-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F1aVbQIc4zriskg/D7LSd36MSp3W9sHdQkZD+/pIakiIbsT0eUIfh5WHrG2tNmQE lNcOEMIH9TAJYjH2+t500Q== 0001116502-04-002195.txt : 20040823 0001116502-04-002195.hdr.sgml : 20040823 20040823151633 ACCESSION NUMBER: 0001116502-04-002195 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040823 DATE AS OF CHANGE: 20040823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL COMMUNICATION SYSTEMS INC CENTRAL INDEX KEY: 0001098207 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 860887822 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30405 FILM NUMBER: 04991740 BUSINESS ADDRESS: STREET 1: 407 LINCOLN ROAD STREET 2: SUITE 6K CITY: MIAMI STATE: FL ZIP: 33139 BUSINESS PHONE: 5108396100 MAIL ADDRESS: STREET 1: 407 LINCOLN ROAD STREET 2: SUITE 6K CITY: MIAMI STATE: FL ZIP: 33139 FORMER COMPANY: FORMER CONFORMED NAME: WORLD WIDE WIRELESS COMMUNICATIONS INC DATE OF NAME CHANGE: 20000124 10QSB 1 universal10qsb.txt QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2004 ------------------ [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO _________ Commission file number: 000-30405 Universal Communication Systems, Inc. ---------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 4812 860887822 (State or jurisdiction (Primary Standard Industrial (IRS Employer of incorporation Identification No.) Classification or organization) Code No.) 407 Lincoln Rd, Suite 12F Miami Beach, FL 33139 ----------------------- (Address of principal executive offices) (305) 672-6344 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ------ ------ State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date. Class Outstanding as of July 30, 2004 ----- ----------------------------------- Common Stock, $.001 par value 200,265,556 Transitional Small Business Disclosure Format: Yes No X -------- --------- TABLE OF CONTENTS PART I FINANCIAL INFORMATION Page ---- Item 1. Consolidated Financial Statements: Consolidated Balance Sheet - June 30, 2004 and September 30, 2003 3 Consolidated Statements of Operations for the three months and nine months Ended June 30, 2004 and 2003 4 Consolidated Statements of Cash Flows for the nine months Ended June 30, 2004 and 2003 5 Notes to the Consolidated Financial Statements June 30, 2004 6 Item 2. Management's Discussion and Analysis or Plan of Operations 7 Item 3. Evaluation Of Disclosure Controls And Procedures 10 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Item 7. Signatures 12 Certifications 12 2 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS
Universal Communication Systems, Inc. Condensed Consolidated Balance Sheets June 30, September 30, 2004 2003 ------------ ------------ (unaudited) ASSETS Current Assets: Cash & cash equivalents $ 128,047 $ 144,682 Accounts receivable, net 115,876 105,859 Due from officer (net) -- -- Note and other receivable 338,180 116,782 Inventory, finished goods 67,136 4,900 Prepaid expenses 10,875 35,185 ------------ ------------ Total Current Assets 660,114 407,408 ------------ ------------ Property, Plant and Equipment Furniture and equipment 340,452 64,838 Less: Accumulated depreciation 30,906 21,579 ------------ ------------ Total Fixed Assets, Net 309,546 43,259 ------------ ------------ Other Assets: Patents 606,714 606,714 Deposits 54,856 4,600 ------------ ------------ Total Other Assets 661,570 611,314 ------------ ------------ Total Assets $ 1,631,230 $ 1,061,981 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Bank overdraft advance $ 82,053 $ 25,721 Accounts payable 309,731 195,538 Accrued expenses 591,868 360,805 Notes payable 60,000 344,746 Liabilities of discontinued operations 946,794 946,794 Due to related parties 39,326 93,308 Due to officer 379,323 11,363 ------------ ------------ Total Current Liabilities 2,409,095 1,978,280 Long-term Liabilities: Convertible debentures 2,468,193 4,446,996 ------------ ------------ Total Liabilities 4,877,288 6,425,276 ------------ ------------ Commitments and Contingencies -- -- ------------ ------------ Stockholders' Deficit: Series A 8% Cumulative Convertible Preferred stock, par value $.001 per share, 10,000,000 shares authorized, 30,000 issued and outstanding 30 -- Common stock, par value $.001 per share, 800,000,000 shares authorized, 155,346,216 and 81,223,000 shares issued and outstanding 155,346 81,223 Additional paid-in capital 31,056,676 26,482,580 Accumulated deficit (34,364,610) (31,833,598) Account receivable stockholder (93,500) (93,500) ------------ ------------ Total Stockholders' Deficit (3,246,058) (5,363,295) ------------ ------------ Total Liabilities and Stockholders' Deficit $ 1,631,230 $ 1,061,981 ============ ============
See notes to condensed consolidated financial statements. 3
Universal Communication Systems, Inc. Condensed Consolidated Statements of Operations UNAUDITED Three Months Ended June 30, Nine Months Ended June 30, ---------------------------- -------------------------- 2004 2003 2004 2003 ---------- -------- ---------- --------- Revenue and other income $ 220,529 $ - $ 449,856 $ - Cost of goods sold 250,051 - 275,221 - ---------- --------- --------- --------- Gross profit (29,522) - 177,635 - Operating expenses Sales and marketing 213,275 - 904,015 - Product development 33,324 - 159,228 - General and administrative 498,019 503,609 1,373,676 917,660 Write down of Assets - - - 26,397 ---------- --------- --------- --------- Operating (loss) (774,140) (503,609) (2,259,284) (944,057) Interest expense (42,456) (51,886) (266,728) (152,836) ---------- --------- --------- --------- Net loss $ (816,596) $(555,495) $(2,526,012) $(1,096,893) Dividend on Preferred Stock 5,000 - 5,000 ---------- --------- --------- --------- Net Loss Applicable to Common Shares $ (821,596) $(555,495) $(2,531,012) $(1,096,893) ========== ========= ========= ========= Basic and diluted loss per share $ (0.01) $ (0.02) $ (0.02) $ (0.08) ========== ========= ========= ========= Number of shares used in computing basic and diluted loss per share 151,069,803 29,813,878 119,866,510 14,457,539 =========== ========== =========== ===========
See notes to condensed consolidated financial statements. 4
Universal Communication Systems, Inc. Condensed Consolidated Statement of Cash Flows UNAUDITED For the For the Nine Months Nine Months Ended Ended June 30, June 30, 2003 2003 ------------------ ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (2,526,012) $ (1,096,893) Adjustments to reconcile net loss from operations to net cash used by operating activities: Common stock issued for services 1,006,828 686,898 Depreciation and amortization expense 9,217 4,267 Interest payable added to principal of debentures and notes 63,979 119,027 Interest accretion 15,254 22,881 Loss on write down of assets - 26,397 Changes in operating assets and liabilities: (Increase) in accounts receivable (222,726) - (Increase) in inventory (62,236) - (Increase) in prepaid and other (25,946) (38,365) Increase in accounts payable and accrued expenses 340,256 22,824 Increase in cash overdraft 56,332 - ------------------ ----------------- Net Cash (Used) by Operating Activities (1,345,054) (252,964) ------------------ ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (275,504) (3,303) ------------------ ----------------- Net Cash (Used) by Investing Activities (275,504) (3,303) ------------------ ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Notes Receivable (8,689) (34,500) Proceeds from sale of Preferred Stock 300,000 - Proceeds from note payable - 70,000 Sale of common stock 1,298,639 192,942 Common Stock subscription proceeds - 334,475 Payment of note payable (300,000) - Increase in due to related parties, net 313,973 - ------------------ ----------------- Net Cash Provided by Financing Activities 1,603,923 475,674 ------------------ ----------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16,635) 219,407 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 144,682 874 ------------------ ----------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $128,047 $220,281 ================== ================= SUPPLEMENTAL DISCLOSURES OF CASH: Interest paid $ - $ - Income taxes paid $ - $ - SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: Interest accrued on debentures, added to the principal of the debentures $ 63,979 $119,027 Debentures converted to common stock $2,042,782 $407,638 Preferred stock dividend accrued $ 5,000 -
See notes to condensed consolidated financial statements. 5 UNIVERSAL COMMUNICATION SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - General and Summary of Business and Significant Accounting Policies. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements included in this Form 10-QSB. The results of operations for any interim period are not necessarily indicative of results for the full year. These statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended September 30, 2003. The balance sheet at September 30, 2003 has been derived from audited financial statements, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Background The Company is currently focusing its operations on the design, manufacture and sale of water production and generation systems along with solar power systems. Reverse Stock Split The Company completed a one-for-one-thousand reverse stock split on August 23, 2002. All share and per share information reflects this reverse stock split. NOTE 2 - GOING CONCERN AND SIGNIFICANT RISKS AND UNCERTAINTIES The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has experienced losses since inception, and as such, there is substantial doubt as to the Company's ability to continue as a going concern. The Company is continuing to secure additional capital through sales of common stock through the current operating cycle. There is no assurance that management will be successful in its efforts. NOTE 3 - BASIC AND DILUTED NET LOSS PER SHARE CALCULATION Loss per common share is calculated in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the nine months ended June 30, 2004 and 2003, common stock equivalents have been excluded from the aforementioned computations as their effect would be anti-dilutive. NOTE 4 - PREFERRED STOCK On April 19, 2004, the Company sold 30,000 shares of Series A 8% Convertible Preferred Stock and Warrants to purchase 4,545,455 shares of common stock for which it received net proceeds of $300,000. The Series A Convertible Preferred Stock, with a face value of $300,000, is convertible into common stock at $0.033 per share. The Warrants are exercisable at $0.05 per share until April 19, 2009. Preferred stock dividends related to the Series A 8% Convertible Preferred Stock amounted to $5,000 for the period April 19, 2004 to June 30, 2004. As of June 30, 2004, the total amount of unpaid and undeclared dividends was $5,000. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Except for historical information contained herein, the statements in this report (including without limitation, statements indicating that the Company "expects," "estimates," anticipates," or "believes" and all other statements concerning future financial results, product offerings, proposed acquisitions or combinations or other events that have not yet occurred) are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements involve known and unknown factors, risks and uncertainties which may cause our actual results in future periods to differ materially from forecasted results. Forward looking statements are all based on current expectations, and we assume no obligation to update this information. RISK FACTORS For the past two fiscal years we have had minimal revenues. We have a history of losses, and an accumulated shareholder deficit of $34,364,610. Because of our recurring losses, our independent auditors have expressed doubt as to our ability to continue as a going concern. We will require additional capital in the short term to remain a going concern. We will require substantial short term outside investment on a continuing basis to finance our current operations and any limited capital expenditures identified to protect existing investments. Our revenues for the foreseeable future may not be sufficient to attain profitability. Since inception, we have generated little revenue and have incurred substantial expenditures. We expect to continue to experience losses from operations while we develop the Air - Water and photo voltaic businesses. In view of this fact, our auditors have stated in their report for the period ended September 30, 2003 that our ability to meet our future financing requirements, and the success of our future operations, cannot be determined at this time. In order to finance our working capital requirements we are negotiating equity investments, but there can be no assurance that we will obtain the required capital or that it will be obtained on terms favorable to us. If we do not obtain short term financing we may not be able to continue as a viable concern. Although one of our subsidiaries has a bank account overdraft facility, we do not have a bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms, if at all. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. We are currently focusing our operations on the design, manufacture and sale of water production and generation systems along with solar power systems. There are no assurances that this business activity will be successful, that we will be able to identify and sell to the market and that the market will respond to our product line. PLAN OF OPERATION FOR THE NEXT 12 MONTHS - ---------------------------------------- Our cash position at June 30, 2004 is $128,047. This is only sufficient to provide coverage for two months of operating cash needs, based on the current reporting period's negative cash flow from operations. However, our Chairman, in connection with Port Universal Ltd., a company in which he owns a one third interest, has agreed to provide funding as needed until our sales activities are sufficient to cover our cash flow needs. This agreement by our Chairman and Port Universal is not a binding obligation; we have no assurances that this funding 7 will continue beyond the short term. Further, based on current sales volume and our projections, we anticipate that by December 31, 2004, our subsidiaries should have sufficient revenues that we will not require funding from equity sales. With the acquisition of Millenium (described later) and the company's new business focus, we have been able to obtain private placement funding to finance our activities in these fields. We anticipate continuing to receive operating funds from private placement sales of our common stock, until such time as product sales are sufficient to support the organization, however no assurances can be made that we will be able to find willing investors. We are also relying upon the same private placement funding to provide the cash required to consumate the proposed GiroSolar acquisition described later. Except for the GiroSolar acquisition, described later, we do not have any major expenditures planned, nor do we anticipate the purchase or sale of plant and / or significant equipment. Our plan calls for the use of third party contract manufacturers, thus avoiding the allocation of our resources into manufacturing operations. We anticipate funding any sizeable orders for either AirWater equipment or Photovoltaic installations, through deposits and advances from customers. Subsequent to this reporting period, we have placed a $100,000 deposit with one of our contract manufacturers. We do not anticipate any substantial change in the number of employees in the near term for our existing operations. We have several potential sizeable contracts in the sales process. Should these contracts be awarded, we will need to raise additional equity or arrange for financing vehicles to fund those contracts. Any equity raised could result in dilution of existing shareholders. Additionally, we are uncertain as to the availability of sufficient financing on acceptable terms. BUSINESS AND ORGANIZATION Universal Communication Systems, Inc. (collectively the "Company", "us" or "we"), prior to 2002, was engaged in activities related to advanced wireless communications, including the acquisition of radio-frequency spectrum internationally. Currently, our activities related to the advanced wireless communications are conducted by our investment in Digital Way, S.A., a Peruvian communication company and former wholly owned subsidiary. We currently hold a twenty seven percent interest in Digital Way, S.A., however, due to a lack of cooperation from their management, our financial results do not include our interest in their activities. Management is actively searching for a buyer of the investment in this subsidiary. All investments and advances made to this subsidiary have been fully reserved through valuation allowances. We also own a U. S. patent on our Distributed Wireless Call Processing System technology. We currently have three channels of activity, each conducted by a wholly owned subsidiary. AirWater Corporation, ("AirWater") a Florida corporation formed in March, 2003, has been established to design, manufacture (utilizing contract manufacturing organizations) and market systems that perform water extraction from air. Millennium Electric T.O.U. Ltd., ("Millenium") an Israeli company, acquired September, 2003, specializes in the development and installation of solar power systems worldwide, primarily to government and industrial users. Solar One, Inc., ("Solar One") a Florida corporation, formed in July, 2003, manufactures (subcontracted to third parties) and markets portable photovoltaic cells in leather cases for consumer electronic products. Solar One was formed to source the manufacturing and to market the product line of photovoltaic consumer energy panel products designed by Solar Style, Ltd., an Israeli company owned by us. We have recently combined the technology of the photovoltaic system of Millenium and the water extraction systems of AirWater and developed a self powered air water machine. Airwater's initial action was to obtain licensing rights to the technology. To that end, we acquired four patents by agreement dated March 24, 2003, relating to this technology from J. J. Reidy Company of Holden, Massachusettes. Under the terms of the agreement, we paid $300,000, and we are obligated to pay a royalty 8 payment of between 5 to 7.5% on all sales of equipment which uses the patented technology. Of the $300,000, $100,000 was paid in cash, and the balance of $200,000 was settled by the issuance of restricted common shares. Beginning in March 2003 we pursued various consulting, marketing and sales agreements. The activities covered by these agreements include, product design, electrical and mechanical engineering, systems integration, research and development, conceptual designs, global contacts, mergers and acquisitions, product and company publicity, marketing, sales and general business consulting. Our plan for development of the AirWater and Photovoltaic product lines call for utilizing outside consultants and agents to assist and/or perform the manufacturing, marketing, sales and integration of our products to the end users. In certain global areas where electricity and/or gas power sources are either not available or in short supply, there is a need for a power alternative to conventional sources. As previously mentioned, on September 29, 2003 we completed the acquisition of Millennium to fulfill this technological need of providing Photo Voltaic (PV) Electric Energy to provide the necessary power for the air-water system. Millenium and its president, Mr. Ami Elazari, operate in the forefront of the high technology field of solar energy, solar panels, and solar powered consumer products. The Company and Mr. Elazari are the holders of more than 21 international patents relating to both Photo Voltaic ("PV") and solar energy systems and products. NEW PRODUCTS In line with our new business plans, AirWater engaged engineers and product development experts to both enhance existing technologies, and to develop new systems and applications. In this regard, the company announced on October 23, 2003 that it had developed a new special Multi Head Dispenser Air to Water system for the marine and Boating industry. INTERNATIONAL SALES AND MARKETING We are focusing our sales efforts in the European, African, Middle Eastern and Asian government and industrial markets for the AirWater and Millenium product and service offerings. Solar One is targeting the North American and European consumer markets. Our sales strategy is to engage independent sales consultants, who are commission based, and thus create a more extensive marketing and networking program than that which could be achieved using an employee based salesforce alone. Since the company started marketing AirWater Machines and Systems, we have made inroads into many international markets. Sample machines have been shipped to Mexico, Los Angeles, Huntsville, Brazil, France, Cameroon, Australia, China, Switzerland, Jordan, Iraq, etc. We have received positive feedback from these demo placements, with an indication of order placements to be forthcoming. We are concentrating our sales and marketing efforts on making large "country sized" sales to governments, federal and local authorities, as well as to international aid agencies. We recognize that because of the complexity of the product, the sales cycle of the AirWater products and systems are somewhat longer than was previously projected. However, management remains confident that sizeable international orders for the machines will occur in 2004 or early 2005. On December 15, 2003, we signed a memorandum of understanding to effect a licensing transaction with an Australian Group for the manufacture and or assembly of AirWater machines and PV Solar Panels in Australia. This transaction secured a one time technology fee, due to us, of $200,000 with Royalty residuals of 5 percent on all manufactured and sold products. In early January, 2004, we received the first installment payment of $10,000 pursuant to this agreement. The balance is due over the following eighteen months, however, no further payments have been received since that initial payment. 9 LISTING ON FOREIGN EQUITIES EXCHANGE On December 1, 2003, the company obtained a listing on the Berlin Exchange in Germany. The company was allocated a trading symbol UCV. Subsequent to this, we have engaged the services of the Geneva Group, an entity with expertise in marketing and corporate promotions, to bring to the German investor an awareness of our business, as well as an awareness of our stock listing in the German exchange. We have been advised that we do not have any regulatory filings in connection with this listing beyond what is required for our United States securities filings. OVERSEAS OFFICES AND STRATEGIC PARTNERSHIPS. In line with marketing and sales needs of AirWater and PV Solar Products, we have opened operational offices in Geneva Switzerland and Paris France through strategic partnerships with existing businesses in those locales. In addition, we have set up representation in Mexico, Brazil, Morocco, China, and in several countries in Africa. Millennium has signed several agreements with strategic partners worldwide: GiraSolar in Holland, Capsolair in Morocco, Team Millennium Group in Sydney Australia, Digital Light in Los Angeles, USA, Jumao Photonic in Korea, and with a subsidiary of PetroChina in China. All of these agreements are for selling a combination of know-how and international marketing licenses. We anticipate that these agreements will result in sales through this network in the near future. These agreements are an integral part of Millennium's Strategic vision for creating a group of international satellite companies working under the Universal Communication Systems, Inc. corporate umbrella which is planned will provide a more extensive marketing and buying power program than that which could be achieved by an employee based sales force. Millennium is also in the process, as part of our group of companies, of establishing new entities for the sale of Solar Style products. The first, Solar One, Inc., USA, (dba Solar Style, Inc.) for which we have recently opened an office in Baltimore and are planning to open a warehouse, will form the basis of the targeted North American distribution network. RESEARCH & DEVELOPMENT PROJECTS IN PROCESS Effective January, 2004 to the present, Millennium has been working on 6 projects within the 5th and 6th framework of the European Commission. These projects are: First project - "Development of a solar distillation waste water treatment plant for olive oil mills" in Crete. Millennium's share of the budget for the first year is 126,000 Euro (USD $102,231). Second project - "Remote Monitoring for Renewable energy systems". Millennium's share of the budget for the first six months is 39,713 Euro (USD $32,222). Third project - "High Efficiency low cost solar cells". Millennium's share in the budget for the fist six months is 16,965 Euro (USD $13,765). Fourth project - "Development of Innovated Quality assurance measures to improve the efficiency of solar panel production." Millennium's share in the budget for the first six months is 4,470 Euro (USD $3,627). Fifth project - "Development of an Integrated solar system for Buildings". In this project Millennium is the coordinator. The budget totals 931,000 Euro (USD $755,376). In addition, Millennium received approval for a new "reflect " project as the coordinator with 908,000 euro (USD $736,715) budgeted for the next 24 months. 10 Millenium has developed, manufactured and sold a Solar Powered Gasoline Pump to the Israeli Army which will be used for tanks and armored personnel carriers. Another project our engineers are working on, is PV Solar Powered Traffic Lights for the municipality of Herzelia. The company also recently signed an R&D agreement with the Netafim Company - a leading manufacturer for computerized irrigation systems. This project involves the development and installation of a PV Solar Energy System that will heat and cool plant roots in order to boost plant fertility. GERMAN MARKET AND OTHER WORLDWIDE ACTIVITIES Millennium recently secured a contract for Millennium Brand PV Solar Panels for delivery in Germany. More than 300 panels have already been supplied and delivered to the customer. During the current reporting period, Millennium experienced some problems in sourcing sufficient Solar Cells for the manufacture of the PV Solar modules required under this contract. The shortage of Solar Cells is a world wide problem, with strong demand for Solar Panels dictating the demand and the prices. As a result, the company was forced to cut back on production and we have not been able to supply as many panels as required under existing contracts. Management expects that the Solar Cells shortage problem will resolve itself on a global basis, and that full PV Solar Panel production will resume in the fall. Millennium is working on a solar desalination project in Heraklion, Crete, pursuant to one of the EU projects. After successful completion of the project for the Cross Israel Highway, we have received a maintenance contract with a monthly revenue stream. In connection with the highway projects, we are awaiting confirmation for participation in the next phase of the Cross Israel Highway, which has a value of about $200,000. Holland - in connection with GiraSolar (Solar Service Buro and Stroomwerk) we are marketing Solar Panels to the Dutch market. China - our marketing efforts have resulted in an OEM agreement for local manufacture of PV Solar Panels under the exclusive brand name of "Millennium Electric" and a joint venture agreement to PhotoVoltaic "Solarize" the first two PetroChina gas stations, one in Beijing and one in Shanghai. The estimated value is about $100,000 per gas station. With 1,000 additional gas stations that potentially may be outfitted, the overall project could have a value of up to $100 million dollars. Although we are pursuing this contract, there is no assurance that we may secure this contract. Beginning in June of 2003, we have worked to design, research and develop as well as source the manufacture of our AirWater machines. With completion of our product line design and reaching manufacturing agreements with third party contract manufacturers, we are now conducting a worldwide sales and marketing program. We are employing outside sales agents to achieve better market penetration. PRODUCT AND MARKETING STRATEGY We have chosen to concentrate our sales and marketing efforts on making large "country sized" sales to governments, federal and local authorities, as well as to aid agencies globally. We have entered into agreements with sales and marketing agents in our target countries. We have realized that because of the complexity of the product, the sales cycle of the AirWater products and systems are somewhat longer than what was previously anticipated. However, we remain confident that large "country sized" international orders for our AirWater machines will be secured through these efforts. In the process of developing our product line, we have determined that the longer sales cycle is due mainly to a number of factors, primarily: 11 1) We are still developing the products based on existing research we are performing and feedback we receive from potential users; 2) Improve the efficiency, and both lower the purchase costs, as well as running costs of the air to water systems; 3) the company needs to develop, build, and perfect customer friendly machines; and 4) the company is at all times aware of the need for the safety factor. In this regard, we have conducted testing of machine models with the relevant government agencies responsible for the quality, industrial and commercial international standards the potential buyer expects. This process is both expensive and time consuming. Management remains very confident that in the short term, we will overcome the obstacles presented by these issues and be able to offer the appropriate machine to all potential markets. During this reporting period, management traveled to both China and Israel, to monitor the planning and production of the AirWater machines, and to ensure that top quality units will be produced for our target customers. Various new enhancements and modifications, that will positively affect the quality of the products, were implemented, and management believes that these new changes will ensure a better sales opportunity and improved sales results. ACQUISITIONS GiraSolar - --------- On September 17, 2003, we announced that we have entered into a letter of intent to acquire a 51% interest in GiraSOLAR, BV, a Dutch company that operates and specializes in the photo voltaic solar energy industry. This Dutch group is composed of two separate operating subsidiaries, Stroomwerk Energy (SWE) and Solar Service Buro (SSB).The company is currently doing its due diligence and legal preparatory work, in anticipation of closing the acquisition. Solar Style Ltd. (Israel) - ------------------------- In connection with our acquisition of Millenium on September 29, 2003 as previously reported, we acquired 50% of Solar Style Ltd. (Israel). On January 29, 2004, we issued 500,000 shares of common stock plus a 2 year warrant to purchase 1 million additional shares of our common stock at an exercise price of 10 cents per share, for the remaining 50% of Solar Style Ltd. (Israel). Solar Style Ltd. is in the business of designing, manufacturing and marketing consumer styled PV solar chargers. The company does not have any sales or assets, other than product designs and licensing/manufacturing agreements. Solar Style Ltd., has developed, and is contracting to manufacture and bring to market solar powered products for the portable consumer markets. Solar Style's technology converts solar energy into electricity, and has developed a solution that charges mobile devices by a small portable photovoltaic solar panel, which is designed to fit in an elegant leather case for high consumer appeal. Solar Style manufactures the panels and carrying-cases, which are then assembled together to be sold as one unit. The panels can be easily plugged into solar cells, and charged outdoors by sunlight and indoors by electric light. The photovoltaic cells act as battery chargers allowing a non-dependant use of the mobile device, making batteries / battery- chargers redundant. 12 Sales and marketing efforts commenced during this reporting period. The company has published full page advertisements in major newspapers in several Caribbean countries and is in the process of appointing distributors. In addition, the company has sourced alternate manufacturers to ensure a steady and reliable supply of product for the anticipated growth in sales. We anticipate commencing product shipments in the following quarter. RESULTS OF OPERATIONS Three Months and Nine Months Ended June 30, 2004 Compared to the Three Months and Nine Months Ended June 30, 2003. Revenues and cost of sales for the three months and nine months ended June 30, 2004 and June 30, 2003 were generated primarily by our subsidiary, Millenium. Operating expenses for the three months and nine months ended June 30, 2004 amounted to $774,140 and $2,259,284, respectively, compared to $503,609 and $944,057 for the three months and nine months ended June 30, 2003. For both periods, these expenses were primarily consultants, professional fees and rents. The increases of $270,531 and $1,315,227, respectively, were due to marketing expenses, legal fees, R&D costs and travel expense which was not incurred in the prior period as a result of the AirWater and Millenium activities new to the company. Interest expense decreased $9,430, from $51,886 for the three months ended June 30, 2003, to $42,456 for the three months ended June 30, 2004. For the nine months ended June 30, 2004 and 2003, interest expense increased $113,892 from $152,836 to $266,728. The decrease for the three months ended June 30, 2004, resulted from the conversion by the bondholders of a portion of their debt to common stock during the period. The increase for the nine months ended June 30, 2004, resulted from an adjustment accrual to the 8% convertible debentures which was recorded in December, 2003 and the accretion of interest imputed on the Andrews Corporation note payable, which was paid April 2004. Net losses for the three months ended June 30, 2004 were $821,596, as compared with $555,495 for the three months ended June 30, 2003. Net losses for the nine months ended June 30, 2004 were $2,531,012, as compared with $1,096,893 for the nine months ended June 30, 2003. The increase in net losses is primarily attributable to sales and marketing and product development costs incurred in the current fiscal year which were not incurred in the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2004, our cash position was $128,047 compared to $144,682 as of September 30, 2003. Cash used in operating activities for the nine months ending June 30, 2004, compared to the nine months ending June 30, 2003 were $(1,345,054) and $(252,964) respectively. The primary use of these funds resulted from operating losses and increase in receivables. Cash employed in investing activities amounted to $(275,504) for the nine months ended June 30, 2004 compared to cash used in investing activities for the nine months ending June 30, 2003 of ($3,303). The use of funds in investing activities for the period ending June 30, 2004 resulted from the purchase of equipment. Cash provided by financing activities for the nine month periods ending June 30, 2004 and 2003 were $1,603,923 and $475,674 respectively. For both periods these amounts were derived from the sale of our common stock. As previously reported, we completed the agreement to purchase 100% of the stock of Millennium Electric T.O.U. Ltd (Millennium), an Israeli company on September 29, 2003. Millenium specializes in the development and installation of solar power systems to international markets. Our purchase cost plus net liabilities assumed, resulted in $300,064 of intangibles in the form of patent costs, for which no impairment has been 13 recognized. No amortization is recorded in the year ended September 30, 2003, or during the nine months ended June 30, 2004. Millennium's assets and liabilities are included in our consolidated balance sheets at September 30, 2003 and June 30, 2004. Millennium's results of operations are included in our consolidated statements of operations for the three months and nine months ended June 30, 2004. However, Millennium's results are not included in our consolidated statements of operations for the three months and nine months ended June 30, 2003. The following pro forma data is presented on a combined basis, as if Millennium had been acquired as of October 1, 2002:
Three Months Ended June 30, Nine Months Ended June 30, --------------------------- -------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Revenues $ 220,529 $ 25,315 $ 449,856 $ 58,867 Expenses 1,037,125 589,094 2,975,868 1,179,435 ----------- ----------- ----------- ----------- Net (Loss) $ (816,596) $ (563,779) $(2,526,012) $(1,120,568) =========== =========== =========== =========== Basic & Diluted Loss per Share $ (0.01) $ (0.02) $ (0.02) $ (0.08) =========== =========== =========== ===========
Corporate Funding: The company chairman, Michael J Zwebner has arranged for substantial funding from his personal resources and from an entity that he owns 33% of and controls: Port Universal Corp.("PUC") This entity has invested in excess of $600,000 cash into the company for a growing equity position. Mr. Zwebner has invested over $500,000 of his funds this reporting period. Mr Zwebner has assured the company that absent other outside investors, PUC along with his personal investments will continue to finance the company in its period of growth until the company and its subsidiaries generate sufficient cash flow from operations to sustain working capital needs. While management restructures the Company and builds the water production and generation systems business along with solar power systems business, current operating cash is being provided by loans and the sale of common stock. Management is attempting to reduce the current working capital deficit through arrangements with creditors. If we do not make satisfactory arrangements with the creditors or obtain short term financing, we may not be able to continue as a viable concern. We do not have a bank line of credit, other than an overdraft facility at Millenium, and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms, if at all. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. We do not have any off-balance sheet arrangements. ITEM 3. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As of the end of the period covered by this quarterly report, the Company's Chief Executive Officer and its Chief Financial Officer evaluated the Company's disclosure controls and procedures as required pursuant to Rule 13a-14 under the Securities and Exchange Act of 1934, as amended. Under rules promulgated by the SEC, disclosure controls and procedures are defined as those "controls or other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms." Based on this evaluation, the Chief Executive Officer and Chief Financial Officer determined that such controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's periodic SEC filings. There were no changes in internal controls and procedures since the date of the evaluation. 14 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On August 26, 1999, we filed suit against Credit Bancorp, in U.S. District Court in San Francisco, regarding improprieties on the part of Credit Bancorp relating to a loan. The case was settled on October 11, 1999. As part of the settlement agreement, Credit Bancorp agreed to convert the original loans granted to us to a convertible debenture in the amount of $740,000. On October 11, 1999, we issued a convertible unsecured debenture for $740,000 to Credit Bancorp in settlement of this obligation. The terms of this convertible unsecured debenture are 7% interest per annum payable, semiannually on the last day of February and September, with the principal due September 30, 2002. All amounts of unpaid principal and accrued interest of this debenture are convertible at any time at the conversion price of $1,600 per share of unregistered, restricted shares of our common stock. Credit Bancorp has agreed to convert principal and accrued interest owing on the debenture into 483 shares of our common stock. In November 1999, the SEC filed suit against Credit Bancorp alleging violations of various securities laws in connection with its actions in relation to us and others, and seeking various forms of relief including disgorgement of its illegal gains. A receiver has been appointed to administer the affairs of Credit Bancorp. We have been informed that the appointed receiver denies that such a conversion request was made and that the principal amount and accrued interest of the debenture are due. We currently carry the 483 share obligation in our equity under escrowed shares. No provision for debenture, principal and accrued interest has been made in our financial statements, as we believe the receiver's claim is unfounded and the company will prevail. The matter remains unresolved at June 30, 2004. On August 7, 2003, Electric Gas & Technology of Dallas, Texas ("ELGT"), published a press announcement claiming that a complaint and $60 million lawsuit had been filed in Federal court in Texas (identified in the court records as Federal District Court, Northern District of Texas -- Dallas Division Cause No. 3-03CV-1798-G). Their press release stated that we had infringed on their patents. Counsel has advised us that their claims lacked substance. On November 24, 2003, the court granted our motion for dismissal due to lack of Texas jurisdiction. ELGT has similar suits filed against other companies in the same industry. We filed a counter claim in the United States District Court, Southern District of Florida, case number 03-22196-Civ-Seitz, disputing ELGT's claims of patent infringement and as a result of statements published in their press releases, we included in our complaint $118 million in damages against both ELGT and its president, Mr. Dan Zimmerman, for their false, defamatory and libelous statements. On January 24, 2004, we were granted a default judgement against ELGT and Mr. Zimmerman, as a result of their failure to appear, answer or respond to the complaint. With respect to the defamation and libel action, at a hearing in March, 2004, the Court awarded a Default Judgement against ELGT and Mr. Zimmerman to the company and requested that the company submit a claim of losses and damages. We submitted a claim of losses and damages in the amount of $82 million. In regard to the claimed patent infringement action we filed against ELGT, in May, 2004, the court ordered all parties to go to mediation in an attempt to reach a settlement. A trial date has been set by the court in June, 2005. ELGT has made an offer of settlement, which we have rejected. We are currently conducting discovery in preparation for mediation scheduled for late September, 2004. ITEM 2. CHANGES IN SECURITIES. Sales of Unregistered Securities - -------------------------------- We have issued and sold unregistered securities that have not previously been reported as set forth below. An underwriter was not utilized in any of these 15 transactions. The recipients of securities in each transaction represented their intention to acquire the securities without a view to distribution. All the issued securities were restricted securities under Rule 144, Reg. D or Reg. S regulations, and appropriate restrictive legends were affixed to the securities in each transaction. All sales of securities were to accredited investors in private placements, and accordingly all of the sales complied with Section 4(2) as well as 4(6) of the Securities Act of 1933. On April 1, 2004, we issued 5,000,000 shares of common stock under a private placement subscription at $0.04 per share. These securities were issued to Port Universal Ltd., an entity in which the Chairman owns 33.3%, in a transaction exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. On April 5, 2004, we issued 400,000 shares of common stock under a private placement subscription at $0.05 per share. These securities were issued in a transaction exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection with this transaction, we paid a commission of 10% to a third party. On April 8, 2004, we issued 5,000,000 shares of common stock under a private placement subscription at $0.04 per share. These securities were issued in a transaction exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. On April 19, 2004, we sold, at $10 per share, 30,000 shares of Series A 8% Convertible Preferred Stock and Warrants to purchase 4,545,455 shares of common stock. The Series A 8% Convertible Preferred Stock is convertible into common stock at $0.033 per share. The Warrants are exercisable at $0.05 per share and expire April 19, 2009. On April 25, 2004, we cancelled a certificate in the amount of 2,400,000 shares of our common stock issued in connection with our agreement with Natra Advanced Technologies (1995) Ltd., as part of our cancellation of that agreement. On April 26, 2004, we issued 1,546,710 shares of common stock under private placement subscriptions at $0.05 per share. These securities were issued in transactions exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection with these transactions, we paid a commission of 10% to a third party. On May 20, 2004, we issued 125,000 shares of common stock at $0.04 per share and 100,000 shares of common stock at $0.05 per share under private placement subscriptions. These securities were issued in transactions exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. These securities were issued to our Chairman to replace shares or funds he had advanced to the subscription holders. On May 24, 2004, we issued 766,460 shares of common stock under private placement subscriptions at $0.05 per share. These securities were issued in transactions exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection with these transactions, we paid a commission of 10% to a third party. On June 01, 2004, we issued 218,071 shares of common stock under private placement subscriptions at $0.05 per share. These securities were issued in transactions exempt from registration under the Securities Act of 1933 in reliance on Sections 4(2) and 4(6) of the Securities Act of 1933. In connection with these transactions, we paid a commission of 10% to a third party. 16 Other Securities Transactions - ----------------------------- Pursuant to the April 14, 2000 Securities Purchase Agreement (the 4% convertible debentures) and the March 29, 2001 Securities Purchase Agreement (the 8% Senior Secured Convertible Debentures), the investors converted $184,820 of debentures into 4,921,975 shares of the Company's common stock on various dates between April 19 and May 6, 2004, at various prices ranging from $0.033 per common share to $0.0573 per common share. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following exhibits are included herewith: EXHIBIT NO. DOCUMENT ----------- -------- (i) 3.1 Articles of Incorporation. (i) 3.2 Amendment to Articles of Incorporation (i) 3.3 Amendment to Articles of Incorporation. (i) 3.4 By-laws. (ii) 3.5 Amendment to Articles of Incorporation. Exhibit 3.5 Certificate of Designation, Series A 8% Cumulative Preferred Stock Exhibit 31.1 Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) Exhibit 31.2 Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) Exhibit 32.1 Certification of Periodic Report by the Chief Executive Officer as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 Exhibit 32.2 Certification of Periodic Report by the Chief Financial Officer as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 - ---------- (i) Filed with the registration statement on Form SB-2 with the Securities and Exchange Commission on May 31, 2000. (ii) Filed with Form DEF14A on April 25, 2002. (b) The Company filed the following reports on Form 8-K during the quarter for which this form is filed: May 3, 2004, Item 5 - Other Events and Regulation FD Disclosure. Notification by the Company's independent certified public accountants that they had not rendered their consent to the filing of their report on the Financial Statements included in the Company's Form 10-KSB for the year ended September 30, 2003. 17 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. Date: August 20, 2004 UNIVERSAL COMMUNICATION SYSTEMS, INC. /s/ MICHAEL J. ZWEBNER ----------------------------------------------- Michael J. Zwebner Chief Executive Officer, Chairman of the Board 18 EX-3.6 2 ex3-6.txt DESIGNATIONS EXHIBIT 3.6 CERTIFICATE TO SET FORTH DESIGNATIONS, VOTING POWERS, PREFERENCES, LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS OF SERIES A 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK, $.001 PAR VALUE PER SHARE It is hereby certified that: I. The name of the corporation is Universal Communication Systems, Inc. (the "Corporation"), a Nevada corporation. II. Set forth hereinafter is a statement of the voting powers, preferences, limitations, restrictions, and relative rights of shares of Series A 8% Cumulative Convertible Preferred Stock hereinafter designated as contained in a resolution of the Board of Directors of the Corporation pursuant to a provision of the Articles of Incorporation of the Corporation permitting the issuance of said Series A 8% Cumulative Convertible Preferred Stock by resolution of the Board of Directors: Series A 8% Cumulative Convertible Preferred Stock, $.001 par value. 1. Designation: Number of Shares. The designation of said series of Preferred Stock shall be Series A 8% Cumulative Convertible Preferred Stock (the "Series A Preferred Stock"). The number of shares of Series A Preferred Stock shall be 36,000. Each share of Series A Preferred Stock shall have a stated value equal to $10 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the "Stated Value"), and $.001 par value. 2. Dividends. (a) The Holders of outstanding shares of Series A Preferred Stock shall be entitled to receive preferential dividends in cash out of any funds of the Corporation legally available at the time for declaration of dividends before any dividend or other distribution will be paid or declared and set apart for payment on any shares of any Common Stock, or other class of stock presently authorized or to be authorized (the Common Stock, and such other stock being hereinafter collectively the "Junior Stock") at the rate of 8% simple interest per annum on the Stated Value per share payable commencing with the period ending December 31, 2004 and semi-annually thereafter. At the Holder's option, however, that dividend payments may be made in additional fully paid and non assessable shares of Series A Preferred Stock at a rate of one share of Series A Preferred Stock for each $10 of such dividend not paid in cash. The issuance of such additional shares shall constitute full payment of such dividends. (b) The dividends on the Series A Preferred Stock at the rates provided above shall be cumulative whether or not earned so that, if at any time full cumulative dividends at the rate aforesaid on all shares of the Series A Preferred Stock then outstanding from the date from and after which dividends thereon are cumulative to the end of the quarterly dividend period next preceding such time shall not have been paid or declared and set apart for payment, or if the full dividend on all such outstanding Series A Preferred Stock for the then current dividend period shall not have been paid or declared and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment (but without interest thereon) before any sum shall be set apart for or applied by the Corporation or a subsidiary of the 1 Corporation to the purchase, redemption or other acquisition of the Series A Preferred Stock or any shares of any other class of stock ranking on a parity with the Series A Preferred Stock ("Parity Stock") and before any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for or applied to the purchase, redemption or other acquisition of Junior Stock. (c) Dividends on all shares of the Series A Preferred Stock shall begin to accrue and be cumulative from and after the date of issuance thereof. A dividend period shall be deemed to commence on the day following a dividend payment date herein specified and to end on the next succeeding dividend payment date herein specified. 3. Liquidation Rights. (a) Upon the dissolution, liquidation or winding-up of the Corporation, whether voluntary or involuntary, the Holders of the Series A Preferred Stock shall be entitled to receive before any payment or distribution shall be made on the Junior Stock, out of the assets of the Corporation available for distribution to stockholders, the Stated Value per share of Series A Preferred Stock and all accrued and unpaid dividends to and including the date of payment thereof. Upon the payment in full of all amounts due to Holders of the Series A Preferred Stock the Holders of the Common Stock of the Corporation and any other class of Junior Stock shall receive all remaining assets of the Corporation legally available for distribution. If the assets of the Corporation available for distribution to the Holders of the Series A Preferred Stock shall be insufficient to permit payment in full of the amounts payable as aforesaid to the Holders of Series A Preferred Stock upon such liquidation, dissolution or winding-up, whether voluntary or involuntary, then all such assets of the Corporation shall be distributed to the exclusion of the Holders of shares of Junior Stock ratably among the Holders of the Series A Preferred Stock. (b) The purchase or the redemption by the Corporation of all or substantially all the shares of any class of stock, the merger or consolidation of the Corporation with or into any other corporation or corporations or the sale or transfer by the Corporation of all or substantially all or its assets shall be deemed to be a liquidation, dissolution or winding-up of the Corporation for the purposes of this paragraph 3. 4. Conversion into Common Stock. Shares of Series A Preferred Stock shall have the following conversion rights and obligations: (a) Subject to the further provisions of this paragraph 4 each Holder of shares of Series A Preferred Stock shall have the right at any time commencing after the issuance to the Holder of Series A Preferred Stock, to convert such shares into fully paid and non-assessable shares of Common Stock of the Corporation (as defined in paragraph 4(i) below) determined in accordance with the Conversion Price provided in paragraph 4(b) below (the "Conversion Price"). All issued or accrued but unpaid dividends may be converted at the election of the Holder simultaneously with the conversion of principal amount of Stated Value of Series A Preferred Stock being converted. (b) The number of shares of Common Stock issuable upon conversion of each share of Series A Preferred Stock shall equal (i) the sum of (A) the Stated Value per share and (B) at the Holder's election accrued and unpaid dividends on such share, divided by (ii) the Conversion Price. The Conversion Price shall be $0.033. 2 (c) Holder will give notice of its decision to exercise its right to convert the Preferred Stock or part thereof by telecopying an executed and completed Notice of Conversion (a form of which is annexed as EXHIBIT A to the Certificate of Designation) to the Corporation via confirmed telecopier transmission or otherwise pursuant to Section 13(a) of the subscription agreement entered into between Holder and the Corporation ("Subscription Agreement"). The Holder will not be required to surrender the Preferred Stock certificate until the Preferred Stock has been fully converted. Each date on which a Notice of Conversion is telecopied to the Corporation in accordance with the provisions hereof shall be deemed a Conversion Date. The Corporation will itself or cause the Corporation's transfer agent to transmit the Corporation's Common Stock certificates representing the Common Stock issuable upon conversion of the Preferred Stock to the Holder via express courier for receipt by such Holder within five (5) business days after receipt by the Corporation of the Notice of Conversion (the "Delivery Date"). In the event the Common Stock is electronically transferable, then delivery of the Common Stock must be made by electronic transfer provided request for such electronic transfer has been made by the Holder. A Preferred Stock certificate representing the balance of the Preferred Stock not so converted will be provided by the Corporation to the Holder if requested by Holder, provided the Holder has delivered an original Preferred Stock certificate to the Corporation. To the extent that a Holder elects not to surrender Preferred Stock for reissuance upon partial payment or conversion, the Holder hereby indemnifies the Corporation against any and all loss or damage attributable to a third-party claim in an amount in excess of the actual amount of the Stated Value of the Preferred Stock then owned by the Holder. In the case of the exercise of the conversion rights set forth in paragraph 4(a) the conversion privilege shall be deemed to have been exercised and the shares of Common Stock issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Corporation of the Notice of Conversion. The person or entity entitled to receive Common Stock issuable upon such conversion shall, on the date such conversion privilege is deemed to have been exercised and thereafter, be treated for all purposes as the recordholder of such Common Stock and shall on the same date cease to be treated for any purpose as the record Holder of such shares of Series A Preferred Stock so converted. Upon the conversion of any shares of Series A Preferred Stock no adjustment or payment shall be made with respect to such converted shares on account of any dividend on the Common Stock, except that the Holder of such converted shares shall be entitled to be paid any dividends declared on shares of Common Stock after conversion thereof. The Corporation shall not be required, in connection with any conversion of Series A Preferred Stock, and payment of dividends on Series A Preferred Stock to issue a fraction of a share of its Series A Preferred Stock and shall instead deliver a stock certificate representing the next whole number. The Corporation and Holder may not convert that amount of the Series A Preferred Stock on a Conversion Date in amounts inconsistent with the limitations set forth in the subscription agreement entered into by the Corporation and Holder (or Holder's predecessor) relating to the issuance of the Series A Preferred Stock ("Subscription Agreement") or that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on such Conversion Date, and (ii) the number of shares of Common Stock issuable upon the conversion of the Series A Preferred Stock with respect to which the determination of this proviso is being made on such Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to 3 the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 9.99%. The Holder may revoke the conversion limitation described in this Paragraph upon 61 days prior notice to the Corporation. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 9.99% amount described above and which shall be allocated to the excess above 9.99%. (d) The Conversion Price determined pursuant to Paragraph 4(b) shall be subject to adjustment from time to time as follows: (i) In case the Corporation shall at any time (A) declare any dividend or distribution on its Common Stock or other securities of the Corporation other than the Series A Preferred Stock, (B) split or subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock into a smaller number of shares, or (D) issue by reclassification of its Common Stock any shares or other securities of the Corporation, then in each such event the Conversion Price shall be adjusted proportionately so that the Holders of Series A Preferred Stock shall be entitled to receive the kind and number of shares or other securities of the Corporation which such Holders would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Series A Preferred Stock been converted immediately prior to the happening of such event (or any record date with respect thereto). Such adjustment shall be made whenever any of the events listed above shall occur. An adjustment made to the Conversion Price pursuant to this paragraph 4(d)(i) shall become effective immediately after the effective date of the event retroactive to the record date, if any, for the event. (ii) For so long as Series A Preferred Stock is outstanding, if the Corporation shall issue any Common Stock except for (i) employee stock options or compensation plans, (ii) as full or partial consideration in connection with any merger, consolidation or purchase of substantially all of the securities or assets of any corporation or other entity, (iii) as has been described in the reports publicly available at the EDGAR website of the Securities and Exchange Commission prior to the first date of issuance of any Series A Preferred Stock, or (iv) conversion of the Series A Preferred Stock or exercise of Common Stock Purchase Warrants issued to the Holder contemporaneously with the Series A Preferred Stock for consideration less than the Conversion Price that would be in effect at the time of such issuance, then, and thereafter successively upon each such issuance, the Conversion Price shall be reduced to such other lower issuance price. For purposes of this adjustment, the issuance of any security or debt instrument of the Corporation carrying the right to convert such security or debt instrument into Common Stock or of any warrant, right or option to purchase Common Stock shall result in an adjustment to the Conversion Price upon the issuance of the above-described security, debt instrument, warrant, right, or option. The reduction of the Conversion Price described in this Section 4(d)(ii) is in addition to any other rights granted or available to the Holder pursuant to agreement with the Corporation, at law, equity or otherwise. (e) (i) In case of any merger of the Corporation with or into any other corporation (other than a merger in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification, conversion, or change of the outstanding shares of Common Stock) then unless the right to convert shares of Series A Preferred Stock shall have terminated, as part of such merger lawful provision shall be made so that Holders of Series A Preferred Stock shall thereafter have the right to convert each share of Series A Preferred Stock into the kind and amount of shares of 4 stock and/or other securities or property receivable upon such merger by a Holder of the number of shares of Common Stock into which such shares of Series A Preferred Stock might have been converted immediately prior to such consolidation or merger. Such provision shall also provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in paragraph (d) of this paragraph 4. The foregoing provisions of this paragraph 4(e) shall similarly apply to successive mergers. (ii) In case of any sale or conveyance to another person or entity of the property of the Corporation as an entirety, or substantially as an entirety, in connection with which shares or other securities or cash or other property shall be issuable, distributable, payable, or deliverable for outstanding shares of Common Stock, then, unless the right to convert such shares shall have terminated, lawful provision shall be made so that the Holders of Series A Preferred Stock shall thereafter have the right to convert each share of the Series A Preferred Stock into the kind and amount of shares of stock or other securities or property that shall be issuable, distributable, payable, or deliverable upon such sale or conveyance with respect to each share of Common Stock immediately prior to such conveyance. (f) Whenever the number of shares to be issued upon conversion of the Series A Preferred Stock is required to be adjusted as provided in this paragraph 4, the Corporation shall forthwith compute the adjusted number of shares to be so issued and prepare a certificate setting forth such adjusted conversion amount and the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Transfer Agent for the Series A Preferred Stock and the Common Stock; and the Corporation shall mail to each Holder of record of Series A Preferred Stock notice of such adjusted conversion price. (g) In case at any time the Corporation shall propose: (i) to pay any dividend or distribution payable in shares upon its Common Stock or make any distribution (other than cash dividends) to the Holders of its Common Stock; or (ii) to offer for subscription to the Holders of its Common Stock any additional shares of any class or any other rights; or (iii) any capital reorganization or reclassification of its shares or the merger of the Corporation with another corporation (other than a merger in which the Corporation is the surviving or continuing corporation and which does not result in any reclassification, conversion, or change of the outstanding shares of Common Stock); or (iv) the voluntary dissolution, liquidation or winding-up of the Corporation; then, and in any one or more of said cases, the Corporation shall cause at least fifteen (15) days prior notice of the date on which (A) the books of the Corporation shall close or a record be taken for such stock dividend, distribution, or subscription rights, or (B) such capital reorganization, reclassification, merger, dissolution, liquidation or winding-up shall take place, as the case may be, to be mailed to the Transfer Agent for the Series A Preferred Stock and for the Common Stock and to the Holders of record of the Series A Preferred Stock. (h) So long as any shares of Series A Preferred Stock shall remain outstanding and the Holders thereof shall have the right to convert the same in accordance with provisions of this paragraph 4 the Corporation shall at all times reserve from the authorized and unissued shares of its Common Stock a sufficient number of shares to provide for such conversions. 5 (i) The term Common Stock as used in this paragraph 4 shall mean the $.001 par value Common Stock of the Corporation as such stock is constituted at the date of issuance thereof or as it may from time to time be changed or shares of stock of any class or other securities and/or property into which the shares of Series A Preferred Stock shall at any time become convertible pursuant to the provisions of this paragraph 4. (j) The Corporation shall pay the amount of any and all issue taxes (but not income taxes) which may be imposed in respect of any issue or delivery of stock upon the conversion of any shares of Series A Preferred Stock, but all transfer taxes and income taxes that may be payable in respect of any change of ownership of Series A Preferred Stock or any rights represented thereby or of stock receivable upon conversion thereof shall be paid by the person or persons surrendering such stock for conversion. (k) In the event a Holder shall elect to convert any shares of Series A Preferred Stock as provided herein, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, or for any other reason unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of said shares of Series A Preferred Stock shall have been issued and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of the Series A Preferred Stock and dividends sought to be converted, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder in the event it obtains judgment. (l) In addition to any other rights available to the Holder, if the Corporation fails to deliver to the Holder such certificate or certificates pursuant to Section 4(c) by the Delivery Date and if after the Delivery Date the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Common Stock which the Holder anticipated receiving upon such conversion (a "Buy-In"), then the Corporation shall pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) within five (5) business days of written notice from the Holder, the amount by which (A) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate Stated Value of the shares of Series A Preferred Stock for which such conversion was not timely honored, together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if the Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of $10,000 of Stated Value of Series A Preferred Stock, the Corporation shall be required to pay the Holder $1,000, plus interest. The Holder shall provide the Corporation written notice indicating the amounts payable to the Holder in respect of the Buy-In. 5. Voting Rights. The shares of Series A Preferred Stock shall not have voting rights except as described in Section 6 hereof. 6. Restrictions and Limitations. (a) Amendments to Charter. The Corporation shall not amend its certificate of incorporation without the approval by the holders of at least a majority of the then outstanding shares of Series A Preferred Stock if such amendment would: 6 (i) change the relative seniority rights of the holders of Series A Preferred Stock as to the payment of dividends in relation to the holders of any other capital stock of the Corporation, or create any other class or series of capital stock entitled to seniority as to the payment of dividends in relation to the holders of Series A Preferred Stock; (ii) reduce the amount payable to the holders of Series A Preferred Stock upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, or change the relative seniority of the liquidation preferences of the holders of Series A Preferred Stock to the rights upon liquidation of the holders of other capital stock of the Corporation, or change the dividend rights of the holders of Series A Preferred Stock; (iii) cancel or modify the conversion rights of the holders of Series A Preferred Stock provided for in Section 4 herein; or (iv) cancel or modify the rights of the holders of the Series A Preferred Stock provided for in this Section 6. 7. Event of Default. The occurrence of any of the following events of default ("Event of Default") shall, after the applicable period to cure the Event of Default, cause the dividend rate of 8% described in paragraph 2 hereof to become 15% from and after the occurrence of such event (except in connection with Section 7(i) below) and the Holder shall have the option to require the Corporation to redeem the Series A Preferred Stock held by such Holder by the immediate payment to the Holder by the Corporation of a sum of money equal to the number of shares that would be issuable upon conversion of an amount of Stated Value and accrued dividends designated by the Holder multiplied by the average of the closing ask prices and closing bid prices of the Corporation's Common Stock as reported by Bloomberg L.P. for the principal trading market for the Common Stock for the five trading days preceding the date notice is given by the Holder to the Corporation: (a) The Corporation fails to pay any dividend payment required to be paid pursuant to the terms of paragraph 2 hereof or the failure to timely pay any other sum of money due to the Holder from the Corporation and such failure continues for a period of ten (10) days after written notice to the Corporation from the Holder. (b) The Corporation breaches any material covenant, term or condition of the Subscription Agreement or in this Certificate of Designation, and such breach continues for a period of seven (7) days after written notice to the Corporation from the Holder. (c) Any material representation or warranty of the Corporation made in the Subscription Agreement pursuant to which the Series A Preferred Stock is issued, or in any agreement, statement or certificate given in writing pursuant thereto shall be false or misleading. (d) The Corporation or any of its subsidiaries shall make an assignment of a substantial part of its property or business for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. (e) Any money judgment, confession of judgment, writ or similar process shall be entered against the Corporation, a subsidiary of the Corporation, or their property or other assets for more than $50,000, and is not vacated, satisfied, bonded or stayed within 45 days. 7 (f) Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Corporation or any of its subsidiaries, and is not dismissed within 45 days. (g) An order entered by a court of competent jurisdiction, or by the Securities and Exchange Commission, or by the National Association of Securities Dealers, preventing purchase and sale transactions in the Corporation's Common Stock. (h) The Corporation's failure to timely deliver Common Stock or a replacement Preferred Stock certificate, if required, to the Holder pursuant to paragraph 4 hereof or the Subscription Agreement. (i) The occurrence of a Non-Registration Event as described in Section 11.4 of the Subscription Agreement. (j) Delisting of the Common Stock from the OTC Bulletin Board ("OTCBB") or such other principal exchange on which the Common Stock is listed for trading; failure to comply with the requirements for continued listing on the OTCBB for a period of three consecutive trading days; or notification from the OTC Bulletin Board or any principal market that the Corporation is not in compliance with the conditions for such continued listing on the OTCBB or other principal market. (k) The Corporation effectuates a reverse split of its common stock without the prior written consent of the Holder. (l) A default by the Corporation of a material term, covenant, warranty or undertaking of any other agreement to which the Corporation and Holder are parties, or the occurrence of a material event of default under any such other agreement, in each case, which is not cured after any required notice and/or cure period. 8. Status of Converted or Redeemed Stock. In case any shares of Series A Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, converted, or reacquired shall resume the status of authorized but unissued shares of Preferred Stock and shall no longer be designated as Series A Preferred Stock. Dated: April 19, 2004 UNIVERSAL COMMUNICATION SYSTEMS, INC. By: -------------------------------------- Michael J. Zwebner, Chairman of the Board 8 EXHIBIT A NOTICE OF CONVERSION (To Be Executed By the Registered Holder in Order to Convert the Series A Convertible Preferred Stock of Universal Communication Systems, Inc.) The undersigned hereby irrevocably elects to convert $______________ of the Stated Value of the above Series A Convertible Preferred Stock into shares of Common Stock of Universal Communication Systems, Inc. (the "Corporation") according to the conditions hereof, as of the date written below. Date of Conversion:_____________________________________________________________ Applicable Conversion Price Per Share:__________________________________________ Number of Common Shares Issuable Upon This Conversion:__________________________ Select one: [ ] A Series A Convertible Preferred Stock certificate is being delivered herewith. The unconverted portion of such certificate should be reissued and delivered to the undersigned. [ ] A Series A Convertible Preferred Stock certificate is not being delivered to Universal Communication Systems, Inc. Signature:______________________________________________________________________ Print Name:_____________________________________________________________________ Address:________________________________________________________________________ - -------------------------------------------------------------------------------- Deliveries Pursuant to this Notice of Conversion Should Be Made to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EX-31.1 3 ex311.txt CERTIFICATION EXHIBIT 31.1 CERTIFICATIONS I, Michael J. Zwebner, Chief Executive Officer of Universal Communication Systems, Inc.(the "Company"), certify that: 1. I have reviewed this quarterly report on Form 10-QSB of the Registrant; 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; 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 condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and d) Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) All significant deficiencies and material weaknesses in the design or operation of internal controls are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: August 20, 2004 /s/ Michael J. Zwebner - ------------------------------------------- Michael J. Zwebner, Chief Executive Officer EX-31.2 4 ex312.txt CERTIFICATION EXHIBIT 31.2 CERTIFICATIONS I, Curtis Orgil, Chief Financial Officer of Universal Communication Systems, Inc.(the "Company"), certify that: 1. I have reviewed this quarterly report on Form 10-QSB of the Registrant; 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; 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 condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and d) Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) All significant deficiencies and material weaknesses in the design or operation of internal controls are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: August 20, 2004 /s/ Curtis A. Orgill - ------------------------------------- Curtis A. Orgill, Chief Financial Officer EX-32.1 5 ex321.txt CERTIFICATION Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-QSB of Universal Communication Systems, Inc. (the "Company") for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Michael Zwebner, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. section 1350, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael Zwebner Dated: August 20, 2004 ----------------------- Michael Zwebner Chief Executive Officer EX-32.2 6 ex322.txt CERTIFICATION Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-QSB of Universal Communication Systems, Inc. (the "Company") for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Curtis Orgil, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. section 1350, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Curtis A. Orgill Dated: August 20, 2004 ----------------------- Curtis A. Orgill Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----