UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[mark one]
•
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
•
For the quarterly period ended: October 31, 2009
*
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
*
For the transition period
Commission File Number 001-15665
UC HUB Group, Inc.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
88-0389393
(I.R.S. Employer Identification No.)
10 Appaloosa Lane, West Hills, Ca 91307
(Address of principal executive offices including Zip Code)
(800) 278-8870
(Registrant’s telephone number, including area code)
Former Address
285 EAST WARM SPRINGS ROAD, SUITE 105, LAS VEGAS, NEVADA, 89119
Registrant's telephone number, including area code: (800) 278-8870
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 o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Number of shares outstanding of the issuer’s common stock as of the latest practicable date: 52,717,804 shares of common stock, $.001 par value per share, as of December 14, 2009.
Transitional Small Business Disclosure Format (check one): Yes o No x
UC HUB Group, Inc.
Index
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PART I. FINANCIAL INFORMATION | |
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Item 1. | Financial Statements | |
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| Consolidated Balance Sheet as of October 31, 2009 (unaudited) | 3 |
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| Consolidated Statement of Operations for the three months ended October 31, 2009 and 2008 (unaudited) | 4 |
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| Consolidated Statements of Cash Flows for the three months ended October 31, 2009 and 2008 (unaudited) | 5 |
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| Notes to Consolidated Financial Statements (unaudited) | 6-15 |
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2
UC HUB Group & Subsidiaries, Inc.
Consolidated Balance Sheet
for the Quarter Ended October 31, 2009
| | | | | |
| | 2009 | 2008 | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS | | | | | |
Cash and cash equivalents | $ | 2,267 | $ | (6,155) | |
Loans Receivable | $ | 30,000 | $ | - | |
Other current assets | | - | | 46,378 | |
Total current assets | $ | 32,267 | $ | 40,222 | |
| | | | | |
Property and equipment, net of accumulated depreciation of ($49,934) | | 38,171 | | 650 | |
Licenses and Software | | 0 | | 105,900 | |
Marketable Securities (Investment PSPP) | | 0 | | 0 | |
Total assets | | 70,438 | | 146,768 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | | | | | |
| | | | | |
CURRENT LIABILITIES | | | | | |
Accounts payable | | 608,348 | | 247,838 | |
Accrued Officer Salary | | 1,058,500 | | 524,905 | |
Notes Payable | | 1,324,099 | | 1,390,055 | |
Accrued Interest Payable | | 72,001 | | | |
Total current liabilities | | 3,062,948 | | 2,162,798 | |
| | | | | |
LONG TERM LIABILITIES | | | | | |
Convertible Debenture | | 818,000 | | 918,000 | |
Long term payables | | 611,738 | | 395,500 | |
Total Long Term Liabilities | | 1,429,738 | | | |
Total Liabilities | | 4,492,687 | | 3,476,298 | |
| | | | | |
Stockholders' (deficit) | | | | | |
Convertible Preferred stock, 10,000,000 shares authorized, .001 par value per share; 4,292,292 shares issued and outstanding at October 31, 2009 | | 4,292 | | 4,292 | |
| | | | | |
Common stock, .001 par value 50,000,000 shares authorized, 52,717,804 shares issued and outstanding at October 31, 2009 | | 52,718 | | 29,593 | |
Stock subscription receivable | | - | | - | |
Additional paid-in capital | | 16,307,252 | | 15,981,183 | |
| | 0 | | 0 | |
Accumulated (deficit) | | (20,786,510) | | (19,344,598) | |
Deferred Compensation | | - | | - | |
Common Stock Issued in Advance | | - | | - | |
| | | | | |
| | | | | |
Total stockholder's (deficit) | | (4,422,248) | | (3,329,530) | |
| | | | | |
Total liabilities and stockholders' (deficit) | $ | 70,438 | $ | 146,768 | |
The accompanying notes are an integral part of these consolidated financial statements.
3
UC HUB Group & Subsidiaries, Inc.
Consolidated Statement of Operations
for the Quarter Ended October 31, 2009
| | | | | | | |
| | 2009 | | | 2008 | |
| | | | | | |
Revenues | $ | 0 | | | $ | 0 | |
| | | | | | | |
Cost of Sales | $ | - | | | $ | (13,351) | |
| | | | | | | |
Gross Profit | $ | 0 | | | $ | 0 | |
| | | | | | | |
Selling, general, and administrative expenses | $ | 132,240 | | | $ | 46,294 | |
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Total operating expenses | $ | 132,240 | | | $ | 172,882 | |
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Loss before other income and expense | $ | (132,240) | | | $ | (32,942) | |
| | | | | | | |
Income (loss) before income taxes | $ | (132,240) | | | $ | (32,942) | |
| | | | | | | |
Income tax benefit | $ | 0 | | | $ | 0 | |
| | | | | | | |
Net Loss | $ | (132,240) | | | $ | (32,942) | |
| | | | | | | |
NET LOSS PER COMMON SHARE | | | | | | | |
Profit (Loss) from operations | | | | | | | |
Loss from discontinued operations | | | | | | | |
Net loss | $ | .003 | | | $ | .003 | |
| | | | | | | |
PER SHARE INFORMATION - BASIC AND FULLY DILUTED | | | | | | | |
Weighted average shares outstanding | | : 52,717,804 | | | | : 29,592,804 | |
The accompanying notes are an integral part of these consolidated financial statements.
4
UC HUB Group & Subsidiaries, Inc.
Consolidated Statements of Cash Flows
for the Quarter Ended October 31, 2009
| | | | | | | | |
| | 2009 | | | 2008 | | |
| | | | | | | |
OPERATING ACTIVITIES | | | | | | | | |
Net (loss) | $ | (132,240) | ) | | $ | (32,942) | | |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | | | | | | | | |
Changes in: | | | | | | | | |
Accounts receivable | | | | | | | | |
Other current assets | | | | | | | | |
Loans Payable | | (35,632) | | | | | | |
Accounts payable | | 18,544 | ) | | | 53,175 | | |
Accrued Salary | | (5,000) | | | | | | |
Net cash (used in) operating activities | | (154,327) | ) | | | 20,233 | | |
| | | | | | | | |
INVESTING ACTIVITIES | | | | | | | | |
Acquisition of property and equipment | | (13,000) | | | | | | |
Net cash (used in) investing activities | | (13,000) | | | | - | | |
| | | | | | | | |
FINANCING ACTIVITIES | | | | | | | | |
Convertible Debentures | | (50,000) | | | | | | |
Investments | | 116,000 | | | | | | |
Capital Stock | | 103,750 | | | | | | |
Net cash provided by financing activities | | 169,750 | | | | - | | |
| | | | | | | | |
Net increase (decrease) in cash | | 2,423 | ) | | | 20,233 | | |
| | | | | | | | |
CASH AT BEGINNING OF QUARTER | | (156) | | | | (26,388) | | |
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CASH AT END OF QUARTER | $ | 2,267 | | | $ | (6,155) | | |
The accompanying notes are an integral part of these consolidated financial statements
5
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
BUSINESS AND BASIS OF PRESENTATION
UC Hub Group Inc. ("Company" or "UC Hub") was originally formed on February 22, 1999 under the laws of the State of California and subsequently became a Nevada Corporation through a California Public Hearing..
The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiaries. Significant inter-company transactions have been eliminated in consolidation.
UC Hub is mining and exploration company in precious metals, gems, oil and gas.
LIQUIDITY
As shown in the accompanying financial statements, the Company incurred a net loss of $132,240 and $32,942 during the three months ended October 31, 2009 and 2008, respectively. The Company's current liabilities exceeded its current assets by $ 4,422,249as of October 31, 2009 (see Note B).
ESTIMATES
The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
REVENUE RECOGNITION
The Company recognizes revenue when earned in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101").
On December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. The staff updated and revised the existing revenue recognition in Topic 13, Revenue Recognition, to make its interpretive guidance consistent with current accounting guidance, principally EITF Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." Also, SAB 104 incorporates portions of the Revenue Recognition in Financial Statements - Frequently Asked Questions and Answers document that the SEC staff considered relevant and rescinds the remainder. The company's revenue recognition policies are consistent with this guidance; therefore, this guidance will not have an immediate impact on the company's consolidated financial statements.
CASH EQUIVALENTS
The Company considers cash on hand, deposits in banks, and short-term investments purchased with an original maturity date of three months or less to be cash and cash equivalents. The carrying amounts reflected in the balance sheets for cash and cash equivalents approximate the fair values due to short maturities of these instruments.
INCOME TAXES
The Company has adopted Financial Accounting Standard No. 109 (SFAS 109) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.
F-7
RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial statements to conform to classifications used in the current year.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using straight-line methods over the estimated useful lives of the assets, principally three to five years, or the term of the lease, if shorter, for leasehold improvements.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No. 144 (SFAS 144). The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. SFAS No. 144 also requires assets to be disposed of be reported at the lower of the carrying amount or the fa ir value less costs to sell.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income," establishes standards for reporting and displaying of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company does not have any items of comprehensive income in any of the periods presented.
SEGMENT INFORMATION
The Company adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131"). SFAS establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions how to allocate resources and assess performance. The information disclosed herein, materially represents all of the financial information related to the Company's principal operating segment.
F-8
NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share," specifying the computation, presentation and disclosure requirements of earnings per share information. Basic earnings per share have been calculated based upon the weighted average number of common shares outstanding. Stock options and warrants have been excluded as common stock equivalents in the diluted earnings per share because they are either anti-dilutive, or their effect is not material.
STOCK BASED COMPENSATION
The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees", and related interpretations, in accounting for its stock option plans. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No.123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123 which are included in Note 17. The Company has also adopted the annual disclosure provisions of SFAS No. 148 in its financial repo rts for the year ended October 31, 2002 and for the subsequent periods.
Had compensation cost for the Plans been determined based on the fair value at the grant dates consistent with the method of SFAS 123, the Company's net loss and net loss per common and common equivalent share for the years ended October 31, 2008 and 2007 would have been increased to the pro forma amounts indicated below:
| | | | | | | |
| | October 31, | |
| | 2,008 | | 2,009 | |
Net Loss, as reported | | | (32,942) | | | (132,240) | |
Add: Total stock based employee compensation | | | | | | | |
compensation expense determined under fair | | | | | | | |
market value based method for all awards | | | - | | | - | |
| | | | | | | |
Pro forma net loss | | | (32,942) | | | (132,240) | |
| | | | | | | |
Earnings per share: | | | | | | | |
Basic and diluted loss per share: | | | | | | | |
| | | | | | | |
As reported | | | (0.003) | | | (0.003) | |
| | | | | | | |
Pro forma | | | (0.003) | | | (0.003) | |
In accordance with EITF 96-18 the measurement date to determine fair value was the date at which a commitment for performance by the counter party to earn the equity instrument was reached. The Company valued the shares issued for consulting services at the rate which represents the fair value of the services received which did not differ materially from the value of the stock issued.
F-9
CONCENTRATIONS OF CREDIT RISK
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. The Company periodically reviews its trade receivables in determining its allowance for doubtful accounts. The allowance for doubtful accounts was $0 as of October 31, 2009.
ADVERTISING
The Company follows a policy of charging the costs of advertising to expenses incurred. The Company incurred advertising expenses of $855 and $0 during the years ended October 31, 2009 and 2008, respectively.
NEW ACCOUNTING PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, "Amendments of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. This pronouncement is effective for contracts entered into or modified after June 30, 2003 (with certain exceptions), and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company's consolidated financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity, and is effective for public companie s as follows: (i) in November 2003, the FASB issued FASB Staff Position ("FSP") No. 150-03, which defers indefinitely (a) the measurement and classification guidance of SFAS No. 150 for all mandatory redeemable non-controlling interests in (and issued by) limited-life consolidated subsidiaries, and (b) SFAS No. 150's measurement guidance for other types of mandatory redeemable non-controlling interests, provided they were created before November 5, 2003; (ii) for financial instruments entered into or modified after May 31, 2003 that are outside the scope of FSP No. 150-3; and (iii) otherwise, at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS No. 150 on the aforementioned effective dates. The adoption of this pronouncement did not have a material impact on the Company's results of operations or financial condition.
In December 2003, the FASB issued a revision of SFAS No. 132, "Employers' Disclosures About Pensions And Other Postretirement Benefits." This pronouncement, SFAS No. 132-R, expands employers' disclosures about pension plans and other post-retirement benefits, but does not change the measurement or recognition of such plans required by SFAS No. 87, No. 88, and No. 106. SFAS No. 132-R retains the existing disclosure requirements of SFAS No. 132, and requires certain additional disclosures about defined benefit post-retirement plans. Except as described in the following sentence, SFAS No. 132-R is effective for foreign plans for fiscal years ending after June 15, 2004; after the effective date, restatement for some of the new disclosures is required for earlier annual periods. Some of the interim-period disclosures mandated by SFAS No. 132-R (such as the components of net periodic benefit cost, and certain key assumptions) are effective for foreign plans for qu arters beginning after December 15, 2003; other interim-period disclosures will not be required for the Company until the first quarter of 2006. Since the Company
does not have any defined benefit post-retirement plans, the adoption of this pronouncement did not have any impact on the Company's results of operations or financial condition. Other significant recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force ("EITF")), the American Institute of Certified Public Accountants, and the SEC are discussed elsewhere in these notes to the consolidated financial statements. In the opinion of management, significant recent accounting pronouncements did not or will not have a material effect on the consolidated financial statements.
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS 151, Inventory Costs* an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that "under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and re-handling costs may be so abnormal as to require treatment as current period charges" This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for inv entory costs incurred during fiscal years beginning after June 15, 2006. Management does not believe the adoption of this Statement will have any immediate material impact on the Company. In December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate Time-Sharing Transactions*an amendment of FASB Statements No. 66 and 67" ("SFAS 152) The amendments made by Statement 152 This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental
F-10
On December 16, 2004, the Financial Accounting Standards Board ("FASB") published Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2006. Accordingly, the Company will implement the revised standard in the fourth quarter of fiscal year 2006. Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements. Management is assessing the implications of this revised standard, which ma y materially impact the Company's results of operations in the fourth quarter of fiscal year 2006 and thereafter.
On December 16, 2004, FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions (" SFAS 153"). This statement amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. Under SFAS 153, if a non-monetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. SFAS 153 is effective for non-monetary transactions in fiscal periods that begin after June 15, 2006. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements during the Quarters ended October 31, 2009 and 2008, the Company incurred losses of ($132,240) and ($32,942) respectively. In addition, the Company has a stockholder's deficit of (4,422,248). These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
The Company's existence is dependent upon management's ability to develop profitable operations. Management is devoting substantially all of its efforts to becoming a public entity so that capital financing may be achieved. The accompanying statements do not include any adjustments that might result should the Company be unable to continue as a going concern. In order to improve the Company's liquidity, the Company's management is actively pursing additional equity financing through discussions with investment bankers and private investors. There can be no assurance the Company will be successful in its effort to secure additional equity financing.
NOTE C – MARKETABLE SECURITIES
In 2008 the transaction involving eSafe was rescinded..
F-11
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment at October 31, 2009 consists of the following:
| | | |
Accumulated depreciation | | | (49,934) |
Computers and Equipment | | | 45,752 |
Mining Equipment | | | 36,861 |
Furniture and Equipment | | | 5,493 |
Property and Equipment | | | 38,171 |
NOTE E - INCOME TAXES
The Company has adopted Financial Accounting Standard No. 109 which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.
At October 31, 2009, the Company has available for federal income tax purposes a net operating loss carry-forward of approximately that may be used to offset future taxable income. In the opinion of management, it is more likely than not that the benefits will not be realized based upon the earnings history of the Company.
NOTE F - LOSSES PER SHARE
The following table presents the computation of basic and diluted losses per share:
| | |
| | |
Selling, general, and administrative expenses | $ | (132,240) |
Total operating expenses | | (132,240) |
| | |
Loss before other income and expense | | (132,240) |
| | |
Other income (expense) | | - |
Other Income | | - |
Net other Income (loss) before income taxes | | (132,240) |
| | |
Income tax benefit | | - |
| | |
Net Loss | | (132,240) |
| | |
NET LOSS PER COMMON SHARE | | .003 |
F-12
NOTE G - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at October 31, 2009 are as follows:
| | | |
| | | |
Accounts payable | | | 608,348 |
Accrued Officer Salary | | | 1,058,500 |
Accrued Interest Payable | | | 72,001 |
Loans payable | | | 1,324,099 |
TOTAL CURRENT LIABILITIES | | | 2,454,601 |
NOTE H - NOTES PAYABLE
Promissory Notes payable
| | | |
Convertible Debenture | | | 818,000 |
Settlements | | | 70,738 |
Investments | | | 116,000 |
Notes payable | | | 425,000 |
TOTAL LONG TERM LIABILITIES | | | 1,429,738 |
Other notes payable
Pursuant to a Securities Purchase Agreement, dated as of June 6, 2007 (the "Securities Purchase Agreement"), UC Hub Group Inc. (the "Company") sold an Original Issue Discount Self-Liquidating Convertible Debenture having a principal amount of $378,000 (the "Debenture'). The Debenture was sold for $350,000. Except to pay off certain liabilities of the Company totaling approximately $327,000, the proceeds of the offering will be used for working capital purposes. The Debenture does not bear interest. The principal sum of the Debenture must be paid by June 7, 2008 and is convertible into 7,560,000 shares of the Company's common stock, at the Purchasers' option, at a conversion price equal to $0.05 per share
(subject to adjustment as provided in the Debenture). On the fist of each month commencing on the first date following the earlier of (a) 30 calendar days following the Effective Date and (b) 180 Calendar days following the Closing Date (as defined in the Securities Purchase Agreement) and terminating upon the full redemption of the Debenture, the Company shall redeem an amount equal to the sum of $21,000 in principal amount of the Debenture and all liquidated damages and other amounts owed to the holder of the Debenture. The full principal amount of the Debenture is due upon a default under the terms of the Debenture. In the event that the Company breaches any representation or warranty in the Securities Purchase Agreement, the outstanding principal amount of the Debenture, plus liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the holder's election, immediately due and payable i n cash at the Mandatory Default Amount (as defined in the Debenture). In connection with the sale of the Debenture, the Company also issued (i) a warrant to purchase 7,560,000 shares of the Company's common stock at a purchase price of $.075 per share, subject to adjustment as provided for in the warrant and a term of exercise of two years from June 7, 2007 (the "Initial Exercise Date") and (ii) a warrant to purchase 7,560,000 shares of the Company's common stock at a purchase price of $.05 per share, subject to adjustment as provided in the warrant, and a term commencing on Initial Exercise Date and terminating on the earlier of (a) 180 days following the date the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement executed in connection with the execution of the Securities Purchase Agreement is declared effective by the Securities and Exchange Commission and (b) the two year anniversary of the Initial Exercise Date. The Warrants on a cashless basis if at any time after one year from the date of issuance of the warrant there is no effective registration statement registering or no current prospectus available for, the resale of the shares of common stock underlying the warrant. In the event the purchaser exercises the warrants on a cashless basis, then the Company will not receive any proceeds. In addition, the conversion price of the Debenture and the exercise price of the warrants may be adjusted in certain circumstances such as if the Company pays a stock dividend, subdivides or combines outstanding shares of common stock into a greater or lesser number of shares, or takes such other actions as would otherwise result in dilution of the selling stockholder's position. The Company is required to file a registration statement with the Securities and Exchange Commission within 30 days of Closing Date (as defined in the Securities Purchase Agreement), which will include 150% of the common stock underlying the Debenture, and the warrant, any additional share s issuable in connection with any anti-dilution provisions in the note or the warrants and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.
Pursuant to a separate Securities Purchase Agreement, dated as of February 16, 2007 (the "Securities Purchase Agreement"), UC Hub Group Inc. (the "Company") sold an second Original Issue Discount Self-Liquidating Convertible Debenture having a principal amount of $540,000 (the "Debenture'). The Debenture was sold for $500,000 and the additional of $40,000 was expensed. Except to pay off certain liabilities of the Company the proceeds of the offering will be used for working capital purposes. The Debenture does not bear interest. The principal sum of the Debenture must be paid by February 16, 2008.
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The holder of the Debentures and the warrants many not to convert the Debentures or exercise their warrants and receive shares of the Company's common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise exceeds 4.9% of the then issued and outstanding shares of common stock. This limitation may be waived by the holder of the Debenture or warrants upon not less than 61 days' prior notice to the Company, to change the beneficial ownership limitation to 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this note or the exercise of the warrants. Upon such a change by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the beneficial ownership limitation may not be further waived by the holder of the notes or warrants.
NOTE I - CAPITAL STOCK
CONVERTIBLE PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of cumulative preferred stock, par value .001 per share. The preferred shares are convertible to common stock at a current ratio of 3:1. At October 31, 2009 there were 4,292,291 shares of preferred stock issued and outstanding.
COMMON STOCK
The Company is authorized to issue 500,000,000 shares of common stock, par value .001 per share. At the three months ended October 31, 2009 there were 52,717,804 shares of common stock issued and outstanding.
NOTE J - COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company does not lease any office space; it uses space provided by its Chief Executive.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has entered into an employment agreement with its Chief Executive Officer:
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Employment Agreement dated as of February 1, 2004 with Larry Wilcox as president and chief executive officer. The term of the agreement is for three years with an automatic extension beginning on the third anniversary of the agreement, and continuing every third anniversary, unless either party notifies the other in writing more than 90 days prior to the extension date that the agreement is no longer to be extended. The agreement provides that Mr. Wilcox may devote time to Wilcox Productions, so long as he continues to completely and adequately perform his duties pursuant to the agreement. Mr. Wilcox will receive a salary of $360,000 per year, plus incentive bonuses and stock options for 1,500,000 shares of our common stock exercisable at $0.16 per share under our 2003 Stock Option Plan. Mr. Wilcox is also subject to a non-competition agreement. NOTE: The 1,500,000 options granted Mr. Wilcox were cancelled on 5/25/2005and replaced with a grant by the board of directors of 6,585,000 options at a $.06 strike p rice.
The Company has consulting agreements with outside contractors, certain of whom are also Company stockholders. The Agreements are for various terms, some renewable automatically from period to period unless either the Company or Consultant terminates such engagement by written notice.
NOTE L - SETTLEMENT OF LITIGATION
In the ordinary course of business, we may be involved in legal proceedings from time to time. Although occasional adverse decisions or settlements may occur, we believe that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity. We will seek to minimize disputes with our customers but recognize the inevitability of legal action in today's business environment as an unfortunate price of conducting business.
Sutton Law Center, P.C. v. Altigen Communications, Inc., et al. (including Allcom)
Case No.: CV06-02167
Court: In the Second Judicial District Court of the State of Nevada, Washoe County
Date filed: September 5, 2006
Description: Plaintiff asserts claims against Integrated Communications Systems, Inc., Allcom USA, Inc. and Shawn Jones and Simon Eggington, former employees of Allcom USA, Inc., alleging that defendants installed a defective telephone system for plaintiff and falsely represented the performance of the phone system. Plaintiff seeks damages in the approximate amount of $70,000. Jones and Eggington have indicated that they believe that plaintiff's claims have little of no basis. Discovery has not yet commenced in the case and no trial date has been set.
Embarq Logistics, Inc. v. Allcom USA, Inc., UC Hub Group, Inc., and Vernon Bill Thompson
Case No.: 06C-036007
Court: Justice Court, Las Vegas Township, Clark County, Nevada
Date Filed: November 2006
Description: Plaintiff claims damages of approximately $10,000 for unpaid telephone equipment sold to defendant Allcom USA. Claims are asserted against the remaining defendants on the allegations that they are alter egos of Allcom. Defendants have offered to settle the claim as funds become available to them. No trial date has been set in the case.
NOTE M - SUBSEQUENT EVENTS
UC HUB Group Inc is focused on the development of mining and the oil and gas industry. The Company became a JV partner with Rector Oil on the first well in Illinois on 400 acre lease and has 6 completed additional wells on a 80 acre lease which will require some refurbishing. The first well is over half completed and as weather permits will be completed in a few weeks. The Company projects 4 to 5 pay zones going to a maximum depth of 1900 feet and has hit oil in the first pay zone. The Company expects to begin its mining venture in March 2010 as weather permits for gold and sapphires.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
UC HUB GROUP INC.
Larry Wilcox
Chief Executive Officer and Director
Date: December 12, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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Signature | | Title | | Date |
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/s/ Larry Wilcox Larry Wilcox | |
Chief Executive Officer and Director | |
December 12 , 2009 |
