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: June 30, 2002
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.)
1820 Bison, B-9-529
Newport Beach, California
(Address of principal executive offices)
92660
(Zip Code)
(949) 451-4518
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(Issuer's Telephone Number)
Former Address:
19762 MacArthur Blvd., # 300
Irvine, California, 92612
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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 June 30, 2002, was 5,300,098
1
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three and six month periods
ended June 30, 2002, are attached hereto.
2
UNITED TRADING.COM
(A Development Stage Enterprise)
BALANCE SHEET
ASSETS
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June 30, 2002 Dec. 31, 2001
(Unaudited)
------------ -------------
CURRENT ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . $ - 1,590
Current portion of contacts receivable (Note 2) . - -
Deposits. . . . . . . . . . . . . . . . . . . . . - -
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Total Current Assets . . . . . . . . . . . . . . . . - 1,590
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PROPERTY AND EQUIPMENT
Fixed Assets - -
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Total Property and Equipment . . . . . . . . . - -
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OTHER ASSETS . . . . . . . . . . . . . . . . . . . . - -
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- -
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Total Assets . . . . . . . . . . . . . . . . . $ - 1,590
============ ==========
Liabilities and Shareholder Equity
CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . 103,798 55,499
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Total Current Liabilities. . . . . . . . . . . . . . 103,798 55,499
OTHER LIABILITIES. . . . . . . . . . . . . . . . . . - -
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103,798 55,499
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STOCKHOLDERS' EQUITY
Common Stock Par value $0.001 (50,000,000 shares
authorized, 5,150,098,and 5,300,098 issued
and outstanding). . . . . . . . . . . . . . . . 5,600 5,150
Additional Paid-in Capital. . . . . . . . . . . . 1,194,679 1,167,829
Retained Deficit - accumulated during
Development Stage. . . . . . . . . . . . . . . (1,303,777) (1,226,889)
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Total Stockholders' Equity. . . . . . . . . . . . (103,798) (53,909)
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Total Liabilities and
Stockholders' Equity . . . . . . . . . $ - 1,590
============ ==========
See accompanying notes to financial statements
3
UNITED TRADING.COM
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(Unaudited)
Three months Three Months
Ended Ended
June 30, 2002 June 30, 2001
--------------- --------------- ---------------
REVENUES
Consulting fees. . . . . . . . . . . . . . . $ - $ -
Sales. . . . . . . . . . . . . . . . . . . . - -
Interest Income. . . . . . . . . . . . . . . - -
--------------- ---------------
Total Revenues. . . . . . . . . . . . . . - -
EXPENSES
General and Administrative . . . . . . . . . 32,735 5,091
Allowance for Uncollectable Debt . . . . . . - -
Loss from write-down of software . . . . . . - 538,492
Loss from write-down of notes receivable . . - 406,067
Depreciation and Amortization. . . . . . . . - 32,396
Loss from activities of NetBet . . . . . . . - -
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Total Expenses. . . . . . . . . . . . . . 32,735 966,046
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Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (32,735) $ (982,046)
Income Taxes (Note 4). . . . . . . . . . . . - 16,000
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Net Income (Loss) After Taxes . . . . . . . . . $ (32,735) $ (966,046) )
=============== ===============
Net Income (loss) per
Common Share, basic and diluted . . . . . . ($0.006) $ (0.188)
=============== ===============
Weighted Average number of Common
Shares outstanding, basic and diluted
adjusted for 1/50 reverse split in 1999,
3/1 forward spit in October, 2000,
and 1/8 reverse split in 2001 . . . . . . . . 5,377,571 5,150,368
=============== ===============
See accompanying notes to financial statements
4
UNITED TRADING.COM
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(Unaudited)
Inception
Six months Six Months December 31, 1994
Ended Ended Thru
June 30, 2002 June 30, 2001 June 30, 2002
--------------- --------------- ---------------
REVENUES
Consulting fees. . . . . . . . . . . . . . . $ - $ - $ 544,894
Sales. . . . . . . . . . . . . . . . . . . . - - 770,000
Interest Income. . . . . . . . . . . . . . . - - 3,764
--------------- --------------- ---------------
Total Revenues. . . . . . . . . . . . . . - - 1,318,658
EXPENSES
General and Administrative . . . . . . . . . 76,889 70,785 1,184,404
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. . . . . . . . - 64,792 164,508
Loss from activities of NetBet . . . . . . . - - 184,528
--------------- --------------- ---------------
Total Expenses. . . . . . . . . . . . . . 76,889 1,080,136 2,638,936
--------------- --------------- ---------------
Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (76,889) $ (1,080,136) $ (1,320,278)
Income Taxes (Note 4). . . . . . . . . . . . - 40,000 -
--------------- --------------- ---------------
Net Income (Loss) After Taxes . . . . . . . . . $ (76,889) $ (1,040,136) $ (1,320,278)
=============== =============== ===============
Net Income (loss) per
Common Share, basic and diluted . . . . . . ($0.015) $ (0.202) ($0.714)
=============== =============== ===============
Weighted Average number of Common
Shares outstanding, basic and diluted
adjusted for 1/50 reverse split in 1999,
3/1 forward spit in October, 2000,
and 1/8 reverse split in 2001 . . . . . . . . 5,264,463 5,150,368 1,884,355
=============== =============== ===============
See accompanying notes to financial statements
5
UNITED TRADING.COM
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(Unaudited)
Inception
Six Months Six Months Dec 31, 1994
Ended Ended Thru
June 30, 2002 June 30, 2001 June 30, 2002
--------------- --------------- ---------------
OPERATING ACTIVITIES
- ----------------------------------
Net Income (Loss). . . . . . . . . . . . . . . . $ (76,889) $ (1,040,136) $ (1,285,778)
Adjustments to reconcile Net Loss to Cash
provided (used) by operating activities:
Depreciation and Amortization . . . . . . . . - 64,792 140,963
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 . . . . . . . . . . . . . . - - -
Increase (decrease) in Accounts Payable . . . 48,299 - 103,798
(Increase) decrease in Receivable from
Software License Sales . . . . . . . . . . - 133,933 (406,067)
Increase (decrease) in Advance License Fees . - (91,300) -
(Increase) decrease in Deposits . . . . . . . - 25,000 -
Increase (decrease) in Deferred Taxes . . . . - (40,000) -
--------------- --------------- ---------------
Net cash provided by Operating Activities. . . . (28,590) 7,106 (486,553)
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INVESTMENT ACTIVAITIES
- --------------------------------------
Decrease (increase) in Property and
Equipment. . . . . . . . . . . . . . . . . - - (36,318)
Decrease (increase) in Software for
License. . . . . . . . . . . . . . . . . . - (27,399) (661,618)
Decrease (increase) in Organization Costs . . - - (1,190)
--------------- --------------- ---------------
Net cash (used) by Investment activities . . . . - (27,399) (699,126)
--------------- --------------- ---------------
FINANCING ACTIVITIES
- ---------------------------------
Disposal of Office Furniture & Equip. . . . . - 3,700 3,700
Increase (decrease) in Common Stock . . . . . 27,000 - 1,181,979
--------------- --------------- ---------------
Net cash provided by Financing Activities. . . . 27,000 3,700 1,185,679
--------------- --------------- ---------------
Increase (decrease) in Cash. . . . . . . . . . . (1,590) (16,594) -
Cash at Beginning of Period. . . . . . . . . . . 1,590 21,975 -
--------------- --------------- ---------------
Cash at End of Period. . . . . . . . . . . . . . $ - $ 5,381 $ -
=============== =============== ===============
See accompanying notes to financial statements
6
UNITED TRADING.COM
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
June 30, 2002
NOTE 1 - Basis of Presentation
------------------------
The accompanying consolidated balance sheet of United Trading.Com (A Development
Stage Company) at June 30, 2002, and the consolidated statements of operations
for the three and six month periods ended June 30, 2002 and 2001 and the
cumulative period during the development stage through June 30, 2002 and the
statement of cash flows for three and six month periods ended June 30, 2002 and
2001 and the cumulative period during the development stage through June 30,
2002, 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,
2001.
Operating results for the six month period ended June 30, 2002, are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2002.
NOTE 2 - Contracts Receivable
In the quarter ended June 30, 2001, the company cancelled two contacts each for
the licensed use of its casino and sports book software. These contracts were
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, 2001. As of June 30,
2002, no revenues have been received from the 7 1/2 % net revenues license
agreement. While the holder of the 7 1/2% net revenues license agreement has
reported an increase in receipts from player activity on its Internet site,
there have been no net revenues to date, and there can be no assurance that
there will ever be any such net revenues.
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.
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 six month period
ended June 30, 2001, $40,000 of the deferred taxes were reversed in the six
month period ended March 31, 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 for the three or six month periods ended June
30, 2002, or 2001 .
In February 2002, the Company announced an agreement to acquire Quick Draw,
Inc., a Nevada corporation, owner of ATM machines located throughout the United
States, subject to completion of due diligence by United Trading. As of June 30,
2002, United Trading was working closely with Quick Draw to complete funding for
the first phase of Quick Draw's expansion. In accordance with the acquisition
agreement, this funding was to be completed prior to the finalization of the
acquisition of Quick Draw by United Trading. As of June 30, 2002, Quick Draw is
still in the process of acquiring such financing and is unable to provide an
explicit date for completion. United Trading continues to be committed to
completing the acquisition of Quick Draw and has authorized an extension of the
agreement to enable Quick Draw to complete the required financing. While the
Company has received assurances from investor groups that financing will be
available in the near future, there can be no assurance that such financing will
in fact be received by Quick Draw, and if such financing is not received, the
acquisition will not be completed. The Company has however continued to research
other alternative acquisition/merger candidates and will aggressively pursue
such alternatives in the event the Quick Draw acquisition is not completed, or
to complement the Quick Draw acquisition if completed.
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) The following is a summary of the information required for all the
sales of unregistered securities by Registrant for the reporting period
January 1, through June 30, 2002.
During the period January 1, to March 31, 2002, there were no sales of the
Company's securities.
During the quarter ended June 30, 2002 450,000 shares of common stock of the
Company were issued at a price of $0.06 per share. All such shares were issued
without registration pursuant to the exemption from registration under Section
4(2)-33 of the Securities Act of 1933. The shares were issued to Ellshay, LLC
(150,000) as compensation for investor relation services, and to BFI Limited
(300,000) to replace shares transferred to Ellshay from BFI in partial
satisfaction of the Company's obligations. The shares issued by the Company to
Ellshay and BFI contain certain restrictive legends as to future sales of the
stock.
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: August 14, 2002 By: /James G. Brewer
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James G. Brewer, President, CEO, CFO and
Chief Accounting Officer
9