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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28663
UNITED VENTURES GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 84-1516192
(State of other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
131 West 35th Street
New York, New York 10001
(Address of principal executive offices)
(212) 736-0880
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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: Common Stock, $.001 par value per
share - 97,590,681 shares outstanding as of June 30, 2000; Series A Preferred
Stock, $.001 par value per share - 200 shares outstanding as of June 30, 2000.
<PAGE>
UNITED VENTURES GROUP, INC.
FORM 10-QSB
FOR THE QUARTER ENDED June 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements.
Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 F-2
Consolidated Statements of Operations for the Three Months
ended June 30, 2000 and June 30, 1999 and the Six Months
ended June 30, 2000 and June 30, 1999 F-3
Consolidated Condensed Statements of Cash Flows for the Six Months
ended June 30, 2000 and June 30, 1999. F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. F-6
PART 11. OTHER INFORMATION
Item 1. Legal Proceedings. F-7
Item 2. Changes in Securities and Use of Proceeds. F-7
Item 3. Defaults upon Senior Securities. F-7
Item 4. Submission of Matters to a Vote of Security Holders. F-7
Item 5. Other Information. F-7
Item 6. Exhibits and Reports on Form 8-K. F-7
</TABLE>
<PAGE>
UNITED VENTURES GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 2000
<TABLE>
<CAPTION>
ASSETS
------
<S> <C> <C>
At 12/31/99
----------------
Current assets:
Cash $ 6,734 97,465
Accounts receivable, net 4,855,332 3,972,855
Inventory 6,050,000 8,285,730
----------------- ----------------
Total current assets 10,912,066 12,356,050
Property and equipment, net 426,177 273,303
Other Assets:
Deferred financing cost 433,208 551,354
Other 227,750 17,625
----------------- ----------------
Total assets $ 11,999,201 13,198,332
================= ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 694,093 1,740,366
Loans payable 2,126,224 4,310,688
Convertible debentures 832,690 1,300,000
Notes payable - financial institution 50,000 6,380,538
----------------- ----------------
Total current liabilities 3,703,007 13,731,592
----------------- ----------------
297,636
Stockholders' equity:
Common stock, $.001 par value -100,000,000 shares authorized,
97,140,681 shares issued and outstanding 97,141 24,931
Preferred stock, $.001 par value - 5,000,000
shares authorised, 200,000 Series A shares
issued and outstanding 200 200
Additional paid-in capital 18,144,122 10,520,067
Deferred compensation expense (34,169) (136,667)
Accumulated deficit (9,911,100) (10,281,849)
----------------- ----------------
Total stockholders' equity 8,296,194 (830,896)
----------------- ----------------
Total liabilities and stockholders'
equity $ 11,999,201 13,198,332
================= ==========
</TABLE>
See notes to financial statements
F-2
<PAGE>
UNITED VENTURES GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------------- -----------------------------------
2000 1999 2000 1999
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 825,554 $ 1,237,103 $ 5,874,404 $ 3,028,642
Cost of goods sold 364,145 908,035 4,250,782 2,246,148
--------------- ---------------- ---------------- -----------------
Gross profit 461,409 329,068 1,623,622 782,494
Non cash compensation expense 450,000 - 450,000 -
Selling, general and administrative 262,678 1,447,191 922,579 2,890,971
Bad debt recovery (700,000) - (700,000) -
--------------- ---------------- ---------------- -----------------
Income (loss) from operations 448,731 (1,118,123) 951,043 (2,108,477)
Interest expense 289,958 288,313 580,294 1,780,142
Income (loss) before extraordinary items 158,773 (1,406,436) 370,749 (3,888,619)
Extraordinary item - loss on early
extinguishment of debt, net of taxes - - - (640,402)
--------------- ---------------- ---------------- -----------------
Net income $ 158,773 $ (1,406,436) $ 370,749 $ (4,529,021)
=============== ================ ================ =================
Basic and diluted net income (loss) per share
Before extraodinary item $ 0.00 $ (0.21) $ 0.00 $ (0.59)
--------------- ---------------- ---------------- -----------------
Extraordinary item $ 0.00 $ (0.00) $ 0.00 $ (0.10)
--------------- ---------------- ---------------- -----------------
Net income (loss) per share $ 0.00 $ (0.21) $ 0.00 $ (0.69)
=============== ================ ================ =================
Weighted average common shares outstanding 97,140,681 6,643,326 97,140,681 6,643,326
=============== ================ ================ =================
</TABLE>
See notes to financial statements
F-3
<PAGE>
UNITED VENTURES GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
2000 1999
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES :
<S> <C> <C>
Net loss $ 370,749 $ (4,529,021)
------------ ----------------
Adjustment to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 17,500 160,000
Amortization - 50,000
Bad debts - 1,500,000
Officers' compensation 450,000 200,000
Imputed interest on loan from shareholders - 180,000
Interest expense on conversion benefit 27,043 562,000
Amortization of deferred compensation 102,498 -
Extinguishment of debt - 640,402
Write-off of deferred financing and offering costs 118,146 59,000
Change in assets and liabilities;
Increase in accounts receivable (882,477) (992,067)
Decrease in inventories 2,235,730 991,722
Decrease in prepaid expenses - 862
Increase in other assets (210,125) -
Decrease (Increase) in accounts payable and accrued expenses (1,046,273) 293,396
------------ ----------------
Total adjustments 812,042 3,645,315
------------ ----------------
Net cash provided by (used in) operating activities 1,182,791 (883,706)
------------ ----------------
CASH FLOWS FROM INVESTING ACTIVITIES :
Acquisition of property and equipment (170,374) -
------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable - financial instituions (1,884,498) (518,408)
Proceeds from convertible debentures 224,450 997,000
Repayment of loans (184,464) 655,344
Increase (decrease) in cash overdraft - (146,065)
Stock subscription received - 250,000
Proceeds from issuance of stock 1,039,000 -
Repayment to stockholders (297,636) (322,193)
------------ ----------------
Net cash used in (provided by) by financing activities (1,103,148) 915,678
------------ ----------------
Net decrease (increase) in cash (90,731) 31,972
Cash - beginning of year 97,465 13,028
------------ ----------------
Cash - end of year $ 6,734 $ 45,000
-
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION :
Interest paid $ 27,043 $ 156,308
============= ===============
Taxes paid $ - $ 1,798
------------ ----------------
NON-CASH FINANICING AND INVESTING ACTIVITIES:
Forgiveness of debt by financial institution $ 4,446,040 $ -
============= ===============
Conversion of debentures $ 691,760 $ -
============= ===============
Forgiveness of notes payable by related party $ 2,000,000 $ -
============= ===============
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
UNITED VENTURES GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared in
accordance with generally accounting principles for interim financial
information and with instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
results of operations for the three-month and six-month periods ended June
30, 2000 are not necessarily indicative of the results to be expected for
the year ended December 31, 2000. The condensed interim financial
statements should be read in conjunction with the audited financial
statements and notes, contained in the Form 8-K filed on June 15, 2000.
2. ACQUISITION
On April 11, 2000, United Ventures Group, Inc. ("UVGI") completed the
acquisition of Advanced Ceiling Supplies, Inc. ("ACSI") under an agreement
dated as of April 3, 2000. As part of the acquisition, the UVGI acquired
666 shares of ACSI's common stock in exchange for 400,000 shares of the
capital stock of UVGI and $110,000 in cash, the balance of $90,000 was paid
to cover closing costs. As a result of this transaction, the UVGI received
100% of the outstanding common stock of ACSI.
3. STOCKHOLDERS EQUITY
During the six months ended June 30, 2000, the principal shareholders
assumed $2,000,000 of the Company's loans payable to unrelated third
parties. This transaction was recorded as a capital contribution.
F-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
SIX-MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO SIX-MONTH PERIOD ENDED JUNE 30,
1999
Net sales amounted to $5,874,404 for the six-month period ended June
30, 2000, compared to $3,028,642, an increase of $2,845,762 or 94% from the
six-month period ended June 30, 1999. The increase of 94% is mainly due to a)
the recognition of sales of approximately $2,000,000 that were shipped in 1999
but recognized in year 2000 as per certain GAAP and SEC requirements, and b)the
broadening of product line.
Gross profit increased by $841,128, or 107% to $1,623,622 for the
six-month period ended June 30, 2000 from $782,494 for the six-month period
ended June 30, 1999. Gross profit as a percentage of net revenues increase to
27.6% for the six-month period ended June 30, 2000 from 25.8% for the six-month
period ended June 30, 1999. The increase in gross profit as a percentage of net
revenues is attributable to global sourcing of production, improved production
and cost controls.
Selling, General and Administrative expenses decreased by $1,968,392,
or 68% to $922,579, or 15.7% of net revenues, for the six-month period ended
June 30, 2000, from $2,890,971. or 78.6% of net revenues for the six-month
period ended June 30, 1999.
The principal decrease in expenses were due to a reduction of
approximately $1,500,000 in bad debt expenses for the six months ended June 30,
1999 compared to the six-month period ended June 30, 2000. Expenses in 1999 were
extraordinarily large due to certain uncollectible sales, which did not recur in
2000. Management was also successful in the recovery of $700,000 of bad debts
that were incurred in 1999.
Interest expenses decreased to $580,294 for the six-month ended June
30, 2000 from $1,780,142 for the six-month ended June 30, 1999. This decrease is
primarily due to substantial reduction of financing debts and the non-recurrence
of 1999 expenses of approximately $500,000 related to the beneficial conversion
benefits of debentures issued in April 1999 recorded as interest.
Liquidity and Capital Resources
-------------------------------
Historically the Company financed operations principally through
collections of accounts receivable, loans from financing institutions, issuance
of stock and advances from officers. In the six months ended June 30, 2000, the
Company financed operations from proceeds from issuance of common stock and from
net income from operations. As a result of repayment of all debts to finance
institutions, forgiveness of other debts and conversions of outstanding
debentures, we believe it will be able to finance future operations from cash
generated from operations.
Working capital increased from a deficit of $1,300,000 at December 31,
1999 to a positive position of $7,200,000 (an increase of $8,500,000) at June
30, 2000. The increase of working capital was generated by the forgiveness of
debt to finance institutions of $4,400,000 (net of cash payment required),
forgiveness of debt to third parties of $2,000,000, decrease in inventories of
$2,000,000, proceeds from sale of stock of $1,000,000 offset by net reduction of
accounts receivable, accounts payables and other expenses of $700,000.
On April 5, 2000 a settlement agreement was reached with a finance
institution canceling a certain Term Promissory Note in the original principal
amount of $2,000,000 from Jarnow to the finance institution; and a certain Term
Promissory in the original principal amount of $3,500,000.
We made a payment of $1,200,000 to the finance institution in
immediately available funds.
The finance institution received 4,000,000 restricted common stock
shares of the company, subject to certain terms and conditions, more fully
explained in the Company's financial statements for the year ended December 31,
1999 (Note 8).
As a result of this settlement the Company recognized a net gain from
the extinguishment of debt of $4,400,000 recorded as addition to Additional Paid
in Capital.
F-6
<PAGE>
On June 1, 2000, we issued approximately 6,000,000 restricted common
shares to certain unrelated parties as a settlement of outstanding debentures to
such parties. As a result of this settlement Additional Paid in capital
increased by $200,000.
At June 30, 2000 debt to third parties of $2,000,000 was forgiven
without any consideration.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
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
27. Financial Data Schedule
(b) Reports on Form 8-K
On April 10, 2000, the Company filed Current Reports on Form
8-K under Item 1, Changes in Control of Registrant, and Item
6, Resignation of Directors. No Financial Statements were
filed with this report.
On June 15, 2000, the Company filed Current Reports on Form
8-K under Item 1, Changes in Control of Registrant, Item 2,
Acquisition and Disposition of Assets and Item 6, Resignation
of Directors. Financial Statement were filed with this report.
F-7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 14, 2000
United Ventures Group, Inc.
/s/ Isaac Nussen
--------------------------
By: Isaac Nussen
President and Chief Executive
Officer
F-8
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
