UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2005
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from to
Commission file number: 000-50284
UNIVERSAL TANNING VENTURES, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 80-0025175 | |
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer I.D. No.) |
600 East Altamonte Drive, Unit 1050
Altamonte Springs, Florida 32701
(407) 260-9206
(Address and telephone number of principal executive offices)
Indicate by check mark whether 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 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. x Yes ¨ No
The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of August 9, 2005 was 7,565,000 and there were 165 stockholders of record.
Transitional Small Business Issuer Format: ¨ YES x NO
UNIVERSAL TANNING VENTURES, INC.
FORM 10-QSB
INDEX
| PART I. | FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements (unaudited) | |||
| Consolidated Balance Sheet (unaudited) at June 30, 2005 | 3 | |||
| Consolidated Statements of Operations (unaudited) for the Three Months and Six Months Ended June 30, 2005 and 2004 | 4 | |||
| Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2005 and 2004 | 5 | |||
| Notes to Consolidated Financial Statements (unaudited) | 6 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 8 | ||
| Item 3. | Controls and Procedures | 14 | ||
| PART II | OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 15 | ||
| Item 2. | Changes in Securities and Use of Proceeds | 15 | ||
| Item 3. | Defaults Upon Senior Securities | 15 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 15 | ||
| Item 5. | Other Information | 15 | ||
| Item 6. | Exhibits and Reports on Form 8-K | 16 | ||
| SIGNATURE PAGE | 17 | |||
Universal Tanning Ventures, Inc.
And Subsidiary
Consolidated Balance Sheet
June 30, 2005 | ||||
| (unaudited) | ||||
| Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 13,916 | ||
Inventories | 3,287 | |||
Total current assets | 17,203 | |||
Property and equipment, net | 50,506 | |||
Total assets | $ | 67,709 | ||
| Liabilities and Stockholders’ Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 38,231 | ||
Accrued expenses | 7,020 | |||
Loan from stockholder | 19,500 | |||
Deferred revenue | 5,953 | |||
Total current liabilities | 70,704 | |||
Stockholders’ equity | ||||
Common stock, $0.0001 par value, 10,000,000 shares authorized, 7,565,000 shares issued and outstanding | 757 | |||
Additional paid-in capital | 554,694 | |||
Accumulated deficit | (558,446 | ) | ||
Total stockholders’ equity | 2,995 | |||
Total liabilities and stockholders’ equity | $ | 67,709 | ||
See accompanying notes to unaudited consolidated financial statements.
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Universal Tanning Ventures, Inc.
And Subsidiary
Consolidated Statements of Operations
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2005 (unaudited) | 2004 (unaudited) | 2005 (unaudited) | 2004 (unaudited) | |||||||||||||
Revenue: | ||||||||||||||||
Tanning services | $ | 33,676 | $ | 38,096 | $ | 69,787 | $ | 73,711 | ||||||||
Product sales, net of returns and allowances | 4,292 | 5,731 | 9,270 | 12,005 | ||||||||||||
Total revenue | 37,968 | 43,827 | 79,057 | 85,716 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Tanning services | 24,935 | 24,866 | 49,286 | 47,516 | ||||||||||||
Product sales | 2,120 | 1,668 | 3,894 | 4,238 | ||||||||||||
Total cost of revenue | 27,055 | 26,534 | 53,180 | 51,754 | ||||||||||||
Gross profit | 10,913 | 17,293 | 25,877 | 33,962 | ||||||||||||
Selling, general and administrative expenses | 24,464 | 26,078 | 55,294 | 62,579 | ||||||||||||
Loss from operations | (13,551 | ) | (8,785 | ) | (29,417 | ) | (28,617 | ) | ||||||||
Non-operating income (expense), net | (2 | ) | (28 | ) | (32 | ) | (23 | ) | ||||||||
Net loss | $ | (13,553 | ) | $ | (8,813 | ) | $ | (29,449 | ) | $ | (28,640 | ) | ||||
Weighted average common shares outstanding | 7,565,000 | 7,565,000 | 7,565,000 | 7,565,000 | ||||||||||||
Basic and diluted loss per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
See accompanying notes to unaudited consolidated financial statements.
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Universal Tanning Ventures, Inc.
And Subsidiary
Consolidated Statements of Cash Flows
| Six months ended June 30, | ||||||||
2005 (unaudited) | 2004 (unaudited) | |||||||
Operating activities: | ||||||||
Net loss | $ | (29,449 | ) | $ | (28,640 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 12,861 | 10,597 | ||||||
(Increase) decrease in assets: | ||||||||
Inventories | (85 | ) | 254 | |||||
Other current assets | — | (400 | ) | |||||
Increase (decrease) in liabilities: | ||||||||
Accounts payable | 5,468 | 7,789 | ||||||
Accrued expenses | 2,034 | (3,563 | ) | |||||
Deferred revenue | (1,394 | ) | (5,018 | ) | ||||
Net cash used in operating activities: | (10,565 | ) | (18,981 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (2,982 | ) | — | |||||
Net cash used in investing activities: | (2,982 | ) | — | |||||
Cash flows from financing activities: | ||||||||
Loan from stockholder | 16,000 | — | ||||||
Net cash provided by financing activities: | 16,000 | — | ||||||
Net increase (decrease) in cash and cash equivalents | 2,454 | (18,981 | ) | |||||
Cash and cash equivalents, beginning of period | 11,462 | 40,632 | ||||||
Cash and cash equivalents, end of period | $ | 13,916 | $ | 21,651 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 32 | $ | 28 | ||||
See accompanying notes to unaudited consolidated financial statements.
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UNIVERSAL TANNING VENTURES, INC.
AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
June 30, 2005
| Note | 1 - Summary of Significant Accounting Policies |
Basis of Presentation.The accompanying unaudited consolidated financial statements have been prepared by Universal Tanning Ventures, Inc. (the “Company”) without audit, pursuant to the rules and regulations of the U. S. Securities and Exchange Commission for Form 10-QSB. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The unaudited consolidated financial statements included herein reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim period. Interim results are not necessarily indicative of the results that may be expected for the year. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis or plan of operation, for the year ended December 31, 2004, contained in the Company’s December 31, 2004 Annual Report on Form 10-KSB.
The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since January 4, 2002 (date of inception), which losses have caused an accumulated deficit of approximately $558,400 as of June 30, 2005. In addition, the Company has consumed cash in its operating activities of approximately $29,200 and $38,800 for the years ended December 31, 2004 and 2003, respectively. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Management has been able, thus far, to finance the losses, as well as the growth of the business, through a private placement and a public offering. The Company is continuing to seek other sources of financing and attempting to increase revenues within its core business of tanning services and products. In addition, the Company is exploring alternate ways of generating revenues through partnerships with other businesses. Conversely, the ongoing development and maintenance of its single location is expected to result in operating losses for the foreseeable future. There are no assurances that the Company will be successful in achieving its goals.
In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.
Income Taxes. The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. The Company has net operating loss carryforwards that may be offset against future taxable income. Due to the uncertainty regarding the success of future operations, management has valued the deferred tax asset allowance at 100% of the related deferred tax assets.
6
UNIVERSAL TANNING VENTURES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
Loss per Share. The Company utilizes Financial Accounting Standards Board Statement No. 128, “Earnings Per Share.” Statement No. 128 requires the presentation of basic and diluted loss per share on the face of the statement of operations.
Basic loss per share has been calculated using the weighted average number of common shares outstanding during the period. In calculating diluted loss per share, the Company had no common stock equivalent shares as of June 30, 2005 or 2004. However, if the Company had such common stock equivalents, they would be considered anti-dilutive due to there being losses, and therefore, basic and diluted loss per share are the same.
Note 2 – Employment Agreement
On February 28, 2002, the Company entered into a two-year employment agreement with its chief executive officer. The agreement provides for a base salary of $2,500 per month. Our employment agreement with Mr. Woods expired in February 2004 and has been extended on a month-to-month basis at a base salary of $3,500 per month.
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Item 2. Management’s Discussion and Analysis or Plan of Operation.
The following discussion of our plan of operation, financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in this Quarterly Report. See “Special Note Regarding Forward Looking Statements” included elsewhere in this Quarterly Report. Additional risk factors are also identified in our annual report to the U. S. Securities and Exchange Commission filed on Form 10-KSB and in other SEC filings.
Overview
We own and operate a single indoor tanning salon business that offers a full range of indoor tanning products and services to our customers. The revenue from this single salon accounts for 100% of our total revenues. Revenues for the three and six month periods ended June 30, 2005 was approximately $38,000 and $79,000, respectively.
We are a Delaware corporation formed for the purpose of acquiring the business of Altamonte Tan, Inc. (“Altamonte Tan”), a single indoor tanning salon previously owned and operated by our president, Glen Woods. Through our wholly owned subsidiary, UT Holdings, Inc., we acquired substantially all of the assets and assumed certain liabilities of Altamonte Tan, Inc. on February 28, 2002 in exchange for $30,000. We have continued to operate the business of Altamonte Tan under the name “Universal Tanning.” Although Altamonte Tan had been in operation for 5 years prior to our acquisition, our own independent pre-acquisition revenues and operations have been de minimis.
We believe that tanning salon customers want a single source from which to access all indoor tanning related products, services and information. Our goal is to become that single source by utilizing online information and services, multiple physical locations and an interconnected network of salons to become a total tanning company and a leading provider of tanning related goods and services. Our business strategy focuses on growth through opening new tanning salons and acquiring existing salons. The timing of the implementation of our strategy and our pace of growth will depend on the amount of capital we are able to secure for this purpose.
90% of our products are lotions; the remaining 10% consist of stickers, drinks, sunglasses and protective eyewear. We carry approximately 80-100 different lotion products ranging from sample packets to premier lotion products. Prices range on our lotion products from $4 for sample products to $55 for premier lotion products.
Our services are comprised of single tanning sessions, multi-session tanning packages, term memberships and upgrades. Single tanning sessions can be purchased on one of our 5 different types of tanning beds at prices ranging from $8 to $16. Our multi-session packages consist of the purchase of 5 or 10 tans on any one of our different types of beds. On each of the beds, we offer term memberships of 1 month. With each term membership, a customer can tan on that specific bed an unlimited number of times over the course of a month. Due to the wide variety of tanning choices, we offer upgrade packages so that clients can increase their tanning experience with an upgrade package to a more powerful tanning bed.
Our expenses from the operation of this single indoor tanning salon consist primarily of lease expenses for the tanning salon store location, payroll and related expenses, costs of tanning products, insurance and utilities.
Revenue recognition.Substantially all of our revenue is generated through the delivery of tanning services and the tanning product sales. Revenue is recognized as services are provided or products are purchased.
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Cost of services. Cost of services consists of direct costs to provide services to our customers and primarily includes certain salaries, wages and related fringe benefits of our employees directly serving customers, the cost of inventory and the allocation of occupancy costs.
Selling, general and administrative. Selling, general and administrative expenses include the salaries and wages and related fringe benefits of our employees not performing work directly for customers, and occupancy and other costs necessary to support those employees. Among the functions included in these expenses are sales and marketing and corporate services (accounting, information systems support, legal and human resources).
Plan of Operation
The Company continues to operate with very limited capital. Since the closing of our initial public offering in September of 2003, we have been unable to locate a consistent source of additional financing for use in our operational or expansion plans. Additionally, we have also been unsuccessful in convincing owners of other tanning salons to sell their businesses to us solely in exchange for our securities. In the absence of additional financing and tanning salon owners who are willing to sell their businesses in exchange only for our securities, we will continue to be unable to pursue our expansion plan.
We also recognize that the operation of a single tanning salon in the form of a public company is highly inefficient. In an effort to protect our stockholders, we intend not only to continue to search for an appropriate source of additional financing, but to re-evaluate our business and expansion plans to include an evaluation of other lines of business, both in the tanning industry and other industries. Until we complete the re-evaluation of our business plan, we intend to focus our available capital resources on the operation of our single tanning salon.
Additional Risks Facing our Business
Since completing our public offering in September of 2003 we have been unable to identify additional sources of capital or to acquire new tanning businesses solely in exchange for our securities. We are re-evaluating our business plan to try to find other ways of growing our business and expanding beyond the single tanning salon location we currently own and operate, as well as opportunities that may exist both inside and outside the tanning industry. There are no guarantees that we will be successful in retooling our business plan to find alternative methods to grow our business. If we are unsuccessful in retooling our business plans, our business prospects for the future and financial viability will be materially adversely affected.
9
Comparison of Three Months and Six Months Ended June 30, 2005 and June 30, 2004.
CONSOLIDATED FINANCIAL INFORMATION
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Total revenue | $ | 38,000 | $ | 43,800 | $ | 79,100 | $ | 85,700 | ||||||||
Total cost of revenue | 27,100 | 26,500 | 53,200 | 51,800 | ||||||||||||
Selling, general and administrative expenses | 24,500 | 26,100 | 55,300 | 62,600 | ||||||||||||
Net loss | (13,600 | ) | (8,800 | ) | (29,400 | ) | (28,600 | ) | ||||||||
Comparison of Three Months Ended June 30, 2005 and June 30, 2004.
Net Sales. Net sales of tanning services for the three months ended June 30, 2005 decreased by approximately $4,400 (or 12%) to $33,700 from $38,100 for the same period in 2004. This decrease was the result of the decreased advertising expenditures in late 2004. Net sales of tanning products for the three months ended June 30, 2005 decreased by approximately $1,400 (or 25%) to $4,300 from $5,700 for the same period in 2004. This decrease was the result of a consumer preference to select lower priced products during the period.
Cost of Revenue. Our cost of revenue for the three months ended June 30, 2005 increased by approximately $500 (or 2%) to $27,100 from $26,500 for the same time period in 2004. This was due to a increase in leasing expenses during 2005.
Selling, General and Administrative. Selling, general and administrative expenses for the three months ended June 30, 2005 decreased $1,600 (or 6%) to $24,500 from $26,100 for the same period in 2004. The decrease was primarily attributable to a decrease in professional fees as compared to the same period in 2004.
Non-operating Income (Expense), Net. Non-operating income (expense), net decreased by $26 to $(2) for the three months ended June 30, 2004 from $(28) for the same period in 2004.
Net Loss. Net loss for the three months ended June 30, 2005 was approximately $13,600 compared to $8,800 for 2004. The increase in our net loss was due to the reasons described herein above.
Comparison of Six Months Ended June 30, 2005 and June 30, 2004.
Net Sales. Net sales of tanning services for the six months ended June 30, 2005 decreased by approximately $3,900 (or 5%) to $69,800 from $73,700 for the same period in 2004. This decrease was the result of decreased advertising expenditures in late 2004. Net sales of tanning products for the six months ended June 30, 2005 decreased by approximately $2,700 (or 23%) to $9,300 from $12,000 for the same period in 2004.
Cost of Revenue. Our cost of revenue for the six months ended June 30, 2005 increased by approximately $1,400 (or 3%) to $53,200 from $51,800 for the same time period in 2004. This was due to a increase in leasing expenses during 2005.
Selling, General and Administrative. Selling, general and administrative expenses for the six months ended June 30, 2005 decreased $7,300 (or 12%) to $55,300 from $62,600 for the same period in 2003. The decrease was primarily attributable to a decrease in professional fees as compared to the same period in 2004.
10
Non-operating Income (Expense), Net. Non-operating income (expense), net increased by $9, to $(32) for the six months ended June 30, 2005 from $(23) for the same period in 2004.
Net Loss. Net loss for the six months ended June 30, 2005 was approximately $29,400 compared to $28,600 for 2004. The decrease in our net loss was due to the reasons described herein above.
Liquidity and Capital Resources
Net cash used in operating activities totaled approximately $10,600 during the six months ended June 30, 2005, compared to net used in operating activities of approximately $19,000 for the same period in 2004.
Cash used in investing activities totaled approximately $3,000 and $0 during the six months ended June 30, 2005 and 2004, respectively. Capital expenditures in 2005 were primarily comprised of the purchasing of lamps for current equipment in our single tanning salon. Net cash used in investing activities is largely attributable to capital expenditures for tanning equipment to maintain our current equipment. We have no material commitments for capital expenditures. However, we will continue to need computer and office equipment if our expansion plans are implemented.
Net cash provided by financing activities totaled approximately $16,000 and $0 during the six months ended June 30, 2005 and 2004, respectively. During the six months ended June 30, 2005, financing activities consisted of proceeds from a loan from one of our stockholders.
At June 30, 2005 we had cash balances in the amount of approximately $13,900. Our principal source of funds has been cash generated from financing activities. In 2002, we received offering proceeds of $562,500 (net of $62,500 of offering expenses) in a private placement, which were primarily used in the purchase of Altamonte Tan along with costs associated with our current public offering. On May 13, 2003, the SEC declared effective our registration statement on Form SB-2, wherein we registered for sale 1,000,000 shares of our common stock at an offer price of $1.00 per share. We offered the securities on a “best efforts” basis and no minimum amount of shares is required to be sold. We sold a total of 65,000 shares in this offering for total gross proceeds of $65,000.
We have been unable to generate significant liquidity or cash flow from our current operations. We frequently change our pricing structure to take into account our clients’ fluctuating cash flows, service and product needs. For example, we may reduce our prices of tanning packages or offer certain advantageous offers during our non-peak months of July through December. We generally experience an increased level of cash flow from operations in the first six months of the calendar year as our clients prepare their tan for the summer. We anticipate that cash flows from operations will be insufficient to fund our business operations for the full year 2005 and that we must continue attempting to raise additional capital to fund our operations and implement our business plan.
Variables and Trends
We anticipate experiencing greater sales in the first and second quarters of the calendar year, as opposed to the third and fourth quarters of the calendar year. The seasonality of our sales will be directly related to weather patterns. The first and second quarters of the calendar year are usually our strongest revenue producing quarters as customers begin to build their tan after the winter for the upcoming spring and summer season. The third quarter of the calendar year is usually the slowest due to the summer weather and customers electing to achieve their tan at the beach or other non-indoor location. The fourth quarter of the calendar year is slow at our location due to the warm temperatures and sunshine usually occurring in the central Florida area, where our store is located. Comparisons of our sales and operating results between different quarters within a single year are, therefore, not necessarily indicators of our future performance.
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Although we have a limited operating history in connection with the operation of our single tanning salon, we have no operating history with respect to our desire to expand our business to multiple locations. In the event we are able to obtain the necessary financing to move forward with our business plan, we expect our expenses to increase significantly as we grow our business and enter into new markets through the opening of new locations or through acquisitions. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance and must be considered in light of our single tanning salon operating history.
Looking forward at our business prospects for the future, we have no way of knowing if scientific research will find new or increased health risks to indoor tanning. If such new or increased health risks are discovered, or if media reports create concern or uncertainty in the public’s perception of the health risks associated with indoor tanning, our existing customers would likely decide to reduce or eliminate their use of our products and services. New customers would similarly be discouraged from patronizing our business. The resulting reduction in revenue would have a material adverse effect on our business and financial conditions.
Critical Accounting Policies
We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available to us. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
Revenue recognition.Substantially all of our revenue is generated through the delivery of tanning services and the tanning product sales. Revenue is recognized when products are purchased. When individual tans and upgrades are purchased, revenue is recognized when the service (or tan) is provided. If the customer buys a tanning package or term membership that contains multiple tanning sessions, the revenue is recognized in a straight-line basis as the tanning service is provided. We account for the total number of tans yet to be provided in the deferred revenue account in the current liability section of the balance sheet. Tanning packages purchased after March 1, 2002 have an expiration date of 12 months after the purchased date. Our experience is that most customers use their tanning package prior to expiration and that as we build our customer base, the balance of the deferred revenue account does not fluctuate that much due to the renewing or repurchasing of tanning packages by our customers.
Inventory Valuation. We review our inventory balances to determine if inventories can be sold at amounts equal to or greater than their carrying value. The review includes identification of slow-moving inventories, obsolete inventories, and discontinued products or lines of products. The identification process includes analysis of historical performance of the inventory and current operational plans for the inventory as well as industry and customer-specific trends. If our actual results differ from management expectations with respect to the selling of our inventories at amounts equal to or greater than our carrying amounts, we would be required to adjust our inventory values accordingly.
Net operating loss carryforwards.We have not recognized the benefit in our financial statements with respect to the approximately $558,400 net operating loss carryforward for federal income tax purposes as of June 30, 2005. This benefit was not recognized due to the possibility that the net operating loss carryforward would not be utilized, for various reasons, including the potential that we might not have sufficient profits to use the carryforward or that the carryforward may be limited as a result of changes in our equity ownership. We intend to use this carryforward to offset our future taxable income. If we were to use any of this net operating loss carryforward to reduce our future taxable income and the Internal Revenue Service were to then successfully assert that our carryforward is subject to limitation as a result of capital transactions occurring in 2002 or otherwise, we may be liable for back taxes, interest and, possibly, penalties prospectively.
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Impairment of Long Lived Assets.We assess the impairment of long-lived assets on an ongoing basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable based upon an estimate of future undiscounted cash flows. Factors we consider that could trigger an impairment review include the following: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; (iii) significant negative industry or economic trends; (iv) significant decline in our stock price for a sustained period; and (v) our market capitalization relative to net book value.
When we determine that the carrying value of any long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure impairment based on the difference between an asset’s carrying value and an estimate of fair value, which may be determined based upon quotes or a projected discounted cash flow, using a discount rate determined by our management to be commensurate with our cost of capital and the risk inherent in our current business model, and other measures of fair value.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Special Note Regarding Forward Looking Statements
This report includes “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be considered “forward looking statements”. We do not guarantee that the transactions and events described in this Report will happen as described or that any positive trends noted in this Report will continue. These types of statements are generally located in the section entitled “Management’s Discussion and Analysis or Plan of Operation,” but may be found elsewhere in this Report as well. Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. You should understand that many important factors, in addition to those discussed elsewhere in this Report, and could cause our results to differ materially from those expressed in the forward-looking statements. These factors include, without limitation, the rapidly changing industry and regulatory environment, our limited operating history, our ability to implement our growth strategy, our ability to integrate acquired companies and their assets and personnel into our business, our fixed obligations, our dependence on new capital to fund our growth strategy, our ability to attract and retain quality personnel, our competitive environment, perceived health issues associated with tanning generally and tanning booths in particular, economic and other conditions in markets in which we operate, increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results.
A more comprehensive list of such factors and related discussion are set forth in our Annual Report on Form 10-KSB and our other filings made with the SEC from time to time.
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ITEM 3 - CONTROLS AND PROCEDURES
We have evaluated, with the participation of our Chief Executive Officer and Principal Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2005. Based on this evaluation, our Chief Executive Officer and Principal Financial Officer has concluded that our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our quarterly reports filed under the Securities Exchange Act within the time periods specified by the Securities and Exchange Commission’s rules and forms.
During the quarterly period covered by this report, there were no changes in our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect its internal controls subsequent to the Evaluation Date.
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The Company is not a party to any pending legal proceedings nor is any of its property subject to pending legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Not Applicable.
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
| EXHIBIT NUMBER | DESCRIPTION | |
| 31.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended* | |
| 32.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.* | |
| * | Filed herewith. |
(b) Reports on Form 8-K.
Not Applicable.
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In accordance with the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 14, 2005
| UNIVERSAL TANNING VENTURES, INC. | ||
| By: | /s/ Glen Woods | |
| Name: | Glen Woods | |
| Title: | Chief Executive Officer, President and Principal Financial Officer | |
| By: | /s/ Dyron Watford | |
| Name: | Dyron Watford | |
| Title: | Principal Accounting Officer | |
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EXHIBIT INDEX
| EXHIBIT NUMBER | DESCRIPTION | |
| 31.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended* | |
| 32.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.* | |
| * | Filed herewith. |
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