U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 2001
Commission File Number: 0-29987
UNITED TRADING.COM
(Exact name of small business issuer as specified in its charter)
Nevada 88-0106514
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
19762 MacArthur Blvd., # 300
Irvine, California
(Address of principal executive offices)
92612
(Zip Code)
(949) 553-9660
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(Issuer's Telephone Number)
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(Former name, former address and former fiscal year,
if changed last report)
Check whether the issuer (1) filed all reports required to be filed by
Section13 or 15(d) of the Securities Exchange Act of 1934 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 [ ].
--- ---
The number of shares of the registrant's only class of common stock issued and
outstanding, as of September 30, 2001, was 41,202,947 shares.
1
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month and nine month periods
ended September 30, 2001, are attached hereto.
2
UNITED TRADING.COM
(A Development Stage Enterprise)
BALANCE SHEET
ASSETS
------
Sept. 30, 2001 Dec. 31, 2000
(Unaudited)
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CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . $ 4,728 21,975
Current portion of contacts receivable (Note 2) . - 270,000
Deposits. . . . . . . . . . . . . . . . . . . . . - 25,000
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Total Current Assets . . . . . . . . . . . . . . . . 4,728 316,975
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PROPERTY AND EQUIPMENT
Fixed Assets (Net of depreciation of
$ 4,862) - 13,958
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Total Property and Equipment . . . . . . . . . - 13,958
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OTHER ASSETS
Contracts receivable. . . . . . . . . . . . . . . - 270,000
Software for Licensing (net of
amortization of none and $58,334) (Note 3) . . - 575,884
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- 845,884
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Total Assets . . . . . . . . . . . . . . . . . $ 4,728 1,176,817
============ ==========
Liabilities and Shareholder Equity
CURRENT LIABILITIES. . . . . . . . . . . . . . . . . - -
OTHER LIABILITIES
Advances/deposits . . . . . . . . . . . . . . . . - 91,300
Deferred income taxes (Note 4). . . . . . . . . . - 40,000
------------ ----------
- 131,300
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STOCKHOLDERS' EQUITY
Common Stock Par value $0.001 (50,000,000 shares
authorized, 41,202,947,and 41,208,104 issued
and outstanding). . . . . . . . . . . . . . . . 41,203 41,208
Additional Paid-in Capital. . . . . . . . . . . . 1,131,776 1,131,771
Retained Deficit - accumulated during
Development Stage. . . . . . . . . . . . . . . (1,168,251) (127,463)
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Total Stockholders' Equity. . . . . . . . . . . . 4,728 1,045,516
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Total Liabilities and
Stockholders' Equity . . . . . . . . . $ 4,728 1,176,816
============ ==========
See accompanying notes to financial statements
3
UNITED TRADNG.COM
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
Sept. 30, 2001 Sept. 30, 2000
--------------- ---------------
REVENUES. . . . . . . . . . . . . . . . . . . . $ - $ 1,400,000
EXPENSES
General and Administrative . . . . . . . . . 652 50,487
Loss from write-down of software . . . . . . - -
Loss from write-down of notes receivable . . - -
Depreciation and Amortization. . . . . . . . - 28,399
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Total Expenses. . . . . . . . . . . . . . 652 78,886
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Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (652) $ 1,321,114
--------------- ---------------
Income Taxes (Note 4) . . . . . . . . . . . . . _ (357,000)
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Net Income (Loss) . . . . . . . . . . . . . . . $ (652) $ 964,114
=============== ===============
Net Income (loss) per
Common Share, basic and diluted . . . . . . $ (0.000) $ 0.025
=============== ===============
Weighted Average number of Common
Shares outstanding, basic and diluted
adjusted for 1/50 reverse split in 1999
and 3 for one forward split in 2000. . . . . 41,202,947 38,992,947
=============== ===============
See accompanying notes to financial statements
4
UNITED TRADING.COM
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(Unaudited)
Inception
Nine Months Nine Months December 31, 1994
Ended Ended Thru
Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001
--------------- --------------- ---------------
REVENUES
Consulting fees. . . . . . . . . . . . . . . $ - $ - $ 544,894
Sales. . . . . . . . . . . . . . . . . . . . - 1,400,000 770,000
Interest Income. . . . . . . . . . . . . . . - - 3,764
--------------- --------------- ---------------
Total Revenues. . . . . . . . . . . . . . - 1,400,000 1,318,658
EXPENSES
General and Administrative . . . . . . . . . 71,437 89,470 1,032,377
Allowance for Uncollectable Debt . . . . . . - - 160,937
Loss from write-down of software . . . . . . 538,492 - 538,492
Loss from write-down of notes receivable . . 406,067 - 406,067
Depreciation and Amortization. . . . . . . . 64,792 30,373 164,508
Loss from activities of NetBet . . . . . . . - - 184,528
--------------- --------------- ---------------
Total Expenses. . . . . . . . . . . . . . 1,080,788 119,843 2,486,909
--------------- --------------- ---------------
Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (1,080,788) $ 1,280,157 $ (1,168,251)
Income Taxes (Note 4). . . . . . . . . . . . 40,000 (357,000) -
--------------- --------------- ---------------
Net Income (Loss) After Taxes . . . . . . . . . $ (1,040,788) $ 923,157 $ (1,168,251)
=============== =============== ===============
Net Income (loss) per
Common Share, basic and diluted . . . . . . ($0.025) ($0.028) ($0.112)
=============== =============== ===============
Weighted Average number of Common
Shares outstanding, basic and diluted
adjusted for 1/50 reverse split in 1999
and 3/1 forward spit in October, 2000 . . 41,202,947 32,510,921 10,397,093
=============== =============== ===============
See accompanying notes to financial statements
5
UNITED TRADING.COM
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(Unaudited)
Inception
Nine Months Nine Months Dec 31, 1994
Ended Ended Thru
Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001
--------------- --------------- ---------------
OPERATING ACTIVITIES
- ----------------------------------
Net Income (Loss). . . . . . . . . . . . . . . . $ (1,040,788) $ 923,157) ($1,168,251)
Adjustments to reconcile Net Loss to Cash
provided (used) by operating activities:
Depreciation and Amortization . . . . . . . . 64,791 30,372 140,962
Loss on disposal of office Furniture & Equip. 10,258 - 15,972
Loss on write-off of software for license . . 538,492 - 538,492
loss on cancellation of notes receivable. . . 406,067 - 406,067
Changes in operating assets and liabilities:
Decrease (increase) in Deferred
Offering Costs . . . . . . . . . . . . . . - 15,550 -
Increase (decrease) in Accounts Payable . . . - (27,583) -
Increase (decrease) in Income Taxes Payable . - 202,800 -
(Increase) decrease in Receivable from
Software License Sales . . . . . . . . . . 133,933 (1,210,000) (406,067)
(Increase) decrease in Other Receivables. . . - (2,819) -
Increase (decrease) in Advance License Fees . (91,300) - -
(Increase) decrease in Deposits . . . . . . . 25,000 18,000 -
Increase (decrease) in Deferred Taxes . . . . (40,000) 154,200 -
--------------- --------------- ---------------
Net cash provided by Operating Activities. . . . 6,453 103,677 (472,825)
--------------- --------------- ---------------
INVESTMENT ACTIVAITIES
- --------------------------------------
Decrease (increase) in Property and
Equipment. . . . . . . . . . . . . . . . . - (2,411) (36,318)
Decrease (increase) in Software for
License. . . . . . . . . . . . . . . . . . (27,400) (477,631) (661,618)
Decrease (increase) in Organization Costs . . - - (1,190)
--------------- --------------- ---------------
Net cash (used) by Investment activities . . . . (27,400) (480,042) (699,126)
--------------- --------------- ---------------
FINANCING ACTIVITIES
- ---------------------------------
Disposal of Office Furniture & Equip. . . . . 3,700 - 3,700
Increase (decrease) in Common Stock . . . . . - 430,450 1,172,979
--------------- --------------- ---------------
Net cash provided by Financing Activities. . . . 3,700 430,450 1,176,679
--------------- --------------- ---------------
Increase (decrease) in Cash. . . . . . . . . . . (17,247) 54,085 4,728
Cash at Beginning of Period. . . . . . . . . . . 21,975 3,458 -
--------------- --------------- ---------------
Cash at End of Period. . . . . . . . . . . . . . $ 4,728 $ 59,543 $ 4,728
=============== =============== ===============
See accompanying notes to financial statements
6
UNITED TRADING.COM
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
NOTE 1 - Basis of Presentation
------------------------
The accompanying consolidated balance sheet of United Trading.Com (A Development
Stage Company) at September 30, 2001, and the consolidated statements of
operations for the three month and nine month periods ended September 30, 2000
and 2001 and the cumulative period during the development stage through
September 30, 2001 and the statements of cash flows for three month and nine
month periods ended September 30, 2000 and 2001 and the cumulative period during
the development stage through September 30, 2001, have been prepared by the
Company's management and they do not include all information of the financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. The unaudited financial statements should be read in
conjunction with the financial statements and footnotes thereto included in the
Company's Form 10-KSB for the year ended December 31, 2000.
Operating results for the three month and nine month periods ended September 30,
2001, are not necessarily indicative of the results that can be expected for the
year ending December 31, 2001.
NOTE 2 - Contracts Receivable
The Company had 2 contacts each outstanding for the licensed use of its casino
and sports book software at March 31, 2001. These contracts were cancelled
effective June 30, 2001 and replaced by a License Agreement calling for 7 1/2
percent of the net revenues from the Licensee's use of the Software for its own
account or from any sub-license of the Software. The Company recorded a loss of
$406,067 from the write-off of the contracts in the quarter ended June 30, 2000.
No revenues have been received from the 7 1/2 % net revenues license agreement.
NOTE 3 - Software for Licensing
The Company capitalized costs of developing its Software for Licensing as costs
were incurred, and began amortizing such costs in the final quarter of 2000.
Amortization was also taken in the three and six months ended June 30, 2001 in
the amounts of $32,396 and 64,792 respectively. The unamortized balance of
expenditures for the development of the Software for Licensing was written off
to expense effective June 30, 2001 due to the Company's inability to determine
the future worth of the 7 1/2 % net revenue license agreement for use of the
Software. The Company recorded a loss, net of accumulated Amortization, of
$538,492 in the quarter ended June 30, 2001.
Note 4 - Income Taxes
The Company recorded $40,000 in deferred income taxes in the year ended December
31, 2000 based on income reported in 2000. Due to losses in the first half of
2001, these deferred taxes were eliminated; $24,000 in the quarter ended March
31, 2001, and $16,000 in the quarter ended June 30, 2001.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and notes thereto included herein.
The Company recorded no revenues and minimal operating expenses for the quarter
ended September 30, 2001.
The Company is presently continuing its a strategic analysis for determining
potential mergers and acquisitions. Issues of primary importance in determining
the right acquisition include (a) industry-leading technology/viable business
operation (b) strategic compatibility (c) market opportunity (d) sales and
earnings (e) original capitalization of the merger candidate (f) additional
capital required to fund operations (g) existing management/infrastructure (h)
competition and (i) liabilities and contingent exposure. Management continues to
utilize this analysis to establish target parameters for an acquisition search.
Due to existing economic and market conditions, particularly in light of the
September 11, 2001 terrorist activities, the timeframe for an initial merger
transaction may extend beyond a twelve-month period. The Company anticipates the
cash requirements to be minimal during the acquisition period.
Forward Looking Statements
In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward looking statements in the
following discussion and elsewhere in this report and in any other statement
made by, or on the behalf of the Company, whether or not in future filings with
the Securities and Exchange Commission. Forward looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. Forward
looking statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company. The Company
disclaims any obligation to update forward looking statements.
8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES
a) NONE
b) NONE
c) There were no sales of securities made by the Company during the
three and nine month periods ended September 30, 2001.
d) None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: - none
ITEM 5. OTHER INFORMATION - NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits None
(b) Reports on Form 8-K: None
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.
UNITED TRADING.COM
Date: _________, 2001 By: /James L. Hancock
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James L. Hancock, President
9