10QSB 1 doc1.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-QSB Quarterly Report Under the Securities Exchange Act of 1934 For Quarter Ended: September 30, 2001 Commission File Number: 0-29987 UNITED TRADING.COM (Exact name of small business issuer as specified in its charter) Nevada 88-0106514 ------ ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 19762 MacArthur Blvd., # 300 Irvine, California (Address of principal executive offices) 92612 (Zip Code) (949) 553-9660 --------------- (Issuer's Telephone Number) -------------------------------------------------- (Former name, former address and former fiscal year, if changed last report) Check whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [ ]. --- --- The number of shares of the registrant's only class of common stock issued and outstanding, as of September 30, 2001, was 41,202,947 shares. 1 PART I ITEM 1. FINANCIAL STATEMENTS. The unaudited financial statements for the three month and nine month periods ended September 30, 2001, are attached hereto. 2
UNITED TRADING.COM (A Development Stage Enterprise) BALANCE SHEET ASSETS ------ Sept. 30, 2001 Dec. 31, 2000 (Unaudited) ------------ ------------- CURRENT ASSETS Cash. . . . . . . . . . . . . . . . . . . . . . . $ 4,728 21,975 Current portion of contacts receivable (Note 2) . - 270,000 Deposits. . . . . . . . . . . . . . . . . . . . . - 25,000 ------------ ---------- Total Current Assets . . . . . . . . . . . . . . . . 4,728 316,975 ------------ ---------- PROPERTY AND EQUIPMENT Fixed Assets (Net of depreciation of $ 4,862) - 13,958 ---------- Total Property and Equipment . . . . . . . . . - 13,958 ------------ ---------- OTHER ASSETS Contracts receivable. . . . . . . . . . . . . . . - 270,000 Software for Licensing (net of amortization of none and $58,334) (Note 3) . . - 575,884 ------------ ---------- - 845,884 ------------ ---------- Total Assets . . . . . . . . . . . . . . . . . $ 4,728 1,176,817 ============ ========== Liabilities and Shareholder Equity CURRENT LIABILITIES. . . . . . . . . . . . . . . . . - - OTHER LIABILITIES Advances/deposits . . . . . . . . . . . . . . . . - 91,300 Deferred income taxes (Note 4). . . . . . . . . . - 40,000 ------------ ---------- - 131,300 ------------ ---------- STOCKHOLDERS' EQUITY Common Stock Par value $0.001 (50,000,000 shares authorized, 41,202,947,and 41,208,104 issued and outstanding). . . . . . . . . . . . . . . . 41,203 41,208 Additional Paid-in Capital. . . . . . . . . . . . 1,131,776 1,131,771 Retained Deficit - accumulated during Development Stage. . . . . . . . . . . . . . . (1,168,251) (127,463) ------------ ---------- Total Stockholders' Equity. . . . . . . . . . . . 4,728 1,045,516 ------------ ---------- Total Liabilities and Stockholders' Equity . . . . . . . . . $ 4,728 1,176,816 ============ ========== See accompanying notes to financial statements
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UNITED TRADNG.COM (A Development Stage Enterprise) STATEMENT OF OPERATIONS (Unaudited) Three Months Three Months Ended Ended Sept. 30, 2001 Sept. 30, 2000 --------------- --------------- REVENUES. . . . . . . . . . . . . . . . . . . . $ - $ 1,400,000 EXPENSES General and Administrative . . . . . . . . . 652 50,487 Loss from write-down of software . . . . . . - - Loss from write-down of notes receivable . . - - Depreciation and Amortization. . . . . . . . - 28,399 --------------- --------------- Total Expenses. . . . . . . . . . . . . . 652 78,886 --------------- --------------- Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (652) $ 1,321,114 --------------- --------------- Income Taxes (Note 4) . . . . . . . . . . . . . _ (357,000) --------------- --------------- Net Income (Loss) . . . . . . . . . . . . . . . $ (652) $ 964,114 =============== =============== Net Income (loss) per Common Share, basic and diluted . . . . . . $ (0.000) $ 0.025 =============== =============== Weighted Average number of Common Shares outstanding, basic and diluted adjusted for 1/50 reverse split in 1999 and 3 for one forward split in 2000. . . . . 41,202,947 38,992,947 =============== =============== See accompanying notes to financial statements
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UNITED TRADING.COM (A Development Stage Enterprise) STATEMENT OF OPERATIONS (Unaudited) Inception Nine Months Nine Months December 31, 1994 Ended Ended Thru Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 --------------- --------------- --------------- REVENUES Consulting fees. . . . . . . . . . . . . . . $ - $ - $ 544,894 Sales. . . . . . . . . . . . . . . . . . . . - 1,400,000 770,000 Interest Income. . . . . . . . . . . . . . . - - 3,764 --------------- --------------- --------------- Total Revenues. . . . . . . . . . . . . . - 1,400,000 1,318,658 EXPENSES General and Administrative . . . . . . . . . 71,437 89,470 1,032,377 Allowance for Uncollectable Debt . . . . . . - - 160,937 Loss from write-down of software . . . . . . 538,492 - 538,492 Loss from write-down of notes receivable . . 406,067 - 406,067 Depreciation and Amortization. . . . . . . . 64,792 30,373 164,508 Loss from activities of NetBet . . . . . . . - - 184,528 --------------- --------------- --------------- Total Expenses. . . . . . . . . . . . . . 1,080,788 119,843 2,486,909 --------------- --------------- --------------- Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (1,080,788) $ 1,280,157 $ (1,168,251) Income Taxes (Note 4). . . . . . . . . . . . 40,000 (357,000) - --------------- --------------- --------------- Net Income (Loss) After Taxes . . . . . . . . . $ (1,040,788) $ 923,157 $ (1,168,251) =============== =============== =============== Net Income (loss) per Common Share, basic and diluted . . . . . . ($0.025) ($0.028) ($0.112) =============== =============== =============== Weighted Average number of Common Shares outstanding, basic and diluted adjusted for 1/50 reverse split in 1999 and 3/1 forward spit in October, 2000 . . 41,202,947 32,510,921 10,397,093 =============== =============== =============== See accompanying notes to financial statements
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UNITED TRADING.COM (A Development Stage Enterprise) STATEMENT OF CASH FLOWS (Unaudited) Inception Nine Months Nine Months Dec 31, 1994 Ended Ended Thru Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 --------------- --------------- --------------- OPERATING ACTIVITIES ---------------------------------- Net Income (Loss). . . . . . . . . . . . . . . . $ (1,040,788) $ 923,157) ($1,168,251) Adjustments to reconcile Net Loss to Cash provided (used) by operating activities: Depreciation and Amortization . . . . . . . . 64,791 30,372 140,962 Loss on disposal of office Furniture & Equip. 10,258 - 15,972 Loss on write-off of software for license . . 538,492 - 538,492 loss on cancellation of notes receivable. . . 406,067 - 406,067 Changes in operating assets and liabilities: Decrease (increase) in Deferred Offering Costs . . . . . . . . . . . . . . - 15,550 - Increase (decrease) in Accounts Payable . . . - (27,583) - Increase (decrease) in Income Taxes Payable . - 202,800 - (Increase) decrease in Receivable from Software License Sales . . . . . . . . . . 133,933 (1,210,000) (406,067) (Increase) decrease in Other Receivables. . . - (2,819) - Increase (decrease) in Advance License Fees . (91,300) - - (Increase) decrease in Deposits . . . . . . . 25,000 18,000 - Increase (decrease) in Deferred Taxes . . . . (40,000) 154,200 - --------------- --------------- --------------- Net cash provided by Operating Activities. . . . 6,453 103,677 (472,825) --------------- --------------- --------------- INVESTMENT ACTIVAITIES -------------------------------------- Decrease (increase) in Property and Equipment. . . . . . . . . . . . . . . . . - (2,411) (36,318) Decrease (increase) in Software for License. . . . . . . . . . . . . . . . . . (27,400) (477,631) (661,618) Decrease (increase) in Organization Costs . . - - (1,190) --------------- --------------- --------------- Net cash (used) by Investment activities . . . . (27,400) (480,042) (699,126) --------------- --------------- --------------- FINANCING ACTIVITIES --------------------------------- Disposal of Office Furniture & Equip. . . . . 3,700 - 3,700 Increase (decrease) in Common Stock . . . . . - 430,450 1,172,979 --------------- --------------- --------------- Net cash provided by Financing Activities. . . . 3,700 430,450 1,176,679 --------------- --------------- --------------- Increase (decrease) in Cash. . . . . . . . . . . (17,247) 54,085 4,728 Cash at Beginning of Period. . . . . . . . . . . 21,975 3,458 - --------------- --------------- --------------- Cash at End of Period. . . . . . . . . . . . . . $ 4,728 $ 59,543 $ 4,728 =============== =============== =============== See accompanying notes to financial statements
6 UNITED TRADING.COM (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS September 30, 2001 NOTE 1 - Basis of Presentation ------------------------ The accompanying consolidated balance sheet of United Trading.Com (A Development Stage Company) at September 30, 2001, and the consolidated statements of operations for the three month and nine month periods ended September 30, 2000 and 2001 and the cumulative period during the development stage through September 30, 2001 and the statements of cash flows for three month and nine month periods ended September 30, 2000 and 2001 and the cumulative period during the development stage through September 30, 2001, have been prepared by the Company's management and they do not include all information of the financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended December 31, 2000. Operating results for the three month and nine month periods ended September 30, 2001, are not necessarily indicative of the results that can be expected for the year ending December 31, 2001. NOTE 2 - Contracts Receivable The Company had 2 contacts each outstanding for the licensed use of its casino and sports book software at March 31, 2001. These contracts were cancelled effective June 30, 2001 and replaced by a License Agreement calling for 7 1/2 percent of the net revenues from the Licensee's use of the Software for its own account or from any sub-license of the Software. The Company recorded a loss of $406,067 from the write-off of the contracts in the quarter ended June 30, 2000. No revenues have been received from the 7 1/2 % net revenues license agreement. NOTE 3 - Software for Licensing The Company capitalized costs of developing its Software for Licensing as costs were incurred, and began amortizing such costs in the final quarter of 2000. Amortization was also taken in the three and six months ended June 30, 2001 in the amounts of $32,396 and 64,792 respectively. The unamortized balance of expenditures for the development of the Software for Licensing was written off to expense effective June 30, 2001 due to the Company's inability to determine the future worth of the 7 1/2 % net revenue license agreement for use of the Software. The Company recorded a loss, net of accumulated Amortization, of $538,492 in the quarter ended June 30, 2001. Note 4 - Income Taxes The Company recorded $40,000 in deferred income taxes in the year ended December 31, 2000 based on income reported in 2000. Due to losses in the first half of 2001, these deferred taxes were eliminated; $24,000 in the quarter ended March 31, 2001, and $16,000 in the quarter ended June 30, 2001. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The following discussion should be read in conjunction with the Financial Statements and notes thereto included herein. The Company recorded no revenues and minimal operating expenses for the quarter ended September 30, 2001. The Company is presently continuing its a strategic analysis for determining potential mergers and acquisitions. Issues of primary importance in determining the right acquisition include (a) industry-leading technology/viable business operation (b) strategic compatibility (c) market opportunity (d) sales and earnings (e) original capitalization of the merger candidate (f) additional capital required to fund operations (g) existing management/infrastructure (h) competition and (i) liabilities and contingent exposure. Management continues to utilize this analysis to establish target parameters for an acquisition search. Due to existing economic and market conditions, particularly in light of the September 11, 2001 terrorist activities, the timeframe for an initial merger transaction may extend beyond a twelve-month period. The Company anticipates the cash requirements to be minimal during the acquisition period. Forward Looking Statements In connection with, and because it desires to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on the behalf of the Company, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company disclaims any obligation to update forward looking statements. 8 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - NONE ITEM 2. CHANGES IN SECURITIES a) NONE b) NONE c) There were no sales of securities made by the Company during the three and nine month periods ended September 30, 2001. d) None ITEM 3. DEFAULTS UPON SENIOR SECURITIES: - NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: - none ITEM 5. OTHER INFORMATION - NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - (a) Exhibits None (b) Reports on Form 8-K: None Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED TRADING.COM Date: _________, 2001 By: /James L. Hancock --------------------------- James L. Hancock, President 9