11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - QSB/ A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File Number 0-20848
UNIVERSAL HEIGHTS, INC.
(Name of small business issuer in its charter)
Delaware 65-0231984
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19589 N.E. 10th Avenue
Miami, Florida 33179
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (305) 653-4274
Indicate by check mark whether the Company (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
Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Number of shares of the Common Stock of Universal
Heights, Inc. issued and outstanding as of December 12,
1997: 14,634,584.
Transitional Small Business Disclosure Format Yes __
No X
UNIVERSAL HEIGHTS, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The following unaudited, condensed consolidated
financial statements of the Company have been prepared in
accordance with the instructions to Form 10-QSB and,
therefore, omit or condense certain footnotes and other
information normally included in financial statements
prepared in accordance with generally accepted accounting
principles. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for
a fair presentation of the financial information for the
interim periods reported have been made. Results of
operations for the six months ended October 31, 1997 are not
necessarily indicative of the results for the year ending
April 30, 1998.
UNIVERSAL HEIGHTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
October 31, April 30,
1997 1997
(Unaudited) (Unaudited)
ASSETS:
Cash and cash equivalents $ 40 $ 35,269
Prepaid Insurance - 2,502
Deposits 9,816 9,816
Assets from discontinued operations 422,135 592,367
Total Current Assets $ 431,991 $ 639,954
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $ 1,093,900 $ 987,619
Accrued expenses 219,121 199,505
Due to related parties 404,459 305,678
Capitalized lease obligations 9,018 15,344
Total Current Liabilities $ 1,726,498 $ 1,507,691
STOCKHOLDERS' DEFICIENCY:
Cumulative preferred stock, $.01
per value; 1,000,000 shares
authorized; 138,640 shares issued
and outstanding 1,387 1,387
Common Stock, $.01 par value,
20,000,000 shares authorized
3,423,608 shares issued at
October 31, 1997 and
3,229,442 at April 30, 1997
and outstanding 34,236 32,294
Additional paid-in capital 8,133,882 7,867,748
Accumulated deficit (9,464,012) (8,722,166)
Subscriptions receivable - (47,000)
Total Stockholders' Deficiency (1,294,507) (867,737)
Total Liabilities and Stockholders'
Deficiency $ 431,991 $ 639,954
The accompanying notes to consolidated financial statements
are an integral part of these statements.
UNIVERSAL HEIGHTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 1997
Six Months Ended Three Months Ended
October 31, October 31,
1997 1996 1997 1996
OPERATING EXPENSES
General and
administrative $(579,106) $(196,727) (350,167) $(123,677)
LOSS FROM OPERATIONS (579,106) (196,727) (350,167) (123,677)
OTHER EXPENSES
Interest expense (2,989) (4,805) (1,430) (2,154)
LOSS FROM CONTINUING
OPERATIONS (582,095) (201,532) (351,597) (125,831)
DISCONTINUED OPERATIONS:
Loss from operations
and disposal of
Sports Novelty and
Souvenir (159,724) (246,396) (120,953) (118,183)
NET LOSS $(741,819) $(447,928) $(472,550) $(244,014)
LOSS PER COMMON SHARES:
Loss from continuing
operations $(0.18) $ (0.07) $(0.11) $(0.05)
Loss from discontinued
operations (0.05) (0.09) (0.04) (0.04)
NET LOSS $(0.23) $ (0.16) $(0.15) $(0.09)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 3,240,000 2,843,000 3,251,000 2,792,000
The accompanying notes to consolidated financial statements
are an integral part of these statements.
UNIVERSAL HEIGHTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
Six Months Ended
October 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
CONTINUING OPERATION:
Net loss from continuing operations $(582,095) $ (201,532)
Adjustments to reconcile net
loss from continuing operations
to net cash used in continuing
operations:
Stock issued for services 118,201 -
Net cash used in continuing operations (463,894) (201,532)
DISCONTINUED OPERATIONS:
Loss from discontinued operations (159,724) (246,396)
Adjustments to reconcile gain from
discontinued operations to net cash
used in discontinued operations:
Depreciation and amortization 25,263 58,219
Stock issued for services 88,750 -
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (4,183) 18,232
Inventories 149,125 (21,155)
Other current assets 2,502 (70,584)
Increase in:
Accounts payable and accrued
expenses 176,806 13,293
Net cash provided by (used in)
discontinued operations 278,539 (248,391)
Net cash used in operating activities
(185,355) (449,923)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - (7,647)
Acquisition of patents and trademarks - 12,647
Net cash used in investing activities - 5,000
The accompanying notes to consolidated financial statements
are in integral part of these statements.
UNIVERSAL HEIGHTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOW
Six Months Ended
October 31, October 31,
1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
common stock 50,000 320,000
Advances from stockholders 106,451 102,337
Payment on capital lease
obligations (6,325) (6,720)
Net cash provided by financing
activities 150,126 415,617
NET DECREASE IN CASH AND (35,229) (29,306)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
Beginning of Period 35,269 30,337
CASH AND CASH EQUIVALENTS,
End of Period $ 40 $ 1,031
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 8,530 $ 1,030
SUPPLEMENTAL NONCASH FINANCING AND
INVESTING ACTIVITIES
Common stock issued in exchange
for debt $ 58,125 $ 631,850
The accompanying notes to consolidated financial statements
are in integral part of these statements.
UNIVERSAL HEIGHTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES:
The consolidated balance sheet of Universal Heights,
Inc. and Subsidiary (the "Company"), as of October 31, 1997,
and the related consolidated statements of operations and
cash flows for the periods ended October 31, 1997 and 1996
are unaudited. The consolidated balance sheet as of April
30, 1997 has been derived from audited financial statements
and footnotes for the year ended April 30, 1997, included in
the Company's report on Form 10-KSB.
The interim financial statements reflect all
adjustments (consisting of only normal and recurring
accruals and adjustments) which are, in the opinion of
management, necessary to a fair statement of the results for
the interim periods presented. The Company's operating
results for any particular interim period may not be
indicative of results for the full year.
Certain reclassifications have been made in the 1996
financial statements to conform them to and make them
consistent with the presentation used in the 1997 financial
statements.
(2) ISSUANCE OF STOCK:
On October 10, 1997, the Company issued 194,166 shares
for past services and to pay debt. The shares have been
valued based at the fair market value, accordingly, $118,200
has been charged to continuing operations, $88,750 to
discontinued operations, and $58,125 to settle debt.
(3) PRIVATE PLACEMENT:
On December 4, 1997, the Company raised approximately
$6,720,000 through the private placement of an aggregate of
$11,208,996 shares of the Company's Common Stock at a price
of $.60 per share to various institutional and/or otherwise
accredited investors. The net proceeds will be used to
capitalize the Company's wholly-owned subsidiary, Universal
Property & Casualty Insurance Company, and for general
working capital purposes.
The Company expects that the proceeds from the Private
Offering will be sufficient to finance its proposed plan of
operations for the next twelve months.
(4) RESTATEMENT:
The April 30, 1997 balance sheet has been restated to
conform to the requirements for accounting for debt
securities.
Item 6. Management's Discussion And Analysis or Plan of
Operation
The following discussion and analysis of the Company's
consolidated financial condition and results of operations
should be read in conjunction with the Company's Condensed
Consolidated Financial Statements and Notes thereto. This
document may contain forward-looking statements that involve
risks and uncertainties. The Company's actual results may
differ significantly from the results discussed in the
forward-looking statements.
Overview
As previously disclosed in the Company's annual report
on Form 10-KSB for the year ended April 30, 1997 ("Annual
Report") filed with the Securities and Exchange Commission
on August 13, 1997 and as amended on October 14, 1997, the
Company has begun to implement its plan to become a
financial services company and, through its wholly-owned
insurance subsidiary, Universal Property & Casualty Company
("UPCIC"), has positioned itself to take advantage of what
management believes to be profitable business and growth
opportunities in the marketplace.
On October 29, 1997, the Florida Department of
Insurance ("DOI") approved the Company's application for a
permit to organize UPCIC as a domestic insurance company in
the State of Florida. On December 4, 1997, the Company
raised approximately $6.72 million in a private offering
with various institutional and/or otherwise accredited
investors pursuant to which the Company issued, in the
aggregate, 11,208,996 shares of its Common Stock at a price
of $.60 per share ("Private Offering"). The proceeds of the
Private Offering will be used to meet the minimum regulatory
capitalization requirements ($5,300,000) required by the DOI
to obtain an insurance company license to engage in the type
of homeowners insurance company business that is planned for
UPCIC and for general working capital purposes. For
additional information on the Private Offering, see "Part II-
Item 2" below.
The Company intends to continue to devote its efforts
to the business plan for UPCIC as previously outlined and
disclosed in the Annual Report.
Seasonality
Sales of the Company's novelty and souvenir products
were correlated with the visibility of the various
proprietary marks and their owners. The Company does not
believe that there will be any seasonality in the insurance
business.
Financial Condition
Cash and cash equivalents at October 31, 1997 were $40
as compared with $35,269 at April 30, 1997. The decrease is
primarily the result of $185,355 being used for operating
activities offset by $150,126 of financing activities. The
operating activities were supported by the liquidation of a
portion of the souvenir product inventory from discontinued
operations of $140,000.
Due to related parties at October 31, 1997 was $404,459
as compared to $305,678 at April 30, 1997. The increase is
due to Deferred Salary to the President.
The Company expects that the proceeds from the Private
Offering will be sufficient to finance its proposed plan of
operations for the next twelve months.
Results of Operations-- Six Months Ended October 31, 1997
versus October 31, 1996
During the six months ended October 31, 1997, the
Company did not actively market its core product line
resulting in sales decreasing from $123,983 for the six
months ended October 31, 1996 to $9,170 for the six months
ended October 31, 1997, which is included in discontinued
operations. The loss from the operations of the core
product line decreased from $246,396 in fiscal 1996 to
$159,724 in fiscal 1997 and included costs of $88,750
attributable to stock issued for services. In addition,
general and administrative costs include $118,201 of similar
costs for stock issuances to pay for professional fees. The
decision to discontinue marketing efforts was based on the
projected continued losses, inability to achieve critical
mass and lessened demand for the products because of market
factors. The Company does not expect to incur material
losses on the disposition of these product lines.
Results of Operations -- Three Months Ended October 31, 1997
versus October 31, 1996
During the three months ended October 31, 1997, the Company
did not actively market its core product line resulting in
sales decreasing from $61,036 for the three months ended
October 31, 1996 to $3,902 for the three months ended
October 31,1997. The loss from the operations of the core
product line increased from $118,183 in fiscal 1996 to
$120,953 in fiscal 1997 and includes costs of $88,750
attributable to stock issued for services. In addition,
general and administrative costs include $118,201 of similar
costs for stock issuances to pay for professional fees.
The decision to discontinue marketing efforts was based on
the projected continued losses, inability to achieve
critical mass and lessened demand for the products because
of market factors. The Company does not expect to incur
material losses on the disposition of these product lines.
The Company is actively pursuing a strategy to enter into
the financial services industry. The Company plans to
qualify as a property and casualty insurer through the state
of Florida market challenge program.
UNIVERSAL HEIGHTS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On May 15, 1997, two former employees of the
Company, Johnny Walker and Larry Martin filed a lawsuit
against the Company in the Circuit Court for Pinellas
County, Florida. The Plaintiffs asserted claims for an
injunction and for damages for breach of an Asset Purchase
Agreement. The Complaint also includes breach of employment
agreements, breach of royalty agreements and other relief.
In connection therewith, the Plaintiff's are demanding
unpaid salaries amounting to approximately $130,000. The
case is currently in the discovery stage.
Item 2. Changes in Securities
On October 10, 1997, the Company issued 194,166
shares of Common Stock of which 167,500 shares were issued
in connection with past services rendered by various
consultants and 26,666 were issued for repayment of a note
issued by the Company to an existing shareholder of the
Company. Of the shares issued, 132,500 were valued at $1.25
and 61,666 were valued at $1.61. The shares of Common Stock
in the above issuances were issued pursuant to an exemption
from registration under Section 4(2) of the Securities Act
of 1933, as amended.
On December 4, 1997, the Company raised
approximately $6.72 million through the private placement of
an aggregate of 11,208,996 shares of the Company's Common
Stock at a price of $.60 per share to various institutional
and/or otherwise accredited investors. The shares of Common
Stock in the private placement were issued pursuant to an
exemption from registration under Rule 506 of the Securities
Act of 1933, as amended.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security
Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
UNIVERSAL HEIGHTS, INC.
______________________________
BRADLEY I. MEIER, President
DATE: April 7, 1998