UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended February 1, 2008
Commission File Number 0-13039
UNIVERSAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 62-1133652 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| P.O. Box 1355 | |
| Englewood Cliffs, New Jersey | 11580 |
| (Address of principal executive offices) | (Zip code) |
Registrant's telephone number, including area code: 201-634-8700
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 x NO o
As of March 1, 2008, 5,354,375 shares of common stock par value, $.06 per share were outstanding.
UNIVERSAL SERVICES GROUP, INC.
FORM 10-QSB
QUARTERLY REPORT
For the Period Ended February 1, 2008
INDEX
| Part I: | FINANCIAL INFORMATION | |
| | | |
| Item 1: | Financial Statements | |
| | | |
| Item 2: | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| | | |
| Item 3: | Controls and Procedures | 10 |
| | | |
| Part II: | OTHER INFORMATION | 11 |
| | | |
| SIGNATURES | 12 |
FORWARD-LOOKING STATEMENTS
Except for historical information, the statements contained in this Form 10-QSB are "forward looking" statements about our expected future business and financial performance. These statements, which appear throughout this Form 10-QSB, include statements as to our intent, belief or current expectations or projections with respect to our future operations, performance or financial position, involve known and unknown risks, including, among others, risks resulting from economic and market conditions, forecasting accuracy in our business plan and projected costs. We are subject to these and many other uncertainties and assumptions contained elsewhere in this Form 10-QSB.
We base our forward-looking statements on information currently available to us, and we assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws. Our actual operating results and financial performance may prove to be very different from what we have predicted as of the date hereof due to certain risks and uncertainties. Accordingly, you are cautioned not to place too much relevance on such forward-looking statements, which speak only as of the date made.
Part I Financial Information
Item 1. Financial Statements.
Universal Services Group, Inc
Index
| | | Page Number |
| Part 1 | Financial Information | |
| | | |
| | | |
| Item 1 | Financial Statement | |
| | | |
| | Balance Sheet as of February 1, 2008 | 1 |
| | | |
| | Statements of Operations for the three months ended February 1, 2008 and 2007 | 2 |
| | | |
| | Statement of Stockholders' Deficit for the three months ended February 1, 2008 | 3 |
| | | |
| | Statements of Cash Flows for the three months ended February 1, 2008 and 2007 | 4 |
| | | |
| | Notes to Financial Statements | 5 - 8 |
Universal Services Group, Inc.
Balance Sheet (Unaudited)
February 1, 2008
Assets: | | | |
| | | | |
| Total Assets | | $ | 0 | |
| | | | | |
Liabilities: | | | | |
| | | | | |
| Current Liabilities | | | | |
| Note Payable-Related Party | | $ | 64,408 | |
| Accounts Payable | | | 56,120 | |
| Accrued Expenses | | | 2,320 | |
| | | | | |
| Total Current Liabilities | | $ | 122,848 | |
| | | | | |
| Non Current Liabilities: | | | | |
| Notes Payable-Related Party | | | 719,995 | |
| | | | | |
| Total Liabilities | | $ | 842,843 | |
| | | | | |
| Commitments & Contingencies | | | | |
| | | | | |
| | | | | |
Stockholders' Deficit | | | | |
| Common Stock-$.06 Par Value 50,000,000 Shares Authorized, 5,354,375 Shares Issued and Outstanding | | $ | 321,232 | |
| Additional Paid in Capital | | | 322,097 | |
| Accumulated Deficit | | | (1,486,172 | ) |
| | | | | |
| Total Stockholders' Deficit | | $ | (842,843 | ) |
| | | | | |
| Total Liabilities & Stockholders' Deficit | | $ | 0 | |
See Notes to Financial Statements
Universal Services Group, Inc.
Statements of Operations (Unaudited)
For the Three Months Ended February 1, 2008 and 2007
| | | 2008 | | 2007 | |
| | | | | | |
Revenues | | $ | 0 | | $ | 0 | |
| | | | | | | | |
Expenses: | | | | | | | |
| General and Administrative Expenses | | | 9,199 | | | 0 | |
| | | | | | | | |
Total Expenses | | $ | 9,199 | | $ | 0 | |
| | | | | | | | |
| Net Loss before Taxes | | $ | (9,199 | ) | $ | 0 | |
| | | | | | | | |
| Less:Provision for Income Taxes | | | 0 | | | 0 | |
| | | | | | | | |
| Net Loss | | $ | (9,199 | ) | $ | 0 | |
| | | | | | | | |
| Net Loss per Share - Basic and Diluted | | $ | (0.00 | ) | $ | 0.00 | |
| | | | | | | | |
| Weighted Average Number of Shares Outstanding: | | | 5,354,375 | | | 5,354,375 | |
| Basic and Diluted | | | | | | | |
See Notes to Financial Statements
Universal Services Group, Inc.
Statements of Stockholders' Deficit (Unaudited)
For the Three Months Ended February 1, 2008
| | | Common Stock | | Additional Paid-in | | Accumulated | | Total Stockholders' | |
| | Shares | | Amount | | Capital | | Deficit | | Deficit | |
| | | | | | | | | | | | | | | | | |
| Balance-November 1, 2007 | | | 5,354,375 | | $ | 321,232 | | $ | 322,097 | | $ | (1,476,973 | ) | $ | (833,644 | ) |
| | | | | | | | | | | | | | | | | |
| Net Loss | | | | | | | | | | | | (9,199 | ) | | (9,199 | ) |
| | | | | | | | | | | | | | | | | |
| Balance-February 1, 2008 | | | 5,354,375 | | $ | 321,232 | | $ | 322,097 | | $ | (1,486,172 | ) | $ | (842,843 | ) |
See Notes to Financial Statements
Universal Services Group, Inc.
Statements of Cash Flows (Unaudited)
For the Three Months Ended February 1, 2008 and 2007
| | | 2008 | | 2007 | |
Cash Flow from Operating Activities | | | | | | | |
| Loss from Operations | | $ | (9,199 | ) | $ | 0 | |
| | | | | | | | |
| Adjustments to Reconcile | | | | | | | |
| Net Loss to Net Cash Provided by | | | | | | | |
| Operating Activities | | | | | | | |
| Interest | | | 1,172 | | | 0 | |
| | | | | | | | |
(Increase) Decrease in Assets | | | 0 | | | 0 | |
| | | | | | | | |
Increase (Decrease) in Liabilities | | | | | | | |
| Accounts Payable | | | 8,027 | | | 0 | |
| Total Adjustments | | $ | 9,199 | | $ | 0 | |
| Net Cash Provided (Used) by Operating Activities | | $ | 0 | | $ | 0 | |
| | | | | | | | |
| Net Cash Provided (Used) by Investing Activities | | $ | 0 | | $ | 0 | |
| | | | | | | | |
| Net Cash Provided (Used) by Financing Activities | | $ | 0 | | $ | 0 | |
| | | | | | | | |
| Net Increase (Decrease) in Cash | | $ | 0 | | $ | 0 | |
| | | | | | | | |
| Cash - Beginning of Year | | | 0 | | | 0 | |
| Cash - End of Year | | $ | 0 | | $ | 0 | |
| | | | | | | | |
| Supplemental Disclosures of Cash Flow Information | | | | | | | |
| Cash Paid during Year for: Interest | | $ | 0 | | $ | 0 | |
| Taxes | | | 0 | | | 0 | |
See Notes to Financial Statements
Universal Services Group, Inc
Notes to Financial Statements
February 1, 2008
[1] THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Universal Services Group, Inc (the “Company”) was incorporated in the state of Delaware on February 27, 1984. The Company has been dormant for many years but began the process of reactivation in June 2007, and is now in the process of seeking new business opportunities.
The accompanying interim unaudited financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and with the rules and regulations under S-B of the Securities and Exchange Commission for Form 10QSB. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles in the United States of America have been omitted. This form 10-Q should be read in conjunction with the Company’s financial statements and notes included in the 2007 Annual Report on Form 10KSB. In the opinion of management, all material adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited financial statements. Interim results are not necessarily indicative of the results for a full year.
Income Taxes – The Company accounts for income taxes using the liability method which requires the recognition of deferred tax assets or liabilities for the temporary differences between financial reporting and tax bases of the Company’s assets and liabilities and for tax carry forwards at enacted statutory rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.
Earnings per Share – Basic net loss per share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number and any potentially dilutive shares outstanding during the year. There were no potentially dilutive securities outstanding for the three months ended February 1, 2008 and 2007.
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual differences may differ from these estimates.
Universal Services Group, Inc
Notes to Financial Statements
February 1, 2008
NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 provides enhanced guidance for using fair value to measure assets and liabilities and also expands information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other accounting standards require or permit assets and liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. FASB Staff position FAS 157-2 delays the effective date of SFAS No. 157 for all nonrecurring fair value measurements of nonfinancial liabilities until fiscal years beginning after November 15, 2008. The Company is currently assessing the impact of SFAS No. 157 and will adopt this standard at the beginning of the fiscal year ending in November 2009.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 (‘‘SFAS No. 159’’). SFAS No. 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at fiscal year ends. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Accordingly, SFAS No. 159 will be adopted commencing in the Company’s fiscal year ending in November 2009. The Company is currently assessing the impact of SFAS No. 159. The Company does not expect the adoption of SFAS No. 159 to have a material impact on their financial statements.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R provides additional guidance on improving the relevance, representational faithfulness, and comparability of the financial information that a reporting entity provides in its financial reports about a business combination and its effects. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008. The Company is in the process of evaluating the effect that the adoption of this standard will have on the Company’s financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 applies to all entities that prepare consolidated financial statements and have an outstanding noncontrolling interest in one or more subsidiaries. SFAS 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is in the process of evaluating the effect that the adoption of this standard will have on the Company’s financial statements.
Universal Services Group, Inc
Notes to Financial Statements
February 1, 2008
[2] GOING CONCERN
On February 1, 2008, the company has no assets, current liabilities of $122,847, negative working capital and a stockholder’s deficit of $842,843. These factors raise substantial doubt about the Company’s ability to operate as a going concern.
The Company does not have the financial ability to pay its remaining liabilities or provide working capital for any new business venture. Accordingly, any new business venture will require the company to raise additional capital to meet its then necessary financial requirements.
[3] RELATED PARTY TRANSACTIONS
At November 1, 2007 notes payable to related party consisted of notes plus accrued interest through November 1, 1994, due to the Chairman of the Company. The original note agreements have been amended and restated at November 1, 2007 on substantially identical terms. The indebtedness is secured by all Company assets, carries interest at prime, and is payable with accrued interest on December 31, 2009, as amended on March 1, 2008.
No interest expense on officer’s notes has been reflected in the accompanying financial statements for the three months ended February 1, 2008 and 2007. The Chairman has waived interest through February 1, 2008.
The amounts reflected as Note Payable-Related Party in Current Liabilities at February 1, 2008 include payments for operating expenses made on behalf of the Company, by a company in which the Chairman of the Board is a manager. The note dated October 29, 2007 is due on demand and bears interest at the current prime rate, beginning November 1, 2007. Interest for the three months ended February 1, 2008 of $1,172 has been accrued and added to the outstanding balance and is included in general and administrative expenses in the statement of operations.
[4] INCOME TAXES
The Company is currently not compliant with all required federal and state tax filings. It is currently in the process of preparing the required tax returns for filing to bring the company into compliance.
Universal Services Group, Inc
Notes to Financial Statements
February 1, 2008
[4] Income Taxes (Continued)
The Company has adopted Fin 48 effective November 2, 2007. Fin 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate authorities before any tax benefit can be recorded in the financial statements. It also provides guidance on recognition, measurement, classification and disclosure in the financial statements for uncertain tax positions taken or expected to be taken in a tax return. The adoption of Fin 48 has had no effect on the Company’s financial statements. The Company has determined that there are no unrecognized tax liabilities/benefits at February 1, 2008, and there have been no income tax related interest or penalties accrued in the three months ended February 1, 2008 and 2007.
The Company policy would be to charge penalty and interest to operations as a component of the provision for income taxes, when assessed, if actually due. At February 1, 2008, the Company has the past fifteen years tax returns open for examination, since they are not yet filed.
As of February 1, 2008, components of deferred tax assets were as follows:
| | $ | 90,700 | |
| | | (90,700 | ) |
| Net Deferred tax asset | | | 0 | |
As of February 1, 2008, realization of the Company’s deferred tax assets of $90,700 was not considered more likely than not and, accordingly a valuation allowance of $90,700 has been provided.
As of February 1, 2008 the Company has net operating loss carry forwards of approximately $260,000 which are available to offset future taxable income through 2028.
[5] COMMITMENTS AND CONTINGENCIES
The Company has been party to various claims and actions arising in the ordinary course of business. In the opinion of management, the amounts, if any, which may be awarded in connection with these claims and actions would not be material to the Company’s financial position.
Item 2. Management's Discussion and Analysis or Plan of Operations.
Introduction
Universal Services Group, Inc. (formerly known as Reprotech, Inc.) was incorporated on February 27, 1984 under the laws of the State of Delaware (the “Company”). The Company, through its wholly-owned subsidiaries, General Industrial Technologies, Inc. and Data Sciences Incorporated (collectively, the “Subsidiaries”), was engaged in the business of providing temporary and permanent technical personnel such as engineers, designers, data processing, computer-aided design drafting specialists and architects.
On August 30, 1993, the Company entered into a sales agreement in which it sold substantially all or all of its fixed, prepaid and intangible assets (including assets owned by the Subsidiaries) to Lehigh-GIT, Inc., an affiliate of Nesco Services Company (the “Transaction”) for $600,000 and an amount of up to $1,000,000 more, contingent upon the purchaser’s future profits. Of the $600,000 purchase price, $75,000 was paid to the Company and $525,000 was escrowed for tax liens and claims of government agencies against the Subsidiaries for payroll tax arrearages. Subsequently, after the closing of the Transaction, the Company wound down its operations and ceased any and all business activities with the expectation to apply the contingent sales proceeds, if any, to satisfy a portion of the remaining liabilities of the Company. The Subsidiaries are no longer active and have been administratively dissolved by their respective states of incorporation.
Results of Operations
The Company has not conducted any business operations since 1993.
The Company generated no revenue for the three month periods ended February 1, 2008 and 2007. Total expenses increased by $9,199 to $9,199 in selling, general and administrative expenses for the three month period ended February 1, 2008, from $0 for the three month period ended February 1, 2007. This increase was due to the Company’s election to resume its compliance with the Company’s reporting requirements under rules and regulations of the U.S. Securities and Exchange Commission while it continues to seek a new business venture.
Liquidity and Capital Resources
As the Company no longer has operations on a going forward basis, the Company
will no longer have revenues, but may have expenses while it seeks a new business venture. The Company has an administrative headcount of one.
The Company may rely on short-term advances from parties affiliated with Mr. Halpern, our sole director and Chief Executive Officer, to finance any cash requirements while seeking a new business venture. As of March 1, 2008, the Company and Colin Halpern, our Chairman and Chief Executive Officer, amended the two promissory notes entered into by and between the Company and Mr. Halpern on November 1, 2007, by extending the maturity date of such notes from December 31, 2008 to December 31, 2009. The notes will continue to bear interest at the prime rate and are secured by all of the assets of the Company.
On February 1, 2008, the Company has no assets, current liabilities of $122,847 negative working capital and a stockholder’s deficit of $842,842. These factors raise substantial doubt about the Company’s ability to operate as a going concern.
The Company does not have the financial ability to pay its remaining liabilities or provide working capital for any new business venture. Accordingly, any new business venture will require the Company to raise additional capital to meet its then necessary financial requirements.
Item 3. Controls and Procedures.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended. The Company carried out an evaluation, under the supervision, and with the participation, of the Company’s Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of the quarterly period ended covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Acting Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of such date. There have been no significant changes during such period in the Company’s internal control over financial reporting or in other factors that could significantly affect the internal control over financial reporting.
The Company is currently not compliant with all required federal and state tax filings. It is currently in the process of preparing the required tax returns for filing to bring the company into compliance.
Part II OTHER INFORMATION
| Item 1. | Legal Proceedings. |
Currently, the Company is not a party to any litigation or governmental proceedings that management believes would result in judgments or fines that would have a material adverse effect on the Company.
| Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds. |
None.
| Item 3. | Defaults Upon Senior Securities. |
None.
| Item 4. | Submission of Matters to Vote of Securities Holders. |
No matters were submitted to a vote of the holders of the Company's common stock during the quarterly period covered by this report.
Not Applicable.
None.
None.
| 31.1 | Certification of Chief Executive Officer and Acting Chief Financial Officer |
| | |
| 32.1 | Section 906 Certification |
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.
| UNIVERSAL SERVICES GROUP, INC. |
| |
| By: /s/Colin Halpern |
| Colin Halpern, Chairman and |
| Chief Executive Officer |
| |
| Date: March 17, 2008 |
