SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from August 31, 1999 to April 7, 2000
Commission file number 0-28663
UNITED VENTURES GROUP, INC.
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(Name of small business issuer in its charter)
Delaware 84-1516192
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
131 West 35th Street, New York, NY 95035
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 212-736-0880
Securities registered under Section 12(b) of the Exchange Act: Common Stock,
$.001 par value
Securities registered under Section 12(g) of the Exchange Act: None
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
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B 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. [X]
State issuer's revenues for its most recent fiscal year December 31, 1999:
$6,980,670 on a pro forma basis, including the revenues of Advanced Ceilings
Supplies Corp. and the issuer.
The aggregate market value as at June 30, 2000 of the Common Stock of the
issuer, its only class of voting stock, held by non-affiliates was approximately
$8,222,244.01 calculated on the basis of the closing price of such stock on the
Nasdaq Bulletin Board on that date. Such market value excludes shares owned by
all executive officers and directors (but includes shares owned by their
spouses); this should not be construed as indicating that all such persons are
affiliates.
The number of shares outstanding of the issuer's Common Stock as at June
30, 2000 was 97,590,681.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format Yes X No
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<PAGE>
FORWARD LOOKING STATEMENTS
Certain statements in this Report under the captions "Item 1.
Business," "Item 2. Properties" and "Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations," and elsewhere in
this Report constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual result, performance or achievements of
the Company, or industry trends and results, to be materially different from any
future results, trends, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors include,
among others, the following: general economic and business conditions; industry
conditions and trends; competition; changes in business strategy or development
plans; availability, terms and deployment of debt and equity capital; relative
values of the United States currency to currencies in the countries in which the
Company's customers and competitors are located; availability of qualified
personnel; changes in, or the failure to comply with, government regulations.
These and certain other factors are discussed from time to time in this Report
and from time to time in other Company reports hereafter filed with the
Securities and Exchange Commission. The Company does not assume an obligation to
update the factors discussed in this Report and other factors referenced in this
Report.
When used in this Report, the words "may", "will, "expect,"
anticipate," "continue," "estimate," "project," "intend", "strategy" and "pro
forma" and similar expressions are intended to identify forward-looking
statements regarding events, conditions and financial trends that may affect the
Company's future plans of operations, business strategy, operating results and
financial position. Any forward looking statements are not guarantees of future
performance and are subject to risks and significant uncertainties and that
actual results may differ materially from those included within the
forward-looking statements as a result of various factors.
PART 1
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ITEM 1. BUSINESS
----------------
The Company was incorporated in May 1996 under the name Travelnet
International, Corp. In 1998 the Company discontinued as a tour organizer and
changed its name to United Ventures Group, Inc. In November 1998, the Company
acquired all of the outstanding shares of common stock of Shilaat Corp., a New
York corporation, in exchange for the issuance of 3,750,000 shares of common
stock of the Company. Shilaat Corp. is not an operating entity but owns all of
the outstanding shares of common stock of Jarnow Corp., the Company's only
active subsidiary. Between November 1993 and April 1994, Jarnow acquired the
assets of Ultimar Creations, Inc., a manufacturer of fashion earrings and rings,
for a consideration of approximately $1,575,000, the assets of the American
Charm division of Goldline
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Co., a manufacturer of charms, for a consideration of approximately $394,000,
and the assets of Joe Eisenberger & Co., Inc., a manufacturer of staple earrings
and rings for a consideration of approximately $2,948,000.
On April 7, 2000, the Company completed a merger with Advanced Ceilings
Supplies Corp. ("ACSC"). ACSC was incorporated in Colorado to serve as a vehicle
to effect a merger, exchange of capital stock, asset acquisition or other
business combination with a domestic business. As of the date of the merger,
ACSC had not yet commenced any formal business operations. The transaction was
consummated pursuant to a Share Purchase Agreement (the "Agreement") that was
entered into by and among the Company, ACSC and certain shareholders of ACSC on
April 3, 2000. Pursuant to the Agreement, the Company acquired 660 shares of
common stock of ACSC for $163.69 per share, which constituted 98.2% of the
issued and outstanding common stock of ACSC. The Company purchased the remaining
12 shares of common stock of ACSC at $163.69 per share from certain other
shareholders of ACSC pursuant to various Sale Agreements dated April 6, 2000.
ACSC was subsequently merged with and into the Company and the ACSC's name was
changed to United Ventures Group, Inc. The source of cash consideration for the
merger was from working capital of the Company. At the time of the merger, ACSC
elected to adopt the Company's December 31 fiscal year rather than ACSC's August
31 fiscal year. Accordingly, this Transition Report on Form 10-KSB is being
filed pursuant to Rule 13a-10(f) of the Securities Exchange Act of 1934 to file
audited financial statements of ACSC for the period September 1, 1999 through
April 7, 2000.
The Company, through its wholly owned subsidiary, Jarnow Corp. is a
manufacturer, designer and distributor of karat gold jewelry in the United
States. It offers its customers a large selection of jewelry styles, consistent
product quality and prompt delivery of product orders. The principal product
line is a wide assortment of 14 karat gold earrings, charms, bracelets and
rings. The Company offers over 1000 styles of gold charms, earrings, bracelets
and rings, with the majority of such products retailing between $50 and $300.
Some of the gold jewelry is accented with colored gemstones.
Customers and Markets. The Company's customers include mass
merchandisers such as JC Penny Company, Inc. and Sears, discount stores, home
shopping networks such as QVC, warehouse clubs and jewelry wholesalers and
distributors. In fiscal 1998 and 1999, the Company's five largest customers
accounted for approximately 53% and 57.85% of net sales, respectively. In 1998
and 1999, the largest customer, JC Penny Company, Inc., accounted for
approximately 21% and 16% of our sales, respectively. In 1998 and 1999, Design
by FMC accounted for sales of approximately 13.2% and 12.7%, respectively. In
1999, AAN Ltd. accounted for approximately 10.1% of our sales. No other customer
accounted for more than 10% of our sales in 1998 and 1999. The Company is
dependent on these large customers and the loss of, or decreased orders from,
the largest customers could have a material adverse effect on the business.
Raw Materials. The principal raw materials purchased by the Company are
gold and semi-precious stones. Approximately 90% of the Company's purchases are
gold and 10% precious and semi-precious stones. The Company purchases both its
gold requirements and its precious and semi-precious stones from Linea Nuova in
Lima, Peru Republic Bank in New York, as well as other
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local and offshore suppliers in both small and large quantities. Gold acquired
for manufacture is at least .9995 fine and is then combined with other metals to
produce 14 karat and 10 karat gold. The term "karat" refers to the gold content
of alloyed gold, measured from a maximum of 24 karats (100% fine gold). Varying
quantities of metals such as silver, copper, nickel and zinc are combined with
fine gold to produce 14 karat gold of different colors. The Company's management
believes these supplier relationships provide the Company with a substantial
competitive advantage, including exclusivity in certain products and areas and
favorable prices and terms. Therefore, the loss of a major vendor relationship
could affect the Company's business. Historically, the Company has not
experienced difficulty in purchasing desired products from its suppliers and
believes it has good working relationships with its suppliers
Trademarks. The Company owns United States trademarks for some of its
various brand names including American Charm(R) and Jarnow(R) but these
trademarks are not material to its business. The Company also uses various
unregistered tradenames, trademarks and service marks.
Competition. The Company encounters competition primarily from
manufacturers with national and international distribution capabilities and, to
a lesser extent, from small regional suppliers of jewelry. The principal
competitive factors in the industry are price, quality, design and customer
service. The Company's specialized customer service programs are important
competitive factors in sales to non-traditional jewelry retailers, including
television shopping networks and discount merchandisers. The Company believes
its product lines are competitively priced. Many of the Company's competitors
have greater financial resources and have more extensive research and
development and marketing staffs than the Company.
Environmental. Due to the manufacturing operations of the Company, the
Company is required to comply with regulations relating to the disposal of waste
water and hazardous wastes and operation of air exhaust systems. The Company is
required to send samples of its wastewater to a laboratory certified by the
State of New York for analysis on a semi-annual basis. In the past, this
analysis has come back reporting acceptable levels of metals in waste waters.
The only hazardous waste generated by the Company results from using cyanide in
the bombing operation. Because the Cyanide waste is shipped to a precious
reclaimer, the Company is exempt from such a regulations. The Company is
required to obtain a permit from the New York City Department of Environmental
Protection Bureau of Air Resources to operate any exhaust fans.
Employees. The Company maintains an in-house design staff to create new
designs for its products and to work closely with its senior officers and
marketing personnel to develop new products meeting the needs of its customers.
At December 31, 1999 the Company employed 38 full time employees. Of such
employees, two were employed in management, three in sales and design, 29 in
refining, machining, finishing, polishing, assaying, and fabricating, and 4 in
administration.
ITEM 2. PROPERTIES.
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As of December 31, 1999, the Company's executive offices and the main
production and distribution center for its jewelry is housed in leased
facilities totaling approximately 20,000 square feet in New York, New York. The
Company believes its facilities are adequate for its present needs.
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ITEM 3. LEGAL PROCEEDINGS.
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The Company is involved in the following lawsuits and claims:
a) The Company is one of several defendants in a case
filed on December 27, 1999, collectively alleging
various causes of action which, in summary, allege
that, in connection with a New Jersey real estate
transaction that occurred in the later part of 1993,
the Company and/or its principal were the recipients
of certain sums of money that were initially
fraudulently obtained (by a third party) from
complainant. The petition seeks damages in the amount
of $6,200,000.
On or about March 3, 2000, the Company, its
principals and certain other defendants filed a
motion to dismiss the Petition for lack of subject
matter jurisdiction. No decision has been rendered on
this motion. At this incipient stage of the
litigation, it is too premature to evaluate the
likelihood of an unfavorable outcome in the event
this matter should go to trial or the likelihood of a
favorable settlement prior to trial. The foregoing
notwithstanding, management and the principals are of
the belief that at least fifty-percent of the six
million dollars in damages sought by the complainant
is susceptible to dismissal by motion for summary
judgment prior to completion of discovery and
significantly before trial.
b) On or about February 4, 2000, a Preliminary Order of
forfeiture (the "Order") was filed by the US
Government pursuant to a Special Verdict of
Forfeiture rendered by a jury. the Company is among
the sixty-two items/entities listed in the Order to
which the government asserts and entitlement and/or
(undefined) ownership interest. Pursuant to the
Order, the Company has thirty days from the final
date of publication of the notice in a newspaper or
receipt of actual notice from the government, by
which to file a petition asserting claims to any
right, title or interest in the properties listed in
the order.
Management will timely file a Petition establishing
the Company's prior right, title and interest to
Jarnow Corporation, and will vigorously contest the
as of yet undisclosed/unarticulated allegations
underlying the Order.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
5
<PAGE>
PART II
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ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
------ ------------------------------------------------------------
The Company's Common Stock has been traded on the Nasdaq
Electronic Bulletin Board under the symbol UVGI since October 7, 1998. The
following table sets forth the high and low bid prices for the Company's Common
Stock for each quarterly period in the period January 1, 1998 through December
31, 1999, as reported by Nasdaq. The Nasdaq quotations are without retail
markups, markdowns or commissions and may not represent actual transactions.
HIGH LOW
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Fiscal 1998
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First Quarter 1.50 1.187
Second Quarter 1.25 .25
Third Quarter .3125 .25
Fourth Quarter 8.03 .25
Fiscal 1999
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First Quarter 8.5 1.50
Second Quarter 4.50 1.875
Third Quarter 2.50 0.625
Fourth Quarter 1.00 0.016
There were approximately 75 holders of record of common stock as of
December 31, 1999.
Holders of common stock are entitled to dividends, when, as, and if
declared by the Board of Directors out of funds legally available therefore. The
holders of the Common Stock may not receive dividends until the holders of the
Preferred Stock, if issued, receive all accrued but unpaid dividends. The
Company has not paid any cash dividends on its common stock and, intends to
retain earnings, if any, for the immediate future to finance the development and
expansion of the business. In addition, the terms of convertible debentures
prohibit the Company from paying dividends without the lender's consent.
No securities that were not registered under the Securities Act have
been issued or sold by the Registrant within the past three years except as
follows:
In November 1998, 3,750,000 shares of Common Stock of the Company was
issued to three persons in exchange for all of the shares of Shilaat Corp. owned
by them. This transaction was exempt under the Securities Act pursuant to
Section 4(2) thereof as a transaction not involving a public offering. The
transaction was made
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without an underwriter and the certificates evidencing the shares bear a
restrictive legend.
From November 13 to December 11, 1998, the Company issued 595,066
shares to four persons for consideration of $650,000. The transaction was exempt
under Regulation D, Rule 504, as an Exemption for a Limited Offering not
exceeding $1,000,000.
From January 6, to March 5, 1999 the Company issued 875,000 shares to
seven persons for consideration of $350,000. The transaction was exempt under
Regulation D, Rule 504, as an Exemption for a Limited Offering not exceeding
$1,000,000.
From February 4, 1999 to August 25, 1999 five persons lent the Company
$750,000 in short term loans. These persons received 330,000 shares as an
inducement to make the loans. These transactions were exempt under the
Securities Act pursuant to Section 4(2) thereof, as transactions not involving a
public offering. The transactions were made without an underwriter and the
certificates evidencing the shares bear a restrictive legend.
In February 1999 Taylor Stuart Financial received 100,000 restricted
shares and warrants to purchase 100,000 shares at $2.50 per share, 100,000
shares at $4.00 per share and 100,000 shares at $5.50 per share, in
consideration for providing financial consulting services to the Company. This
transaction was exempt under the Securities Act, pursuant to Section 4(2)
thereof as not involving a public offering. The Securities contain a restrictive
legend.
In April 1999 the Company sold 8% Convertible Debentures in the
Principal amount of $1,300,000 and issued warrants to purchase 1,114,285 shares
at $3.25 per share and 300,000 shares at $.70 per share to five persons. This
transaction was exempt under Securities Act pursuant to Section 4(2) thereof as
a transaction not involving a public offering. The transaction was made without
an underwriter and the certificates evidencing the securities contain a
restrictive legend.
On September 30, 1999, the Company's finance company received a warrant
to purchase 675,501 shares of common stock as part of a settlement of
outstanding indebtedness. This transaction was exempt under the Securities Act,
pursuant to Section 4(2), thereof, as not involving a public offering. The
warrant contains a restrictive legend.
In November 1999, the Company issued $680,000 aggregate principal
amount of 8% Series B Convertible Debentures pursuant to Rule 504 of Regulation
D promulgated under Securities Act of 1933, as amended ("Rule 504") and,
subsequently, in December 1999 the Company issued $250,000 principal amount of
common stock in a private placement under Rule 504. The private placements under
Rule 504 were made solely to Investors in selected states, which, under their
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respective state laws, permit general solicitation and general advertising so
long as sales are made only to "accredited investors" as that term is defined
under Rule 501(a).
The Company issued 200,000 shares of Series A Preferred Stock to two
persons in March 1999 for nominal consideration. This transaction was exempt
under the Securities Act, pursuant to Section 4(2) thereof as not involving a
public offering. The Securities contain a restrictive legend.
The aforementioned issuances and sales were made in reliance upon the
exemption from the registration provisions of the Securities Act afforded by
Section 3(b) or 4(2) thereof and/or Regulation D promulgated thereunder, as
transactions by an issuer not involving a public offering. The purchasers of the
securities described above acquired them for their own account and not with a
view to any distribution thereof to the public.
ITEM 6. PLAN OF OPERATION
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As of the date of the balance sheet of ACSC filed herewith and the date
of succesion ACSC did not have any product research and development plans, did
not expect to purchase or sell plant and significant equipment and did not
expect significant changes in its number of employees. It's sole plan was to
identify an appropriate merger candidate.
ITEM 7. FINANCIAL STATEMENTS
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The following financial statements of ACSC for the transition period
are contained on the pages indicated.
Page
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Report of Independent Certified Public Accountants F-2
Balance Sheet at April 7, 2000 F-3
Statements of Income for the period September 1, 1999
through April 7, 2000, for the year ended August 31, 1999,
and for the period from August 9, 1995 to April 7,2000. F-4
Statements of Changes in Stockholders Deficit for the period
from August 31, 1998 through April 7, 2000 F-5
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Statements of Cash Flows for the period September 1, 1999
through April 7, 2000, for the year ended August 31, 1999,
and for the period from August 9, 1995 to April 7, 2000. F-6
Notes to Financial Statements F-7
<PAGE>
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
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(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
-----------------------------
<TABLE>
<CAPTION>
Page number
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<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Deficit F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and Stockholders
Advanced Ceiling Supplies, Inc.
New York, New York
We have audited the accompanying balance sheet of Advanced Ceiling
Supplies, Inc. (a development stage company) as of April 7, 2000, and the
related statements of operations, changes in stockholders' deficit, and cash
flows for the period September 1, 1999 through April 7, 2000 and the year ended
August 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we 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.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Advanced Ceiling
Supplies, Inc. as of April 7, 2000, and the results of its operations and its
cash flows for the period September 1, 1999 through April 7, 2000 and the year
ended August 31, 1999 in conformity with generally accepted accounting
principles.
/s/ Feldman Sherb & Co., P.C.
-----------------------------
Feldman Sherb & Co., P.C.
Certified Public Accountants
New York, New York
July 19, 2000
F-2
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
(A Development Stage Company)
BALANCE SHEET
APRIL 7, 2000
ASSETS
------
<TABLE>
<CAPTION>
<S> <C>
ASSETS $ -
======================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
TOTAL LIABILITIES $ -
STOCKHOLDERS' DEFICIT:
Common stock, no par value, 1,000 shares,
authorized, 672 shares issued and outstanding 300
Deficit accumulated during the development stage (300)
----------------------
Total stockholders' deficit -
----------------------
$ -
======================
</TABLE>
See notes to financial statements.
F-3
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period Cumulative from
September 1, 1999 August 9, 1995
through Year Ended (Inception) to
April 7, 2000 August 31,1999 April 7, 2000
------------------ -------------------- ----------------
(Unaudited)
<S> <C> <C>
Revenues $ - $ - $ -
General and administrative 205 - 300
---------------------- --------------------- --------------------
Net loss $ (205)$ - (300)
====================== ===================== ====================
Net loss per common share - BASIC
and DILUTED $ (0.31)$ - $ (0.45)
====================== ===================== ====================
Weighted average number of
common shares outstanding 672 672 672
====================== ===================== ====================
</TABLE>
See notes to financial statements.
F-4
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT
FOR THE PERIOD FROM AUGUST 31, 1998 THROUGH APRIL 7, 2000
<TABLE>
<CAPTION>
Common Stock Accumulated
------------
Shares Amount Deficit Total
------ ------ ------- -----
<S> <C> <C> <C> <C>
Balance, August 31, 1998 672 $ 300 $ (95) $ 205
Net loss - - - -
---------------- ----------------- ----------------- -----------------
Balance, August 31, 1999 672 300 (95) 205
Net loss - - (205) (205)
---------------- ----------------- ----------------- -----------------
Balance, April 7, 2000 672 $ 300 $ (300) $ -
================ ================= ================= =================
</TABLE>
See notes to financial statements.
F-5
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period Cumulative from
September 1, 1999 August 9, 1995
through Year Ended (Inception) to
April 7, 2000 August 31,1999 April 7, 2000
------------- -------------- -------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (205)$ - $ (300)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash - - 300
NET DECREASE IN CASH (205) - -
CASH - Beginning of period 205 205 -
CASH - End of period $ - $ 205 $ -
===================== ===================== =====================
</TABLE>
See notes to financial statements
F-6
<PAGE>
ADVANCED CEILING SUPPLIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 7, 2000
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
----------------------------------------
Advanced Ceiling Supplies, Inc. (the "Company"), a development stage company,
was organized under the laws of the State of Colorado on August 9, 1995. The
Company is in the development stage as defined in Financial Accounting Standards
Board Statement No. 7. Their most recent fiscal year end was August 31, 1999.
On April 7, 2000 the Company completed a merger with United Ventures Group, Inc.
("UVGI"). The transaction was consummated pursuant to a share purchase agreement
that was entered into by and among UVGI, a Delaware corporation, the Company, a
Colorado corporation and certain shareholders of the Company. Under the
agreement UVGI acquired 660 shares of the Company's common stock for $163.69 per
share, which constituted 98.2% of the issued and outstanding common stock of the
Company. The remaining 12 shares of the Company were purchased from certain
other shareholders for $163.69 per share , pursuant to various sales agreements
dated April 6, 2000. As a result of this transaction , UVGI received 100% of the
total outstanding common stock of the Company, which was subsequently merged
into UGVI. The Company's name was subsequently changed to United Ventures Group,
Inc..
2. SUMMARY OF SIGNIFIANT ACCOUNTING POLICIES
-----------------------------------------
(a) Income Taxes - The Company utilizes the liability method of accounting
for income taxes pursuant to Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under this method,
deferred income taxes are determined based on the difference between
the financial, statements and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are
expected to reverse.
As reflected in the accompanying statements of operations, the Company
has incurred losses while in the development stage. Due to the limited
operations of the Company and uncertainty surrounding the eventual
utilization of its losses, a valuation allowance has been recorded to
fully reserve for the deferred tax benefits generated by its net
operating losses.
(b) Loss Per Share - The Company has adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share." Basic loss per
share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding.
(c) Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates and assumptions.
F-7
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
------------------------------------
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
--------------------------------------------------
The following information is presented with respect to the background
of each of the directors and executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position
<S> <C>
Isaac Nussen 50 President, CEO and Director
George Weisz 60 Chief Operating Officer, Vice President,
Secretary and Director
Eric J. Rothschild 68 Director
Martin Weisz 32 Treasurer and Chief Financial Officer
Israel Braun 54 Director
</TABLE>
Isaac Nussen has served as President, CEO and Director since November
1998. Since 1993 he also served in the same positions for Jarnow Corporation. He
is responsible for our marketing and sales. Mr. Nussen served as an executive
officer of other jewelry manufacturing companies for over 25 years.
George Weisz (a.k.a. Ghidale Weisz) has served as Chief Operating
Officer, Vice President and Secretary since November 1998. Since 1993 he also
served in the same positions for Jarnow Corporation. He is responsible for day
to day operations including development and manufacturing. Mr. Weisz served as
an executive officer of other jewelry manufacturing companies for over 25 years.
Eric J. Rothschild has served as a director since November 1998. For
the past five years, and prior thereto, he has been a self-employed physician
and a member of Orangeburg Orthopedic Associates.
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<PAGE>
Martin Weisz has served as Treasurer and Chief Financial Officer since
January 1999. During the past five years Mr. Weisz was vice president of Jarnow
Inc., in charge of several major customer accounts. He is a signatory to all the
Company's bank accounts and was involved in bank relations since he started with
the Company.
Israel Braun has served as a Director since November 1998. Since 1990
he has been the President of American Computer Forms, Inc., a distributor of
stationary and computer paper.
Mr. George Weisz and Mr. Isaac Nussen are brothers in law. Martin Weisz
is George Weisz's son.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
There was no director, officer or beneficial owner of more than 10% of
the class of equity securities of the Registrant that failed to file on a timely
basis.
ITEM 10. EXECUTIVE COMPENSATION.
-----------------------
The Summary Compensation Table below sets forth compensation paid by
the Company for the three fiscal years ended December 31, 1999 for services in
all capacities for its CEO and President. No other principal executive officer
received a total annual salary and bonus which exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
-------------------------------- ------------------- -------------------- ------------------- -----------------
Other
Name and Principal Position Year Annual Annual Awards
Compensation Compensation Options
-------------------------------- ------------------- -------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Isaac Nussen, 1999 $ 250,000 none none
President ------------------- -------------------- ------------------- -----------------
1998 $ 23,000 none none
------------------- -------------------- ------------------- -----------------
1997 $ 117,000 none none
-------------------------------- ------------------- -------------------- ------------------- -----------------
George Weisz, 1999 $ 250,000 none none
Chief Operations Officer ------------------- -------------------- ------------------- -----------------
1998 $ 23,000 none none
------------------- -------------------- ------------------- -----------------
1997 $ 117,000 none none
-------------------------------- ------------------- -------------------- ------------------- -----------------
</TABLE>
Mr. Weisz and Mr. Nussen are entitled to receive an annual salary of
$250,000 each, however they did not receive the entire salary allowed and are
10
<PAGE>
owned the amounts from the Company not paid by the Company in prior years.
In addition, both are entitled to receive a bonus of 2.5% of net profit (before
taxes) in excess of $500,000 in each fiscal year commencing with the fiscal year
ending December 31, 1999, cost of living increase, a life insurance policy in
the face amount of $1,000,000 payable to them. In addition, on a change of
control, in the event either or both Mr. Weisz or Mr. Nussen, terminates their
employment with the Company, they will each be entitled to receive a lump sum
payment equal to 290% of his average annual compensation for the five years
preceding the date of termination.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------
The following table sets forth information, as at June 30, 2000 with
respect to the shares of Common Stock which are beneficially owned by (i) any
person (including any "group", as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934), who is known to the Company to be the
beneficial owner of more than five percent of the Company's outstanding Common
Stock, (ii) the executive officers of the Company named in the Summary
Compensation Table under the caption "Executive Compensation", below, (iii) each
director of the Company and (iv) all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OWNED PERCENT OF SHARES
---------------- ------------ BENEFICIALLY PERCENT OF
OWNED VOTING POWER
----- ------------
<S> <C> <C> <C>
GEORGE WEISZ 5,000,000 5.12% 32.12%(1)
131 WEST 35TH STREET
NEW YORK, NEW YORK 10001
ISAAC NUSSEN 5,000,000 5.12% 32.12%(1)
131 WEST 35TH STREET
NEW YORK, NEW YORK 10001
MARTIN WEISZ -0- -0- -0-
131 WEST 35TH STREET
NEW YORK, NEW YORK 10001
ERIC J. ROTHSCHILD -0- -0- -0-
131 WEST 35TH STREET
NEW YORK, NEW YORK 10001
ISRAEL BRAUN 120,000 * *
131 WEST 35TH STREET
NEW YORK, NEW YORK 10001
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ALL OFFICERS AND DIRECTORS AS A 10,120,000 10.36% 64.24%
GROUP (5 PERSONS)
----------
</TABLE>
* Less than one (1) percent
(1) Mr. Nussen and Mr. Weisz each owns 100,000 shares of Series A Preferreed
Stock, allowing them the right to 54% of total votes. This preferred stock
does not have the right to receive dividends, distributions or conversion
rights.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
On November 26, 1998, 2,250,000 shares of Common Stock of the Company
was issued to George Weisz and Isaac Nussen (1,125,000 to each) in exchange for
all of their issued and outstanding shares of Shilaat Corp., the parent company
of Jarnow Corp. In addition, in November 1998, 1,500,000 shares of Common Stock
of the Company was issued to Odyssey Acquisition Corp. in exchange for its
shares of Shilaat Corp. Mr. Nussen and Mr. Weisz, each received 100,000 shares
Series A Preferred Stock, for nominal consideration, allowing them the right to
54% of total votes. These preferred Stock do not have the right to receive
dividends, distributions or conversion rights.
At September 1999, the Company owed George Weisz and Isaac Nussen
$3,626,056 in connection with certain interest free loans made to the Company.
The loans are due on demand. These loans have been subordinated to senior debt
of the factor.
George Weisz and Isaac Nussen have personally guaranteed, without
compensation, the indebtedness of the Company to its factor. In accordance with
the terms of guarantee, in the event that payments are not made to the factor,
Mr. Weisz and Mr. Nussen will be required to make such payments. On September
30, 1999 Mr. Nussen and Mr. Weisz also personally assumed approximately
$3,477,000 of an obligation formerly due to the finance company as part of an
agreement to terminate that loan. In addition, they have guaranteed the
$2,000,000 note to the finance company issued by the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 10-KSB.
------------------------------------
(a) Exhibits
--------
Exhibit
-------
Number Description
------ -----------
*3.1 Certificate of Incorporation of the Registrant.
*3.2 Amendment to Certificate of Incorporation
*3.3 Bylaws of the Registrant.
*4.1 Form of Registrant's Common Stock Certificate.
*10.1 Stock Option Plan.
*10.2 Securities Purchase Agreement relating to the Debentures.
*10.3 Form of 8% Convertible Debentures.
12
<PAGE>
*10.4 Form of Warrant between the Registrant and the Debenture Holder.
**10.5 Share purchase agreement dated April 3, 2000, by and among
UVGI, Advanced Ceiling and the shareholders of Advanced
Ceiling.
**10.6 Plan of Merger dated April 7, 2000.
**10.7 Form of Acceptance and Sale Agreement dated April 3, 2000.
27 Financial Data Schedule.
* This exhibit has been incorporated by reference from Registration Statement on
Form SB-2, file no. 333-92037, filed on December 3, 1999.
** This exhibit has been incorporated by reference from the Current Reports on
Form 8-K, file no. 000-28663, Filed on June 15, 2000.
(b) Reports on Form 8-K
-------------------
No Reports on Form 8-K were filed by the Company
during the last fiscal quarter of the Company's
fiscal year ended December 31, 1999.
Following the close of the fiscal year, the Company
filed Current Reports on Form 8-K dated (date of
earliest event reported) April 7, 2000 on April 10,
2000 reporting under Items 1, 6 and 7.
The Company also filed Current Reports on Form 8-K
dated (date of earliest event reported) April 7, 2000
on June 15, 2000 reporting under Items 1,2,6 and 7,
and containing the following financial statements:
Consolidated Balance Sheet of the Company
for the year ended December 31, 1999.
Consolidated Statement of Operations for
years ended December 31, 1998 and 1999.
Consolidated Statements of Cash Flows for
years ended December 31, 1998 and 1999.
Unaudited Pro Forma Consolidated Balance
Sheet as of March 31, 2000.
13
<PAGE>
Unaudited Pro Forma Consolidated Statement
of Operations as of March 31, 2000.
The Company filed amendments on July 14, 2000 and
July 18, 2000 to the Current Reports on Form 8-K
filed on June 15, 2000.
14
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
UNITED VENTURES GROUP, INC.
Dated: August 9, 2000
By: /s/ Isaac Nussen
-----------------------------
Isaac Nussen
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C>
/s/Isaac Nussen
---------------------------------- President, Chief Executive Officer August 9, 2000
Isaac Nussen and Director
/s/George Weisz
---------------------------------- Chief Operating Officer, Vice-President August 9, 2000
George Weisz and Director
/s/ Martin Weisz
---------------------------------- Treasurer and Chief Financial Officer August 9, 2000
Martin Weisz
/s/ Eric J. Rothschild
---------------------------------- Director August 9, 2000
Eric J. Rothschild
/s/ Israel Braun
---------------------------------- Director August 9, 2000
Israel Braun
</TABLE>
15
<PAGE>
EXHIBIT INDEX
Exhibit
-------
Number Description
------ -----------
*3.1 Certificate of Incorporation of the Registrant.
*3.2 Amendment to Certificate of Incorporation
*3.3 Bylaws of the Registrant.
*4.1 Form of Registrant's Common Stock Certificate.
*10.1 Stock Option Plan.
*10.2 Securities Purchase Agreement relating to the Debentures.
*10.3 Form of 8% Convertible Debentures.
*10.4 Form of Warrant between the Registrant and the Debenture Holder.
**10.5 Share Purchase Agreement dated April 3, 2000, by and among
UVGI, Advanced Ceiling and the shareholders of Advanced
Ceiling.
**10.6 Plan of Merger dated april 7, 2000.
**10.7 Form of Acceptance and Sale Agreement dated April 3, 2000.
27 Financial Data Schedule.
* This exhibit has been incorporated by reference from Registration Statement on
Form SB-2, file no. 333-92037, filed on December 3, 1999.
** This exhibit has been incorporated by reference from the current reports on
Form 8-K, file no. 000-28663, filed on June 15, 2000.
16
