing acquisition targets and to file its annual report on Form 10-KSB late.
NewBridge is currently assisting management in identifying acquisition targets
as a means to avoid litigation by NewCom.

Management expects it will be necessary for NewCom to borrow funds or raise
funds through a equity or debt offering to conduct its current operations during
the next twelve (12) months. Management has attempted to keep its overhead as
low as possible, and further reduce its overhead in 2002. In the event NewCom
identifies an acquisition target, additional funds will most likely be required
for NewCom to operate and remain viable. This adds an additional element of risk
to investors and/or an operating company which may ultimately be acquired. The
financial statements have been presented under the assumption NewCom will
continue as a going concern. No adjustments have been made to the financial
statements as a result of NewCom's liquidity uncertainty.

The Registrant had minimal cash and cash equivalents at March 31, 2002 and 2001
and had negative working capital of $133,000 as of March 31, 2002. The limited
working capital is a direct result of the Registrant incurring expenses for
professional, consulting and advisory services and other overhead during the
periods. As of the date of this Report, the Registrant has no material
commitments for capital expenditures and no commitments for additional equity or
debt financing.

During the fiscal year 2000, $260,557 of cash was received on notes receivable.
Additionally during fiscal year 2000, the Company paid NewBridge $258,000, of
which $75,000 was for services rendered, advisory fees and out of pocket
expenses. Of such amount paid to Newbridge, $9,000 was accounted for as a
prepaid expense at December 31, 2001 to be used for future fees and expenses.
During the first quarter of 2002, this amount was used for fees and expenses.
The Company did not pay any expenses in cash.

GOING CONCERN

As a result of the Registrant having no revenue producing activities, the
Registrant has limited cash and cash equivalents remaining as of March 31, 2002,
to finance future operations. Such conditions raise substantial doubt about the
Registrant's ability to continue as a going concern. The Registrant will
continue to seek investments in entities which increase shareholder value. In
the interim, the Registrant will continue operating with minimal overhead, and
key administrative and management functions which will be provided by
consultants.

CRITICAL ACCOUNTING POLICIES

Accounting principles generally accepted in the United States ("GAAP") requires
the use of estimates, assumptions, judgments and subjective interpretations of
accounting principles that have an impact on the assets, liabilities, and
expense amounts reported. We believe our use of estimates and underlying
accounting assumptions adhere to GAAP and are consistently and conservatively
applied. We base our estimates on limited historical experience and on various
other assumptions that we believe to be reasonable under the circumstances.
Actual results may differ materially from these estimates under different
assumptions or conditions. Significant estimates made in 2001 and 2000 relate to
the recoverability of the notes receivable. We provided a full allowance for our
receivables in the amount of $218,802. We are unsure if any amounts will be
recovered in the near future.

REVERSE ACQUISITION ACCOUNTING

In the event NewCom acquires an operating company, which results in a change in
control of NewCom, the acquisition will be accounted for as a recapitalization
of the operating company, whereby, the assets and liabilities of NewCom will be
recorded at fair value, with no goodwill being attributable to NewCom, since
NewCom has no trade or business and has no intangible assets. The assets and
liabilities of the operating company, which subsequently maintains control of
NewCom, will be recorded at their historical bases.


                                        8
<PAGE>


                            PART II:OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          None

ITEM 2.   CHANGES IN SECURITIES

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None

ITEM 5.   OTHER INFORMATION

          None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)      Exhibits - None

          (b)      Form 8-K - None




                                        9

<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Company


                                               NewCom International Inc.


Date: May 18, 2002                             by: /s/ David Lo
                                                   -----------------------------
                                                   David Lo
                                                   President and Director




                                       10
                                      
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