10KSB 1 doc1.txt Securities and Exchange Commission Washington DC 20549 Form 10-KSB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS [X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934: For the fiscal year ended December 31, 2001 [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934: For the transition period from__________ to____________ Commission file number 0-29987 ------------- United Trading.Com ------------------------------------ (Name of Small Business Issuer in its charter) Nevada 88-0106514 ------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10762 MacArthur Blvd. Suite 300, Irvine, CA 92612 ------------------------------------------------- (Address of principal executive offices) (949) 553-9660 -------------- Issuer's telephone number Securities registered under Section 12(b) of the Act: NONE Securities registered under Section 12(g) of the Act: $0.001 Par Value Voting Common Shares OTC Bulletin Board (Title of Class) (Registered Exchange) Check whether the issuer (1) filed all reports required to be filed by Sections 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. [X]Yes [ ]No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] The issuers revenues for the year ended December 31, 2001. NONE 1 The aggregate market value of the voting and non-voting common equity held by non-affiliates based on the average bid and asked price of such common equity, as of March 26, 2002 was $181,759. The number of shares outstanding of each of the issuer's classes of such common equity, as of March 26, 2002, was 5,150,098 shares. Transitional Small Business Disclosure Format (check one): Yes___; No_X_ PART I ITEM 1. DESCRIPTION OF BUSINESS. Organization and General History United Trading.Com (hereinafter referred to as "United" or the "Company") was formed as a corporation under the laws of the State of Nevada in 1952 under the name "Blue Jacket Mining Company". In December 1994 the Company's shareholders approved a reverse merger with United Casino Corporation, a Nevada Corporation, and the Company's name was changed at that time to United Casino Corporation. The Company then pursued the general business objectives of providing consulting and product support for the entertainment industry particularly as applied to the world wide Internet. In April, 1996, the Company's controlled subsidiary UCC-Netco Ltd. (an Alberta, Canada Corporation) formed in 1995 merged with Alexander Wolfe a publicly traded Nevada Company (renamed Netbet Inc.). As a result of the merger the Company acquired 3,913,402 restricted (pursuant to Rule 144) shares of Netbet Inc. (approximately 32% ownership of Netbet Inc.) In January, 1997, the Company acquired approximately a 31% interest (restricted shares pursuant to Rule 144) in Torrey Pines Nevada Inc. a publicly traded Nevada Company through a merger of the Company's wholly owned subsidiary Internet Consultants Ltd. (a private Nevada Corporation formed in 1995) with Torrey Pines Nevada. In January, 1998, Torrey Pines Nevada Ltd. merged with Netbet Inc. As a result of the merger the Company received an additional 1,033,437 restricted shares of Netbet Inc. The Company's total interest in Netbet Inc. as of January 1998 represented approximately 26% of the issued and outstanding shares of Netbet Inc. In March 1999 Netbet Inc. merged with a private company. As a result of this merger the Company's interest in Netbet Inc. was reduced to approximately 7.8%. In June of 1999 the Company distributed the 3,913,402 shares of Netbet Inc. acquired by the Company in April 1996 directly to the Company's shareholders on a prorate basis of the Shareholders ownership of the Company. In July of 1999 the Company sold the remaining 1,033,437 shares of Netbet Inc. acquired in January 1998 in a Rule 144 sale. The Company used the proceeds from this sale of stock to develop proprietary software for e-commerce applications for future license sales. In November of 1999 the Company effected a 50/1 reverse split of its issued and outstanding common stock. In February, 2000, the Company entered into an agreement with BFI, Limited, a Cook Islands corporation, whereby for 10,000,000 shares of the Company's common restricted stock, the Company received $300,000 in notes and software services, (the notes were subsequently paid by BFI by providing an additional $200,000 in software programming services. In March, 2000, the Company sold a total of 2,000,000 shares of common stock through a private placement in Nevada pursuant to Nevada Revised Statutes 90.490 for a total of $150,000. In August, 2000, the Company's name was changed to United Trading.Com. In October, 2000 the Company's common stock was adjusted by a 3 for 1 forward split, and in December, 2001 adjusted by a 1 for 8 reverse split. 2 - BUSINESS OF ISSUER -------------------- During the first half of 2001, the Company continued its marketing of software aimed at the On-line gaming industry. Due to a lack of success in developing updated and improved software following the departure of the Company's sole programmer, an agreement was entered with Recantoazul, the holder of a license to use the Company's software, whereby Recantoazul would assume all future maintenance and update of the software and pay the Company a license fee based on Recantoazul's profits from the sublicense of the software to franchised On-line gaming sites. During the last half of 2001, and presently, the Company is continuing a strategic analysis for determining potential mergers and acquisitions. Management is seeking a merger or acquisition candidate which will meet predetermined objectives for the Company's future profit and growth. See also Managements Plan of Operations elsewhere in this document. Due to existing economic and market conditions, the timeframe for an initial merger transaction may extend beyond a twelve-month period. The issuer anticipates the cash requirements to be minimal during the acquisition period. The Company does not currently rely on the availability of any raw materials. The Company currently has no products or services for sale and accordingly has no customers. The Company intends to apply for patents and copyrights when deemed appropriate. Currently there are no patents or copyrights held by the Company. During the Company's current stage of development there are no governmental Approvals Required for any of the Company's activities. The Company is not currently expending any resources on research and development. The Company does not believe that its current or near term planned operations will require approval under existing environmental laws. The Company currently has one full time employee. Future requirements for additional personnel will depend on any merger or acquisition that that the Company may effect. 3 Item 2 DESCRIPTION OF PROPERTY. ----------------------- The Company currently leases Executive office space in Irvine, California for its principal executive office. The Company has no official policy with respect to any investments in real estate and does not have, or plan to have, any investments in any such properties. Item 3 LEGAL PROCEEDINGS. ----------------- The Company is not a party to any pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders during the quarter ended December 31, 2001. PART II ITEM 5. MARKET PRICE AND DIVIDENDS ON UNITED'S COMMON EQUITY AND OTHER ----------------------------------------------------------------------- STOCKHOLDER MATTERS. ------------------- The Company's Common Stock was traded on a limited basis in the over the counter market under the name Untied Casino Corporation and the symbol "UCNO" prior to August 3, 2000. From August 3, 2000 until October 10, 2000, the Company's stock was traded under the name United Trading. Com with the symbol "UTTD." From October 10, 2000, following the forward split of the Company's stock, through December 20,2001 the stock was traded under the symbol "UTDT." On December 21, 2001 following a one for eight reverse stock split, the stock has traded under the symbol "UDTC" and has continued to be traded under this symbol with quotations published on the OTC Bulletin Board. The high and low sales prices for each quarter for the years ended December 31, 2000 and 2001 adjusted for all forward and reverse splits were as follows: Quarter Ended Low High * -------------- --------------- ---------------- March 31, 2000 0.1600 0.1600 June 30, 2000 3.3336 8.6664 September 30, 2000 2.6936 9.3336 December 31, 2000 0.3600 4.6664 March 31, 2001 $0.7200 $0.1280 June 30, 2001 0.6800 0.0720 September 30, 2001 0.6320 0.1040 December 31, 2001 0.1200 0.0400 * Prices adjusted for 1/50 reverse stock split in November, 1999, a 3/1 forward stock split effective October 10, 2000, and a 1/8 reverse stock split effective December 21, 2002. Quotations for United's common stock reflect inter-dealer prices, without retail markups, markdowns or commissions and may not represent actual transactions. 4 - HOLDERS ------- The number of holders of the Company's common stock as of Dec. 31, 2000 was approximately 1300. These numbers do not include an indeterminate number of stockholders whose shares may be held by brokers in street name. - DIVIDENDS --------- (1) No cash dividends have been declared on any stock of the Registrant in the last two fiscal years. (2) The Registrant does not plan to pay dividends on common equity in the foreseeable future. RECENT SALES OF UNREGISTERED SECURITIES --------------------------------------- The Table below summarizes the information required for all the sales of unregistered securities by Registrant for the past 3 years.
Date Shares* Base Rules Relied Shareholder Consideration other upon for Exemption Name or Than Cash from Registration** Class --------------- -------------------- -------------- ------------------- Regulation S & Bus. Eng. Ltd. Consulting Services Jun-99 15,000 Section 4(2) of the Valued at $2,000 Act. -------------------- -------------- -------------------- Regulation S & Malt Ltd. Revenue Sharing Jun-99 225,000 Section 4(2) of the Agreement valued at Act. $ 30,000 -------------------- -------------- -------------------- Regulation S & Binary Magic Consulting Services Jun-99 7,500 Section 4(2) of the Ltd. Valued at $1,000 Act. -------------------- -------------- -------------------- Regulation S & Chinatech Consulting Services Jun-99 7,500 Section 4(2) of the Trading Valued at $1,000 Act. -------------------- -------------- -------------------- Jun-99 1,850 Section 4(2) of the Gary Tate Consulting Services Act & Rule 144 Valued at $250 -------------------- -------------- -------------------- Regulation S & Graeme Consulting Services Jun-99 1,850 Section 4(2) of the Whitfield Valued at $250 Act. -------------------- -------------- -------------------- Regulation S & BFI Ltd. $ 100,000 Consulting Feb-00 3,750,000 Section 4(2) of the Services and Act. $ 200,000 Promissory Note -------------------- -------------- -------------------- a) Reg D Section 504 Sales made in Cash $150,000 gross Mar-00 750,000 b)Nevada Revised Nevada U.S.A. Proceeds. Statutes 90.490 to four Net Proceeds c)Section 4.2 of the unaccredited $ 147,000 Act. investors -------------------- -------------- -------------------- Regulation S & Company Consulting Services Oct-00 18,750 Section 4(2) of the Consultants Valued at $51,500 Act. -------------------- -------------- -------------------- Regulation S & Company Consulting Services Dec-00 257,500 Section 4(2) of the Consultants Valued at $103,000 Act. -------------------- -------------- -------------------- * Prices adjusted for 1/50 reverse stock split in November, 1999, a 3/1 forward stock split effective October 10, 2000, and a 1/8 reverse stock split effective December 21, 2002. ** As well as any other available exemptions from registration.
5 Item 6 -PLAN OF OPERATION ------------------- The Company is continuing 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 will utilize this analysis to establish target parameters for an Acquisition search. Due to existing economic and market conditions, the timeframe for an initial merger transaction may extend beyond a twelve-month period. The issuer anticipates the cash requirements to be minimal during the acquisition period. Should additional funding be required, the Company will seek private sources of loans to meet such needs, however, there can be no assurances that needed funds will be available at reasonable costs if available at all. No significant purchases of additional equipment are planned. The Registrant does not plan to hire any new full time employees during the next 12 months unless, or until an merger or acquisition is consummated, in which case the requirement for any additional employees will depend on the actual merger or acquisition. In February 2001, the Company announced an agreement to acquire Quick Draw, Inc., a Nevada corporation owner of ATM machines located throughout the United States, subject to completion of due diligence by United Trading. As of the date of this document, United Trading has not completed its due diligence and is awaiting the confirmation of funding by Quick Draw which was to be completed prior to the finalization of the acquisition of Quick Draw by United Trading. Quick Draw is still in the process of acquiring such financing and is unable to provide an expected date of completion. United Trading continues to be committed to completing the acquisition of Quick Draw and has authorized an extension of the agreement to enable Quick Draw to complete the required financing. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF --------------------------------------------------------------------------- OPERATIONS. ---------- During the fiscal year ended December 31, 2000, United announced the sale of six licenses each for its casino and sports book software. However due to the deterioration of the Internet market, two of the licenses for each software were never fully consummated and two sales of each software were canceled by the purchasers due to their inability to bring the planned Internet sites on line. In the fiscal year ended December 31, 2001, there were no sales of software made, and all prior sales were canceled. The Company ceased sales of software and entered into a one time exclusive license agreement with Recantoazul, the primary purchaser of the Company's software in 2000, where by the Company would receive a license fee based solely on the profits of Recantoazul from its sublicense and franchising of On-line gaming sites. ITEM 7. FINANCIAL STATEMENTS. 6 UNITED TRADING.COM AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 2001 WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANT 7 UNITED TRADING.COM (A Development Stage Company) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ---- Independent Auditor's Report F-3 Consolidated Balance Sheet as of December 31, 2001 F-4 Consolidated Statements of Operations for the years ended December 31, 2000 and 2001 and the cumulative period during the development stage from Inception through December 31, 2001 F-5 Consolidated Statement of Changes in Shareholders' Equity (Deficiency), for the years ended December 31, 2000 and 2001, and from Inception through December 31, 2001 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2000 and 2001 and the cumulative period during the development stage from Inception through December 31, 2001 F-7 Notes to Consolidated Financial Statements F-8 - F-10 F-2 8 WILLIAM E. COSTELLO, CPA 16055 VENTURA BOULEVARD, suite 1212 ENCINO, CALIFORNIA 91436 INDEPENDENT AUDITOR'S REPORT Board of Directors United Trading.con I have audited the accompanying balance sheets of united Trading.com and Subsidiaries as or December 31, 2001, and December 31, 2000, and the related statements of income (loss), changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion the financial statements referred to above present fairly, in all material respects, the financial position of United Trading.com and Subsidiaries as of December 31, 2001 and 2000, and the results of its operations and cash flows for the years then ended, in conformity with generally accepted accounting principles. S/William E. Costello ------------------------ William E. Costello, CPA March 28, 2002 Encino, California F-3 9
UNITED TRADING.COM (A Development Stage Enterprise) BALANCE SHEET ASSETS ------ December 31, ------------ 2001 2000 ------------ ------------- CURRENT ASSETS Cash. . . . . . . . . . . . . . . . . . . . . . . $ 1,590 21,975 Current portion of contacts receivable (Note 2) . - 270,000 Deposits. . . . . . . . . . . . . . . . . . . . . - 25,000 ------------ ---------- Total Current Assets . . . . . . . . . . . . . . . . 1,590 316,975 ------------ ---------- 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 . . . . . . . . . . . . . . . . . $ 1,590 1,176,817 ============ ========== Liabilities and Shareholder Equity CURRENT LIABILITIES Accounts payable. . . . . . . . . . . . . . . . . 55,499 - OTHER LIABILITIES Advances/deposits . . . . . . . . . . . . . . . . - 91,300 Deferred income taxes (Note 4). . . . . . . . . . - 40,000 ------------ ---------- 55,499 131,300 ------------ ---------- STOCKHOLDERS' EQUITY Preferred Stock par value $0.001 (20,000,000 Shares authorized, none issued and outstanding - - Common Stock par value $0.001 (50,000,000 shares authorized, 5,150,098,and 41,208,104 issued and outstanding). . . . . . . . . . . . . . . . 5,150 41,208 Additional Paid-in Capital. . . . . . . . . . . . 1,167,829 1,131,771 Retained Deficit - accumulated during Development Stage. . . . . . . . . . . . . . . (1,226,889) (127,463) ------------ ---------- Total Stockholders' Equity. . . . . . . . . . . . (53,909) 1,045,516 ------------ ---------- Total Liabilities and Stockholders' Equity . . . . . . . . . $ 1,590 1,176,816 ============ ========== See accompanying notes to financial statements
F-4 10
UNITED TRADING.COM (A Development Stage Enterprise) STATEMENT OF OPERATIONS Inception Year ended Year ended December 31, 1994 December, 31 December, 31 Thru 2001 2000 December 31, 2001 --------------- --------------- --------------- REVENUES Consulting fees. . . . . . . . . . . . . . . $ - $ - $ 544,894 Sales. . . . . . . . . . . . . . . . . . . . - 770,000 770,000 Interest Income. . . . . . . . . . . . . . . - - 3,764 --------------- --------------- --------------- Total Revenues. . . . . . . . . . . . . . - 770,000 1,318,658 EXPENSES General and Administrative . . . . . . . . . 130,075 336,658 1,091,015 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 62,173 164,508 Loss from activities of NetBet . . . . . . . - - 184,528 --------------- --------------- --------------- Total Expenses. . . . . . . . . . . . . . 1,139,426 398,831 2,545,547 --------------- --------------- --------------- Net Pre-Tax Income (Loss) . . . . . . . . . . . $ (1,139,426) $ 371,169 $ (1,226,889) Income Taxes (Note 4). . . . . . . . . . . . 40,000 (40,000) - --------------- --------------- --------------- Net Income (Loss) After Taxes . . . . . . . . . $ (1,099,426) $ 331,169 $ (1,226,889) =============== =============== =============== Net Income (loss) per Common Share, basic and diluted . . . . . . ($0.213) $0.077 ($0.761) =============== =============== =============== Weighted Average number of Common Shares outstanding, basic and diluted adjusted for 1/50 reverse split in 1999, 3/1 forward spit in October, 2000, and 1/8 reverse split in 2001 . . . . . . . . 5,150,300 4,275,063 1,612,785 =============== =============== =============== See accompanying notes to financial statements
F-5 11
UNITED TRADING.COM (A Development Stage Enterprise) STATEMENT OF CASH FLOWS Inception Year ended Year ended Dec 31, 1994 December 31, December 31, Thru 2001 2000 December 31, 2001 --------------- --------------- ----------------- OPERATING ACTIVITIES ---------------------------------- Net Income (Loss). . . . . . . . . . . . . . . . $ (1,099,426) $ 331,169 ($1,226,889) Adjustments to reconcile Net Loss to Cash provided (used) by operating activities: Depreciation and Amortization . . . . . . . . 64,792 62,173 140,963 Loss on disposal of office Furniture & Equip. 10,258 - 15,972 Loss on write-off of software for license . . 538,492 - 538,492 loss on cancellation of notes receivable. . . 406,067 - 406,067 Changes in operating assets and liabilities: Decrease (increase) in Deferred Offering Costs . . . . . . . . . . . . . . - 15,550 - Increase (decrease) in Accounts Payable . . . 55,499 (27,583) 55,499 (Increase) decrease in Receivable from Software License Sales . . . . . . . . . . 133,933 (540,000) (406,067) (Increase) decrease in Other Receivables. . . - - - Increase (decrease) in Advance License Fees . (91,300) 91,300 - (Increase) decrease in Deposits . . . . . . . 25,000 (25,000) - Increase (decrease) in Deferred Taxes . . . . (40,000) 40,000 - --------------- --------------- --------------- Net cash provided by Operating Activities. . . . 3,315 (52,391) (475,963) --------------- --------------- --------------- INVESTMENT ACTIVAITIES -------------------------------------- Decrease (increase) in Property and Equipment. . . . . . . . . . . . . . . . . - (2,411) (36,318) Decrease (increase) in Software for License. . . . . . . . . . . . . . . . . . (27,400) (511,631) (661,618) Decrease (increase) in Organization Costs . . - - (1,190) --------------- --------------- --------------- Net cash (used) by Investment activities . . . . (27,400) (514,042) (699,126) --------------- --------------- --------------- FINANCING ACTIVITIES --------------------------------- Disposal of Office Furniture & Equip. . . . . 3,700 - 3,700 Increase (decrease) in Common Stock . . . . . - 584,949 1,172,979 --------------- --------------- --------------- Net cash provided by Financing Activities. . . . 3,700 584,949 1,176,679 --------------- --------------- --------------- Increase (decrease) in Cash. . . . . . . . . . . (20,385) 18,516 1,590 Cash at Beginning of Period. . . . . . . . . . . 21,975 3,459 - --------------- --------------- --------------- Cash at End of Period. . . . . . . . . . . . . . $ 1,590 $ 21,975 $ 1,590 =============== =============== =============== See accompanying notes to financial statements
F-6 12
UNITED TRADING.COM (A Development Stage Enterprise) CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the Years ended December 31, 1999, 2000 and 2001 Common Stock -------------- Paid-in Retained Total Shares $ Capital Earnings Equity ---------- ---------- --------- --------- --------- Balance 12/31/98 115,150 $ 115 $ 922,038 ($201,221) $ 720,932 Distribution of NetBet stock to Shareholders (368,623) (368,623) Issuance of Stock for Software 225,000 225 29,775 30,000 Issuance of Stock for Consulting services 33,750 34 4,466 4,500 Net Loss (257,411) (257,411) --------- --------- --------- --------- --------- Balance @ 12/31/99 373,900 $ 374 $ 587,656 ($458,632) $ 129,398 ========= ========= ======== ========= ========= Shares issued to achieve rounding to even number Nov.'99 rev. stock split 219 Issuance of Stock for Cash and Services 3,750,000 3,750 296,250 300,000 Sale of Stock (504D) 750,000 750 129,700 130,450 Issuance of stock for Services 18,750 19 51,481 51,500 Issuance of stock for Services 257,500 257 102,742 102,999 Net Income year ended 12/31/00 331,169 331,169 --------- --------- ----------- --------- --------- Balance @ 12/31/00 5,150,369 $ 5,150 $ 1,167,829 (127,463) 1,045,516 ========= ========= =========== ========= ========== Shares lost due to reverse Stock split rounding (271) Net Loss year ended 12/31/01 (1,099,426) 331,169 --------- --------- --------- --------- --------- Balance @ 12/31/01 5,150,098 $ 5,150 $1,167,829 ($1,226,889) $ 53,909 ========= ========= ========== =========== ========== Number of shares issued reflects a 1 for 50 reverse stock split effected November 2, 1999, a 3 for 1 forward stock split effected October 4, 2000 and a 1 for 4 reverse stock split effected December 21, 2001.
See Accompanying Notes F-7 13 UNITED TRADING.COM (Formerly United Casino Corporation) (A Development Stage Enterprise) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 and 2001 1. ORGANIZATION ------------------------- United Trading.COM (hereinafter referred to as the "Company") was formed as a corporation under the laws of the State of Nevada in 1952 under the name "Blue Jacket Mining Company." In December 1994 the Company's shareholders approved a reverse merger with United Casino Corporation, a Nevada Corporation, and the Company's name was changed at that time to United Casino Corporation. The Company then pursued the general business objectives of providing consulting and product support for the entertainment industry particularly as applied to the world wide Internet. In August, 2000, the name was changed to United Trading.Com to reflect the change in business to encompass a broader e-commerce visibility on the Internet In April 1996, the Company's controlled subsidiary UCC-Netco Ltd. (an Alberta, Canada Corporation) formed in 1995, merged with Alexander Wolfe a publicly traded Nevada Company (renamed Netbet Inc.). As a result of the merger the Company acquired 3,913,402 restricted (pursuant to Rule 144) shares of Netbet Inc. (approximately 32% ownership of Netbet Inc.) In January 1997 the Company acquired approximately a 31% interest (restricted shares pursuant to Rule 144) in Torrey Pines Nevada Inc. a publicly traded Nevada Company through a merger with Torrey Pines Nevada of the Company's wholly owned subsidiary Internet Consultants Inc. (a private Nevada Corporation formed in 1995). In January 1998 Torrey Pines Nevada Inc. merged with Netbet Inc. As a result of the merger the Company received an additional 1,033,437 restricted shares of Netbet Inc. The Company's total interest in Netbet Inc. as of January 1998 represented approximately 26% of the issued and outstanding shares of Netbet Inc. In March 1999 Netbet Inc. merged with a private company. As a result of this merger the Company's interest in Netbet, Inc. was reduced to approximately 7.8%. In June of 1999 the Company distributed the 3,913,402 shares of Netbet Inc. acquired by the Company in April 1996 directly to the Company's shareholders on a prorate basis of the Shareholders ownership of the Company. In July of 1999 the Company sold the remaining 1,033,437 shares of Netbet Inc. acquired in January 1998 in a Rule 144 sale. The Company used the proceeds from this sale of stock to develop proprietary software for e-commerce applications for future license sales. In November of 1999 the Company effected a 50/1 reverse split of its issued and outstanding common stock, in October, 2000 effected a 3/1 forward stock split, and in December of 2001, the Company effected a 8/1 reverse split of the issued and outstanding common stock. F-8 14 UNITED TRADING.COM (Formerly United Casino Corporation) (A Development Stage Enterprise) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 and 2001 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ a. Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. b. Investments Investments are carried at cost except, where in the opinion of management, there has been a loss in value other than a temporary decline in which case the carrying value is reduced to its estimated value. c. Software for Licensing Expenditures incurred for the acquisition of and and development of computer software for licensing to third parties was capitalized and amortized over a 5 year period from October, 2000, the date of the first licensing of the software until the investment was totally written off in 2001. d. Income Taxes The Company provides for income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires the use of the asset and liability method and recognizes deferred income taxes for the consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. 3. ALLOWANCE FOR UNCOLLECTABLE DEBT -------------------------------- At December 31, 1999, the Company had advanced a total of $160,937 to Netbet. The Company has an option to convert this note to common restricted shares of Netbet at a price of $0.125 per share. The company could otherwise expect to receive reimbursement of these funds from Netbet through revenues received by Netbet from its operations, and/or from funds raised by Netbet from equity offerings made by Netbet. As of December 31, 1999, Netbet had not generated any significant revenues and does not have any planned equity offerings in process which would permit repayment of the note. Accordingly, the Company charged $160,937 to expense in 1999. Proceeds, if any, from payments on this note which may be received in future periods will be accounted for as revenues in the periods in which such proceeds are received. 4. RELATED PARTY TRANSACTIONS -------------------------- During the year ended December 31, 2000, the Company made two sales each of its casino and sports book software to Recantoazul, S.A. Recantoazul is a Costa Rica corporation whose President is Mr. Darren Wright, the son of Mr. Norman Wright, former President of United Trading.Com. The sale of the licenses to Recantoazul was made under the same conditions as the sale to Malt Limited, a Cook Island corporation, of two licenses each of the Company's software. Malt Limited, was the holder of 1,800,000 shares (4.3%) of the Company's common stock. Both Recantoazul and Malt have canceled their licenses for the Company's software, However, Recantoazul has entered into a new license agreement for use of the software. As of the date of the agreement, the Company was unable to determine the future expected revenues from the agreement and therefore no value was booked. F-9 15 UNITED TRADING.COM (Formerly United Casino Corporation) (A Development Stage Enterprise) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 and 2001 5. NOTES RECEIBABLE ---------------- Notes receivable, current portion and long term in the year ended 2000 are from license sales to two new companies starting business in Internet gaming (see Note 4 RELATED PARTY TRANSACTIONS). 6. PREFERRED STOCK --------------- The Board of Directors approved the establishment and issuance of 5,000,000 shares of Series A Convertible Preferred Stock on December 14, 2001. At December 31, 2001, none of the authorized shares had been issued. The Series A Convertible Preferred Stock contains the following features: 8% non-cumulative dividend Each share entitled to 20 votes Each issued share convertible, at any time, at the option of the holder, into the corporation's common stock at one common share for each class "A" preferred share held The common share conversion feature is not subject to dilution as a common stock equivalent Payment of any dividends on Class "A" preferred stock is subject to and not in excess of dividends on the corporation's common stock based on the factor (one for one) into which the Class "A" preferred shares are entitled to convert into the corporation's common stock. 7. COMMON STOCK ------------ The Company effected a reverse split of its common stock $0.001 par value on November 2, 1999 on the basis of one share of common stock $0.001 par value for each 50 shares of issued and outstanding common stock $0.001 par value. On October 4, 2000, the Company effected a forward split of its common stock on the basis of 3 shares for each one share of issued and outstanding common stock. On December 21, 2001 the Company effected a reverse split of its common stock on The basis of 1 share for each one share of issued and outstanding common stock. The authorized capitalization of the Company remained unchanged, with 50,000,000 (par value $0.001) common shares and 20,000,000 (par value $0.001) preferred stock authorized. At December 31, 2001, there were 5,105,098 common shares and no preferred shares outstanding. During the year ended December 31, 2000, the company made sales of its common stock to the following entities: Entity or Group Number of Shares* Per share price determination ----------------- ---------------- ----------------------------- BFI Limited 3,750,000 (restricted) $0.08 - Board determination extremely limited market Private Placement in Nevada 750,000 (Free Trading) $0.16 - Board determination extremely limited market Consulting Services 18,750 (restricted) $2.72 - closing price previous Trading day Consulting Services 257,500 (restricted) $0.40 - closing price previous Trading day No additional shares were issued during the year ended December 31, 2001. Stock Options and Warrants ----------------------------- In December 2001, the Company granted Mr. James Brewer options to purchase 500,000 shares, and Mr. James Hancock options to purchase 100,000 shares (adjusted for the one for eight reverse stock split effective December 21, 2001) of United Trading stock at an exercise price of $0.10 per share. Still outstanding at December 31, 2001, the options are exercisable at any time prior to December 14, 2006. No other options or warrants were granted during the years ended December 31, 2000 or 2001. The Company has adopted the disclosure only provisions of SFAS 123. For disclosure of stock option compensation to the above individuals, the fair value of options is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for stock options granted during fiscal 2001: no annual dividends, expected volatility of 50%; risk-free interest rate of 6%; and expected lives of 5 years. The weighted average fair value of stock options granted to employees and officers during the fiscal year 2001 was approximately $6,200. Accordingly, the Company's pro forma loss and net loss per share for the year ended December 31, 2001 would have been as follows: Year Ended December 31, 2001 Net loss applicable to common shares: As reported $ (1,099,426) ================= Pro forma $ (1,105,626) ================= Net loss per common share: As reported $ (0.213) ================= Pro forma $ (0.217) ================= 8. PROVISION FOR INCOME TAXES -------------------------- The Company generated $398,831 in pre-tax income in the year ended December 31, 2000, allowing for the cancellation in the fourth quarter of four of its license agreements which sales were originally recognized in the third quarter. In calculation of the taxable income for the same period, the Company utilized a tax-loss carry forward of approximately $230,000 and for tax purposes expensed the development costs of its software incurred in the current year. (Such expenditures were capitalized and will be amortized over a five year period for book purposes -see also note 2.) Expenditures incurred in prior years was capitalized for both book and tax purposed to be amortized over a five year period for both book and tax purposes. The future tax on the difference between amounts capitalized for book versus tax was treated as deferred income taxes in 2000. In 2001, due to the write off of all investment in software and receivables, there were no deferred income taxes. F-10 16 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS. --------------------------------------------- There have not been any changes in or disagreements with Accountants. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS. -------------------------------------------------------------- This table describes United's current Directors and Executive Officers. NAME AGE TITLE ---------------------------------------- --- ------- James G. Brewer 59 President, Chief Executive Officer and Chief Financial Officer and Director James L Hancock 52 Director Mr. James Brewer, President, CEO, CFO and Director Mr. James Brewer has Served as President, CEO and CFO since December, 2001. Mr. Brewer has served As Vice President and Chief Financial Officer for a number of publicly traded Bulletin Board companies over the past 20 years, including Wright Energy Corporation, Magellan Filmed Entertainment, Inc. and NetBet, Inc. He also served As Controller for McCulloch Oil Corporation, a public American Stock Exchange corporation. Mr. Brewer holds a Bachelor of Science degree in Administrative Management from California State University at Los Angels and an MBA from United States International University in San Diego California. Mr. James Hancock, Director. Mr. Hancock has served as a private investment Banker over the last 20 years for numerous businesses including manufacturing, telecommunications, medical diagnostic equipment, printing and publishing and real estate. In 1998, Mr. Hancock became a Principal of Shoreline Partners, LLC, a middle-market merger and acquisition company located in San Diego. While at Shoreline, Mr. Hancock represented clients for divestiture in industries that include injection molding, candy manufacturing, concrete block manufacturing, insurance, software and e-commerce. In January 2001, Mr. Hancock formed Interactive Mergers Group, a private investment banking firm for emerging companies and investors. Mr. Hancock earned a Law Degree from the California Western School of Law and a Bachelors of Business Administration from Southern Methodist University. There are no family relationships among any of the Registrant's officers or directors. No director, executive officer, promoter or control person of the Company during the past five years has had any involvement in any legal proceedings as described in Item 401 (d) of Regulation S-B. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ------------------------------------------------------- Due to an oversight, the following individuals did not file on a timely basis Forms 4 or 5 reporting changes in beneficial ownership: James Hancock. The aforementioned reports have been filed prior to the filing of this Form 10-KSB. Schedule of non-compliance with section 16(a) of the exchange Act Number of Name Number of Transactions Late Reports Not Reported James Hancock 1 0 17 ITEM. 10 EXECUTIVE COMPENSATION ---------------------- The following table sets forth the compensation of United Trading.Com's chief executive officer for the periods indicated.
SUMMARY COMPENSATION TABLE -------Annual Compensation------- -----Long-term Compensation----- Other Securities Annual Restricted Underlying All Other Name and Compen- Stock Options/ LTIP Compen- Principal Salary Bonus sation Award(s) SAR's Payouts sations Position Year $ $ $ $ # $ $ (a) (b) (c) (d) (e) (f) (g) (h) (I) ----------- -------- -------- ------- --------- ----------- ----------- --------- ----------- D. Wright President/ 1999 0 0 0 0 0 0 0 ----------- -------- -------- ------- --------- ----------- ----------- --------- ----------- N. Wright Jul-99 President/ to Dec. CEO 31,1999 $ 12,000 0 0 0 0 0 0 2000 2,000 0 0 0 0 0 0 2001 thru July 23 0 0 0 0 0 0 0 ----------- -------- -------- ------- --------- ----------- ----------- --------- ----------- J. Hancock President/ CEO July 24, 2001 Thru Dec. 13, 2001 $1,000 0 0 0 0 0 0 ----------- -------- -------- ------- --------- ----------- ----------- --------- ----------- J. Brewer President, CEO CFO Dec 14, 2001 Thru Dec 31, 2001 $5,000 0 0 0 0 0 0 ----------- -------- -------- ------- --------- ----------- ----------- --------- -----------
Option/SAR Grants in Last Fiscal Year Individual Grants
Number of Securities % of Total Options/SARs Exercise or Underlying Options/SARS Granted to Employees in Base Price Expiration Name Granted (#) Fiscal Year ------------ --------------------- ----------------------- ------------- ---------- James G. Brewer CEO, CFO and Director 500,000 83% $0.10 12-15-06 James L.Hancock Director and Former President and CEO 100,000 17% $0.10 12-15-06 Number of shares and exercise price reflect 1 for 8 reverse stock split effective December 21, 2001.
Mr. James Brewer entered into a three year consulting agreement with the company Effective October 1, 2001, which agreement was cancelled on December 14, 2001 and replaced by a three year employment agreement effective December 1, 2001 calling for salary of $10,000 per month through September, 30, 2002, $11,250 per month from October 1, 2002 through September 30, 2003, $12,500 per month, from October 1, 2003 through September 30, 2004, and $15,000 per month from October 1, 2004 through November 30, 2004. Through December 31, 2001, no cash payments have been made to Mr. Brewer on either the consulting agreement or the employment agreement. Mr. Brewer also received an option to purchase 500,000 shares of the Company's common restricted stock at an option price of $010 per share exercisable at any time prior to December 15, 2006. - COMPENSATION OF DIRECTORS ------------------------- Prior to December, 2001 there were no standard arrangements pursuant to which the Company's directors were to be compensated. In December, 2001 the Board of Directors approved a resolution under which non-employee Directors are to be paid $500 per month for their services. In addition, Directors are entitled to reimbursement in accordance with the Company's policies for traveling, entertainment and any other expenses reasonably incurred and related to the performance of a Director's duties and responsibilities on behalf of Corporation. Such fees are in lieu of any payments for attendance at Directors' meetings. Mr. Gary Tate was paid $500 per month from July 1999 through December, 2000 and in June 1999 was issued 5,000 restricted common shares of the Registrant valued at $250. Mr. Tate was also paid a total of $950 in 2000 for attendance at special meetings of the Board. Mr. Anderson was paid a total of $20,113 in 2000 for consulting services related to the Company's software development. There are no other arrangements pursuant to which any of the Company's directors was otherwise compensated during the last three fiscal years for any service provided as director. - TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENT --------------------------------------------------------- In the event of termination of Mr. Brewer's employment agreement, Regardless of the reasons or purpose of the termination of Brewer's retention as an Employee to the Corporation, the Corporation shall not and may not terminate Brewer's employment as President, CEO and CFO unless and until the Corporation has fully arranged for and commenced performance of the following i) Offer in writing by the Corporation, approved by the Board of Directors to purchase all shares of stock of the Corporation directly or beneficially owned by JAMES G. BREWER for cash at least thirty (30) days prior to the proposed termination date of Brewer' Employment Agreement at the then existing market price based on the average published closing trade price for the five (5) business days prior to the date of Notice. Brewer may elect in his absolute discretion to waive this provision, by notifying the Corporation in writing. ii)Payment, in cash, by the Corporation of all sums then due and owing, if any, as compensation, iii) Payment, in cash, by the Corporation of all sums then due and owing, if any, pursuant reimbursement of expenses. And iv) Payment, in cash, by the Corporation for buyout of remainder of the Employment Agreement at the rate of fifty percent (50%) of the regular Salary in effect. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. -------------------------------------------------------------- This table describes the ownership at December 31, 2001 of the Company's outstanding common stock by: (i) each of the Company's Officers and Directors; (ii) each person who is known by the Company to own more than 5% of the Company's outstanding common stock; and (iii) all of the Company's Officers and Directors as a group: 18
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (Common Shares) Principle Shareholders --------------------------------- Common BFI Ltd. 3,750,000 ( See Note1) 72.8%(1) Stock C/O Trustnet (Cook Islands) Ltd. Avarua, Rarotonga Cook Islands Officers Directors --------------------------------- Common James Hancock - 0 - - 0 - Stock 19762 MacArthur Blvd., suite 300 Irvine, CA 92612 --------------------------------- Common James Brewer 1,875 0.036% Stock 17612 Jordan Ave. #1A Irvine, CA 92612 ________ ________ --------------------------------- All Officers and Directors as a group (3 persons) 1,875 0.036%
(1) Note - Shares owned by BFI Ltd. are restricted securities pursuant to Regulation S issued on Feb 12, 2000 (see also Part 2 - Item 5 "Recent Sales of Unregistered Securities"). BFI Ltd. has performed certain software consulting services for the Company (See Part 3 Item 12 "Certain Relationships and related transactions"). The Company is not aware of any other arrangements which may result in a change of control of the Company. Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- Software consulting services were provided to the Company by BFI Ltd. a holder of 72.8% of the Company's common stock. BFI was paid $300,000 in restricted securities during the year ended December 31, 2000, and nothing in prior years for such services. The Company has a license agreement with Recantoazul S.A. for the use of The Company's casino and sports book software. Recantoazul S.A. is a Costa Rican Corporation which Mr. Darren Wright, the son of Mr. Norman Wright (former President of United Trading.Com), is president. Recantoazul paid a total of $105,000 to the Company in 2000 and $31,000 in 2001 for the use of the Company's software. Recantoazul has since canceled all original agreements and Entered into a new license agreement in 2001 whereunder Recantoazul is responsible for all maintenance and update of the Company's software in exchange for a license fee based on Recantoazul's profits. 19 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. -------------------------------- a) Exhibits Exhibit Number Description ** ------ -------------- 3.1* Articles of Incorporation, as restated for United Trading.Com 3.2* By-Laws as restated for United Trading.Com 4.1* Specimen Stock Certificate 4.2 Rights, Preferences, Privileges and Restrictions Series "A" Convertible Preferred Stock 10.1* Revenue Sharing Agreement with Malt Ltd. dated June 6, 2000 10.2* License Agreement with Recantoazul S.A. for use of Internet Casino Software dated 11 July, 2000. 10.3* License Agreement with Recantoazul S.A. for use of Internet Sports book Software dated September 20, 2000. 10.4* License Agreement with Malt Limited for use of Internet Casino Software dated July 25, 2000. 10.5* License Agreement with Malt Limited for use of Internet Sports book Software dated September 20, 2000. 10.6* 2nd License Agreement with Recantoazul S.A. for use of Internet Casino Software dated September 30, 2000. 10.7* 2nd License Agreement with Recantoazul S.A. for use of Internet Sports book Software dated September 28, 2000. 10.8* 2nd License Agreement with Malt Limited for use of Internet Casino Software dated August 14, 2000. 10.9* 2nd License Agreement with Malt Limited for use of Internet Sports book Software dated September 20, 2000. 10.10* Cancellation notice dated December 22, 2000 for 2nd License Agreement with Recantoazul S.A. for use of Internet Casino Software dated September 30, 2000. 10.11* Cancellation notice dated December 22, 2000 for 2nd License Agreement with Recantoazul S.A. for use of Internet Sports book Software dated September 28, 2000. 20 10.12* Cancellation notice dated December 28, 2000 for 2nd License Agreement with Malt Limited for use of Internet Casino Software dated August 14, 2000. 10.13* Cancellation notice dated December 28, 2000 for 2nd License Agreement with Malt Limited for use of Internet Sports book Software dated September 20, 2000. 10.14* Stock Option Plan 10.15* Recantoazul Software License Agreement Dated August 6, 2001,With Recantoazul, S.A., for use and maintenance of software 10.16 Employment agreement with Mr. James Brewer, retaining him as President, CEO CFO dated December 14, 2001. 10.17 Agreement and Plan of Merger, United Trading.Com, and Quick Draw ATM, Inc. * Exhibits were previously filed. ** Summaries of all Exhibits contained within this Registration Statement are modified in their entirety by reference to these Exhibits. (b) REPORTS ON FORM 8-K There have been no reports of Form 8-K made during the quarter ended December 31, 2001. SIGNATUARES IN accordance with Section 13 or 15(d) of THE Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNITED TRADING.COM --------------------------------------------------- (Registrant) By: s/James Brewer, President and Director ------------------------------------------------- Date: March 29, 2001 ---------------- In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicted. By: s/James Hancock, Director ------------------------------------ Date: March 29, 2001 ---------------- 21