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 Quarterly period ended June 30, 2000

                                       or

          [ ] Transition Report pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                  For the transition period from _____ to _____

                         Commission file number 0-21907

                             NEWSTATE HOLDINGS, INC.
        (Exact name of small business issuer as specified in its charter)


         Delaware                               84-1182875
-------------------------------         ------------------------------------
(State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
Incorporation or Organization)

               156 W. 56th Street, Suite 2005, New York, NY 10019
            --------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (212) 245-5801
                              --------------------
                         (Registrant's Telephone Number
                              Including Area Code)

                               RACOM SYSTEMS, INC.
                   16 W. 32nd Street, New York, New York 10001
                        Former Fiscal Year - December 31
                              ---------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

         Check whether the issuer (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 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:
             -----          ----

         Indicate the number of shares  outstanding of each of the  Registrant's
classes of common stock, as of August 8, 2000:

Class                                  Number of Shares Outstanding
------                             -------------------------------------

Common Stock, .01 par value                 11,508,684


<PAGE>

<TABLE>
<CAPTION>

                                      INDEX

<S>               <C>                                                                        <C>
Part I            Financial Information                                                      Page

                    Item 1.         Condensed Consolidated Balance Sheet as of                  4
                                    June 30, 2000

                                    Condensed Consolidated Statements of                        5
                                    Operations for the three months ended
                                    June 30, 2000 and June 30,1999

                                    Condensed Consolidated Statements of Cash                   6
                                    Flows for the three months ended June 30,
                                    2000 and June 30, 1999

                                    Notes to Condensed Financial Statements                     8

                    Item 2.         Management's Discussion and Analysis of                    11
                                    Financial Condition and Results of Operations

Part II           Other Information and Signatures                                             14

----------------------------------------------
</TABLE>

Statements  contained  in this  Report  which are not  historical  in nature are
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform  Act  of  1995.  These  forward-looking   statements  can  be
identified  by the  use  of  forward-looking  terminology  such  as  "believes,"
"expects,"  "may,"  "should",  or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.

Such  forward-looking  statements  involve certain risks and uncertainties  that
could cause actual results to differ materially from anticipated results.  These
risks and  uncertainties  include  regulatory  constraints,  changes  in laws or
regulations  governing  the  Company's  products and  international  trade,  the
ability of the Company to market  successfully  its products in an  increasingly
competitive  worldwide  market,  changes in the  Company's  operating  strategy,
failure to consummate  or  successfully  integrate  products  developments,  the
general  economy of the United States and the specific  global  markets in which
the Company  competes,  the availability of financing from internal and external
sources  and  other  factors  as may be  identified  from  time  to  time in the
Company's  filings  with  the  Securities  and  Exchange  Commission  or in  the
Company's  press  releases.  No assurance  can be given that the future  results
covered by the forward-looking  statements will be achieved. Other factors could
also cause actual results to vary  materially from the future results covered in
such forward-looking statements.


<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1.       Financial Statements.
<TABLE>
<CAPTION>

                    NEWSTATE HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

                                                               June 30, 2000
                                                               -------------
<S>                                                      <C>
ASSETS

Cash and cash equivalents                                 $          242,443
Restricted cash                                                       37,556
Interest-bearing deposits with banks                               3,339,783
Securities available for sale                                      1,442,258
Securities held to maturity                                           24,263
Loans held for investment                                          7,783,323
Loans held for sale                                               11,126,486
Residual interest in securitization                                7,123,698
Premises and equipment, net                                           98,103
Accrued interest receivable                                          954,576
Building and land                                                  3,234,921
Other assets                                                       5,314,924
         Total assets                                     $       40,722,334

LIABILITIES AND SHAREHOLDERS' DEFICIT

Short-term borrowings                                     $       31,543,177
Accrued expenses and other liabilities                               556,559
Long-term debt                                                     8,647,030
Severance and retirement benefits                                      3,403
Negative goodwill                                                 10,142,104
         Total liabilities                                        50,892,273

Minority interest                                                    (31,982)

Commitments and contingencies

Shareholders' deficit:
Common stock: $.01 par value;
        40,000,000 shares authorized;                              5,512,480
        11,508,684 shares issued and outstanding
Preferred Stock: no par value
        10,000,000 shares authorized;
        none issued and outstanding
Accumulated deficit                                              (14,749,908)
Accumulated other comprehensive loss                                (900,529)
         Total shareholders' deficit                             (10,137,957)
         Total liabilities and shareholders' deficit      $       40,722,334

</TABLE>

              The accompanying  notes are an integral part of these consolidated
financial statements.

<PAGE>

<TABLE>
<CAPTION>


                    NEWSTATE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)


                                                                    Three Months Ended       Three Months Ended
                                                                       June 30, 2000           June 30, 1999
                                                                    -------------------       ------------------
<S>                                                                      <C>                    <C>
Interest income:
      Loans                                                             $ 1,299,876            $ 2,727,491
      Deposits with banks                                                   237,574                914,104
                                                                          ---------            -----------
           Total interest income                                          1,537,450              3,641,595

Interest expense:
      Short-term borrowings                                                 918,653              1,616,480
      Long-term debt                                                        317,655              1,994,708
                                                                          ---------            -----------
           Total interest expense                                         1,236,308              3,611,188
                                                                          ---------            -----------

Net interest income                                                         301,142                 30,407
Provision for loan losses                                                   (16,349)                (3,474)
                                                                          ---------            -----------
Net interest expense after provision for loan losses                        284,793                 26,933
                                                                          ---------            -----------

Other income and expenses:
      Salaries and employee benefits                                       (516,384)              (889,469)
      General and administrative                                           (436,968)              (719,003)
      Provision for severance and retirement benefits                             0               (138,253)
      Amortization of negative goodwill                                     672,666                683,438
      Other income (expense), net                                              (162)               203,893
                                                                          ---------            -----------
                                                                           (280,848)              (859,394)
                                                                          ---------            ------------
Income (loss) before income taxes                                             3,945               (832,461)

Provision for income taxes                                                        0                (96,540)
Minority interest                                                             2,602                  8,662
                                                                          ---------            -----------
Net income (loss)                                                             6,547           $   (920,339)
                                                                         ==========            ===========
Basic and diluted net income (loss) per share of common stock           $      0.00           $      (0.10)

Average number of shares outstanding                                     11,508,684              9,332,482
                                                                         ==========             ==========


</TABLE>

              The accompanying  notes are an integral part of these consolidated
financial statements.


<PAGE>

<TABLE>
<CAPTION>

                    NEWSTATE HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                Three Months Ended        Three Months Ended
                                                                   June 30, 2000             June 30, 1999
                                                                -------------------       ------------------
<S>                                                                <C>
Cash flows from operating activities:
    Net income (loss)                                              $     6,547            $      (920,339)
    Adjustments to reconcile net loss to net cash used in
    Operating activities:
       Minority interest                                                (2,602)                    (8,662)
       Depreciation and amortization                                         -                     16,026
       Amortization of negative goodwill                              (672,666)                  (683,438)
       Provision for loan losses                                        16,350                          -
      Net loss on disposal of securities available for sale             76,443                          -
       Provision for severance and retirement benefits                 (16,873)                         -
       Increase in accrued employee benefit                                 -                     218,451
       Decrease in accrued expenses and other liabilities             (629,287)                  (272,183)
       Increase in accrued interest receivable and other              (732,196)                   107,646
                                                                   -----------               -------------
       assets

Net cash used in operating activities                               (1,954,284)                (1,542,499)

Cash flows from investing activities:
    Decrease in loans, net                                           7,279,951                 16,781,703
    Decrease in interest bearing deposits with banks                   801,760                  1,207,685
   Proceeds from sale of securities available for sale                  75,406                          -
   Purchase of securities available for sale                           (26,259)                (1,233,767)
    Acquisition of building and land                                (3,278,599)                         -
    Others                                                              25,766                    166,545
                                                                   -------------             -------------
Net cash provided by investing activities                            4,878,025                 16,922,166

Cash flows from financing activities:
    Increase in short-term borrowings, net                           1,659,762                 (3,027,707)
   Proceeds from issuance of long-term debt                            447,948                          -
    Payment on long term-debt                                       (5,150,077)               (18,712,052)
                                                                   -------------             ------------
Net cash used in financing activities                               (3,042,367)               (21,739,759)
Effect of exchange rate changes on cash                                    272                  1,570,770
                                                                   -------------             ------------
Net decrease in cash and cash equivalents                             (118,354)                (4,789,322)

Cash and cash equivalents at beginning of year                         360,797                 26,118,761
                                                                   -------------             ------------
Cash and cash equivalents at end of year                               242,443                 21,303,942
                                                                   -------------             ------------
Supplemental cash flow information:
    Cash paid for interest                                         $ 1,603,078               $  2,693,365
                                                                   =============             ============
    Cash paid for income taxes                                     $         0               $          0
                                                                   =============             ============

</TABLE>

              The accompanying  notes are an integral part of these consolidated
financial statements.


<PAGE>


                             NEWSTATE HOLDINGS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  JUNE 30, 2000


NOTE 1:       BASIS OF PRESENTATION

The  accompanying  financial  statements  report the  consolidated  accounts  of
NewState  Holding,  Inc.  (formerly  Racom Systems,  Inc.) and its  wholly-owned
subsidiaries,  NSK Holdings, Inc. (a Delaware corporation),  Racom Systems, Inc.
(a  Colorado  corporation)  and its 99.6% owned and newly  acquired  subsidiary,
NewState Capital Co., Ltd. (a Korean  corporation).  Pursuant to the acquisition
described in Note 3 below,  the Company has treated the transaction as a reverse
acquisition  and,  accordingly,  has  reported  the pro forma effect in the 1999
financial  statements in order to achieve  comparability  in its  operations and
cash flows. The Company was incorporated on June 3, 1991 pursuant to the laws of
the State of Delaware  and  presently  has its  principal  executive  offices in
Seoul, Korea and New York, New York.

NOTE 2:       UNAUDITED FINANCIAL STATEMENTS

The consolidated  financial  statements as of June 30, 2000, and for the periods
ended June 30,  2000 and 1999,  included  herein are  unaudited;  however,  such
information reflects all adjustments consisting of normal recurring adjustments,
which are, in the opinion of management,  necessary for a fair  presentation  of
the information for such periods.  The 1999 pro forma  presentation gives effect
to the reverse  acquisition in July 1999, in order to provide  comparability  in
the  presentation  of  operations  and cash flows.  In addition,  the results of
operations for the interim periods are not necessarily indicative of the results
for the  entire  fiscal  year.  The  accompanying  financial  statements  are in
condensed  form and  should be read in  conjunction  with the  Company's  annual
report filed on Form 10-KSB.

NOTE 3:       ACQUISITION

On July 20, 1999, the Company acquired approximately 99.6% (4,958,000 shares) of
the issued and outstanding capital stock of NewState Capital Co., Ltd., a Korean
corporation  ("NewState  Capital")  which was formerly a subsidiary  of NewState
Capital Corp., a New York  corporation  ("NewState NY"), in exchange for issuing
8,000,000 shares of the Company's common stock,  representing  approximately 80%
of the  Company's  total  issued  and  outstanding  shares of common  stock,  to
NewState.  The Company also  assumed a $5,000,000  liability of NewState NY to a
bank.  The terms and conditions of the  acquisition  are more fully set forth in
the  Agreement  and  Plan of  Reorganization,  dated as of July  14,  1999  (the
"Acquisition  Agreement"),  by and  among the  Company,  NewState  NY,  NewState
Capital and a newly formed wholly-owned subsidiary of the Company, NSK Holdings,
Inc., a Delaware corporation ("NSK"),  which is incorporated herein by reference
to the  Company's  Form 8-K filed with the  Securities  and Exchange  Commission
("Commission") on July 21, 1999. As a result of the Acquisition  Agreement,  (i)
NewState  Capital has become a subsidiary  of NSK,  (ii)  several new  investors
acquired 667,000 shares of the Company for $1,000,000 ($1.50 per share) pursuant
to the terms and  conditions of the Common Stock Purchase  Agreement  dated July
14, 1999 by and among the Company,  Ocean Strategic  Holdings  Limited and Zebra
Strategic  Holdings  Limited  which is  incorporated  herein by reference to the
Company's  Form 8-K  filed  with the  Commission  on July 21,  1999,  and  (iii)
NewState NY owns 80% of the common stock in the Company. Accordingly,  following
the consummation of the Acquisition, NewState NY controls the Company.

The  Company  accounted  for the  acquisition  as a  purchase  under  a  reverse
acquisition   procedure  whereby  NewState  Capital's  operations  and  retained
earnings are reported as continuous.

NewState  Capital is a finance  company  incorporated on February 18, 1994 under
the laws of the  Republic of Korea to engage in factoring  commercial  notes and
accounts  receivables,  and  to  provide  short-term  and  long-term  financing,
including home mortgage loans, to customers. On March 12, 1999, NewState Capital
acquired all the  outstanding  stock of Youngnam  Housing  Finance Co.,  Ltd., a
Korean company  providing  financings for the purchase of homes to middle-income
individuals.   The  acquisition  was  recorded  under  the  purchase  method  of
accounting.


NOTE 4: LOANS

Loans held for  investment at June 30, 2000 are as  followings  (in thousands of
Won):

<TABLE>
<CAPTION>

                                          Allowance for
                           Principal       loan losses      Balance       U.S.Dollars(a)
                           -------------  --------------  ------------  -----------------
<S>                        <C>              <C>            <C>               <C>
Loans held for investment  W17,549,004      W8,871,377     W8,677,627        $7,783,323

</TABLE>

     Loans  held  for   investment   consist  of   residential   mortgage  loans
(approximately  62%) and commercial and consumer  loans  (approximately  38%) at
June 30, 2000.

     (a) translated at the rate of W1,114.9:  $1.00,  the prevailing Won to U.S.
Dollar exchange rate on June 30, 2000

NOTE 5: SHORT TERM BORROWINGS

Short-term borrowings at June 30, 2000 comprise the following:

<TABLE>
<CAPTION>

                                     Annual Interest        Thousands
                                          Rate (%)            of Won         U.S. Dollars(a)
                                     -------------------  ----------------  ------------------
<S>                                     <C>               <C>                <C>
 General term borrowings                12.75 ~ 14.5       W   967,488         $   867,780
 Notes with short-term
    Finance companies                    9.25 ~ 14.0       W34,200,000         $30,675,397
                                                           -----------        ------------
                                                           W35,167,488         $31,543,177
                                                           ===========        ============

</TABLE>

(a)  translated  at the rate of  W1,114.9:  $1.00,  the  prevailing  Won to U.S.
     Dollar exchange rate on June 30, 2000

NOTE 6: LONG-TERM DEBT

Long-term debt at June 30, 2000 comprise the following:

                                     Thousands
            Reference                  of Won        U.S. Dollars(a)
                                     --------------   ---------------
            Debentures          (A)     W 3,240,574       $ 2,906,605
            Won currency loans  (B)     W 6,400,000       $ 5,740,425
                                     --------------   ---------------
                                        W 9,640,574       $ 8,647,030
                                     ===============  ===============

           (A) Debentures outstanding at June 30, 2000 comprise the following:

                                         Annual    Thousands
                                         Rates(%)    of Won     U.S. Dollars(a)
                                         --------    ------     ---------------

Debentures collateralized
  by bank letter of credit                 9.7     W  490,574     $  440,016
Non-collateralized debentures             10.5     W2,750,000     $2,466,589
                                          ----      ---------      ---------

                                                   W3,240,574     $2,906,605
                                                    =========       =========

(a)  translated  at the rate of  W1,114.9:  $1.00,  the  prevailing  Won to U.S.
     Dollar exchange rate on June 30, 2000


          (B) Won  currency  loans  outstanding  at June 30, 2000  comprise  the
following:

                          Annual          Thousands
                          Rates(%)          of Won          U.S. Dollars(a)
                       --------------    --------------    -----------------
Won currency loans      10.25 ~ 14.5      W6,400,000          $5,740,425
                        ------------       ---------           ---------
                                          W6,400,000          $5,740,425
                                           =========           =========

(a)  translated  at the rate of  W1,114.9:  $1.00,  the  prevailing  Won to U.S.
     Dollar exchange rate on June 30, 2000

NOTE 7:  SUBSEQUENT EVENT

The company issued  debentures on July 31, 2000 amounting to  approximately  $27
million (Korean Won equivalent  30,000 million.) The debentures were issued at a
discount  basis of 1.99% with  maturing  dates of January  31, 2002 and July 31,
2002, respectively.
<PAGE>


Item 2.       Management's Discussion and Analysis of Plan of Operation.

THE FOLLOWING ANALYSIS OF THE OPERATIONS AND FINANCIAL  CONDITION OF THE COMPANY
SHOULD  BE  READ  IN  CONJUNCTION  WITH  THE  CONDENSED  CONSOLIDATED  FINANCIAL
STATEMENTS,  INCLUDING NOTES THERETO, OF THE COMPANY CONTAINED ELSEWHERE IN THIS
FORM 10-QSB.

OVERVIEW

The Company's business strategy, undertaken by its operating subsidiary NewState
Capital Co. Ltd.  ("NewState  Capital"),  is  primarily  focused on three areas:
residential  mortgage loan  production,  loan  servicing and capital  markets in
Korea.  Loan  production  and loan  servicing  comprise the  Company's  mortgage
banking business and is core to the Company's whole operation. The operations of
the  capital  markets  segment  include  issuing  and  selling   mortgage-backed
securities (MBS) and making bulk purchases and sales of whole loans.  Currently,
issuing and selling MBS is only considered a source of funding primarily for the
Company's mortgage banking business.  However,  the Company plans to expand this
segment as a revenue generating operation in the near future.

The  Company's  current  business  plan is to expand  its  mortgage  origination
efforts throughout Korea,  develop and offer innovative new mortgage products to
Korean  middle-income  families and individuals,  and to securitize and sell its
mortgage loan portfolio as MBS to investors in Korea.

The Company's  results of operations  are  influenced  primarily by the level of
demand for mortgage  loans,  which is affected by such  external  factors as the
level and direction of interest  rates and the strength of the overall  economy,
as well as the economy in the Company's lending markets.  Home mortgage loans in
Korea,  including  those  originated  by the Company,  typically  have  variable
interest  rates.  There is no standard  lending rate by which mortgage  interest
rates  are  determined;   however,  mortgage  lenders,  including  the  Company,
typically  adjust their interest rates monthly to reflect the lender's  on-going
cost of funding.

The fiscal year ended  March 31,  2000 was the first year since its  acquisition
that the  Company was able to resume  normal  business  activities.  The Company
restructured  its  systems of  operations  and  processes  with an  emphasis  on
efficiently   originating,   underwriting  and  servicing   investment   quality
residential  mortgage  loans.  On March 20, 2000,  the Company  issued through a
special purpose entity (SPE) mortgage-backed  securities in the principal amount
of $38.8  million and became the first issuer of  mortgage-backed  securities in
Korea.  The Company  services the MBS, taking  responsibility  for collecting on
delinquent loans and recovering on defaulted loans. The Company intends to enter
the public mortgage-backed securitization market on a periodic basis.

RESULTS OF  OPERATIONS  FOR THE THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 1999

INTEREST INCOME

Interest  income on loans  decreased  53.6% to $1.3 million for the three months
ended June 30,  2000  ("First  Quarter  2000")  from $2.7  million for the three
months ended June 30, 1999 ("First Quarter  1999").  The decrease was due to the
decrease  of  approximately  $65.9  million  in loans,  compared  to the  amount
outstanding as of June 30, 1999.  The decrease in outstanding  loans is a result
of mortgage loans sold in connection with the issuance of MBS and prepaid loans.

Interest income on bank deposits decreased to $237,574 in the First Quarter 2000
from  $914,104  in the  First  Quarter  1999 due to a  decline  in cash and bank
deposits to $3.6 million from $27 million.

INTEREST EXPENSES

Total interest expense  decreased to $1.2 million in the First Quarter 2000 from
$3.6 million in the First Quarter 1999 due to lower outstanding borrowings.  The
Company  utilized  funds  raised from the  issuance of MBS and prepaid  loans to
reduce total  borrowings  to $40.2  million at the end of the First Quarter 2000
from $111 million at the end of the First Quarter 1999.

NET INTEREST INCOME

Net interest  income  increased to $301,142 for the First  Quarter 2000 from net
income of $30,407 for the First  Quarter  1999.  This  increase was due to lower
interest expenses resulting from decrease in borrowing rates and related costs.

SALARIES AND EMPLOYEE BENEFITS

Salaries and employee  benefits  decreased to $516,384 in the First Quarter 2000
from $889,469 in the First  Quarter  1999.  The decrease was due to the one-time
payment of special bonuses to employees in May 1999.

GENERAL AND ADMINISTRATION ("G&A")

G&A decreased to $436,968 for the First Quarter 2000 from $719,003 for the First
Quarter 1999 due mainly to one-time  consulting  and  professional  service fees
incurred with respect to the acquisition of NewState  Capital in 1999.

AMORTIZATION OF NEGATIVE GOODWILL

Negative goodwill, which represents the excess of fair value over purchase price
of net assets acquired,  is amortized on the  straight-line  basis over 5 years.
The amount of amortization for the First Quarter 2000 was $672,666.

OTHER INCOME (EXPENSE), NET

Other  income  (expense)  decreased  to ($162) in the  First  Quarter  2000 from
$203,893 in First  Quarter  1999.  Other  income in the First  Quarter  1999 was
primarily  attributed to the reversal of discount on loans recorded at March 31,
1999 in connection with prepayments of outstanding loans.

NET INCOME

The  Company  recorded  a net  income of $6,547 or $0.00 per share for the First
Quarter 2000 compared to a net loss of $920,339 or $0.10 per share for the First
Quarter  1999.  The  increase  in net income was  primarily  attributable  to an
increase  in net  interest  income and a  reduction  in  salaries  and  employee
benefits.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2000, the Company had cash and cash equivalents and interest-bearing
deposits  totaling $3.6 million  compared to $26.9 million at June 30, 1999. For
the three months ended June 30, 2000, cash used in operating  activities of $2.0
million was primarily due to (i) amortization of negative  goodwill of $672,666,
(ii) decrease in accrued expenses and other  liabilities of $629,287,  and (iii)
increase in accrued interest receivable and other assets of $732,295.

Cash provided by investing  activities was $4.9 million was primarily due to (i)
proceeds  received from  decrease in loans  outstanding  of $7.3  million,  (ii)
decrease in interest  bearing  deposits  with banks of $0.8  million,  and (iii)
acquisition of premises and equipment of $3.3 million.

For the First  Quarter 2000,  cash used in financial  activities of $3.0 million
was primarily due to (i) increase in short-term borrowings of $1.7 million, (ii)
increase in long-term  debt of $0.4  million,  and (iii)  repayment of long-term
debt of $5.2 million.  The Company will require  additional  capital to continue
its  operations.  The Company  intends to secure  additional  capital by issuing
corporate   bonds,   pledging   assets   for  bank   borrowings,   and   issuing
mortgage-backed  securities.  The  Company may also issue  additional  equity or
convertible  debt  securities,  if  required,  which may  result  in  additional
dilution to the holders of the Company's common stock. There can be no assurance
that additional  financing will be available on terms and conditions  acceptable
to the Company, if available at all.


<PAGE>


                                     PART II
                                OTHER INFORMATION

Item 1.       Legal Proceedings.
              ----------------------
              None.

Item 2.       Changes in Securities and Use of Proceeds.
              ----------------------------------------------------
              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:

         27       Financial Data Schedule

(b)      Reports on Form 8-K

         None.


<PAGE>



                                   SIGNATURES

         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.

                                         NEWSTATE HOLDINGS, INC.


                                         By:      ERNEST B. KIM
                                                  ----------------------------
                                                  Ernest B. Kim, Chief Executive
                                                  Officer and President