UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 2002
/ / 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 000-28459
Universal Media Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 22-3360133
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
44 Delafield, New Brunswick, New Jersey 08901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (403) 678-9763
----------------------------
Indicate by check mark whether the 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. YES [X] NO [ ].
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
Class Number of Shares
- ------------------------------- ---------------------
Common shares, $.0001 par value 46,622,245
UNIVERSAL MEDIA HOLDINGS, INC.
AND SUBSIDIARY
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Report of Independent Accountant F-1
Balance Sheet as of March 31, 2002 F-2
Statements of Operations and Accumulated Deficit for the
three months ended March 31, 2002 and 2001 F-3
Statements of Operations and Accumulated Deficit for the
Six months ended March 31, 2002 and 2001 F-4-5
Statements of Cash Flows for the six months ended F-6
March 31, 2002 and 2001
Notes to Financial Statements F-7-10
ITEM 2. PLAN OF OPERATION 11
PART II: OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS 11
ITEM 2 CHANGES IN SECURITIES 11
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5 OTHER INFORMATION 11
ITEM 6 EXHIBITS AND REPORTS OF FORM 8-K 11
Signature 12
REVIEW REPORT OF INDEPENDENT ACCOUNTANT
Board of Directors and Stockholders
Universal Media Holdings, Inc & Subsidiary
I have reviewed the accompanying condensed consolidated balance sheet of
Universal Medial Holdings, Inc. and Subsidiary as of March 31, 2002, and the
related condensed consolidated statements of operations and accumulated deficit
for the three months and six months ended March 31, 2002 and 2001, and the
statement of cash flows for the six months ended March 31, 2002 and 2001. These
financial statements are the responsibility of the corporation's management.
I conducted my review in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The accompanying condensed financial statements have been prepared assuming that
the Corporation will continue as a going concern. As discussed in Note 1 to the
condensed financial statements, certain conditions raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1 to the respective financial
statements.
Aaron Stein
Certified Public Accountant
Woodmere, New York
May 21, 2002
F-1
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
BALANCE SHEETS
MARCH 31,
2002
------------
(unaudited)
ASSETS
CURRENT ASSETS $ -
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 926,828
Credit line - Metro 141,787
Accrual disposition costs 25,000
Other current liabilities 30,760
------------
Total current liabilities 1,124,375
------------
STOCKHOLDERS' DEFICIT
Common stock, $.0001 par value,
200,000,000 shares authorized,
4,621,811 issued and outstanding 462
Additional paid-in capital 2,249,616
Accumulated deficit (3,374,453)
------------
(1,124,375)
------------
$ -
============
See review report of independent accountant and notes to financial statements.
F-2
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2002 2001
------------ ------------
REVENUES EARNED $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES 6,500 105,100
------------ ------------
OPERATING LOSS BEFORE
WRITE-OFF OF GOODWILL (6,500) (105,100)
WRITE-OFF OF GOODWILL - -
------------ ------------
OPERATING LOSS (6,500) (105,100)
------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (4,000) -
Other income - -
------------ ------------
Total other income (4,000) -
------------ ------------
LOSS BEFORE PROVISION FOR INCOME TAXES (10,500) (105,100)
INCOME TAXES - -
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NET LOSS $ (10,500) $ (105,100)
============ ============
LOSS PER SHARE
Basic $ (0.00) $ (0.28)
============ ============
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 4,621,811 376,145
============ ============
ACCUMULATED DEFICIT, Beginning of period $(3,363,953) $(3,189,389)
NET LOSS (10,500) (105,100)
------------ ------------
ACCUMULATED DEFICIT, End of period $(3,374,453) $(3,294,489)
============ ============
See review report of independent accountant and notes to financial statements.
F-3
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (UNAUDITED)
SIX MONTHS ENDED
MARCH 31,
---------------------
2002 2001
--------- ----------
REVENUES EARNED $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES 17,500 144,702
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OPERATING LOSS BEFORE
WRITE-OFF OF GOODWILL (17,500) (144,702)
WRITE-OFF OF GOODWILL - -
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OPERATING LOSS (17,500) (144,702)
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OTHER INCOME (EXPENSE)
Interest expense (8,000) (4,000)
Interest income -
Other income - 28,901
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Total other income (8,000) 24,901
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LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (25,500) (119,801)
INCOME TAXES - -
--------- ----------
LOSS FROM CONTINUING OPERATIONS
AFTER PROVISION FOR INCOME TAXES (25,500) (119,801)
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DISCONTINUED OPERATIONS
Net income from discontinued operations,
net of income taxes of $0 - 15,467
Provision for abandonment of fixed assets
during phase-out period, net of income
taxes of $0 - (3,200)
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- 12,267
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NET INCOME $(25,500) $(107,534)
========= ==========
See review report of independent accountant and notes to financial statements.
F-4
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (UNAUDITED)
- CONTINUED
SIX MONTHS ENDED
MARCH 31,
--------------------------
2002 2001
------------ ------------
LOSS PER SHARE
Basic $ (0.01) $ (0.02)
============ ============
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 4,621,811 4,387,812
============ ============
ACCUMULATED DEFICIT, Beginning of period $(3,348,953) $(3,186,955)
NET LOSS (25,500) (107,534)
------------ ------------
ACCUMULATED DEFICIT, End of period $(3,374,453) $(3,294,489)
============ ============
See review report of independent accountant and notes to financial statements.
F-5
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
STATEMENTS OF CASH FLOWS (unaudited)
SIX MONTHS ENDED
MARCH 31,
---------------------
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(25,500) $(107,534)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Loss on abandonment of fixed assets - 3,200
Changes in assets and liabilities:
Accounts receivables - 17,144
Other assets - -
Accounts payable and accrued expenses 25,500 39,602
Loan payable - stockholder - -
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Net cash provided by (used in)
operating activities - (47,588)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net reduction in Metro credit line - (57,512)
Issuance of common stock - 105,100
Write-off of goodwill and adjustments
to effectuate acquisition - -
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Net cash (used in) provided by
financial activities - 47,588
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - -
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Net cash used by investing activities - -
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NET INCREASE IN CASH
AND CASH EQUIVALENTS - -
CASH AND CASH EQUIVALENTS, Beginning - -
--------- ----------
CASH AND CASH EQUIVALENTS, Ending $ - $ -
========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 4,000 $ 4,000
========= ==========
Income taxes paid $ - $ -
========= ==========
See review report of independent accountant and notes to financial statements.
F-6
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
NOTES TO FINANCAIL STATEMENTS (unaudited)
NOTE 1 -- ORGANIZATION, NATURE OF BUSINESS AND DISCONTINUED OPERATIONS
Organization
Universal Media Holdings, Inc. (the Company) was originally incorporated in
Delaware as Tyconda Minerals Corp. in December of 1969. In February 1970, the
Company merged leaving Tyconda Minerals Corp. as the surviving corporation. In
November 1983 the Company filed a Certificate of Amendment to its Certificate of
Incorporation changing its corporate name to Hy-Poll Technology, Inc. That
amendment also changed the capital structure of the corporation from an
authorization to issue 5,000,000 shares of Common Stock with a par value of $
...01 per share, to an authorization to issue 200,000,000 shares of Common Stock
with a par value of $ .0001 per share.
In August of 1995, Hy-Poll acquired all of the issued and outstanding shares of
the Company's Common Stock. On December 21, 1995 the Company amended its
Certificate of Incorporation changing its corporate name to Universal Turf, Inc.
The Company then amended the name again on November 8, 1999, changing its
corporate name to Universal Media Holdings, Inc.
On February 14, 2000, the Company purchased 100 percent of the outstanding stock
of E-Trans Logistics, Inc. (E-Trans), formerly known as Gerard Express, Inc. for
6,297,348 shares of Universal. E-Trans is a trucking, transport and logistics
Company located in New Jersey. Universal had no operating assets prior to its
acquisition of E-Trans. The fair value of E-Trans approximately equaled the cost
basis of the assets.
On March 27, 2000, the Company acquired all the outstanding shares of
Net-Tronics for $100,000 and 250,000 shares of Universal Media stock. This
resulted in $100,000 of goodwill that was subsequently written off. Net-Tronics
had no operations since formation. Immediately subsequent to the aforementioned,
Universal merged into its wholly owned subsidiary, dissolving its subsidiary
with Universal.
Discontinued Operations
Subsequent to September 30, 2000 the Company made a determination to exit its
trucking, transport and logistics operation after the acquisition of E-Trans due
to continuing losses. The Company incurred a one-time charge of $25,000 related
to an accrual for estimated expenses during the phase out period. The Company
had attempted to settle with the lessor and other creditors of the operations.
E-Trans filed for protection under Chapter 11 of the United States Bankruptcy
Code, in the District of New Jersey on March 22, 2001. The Chapter 11 filing was
subsequently converted to a Chapter 7 filing. The Company is currently waiting
the disposition of this filing from the court appointed trustee. The disposition
of the transport business represents a disposal of a business segment under
Accounting Principles Board Opinion No. 30. Accordingly, results of this
operation have been classified as discontinued.
F-7
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
NOTES TO FINANCAIL STATEMENTS (unaudited)(continued)
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $ 25,500 for the six months ended March 31,
2002 and has incurred a net loss of $10,500 for the three months ended March 31,
2002. At March 31, 2002 current liabilities exceed current assets by $
1,124,375. These factors raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and disclosures required
by accounting principles generally accepted in the United States of America.
However, in the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position of Universal Media
Holdings, Inc. and Subsidiary (the Company) at March 31, 2002, and the results
of operations and stockholders' deficit for the three months and six months
ended March 31, 2002, and the statement of cash flows for the six months ended
March 31,2002. For further information, refer to the financial statements and
disclosures that were filed by the Company with the Securities and Exchange
Commission on Form 10-KSB for fiscal year ended September 30, 2001 (Annual
Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934) (File
No. 000-28459).
NOTE 3 --CREDIT ARRANGEMENT
On February 1, 2000, the Company, through its subsidiary E-Trans, entered into a
factoring and security agreement with Metro Factory's, Inc. (Metro), a financial
institution that specializes in factoring transactions. The Company identified
certain customers and sold related receivables to Metro for their face value.
All the invoices purchased by Metro from the Company constituted a sale with
legal title passing to Metro including its right to use those invoices as
collateral. The Company was able to borrow up to 90 percent of the total face
value sold at an interest rate of 2.75 over the base-lending rate of Key Bank
National Association of Cleveland, Ohio. The Company also paid Metro a
commission equal to .6 percent of the face amount of invoices purchased and an
additional .25 percent due each fifteenth day period beginning with 61st date on
the invoice. All invoices were purchased on a recourse basis. Invoices unpaid
in excess of 90 days were deemed uncollectible and the Company agreed to
repurchase these invoices from Metro at the full-face amounts.
F-8
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
NOTES TO FINANCAIL STATEMENTS (unaudited)(continued)
NOTE 3 --CREDIT ARRANGEMENT (continued)
At the time of transfer of the receivable, the Company recognized the sale of
such invoices and any commissions owed Metro. At the time an invoice is
presented back for repayment, the Company records it at its estimated fair value
and recognizes any losses.
Metro has the right to inspect all books and records of the Company at any time
including requiring certain financial reporting.
This credit arrangement is personally guaranteed by two stockholders of the
Company and cross-collaterized with another corporation in which these two
stockholders have common ownership. Additionally Metro has a blanket security
interest in assets of E-Trans.
As a result of E-Trans petition of Bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code, along with all collateral being dissipated, E-Trans has
defaulted on this obligation. Additionally, E-Trans is in violation of most of
the covenants of its lending agreement, as well as one of the guaranteeing
stockholders has declared and filed personal bankruptcy. As a result, Metro has
filed judgments against E-Trans for payment of amounts due under the above
arrangements, and will be subject to settlement of amounts owed it per the
bankruptcy court's determination.
No adjustments have been recognized as the result of any modifications or
reductions of this or other indebtedness of the Company as a result of E-Trans
bankruptcy filing.
NOTE 4-SUBSEQUENT EVENTS
Change of Control
On April 12, 2002, a new Board of Directors was elected with all the former
directors resigning. In addition, the new board of directors selected new a new
president, vice president, and new chief financial officer, with all the
previous officers resigning. Immediately preceding the election of the new
board, 42,000,000 shares of voting common stock were issued to these individuals
(post-reverse split basis)
Reverse split
In conjunction with the above "change of control" the Company on April 12, 2002,
completed a reverse split of thirty old shares of common stock for each one
share of new common stock. Shares issued to new management are new shares of
common stock. This transaction has been retroactively applied to all share
disclosures in the financial statements.
F-9
UNIVERSAL MEDIA HOLDINGS, INC. & SUBSIDIARY
NOTES TO FINANCAIL STATEMENTS (unaudited)(continued)
NOTE 4-SUBSEQUENT EVENTS(continued)
Agreement to Purchase
On April 19, 2002 the Company entered into an agreement to purchase 52% of the
outstanding stock of INCOMM HOLDINGS, INC, a corporation organized under the
laws of the province of British Columbia, Canada (DBA GALAXY TELECOM), in return
for 2,000,000 shares of common stock. The Company also has offered to purchase
up to $1,000,000 U.S. of convertible notes, the terms of which have yet to be
negotiated.
Galaxy Telecom is a provider of integrated IP solutions with a primary focus on
wholesale VOIP (Voice Over Internet Protocol), through which it presently
terminates over 4 million minutes per month into China. It has recently signed
an agreement to provide telecommunications and engineering services to Mexico.
F-10
UNIVERSAL MEDIA HOLDINGS, INC.
ITEM 2. PLAN OF OPERATION
The Company has reorganized as a management and holding company with a focus on
acquiring and managing small enterprises that have good growth prospects. The
primary criteria for acquisition candidates are that they must be at or near
profitability and exhibit potential for growth with a minimal amount of
financing. Incomm Holdings (D.B.A. Galaxy Telecomm) is the first acquisition to
date and demonstrates these criteria. Galaxy Telecomm operates profitably in a
depressed industry that is currently out of favor in the investment community.
It has demonstrated the ability to grow profitably and has excellent management
to guide the future progress of the operation.
The Company anticipates that in order to fulfill its plan of operation including
payment of certain past liabilities of the company, it will need to seek
financing from outside sources and is actively pursuing equity and debt
financing alternatives. There is no assurance that the company will be
successful in raising the necessary funds.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
Our subsidiary, E-Trans Logistics, Inc., has several possible
collection actions that may be brought against it. It is believed that any
actions involving the subsidiary would not affect the Company. It is also named
as a debtor in a Chapter 7 bankruptcy proceeding in the District of New Jersey.
The primary debtor is National Expedite, Inc. The Primary creditor in the
proceeding is Metro Finance. E-Trans was a guarantor, along with other entities
on the debt. It is believed by management, that debt remains with the
subsidiary and does not affect the parent company.
ITEM 2 - Changes in Securities
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
(a) Exhibits
EXHIBITS AND SEC REFERENCE NUMBERS
Number Title of Document
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2(a) Certificate of Incorporation (1)
2(b) Plan of Merger (1)
2(c) Amendment to Certificate of Incorporation to Increase Authorized
Shares (1)
2(d) Amendment to Certificate of Incorporation to Amend Name (1)
2(f) By-Laws (1)
(1) Filed as exhibits to Form 8-K, filed April 14, 2000, as Exhibit 99.1,
Form 10-SB
(b) Reports on Form 8-K
We did not file any reports on Form 8-K during the three months ended
March 31, 2002.
We filed the following reports after march 31, 2002:
May 1, 2002, "Item 1. Changes in Control of Registrant" which included advise of
the change of phone number and address of the registrant, and the appointment of
a new President, Vice President and Chief Financial Officer.
On May 15, 2002, we filed a report on Form 8-K "Item 5. Other Events" describing
an agreement that the company entered into for purchase of 52% of the stock of
INCOMM HOLDINGS, INC.
11
UNIVERSAL MEDIA HOLDINGS, INC.
SIGNATURE
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 MEDIA HOLDINGS, INC.
May 21, 2002 By: /s/ Douglas Thiessen
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Douglas Thiessen,
Chairman and President
May 21, 2002 By /s/ David Berkowitz
- ------------------ -------------------------------
David Berkowitz,
Director and Secretary
May 21, 2002 By /s/ George L. Riggs, III
- ------------------ -------------------------------
George L. Riggs, III,
Chief Financial Officer
12