UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2002
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: 000-31160
UgoMedia Interactive Corporation
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(Exact name of registrant as specified in its charter)
Nevada 88-0470239
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
704 Mara Street, Suite 100 N7V 1X4
Pt. Edward, Ontario ---------------------
------------------------------ (Zip Code)
(Address of principal executive
offices)
(519) 541-1564
----------------------
(Registrant's telephone number, including area code)
3400 W. Desert Inn Road, Suite 13
Las Vegas, Nevada 89102
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(Former name, former address and former fiscal year, if changed
since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
9,050,668
PAGE-1-
UGOMEDIA INTERACTIVE CORPORATION
(A Development Stage Company)
Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet 4
Income Statements 5
Statement of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Plan of Operation 8
PART II - OTHER INFORMATION
Item 4. Controls and Procedures 9
Item 6. Exhibits 9
SIGNATURES 9
CERTIFICATION 10
PAGE-2-
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial reporting and pursuant to the
rules and regulations of the Securities and Exchange Commission
("Commission"). While these statements reflect all normal
recurring adjustments which are, in the opinion of management,
necessary for fair presentation of the results of the interim
period, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. For further information, refer to the
financial statements and footnotes thereto, which are included in
the Company's Registration Statement on Form 10-SB previously filed
with the Commission on April 5, 2002, and subsequent amendments
made thereto.
The accompanying notes are an integral part of these
consolidated financial statements.
PAGE-3-
UGOMEDIA INTERACTIVE CORPORATION
BALANCE SHEET
As of September 30, 2002
ASSETS
Current Assets
Accounts receivable $29,750
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-------
TOTAL ASSETS $29,750
=======
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $57,586
Accrued expenses 1,495
Notes payable 70,693
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-------
Total Liabilities 129,774
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STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value,
5,000,000
shares authorized, none issued and
outstanding
Common stock, $.001 par value,
20,000,000 shares
authorized, 9,050,668 shares issued and 9,051
outstanding
Additional paid in capital 1,001,260
Retained deficit (1,110,335)
-------
-------
Total Stockholders' Deficit (100,024)
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--------
TOTAL LIABILITIES AND STOCKHOLDERS' $29,750
DEFICIT ========
PAGE-4-
UGOMEDIA INTERACTIVE CORPORATION
INCOME STATEMENTS
For the Three Months and Nine Months
Ended September 30, 2002 and 2001
Three Months Nine Months
Ended September Ended September
30, 30,
2002 2001 2002 2001
------- ------- ------- -------
------- ------- ------- -------
Revenues $7,030 $122,905 $165,155 $171,200
Cost of sales 41,979 92,839 86,847
------- ------- ------- -------
------- ------- ------- -------
Gross Margin 7,030 80,926 72,316 84,353
Operating Expenses
General and
Administrative (56,239) (170,635) (730,042)(188,895)
Depreciation (2,011) (1,938) (6,032) (3,372)
------- ------- ------- -------
------- ------- ------- -------
Net Loss from Operations (51,220) (91,647) (663,758)(107,914)
Other Income and Expense
Interest income 40
Interest expense (651) (506) (1,495) (1,777)
Other income 667 4,040 667
------- ------- ------- -------
------- ------- ------- -------
Net Loss $ $ $ $
(51,871) (91,486) (661,173) (109,024)
======= ======= ======= =======
Basic and diluted
loss per common share $(.01) $(.02) $(.13) $(.03)
Weighted average common
shares outstanding 5,907,334 4,918,000 5,201,223 4,198,183
PAGE-5-
UGOMEDIA INTERACTIVE CORPORATION
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2002 and 2001
2002 2001
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CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $(661,173) $(109,024)
Adjustment to reconcile net loss
to net cash
used by operating activities:
Depreciation 6,032 3,372
Stock issued for services 558,300
Bad debt 37,500
Changes in:
Accounts receivable 10,959 (53,972)
Other current assets 1,604 8,453
Accounts payable and accrued 14,902 23,294
expenses
Deferred revenue (8,738)
----------- -----------
----------- -----------
NET CASH USED BY OPERATING (40,614) (127,877)
ACTIVITIES
----------- -----------
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of equipment (2,015) (4,432)
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CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale of common 15,000 151,200
stock
Proceeds from note payable 25,000
Payments on note payable (3,976)
Purchase of treasury stock (28,500)
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----------- -----------
NET CASH PROVIDED BY FINANCING 11,500 147,224
ACTIVITIES
----------- -----------
----------- -----------
NET CHANGE IN CASH (31,129) 14,915
CASH BALANCES
- Beginning of period 31,129 13,089
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- End of period $0 $28,004
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PAGE-6-
UGOMEDIA INTERACTIVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of UgoMedia
Interactive Corporation ("UgoMedia"), have been prepared in
accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with
the audited financial statements and notes thereto contained in
UgoMedia's Annual Report filed with the SEC on Form 10-KSB. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim
periods presented have been reflected herein. The results of
operations for interim are not necessarily indicative of the
results to be expected for the full year. Notes to the financial
statements which would substantially duplicate the disclosure
contained in the audited financial statements for 2001 as reported
in the 10-KSB have been omitted.
NOTE 2 - NOTE PAYABLE
In February 2002, Ugo issued a promissory note in the amount of
$25,000. The note bears interest of 10% and matures in April 2003.
As of September 30, 2002, $1,495 of interest had been accrued.
NOTE 3 - COMMON STOCK
In April 2001, a major stockholder contributed a small sole
proprietorship operating under the names Digitalink and Sierra
System Solutions to Ugomedia. Digitalink and Sierra System
Solutions provided computer networking services to small
businesses. During the remainder of 2001 and the first quarter of
2002, Digitalink's services accounted for revenues of $0 and
$74,782, or 0% and 57%, respectively, of Ugomedia's total revenues
during these periods.
In March 2002, Ugomedia and this stockholder mutually decided to
end their relationship. The stockholder returned his 966,666
shares of Ugomedia stock and 100,000 stock options. Ugomedia gave
up all assets and business related to Digitalink and Sierra System
Solutions, and $13,500.
The above transaction was accounted for as a purchase for nominal
consideration in April 2001 and fully consolidated for the period
it was operated as a division of Ugomedia until its disposition in
March 2002. In the disposition, it was accounted for as a sale.
Their was no gain or loss recorded on the transaction.
In the three months ended June 30, 2002, UgoMedia issued 1,936,000
to officers, employees, and consultants for services valued at
$558,300.
NOTE 3 - SUBSEQUENT EVENT
The following transactions occurred on October 2, 2002, but are
recorded as of the current balance sheet date, September 30, 2002
as the type of subsequent event that requires adjustment to the
balance sheet carrying values because they affect the estimates
used in preparing financial statements.
Ugomedia sold 5,000,000 shares of common stock for $65,000.
Ugomedia received $15,000 in cash and a $50,000 note receivable.
The note receivable bears no interest. $5,000 is due on November
1, 2002 and the balance is due on October 1, 2003.
Ugomedia purchased 1,856,666 shares of treasury stock for $89,675.
Ugomedia paid $15,000 cash, issued a promissory note for $50,000,
discounted to $45,693, and all of Ugomedia's fixed assets with a
carrying value of $28,982. The note payable bears no interest.
$5,000 is due on November 1, 2002 and the balance is due on October
1, 2003. The note has been discounted at 10% for a discounted
value of $45,693 as of September 30, 2002. Their was no gain or
loss recorded on the transaction.
PAGE-7-
Item 2. Management's Discussion and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements
about UgoMedia Interactive Corporation's business, financial
condition and prospects that reflect management's assumptions and
beliefs based on information currently available. We can give no
assurance that the expectations indicated by such forward-looking
statements will be realized. If any of our management's
assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize,
UgoMedia's actual results may differ materially from those
indicated by the forward-looking statements.
The key factors that are not within our control and that may
have a direct bearing on operating results include, but are not
limited to, acceptance of our services, our ability to expand our
customer base, managements' ability to raise capital in the future,
the retention of key employees and changes in the regulation of our
industry.
There may be other risks and circumstances that management may
be unable to predict. When used in this Quarterly Report, words
such as, "believes," "expects," "intends," "plans,"
"anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements, as defined in Section 21E of
the Securities Exchange Act of 1934, although there may be certain
forward-looking statements not accompanied by such expressions.
The safe harbors of forward-looking statements provided by
Section 21E of the Exchange Act are unavailable to issuers of penny
stock. As we issued securities at a price below $5.00 per share,
our shares are considered penny stock and such safe harbors set
forth under the Reform Act are unavailable to us.
Results of Operations
We generated $7,033 in gross revenues for the quarter ended
September 30, 2002 compared to $122,905 during the same period in
2001. This represents a 94% decrease in revenues year over year.
Total expenses, comprised primarily of general and administrative
expenses, as well as depreciation, were $58,250 during the period
ended September 30, 2002, compared to $172,573 for the year ago
period. We thus experienced a net loss before income and taxes of
$51,220 for quarter ended September 30, 2002, compared to a net
loss of $91,647 for the year ago period. We expect to continue to
experience ongoing net losses for the foreseeable future.
Continuing since the second quarter of 2002, we experienced a
significant decline in our revenues. We attribute this slowdown to
general economic factors, the ceasing of our network consulting and
development business segment and a general decline in our business
operations.
Certain Events
On August 12, 2002, Ugomedia received a letter of intent from
Sovereign Capital Corporation, an Ontario Canada corporation,
involved in the funeral home business, to merge with Ugomedia.
This transaction has since been abandoned and is not expected to be
revived.
Ugomedia has continued to experience a decrease in business
and an inability to raise capital. Management of the Company thus
determined to explore all alternatives to preserve and protect
shareholder value. As a result, on October 2, 2002, Ugomedia sold
5,000,000 shares of common stock for $65,000. Ugomedia received
$15,000 in cash and a $50,000 note receivable. The note receivable
bears no interest. $5,000 is due on November 1, 2002 and the
balance is due on October 1, 2003.
Also on October 2, 2002, Ugomedia purchased 1,856,666 shares
of treasury stock for $89,675. Ugomedia paid $15,000 cash, issued
a promissory note for $50,000, discounted to $45,693, and all of
Ugomedia's fixed assets with a carrying value of $28,982. The note
payable bears no interest. $5,000 is due on November 1, 2002 and
the balance is due on October 1, 2003. The note has been
discounted at 10% for a discounted value of $45,693 as of September
30, 2002. There was no gain or loss recorded on the transaction.
Following the closing of the transactions described in our
Form 8-K filed on October 9, 2002, we conduct limited operations
and are exploring all options to enhance shareholder value.
PAGE-8-
PART II - OTHER INFORMATION
Item 4. Controls and Procedures
Within 90 days prior to the date of filing of this report, we
carried out an evaluation, under the supervision and with the
participation of our management, including the Chief Executive
Officer (who also effectively serves as the Chief Financial
Officer), of the design and operation of our disclosure controls
and procedures. Based on this evaluation, our Chief Executive
Officer concluded that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information
we are required to disclose in the reports we file under the
Securities Exchange Act of 1934, within the time periods specified
in the SEC's rules and forms. There have been no significant
changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
this evaluation.
Item 6. Exhibits and Reports on Form 8-K
Exhibit Name and/or Identification of Exhibit
Number
- ------- --------------------------------------------------
3 Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company.*
(b) By-Laws of the Company.*
99 Certification Pursuant to Section 906 of the Sarbanes-
Oxley Act pf 2002
* Incorporated by reference to the exhibits to the Company's General
Form for Registration of Securities of Small Business Issuers on Form 10-
SB, and amendments thereto, previously filed with the Commission.
Reports on Form 8-K
Date of Report Items Reported
- --------------- -----------------------------------
August 8, 2002 Item 4
September 18, 2002 Item 2
October 9, 2002 Items 1 and 2
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
UgoMedia Interactive Corporation
(Registrant)
By: /s/ Aldo Rotondi
- -----------------------
Aldo Rotondi
President
PAGE-9-
CERTIFICATIONS
I, Aldo Rotondi, certify that:
1.I have reviewed this quarterly report on Form 10-QSB of
UgoMedia Interactive Corporation;
2.Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report; and
3.Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
position, results of operations, and cash flows of the issuer
as of, and for, the periods presented in this quarterly
report.
4.I am responsible for establishing and maintaining disclosure
controls and procedures for the issuer and have:
(i) Designed such disclosure controls and procedures to
ensure that material information relating to the issuer is
made known to me, particularly during the period in which
the periodic reports are being prepared;
(ii) Evaluated the effectiveness of the issuer's disclosure
controls and procedures as of September 30, 2002; and
(iii) Presented in the report our conclusions about the
effectiveness of the disclosure controls and procedures
based on my evaluation as of the Evaluation Date;
5.I have disclosed, based on my most recent evaluation, to the
issuer's auditors and the audit committee of the board of
directors (or persons fulfilling the equivalent function):
(i) All significant deficiencies in the design or
operation of internal controls which could adversely affect
the issuer's ability to record, process, summarize and
report financial data and have identified for the issuer's
auditors any material weaknesses in internal controls (none
were so noted); and
(ii) Any fraud, whether or not material, that involves
management or other employees who have a significant role
in the issuer's internal controls (none were so noted); and
6.I have indicated in the report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 12, 2002
/s/ Aldo Rotondi
President, CEO, and Principal Financial Officer
PAGE-10-