FORM 10-KSB
SECURITY AND EXCHANGE COMMISSION
Washington, DC 20549
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exhange Act of 1934
For the fiscal year ended December 31, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 0-9249
UNITED TRANS-WESTERN, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1519286
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600-3795 Carey Road
Victoria, British Columbia
Canada V8Z 6T8
(address of principle executive offices) (Postal Code)
Registrant's telephone number, including area code: (250) 475-6000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 of the past 90 days.
YES [ ] NO [X]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the 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.
YES [X] NO [ ]
<PAGE> 1
The registrant's revenues for its most recent fiscal year were zero.
The aggregate market value of the voting stock held by non-affiliates
of the registrant is not presently determinable. See "Item 5. Market
for Registrant's Common Stock and Related Stockholder Matters"
The number of shares outstanding of each of the registrant's classes of
common stock, as of July 5, 2000 was 8,859,155 shares of common stock.
Transactional Small Business Disclosure Format (check one):
YES [X] NO [ ]
PART 1
Item 1. DESCRIPTION OF BUSINESS
Development of Business
-----------------------
The Company emerged from bankruptcy in August 1986 and was actively
engaged in the business of acquiring and developing oil and gas
properties until January 1994, when it sold all of its remaining
oil and gas properties. The proceeds from the property sale were
used to repay all of the Company's bank debt and a significant
portion of indebtedness to affiliates.
In early 1997, the Company privately placed 160,000 shares of newly
issued common stock for $160,000. Substantially all of this amount
was used to pursue a joint venture interest with a regional Chinese
energy company through the Company's subsidiary UTW China Ltd. The
interest in the subsidiary and resource property was disposed of
during 1998 with the accumulated debt being assumed by the purchaser.
The purchaser, First Oil Limited, has assumed full responsibility to
move the project forward. United Trans-Western, Inc. has retained
a 0.4% overriding royalty interest in the project. Further, there
is provision for United Trans-Western, Inc. to recover its investment
of $134,582 from future revenues from the project. There is no
indication as to when revenues can be expected.
In March 1998, the Company retained joint venture rights as a joint
venture partner with Rebound Rubber Corporation. These were usage
rights of the proprietary technology owned by Rebound Rubber
Corporation within the United States. Extensive efforts for the
funding of a reactivation facility either by debt, equity or a
combination of both was not successful. In December 1998, the
Company received an offer by LandStar, Inc. to acquire its joint
venture interest for $100,000 and 8,500,000 shares of LandStar, Inc.
This offer was accepted by the Company and closed in 1999.
BUSINESS ACTIVITY
-----------------
The Company investigated several potential shredding and grinding
operations during the year with a view to acquiring the operations.
The long term objective is to establish a supply of crumb rubber in
the size and quantity required by LandStar, Inc. in their rubber
reactivation business. To date no suitable target operations have
been identified and there are not contract supply requirements as
LandStar has no demand at this time.
<PAGE> 2
During the year the Company sold its joint venture interest with
Rebound Rubber Corp. to Landstar, Inc. for $100,000 cash and 8,500,000
shares. It is the intention of the Company to work closely with
LandStar, Inc. to supply raw materials to LandStar in its rreactivation
operations.
Item 2. PROPERTIES
Corporate Headquarters
----------------------
The Company's corporate headquarters are currently located in Victoria,
British Columbia, Canada.
Other Properties
----------------
The Company does not own or lease any properties other than the
corporate offices described above.
Item 3. LEGAL PROCEEDINGS
There are no material or pending or, to the Company's knowledge,
threatened lawsuuits against the Company requiring disclosure under
this Item 3.
Item 4. SUBMISSION OF MATTERS TO A VOTE
During the fourth quarter of the year ended December 31, 1999,
no matters were submitted to a vote of security holders through
solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company shares are currently traded over the counter on the
Canadian Dealer Network (CDN) with the trading symbol UTWI. As at
July 5, 2000, there were approximately 900 record shareholders of the
common stock of the Company. The Company has not paid dividends on
its common stock and the Board of Directors presently intends to
continue the policy of retaining any earnings for use in the Company's
operations.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Plan of Operation
-----------------
It is intended that the sole focus of the Company be the
shredding and grinding of used tires for the production and supply
of crumb rubber to LandStar, Inc.
Management's Discussion and Analysis
------------------------------------
Results of Operations
The Company had no operating revenues during 1999. Nevertheless,
the Company has created and preserved significant equity by
accepting the LandStar, Inc. offer. The ownership of 8,500,000
shares makes the Company the largest shareholder of LandStar, Inc.
and will benefit from the expected future development of their
reactivation plants. In addition, the Company will be able to
grow contemperaneously with LandStar, Inc. through the steady
supply of raw material.
The Company incurred expenses of $430,904 during the year. This
amount includes a loss on equity investment of $295,440 on LandStar,
Inc. shares as the Company share of LandStar, Inc. losses incurred
during the year. Other expenses were incurred for management services
and general and administrative expenses.
Item 7. FINANCIAL STATEMENTS
Audited financial statements for the year ended December 31, 1999
are attached herewith.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
For the first year ended December 31, 1999, there were no disagreements
between the Company and Hein + Associates LLP on matters of accounting
principles or practices, financial statement disclosures, or auditing
scope or procedure, which disagreements, if not resolved to the
satisfaction of Hein + Associates LLP would have caused it to make
a reference to the subject matter of the disagreements in connection
with its reports.
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE RREGISTRANT
The following table sets forth certain information as of
July 5, 2000 concerning the directors and executive officers of
the Company:
Name Age Position
---- --- --------
Michael C. Pinch, CA 55 President, Director and CEO
Scott B. Randolph 47 Vice-President and Director
Glenn Rozon 57 Secretary and Director
Each director serves until the next annual meeting of
stockholders and until his successor is duly elected and qualified.
Officers serve at the discretion of the Board of Directors.
Michael C. Pinch - President and Chief Executive Officer since
June 1999 and director since November, 1997. Mr. Pinch has served
as a director and financial consultant to several private and
public companies over the past several years and currently focuses
on the management and administration of public companies.
Scott B. Randolph - Director and Vice-President since May, 1997.
Mr. Randolph has been project manager for OGCI Management, Inc.
for 25 years and has extensive experience in the oil and
gas industry.
Glenn Rozon - Mr. Rozen joined the Company as a director and
Secretary in June, 1999. He owns and operates a successful plumbing
contracting business in Victoria, British Columbia.
Item 10. EXECUTIVE COMPENSATION
Management salaries of $77,000 were accrued to the two senior officers
of the Company but remain unpaid. Directors fees of $1,000 per month
for each month of service was accrued but remained unpaid as at
December 31, 1999.
The Company has no formal employment agreement with any of its
officers or directors as at December 31, 1999. The Company has
no retirement, profit sharing, pension or insurance plans covering
them. No officer received any bonus, restricted stock award,
options or stock appreciation rights, long-term incentive plan
payouts, insurance or other benefits from the Company during the
year ended December 31, 1999.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information indicating the
Common Stock beneficially owned as of July 5, 2000 by each director,
by all officers and directors as a group and by each person known to
the Company to be the beneficial owner of more than five percent of
the Company's common stock:
<TABLE>
<S> <C> <C>
Amount and Nature of Percent of
Name Beneficial Ownership (1) (2) Class
---- ----------------------------- -----
J.W. Brown 859,506 9.70
Glenn Rozon 100,000 1.13
Michael C. Pinch 16,000 0.02
</TABLE>
(1) Pursuant to Rule 13(d)-3 under the Securities Exchange Act
of 1934, as amended, beneficial ownership of a security consists
of sole or shared voting power (including the power to vote or direct
the voting) and/or sole or shared investment power (including the
power to dispose or to direct the disposition) with respect to a
security whether through any arrangement, understanding, relationship
or otherwise.
(2) Except as otherwise indicated, the named person has sole voting
and investment power with respect to the Common Stock set forth
opposite his name.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Shina Investments Ltd. is wholly owned by a director of the Company.
Shina Investments Ltd. is owed $6,000 as at December 31, 1999 for
administrative services provided in a previous year.
A stockholder has advanced $4,653 to the Company which remains unpaid
at December 31, 1999.
Kentucky Financial Inc. has advanced $95,600 to the Company.
Mr. Elroy Fimrite is a director of Kentucky Financial Inc. and
related to the shareholders of Kentucky Financial Inc. He is also
a shareholder and former director of the Company.
Item 13. EXHIBITIS AND REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto authorized, on the 5th day of July, 2000.
UNITED TRANS-WESTERN, INC.
(Registrant)
By: /s/ Michael C. Pinch
------------------------
Michael C. Pinch
President
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>
<S> <C> <C>
Name Capacities Date
---- ---------- ----
/s/ Michael C. Pinch President, Director 5-Jul-00
-------------------- and CEO
Michael C. Pinch
/s/ Glenn Rozon Secretary, Director 5-Jul-00
-------------------- and CFO
Glenn Rozon
</TABLE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
United Trans-Western, Inc.
We have audited the accompanying consolidated balance sheet of
United Trans-Western, Inc. as of December 31, 1999, and the related
consolidated statements of operations, changes in stockholders'
deficit and cash flows for the years ended December 31, 1999 and 1998.
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 United
Trans-Western, Inc. as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1999
and 1998, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.
As discussed in Note 1, in January 1994 the Company sold substantially
all of its oil and gas properties. Subsequent to the sale, the
Company has been without significant assets or business operations,
which raises substantial doubt about its ability to continue as a
going concern. Management's plans for the Company are discussed
in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HEIN + ASSOCIATES LLP
Dallas, Texas
April 3, 2000
F-1
UNITED TRANS-WESTERN, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
INVESTMENT IN LANDSTAR, INC. $ 207,560
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 118,347
Advances from and accrued expenses due to
related parties 329,543
----------
Total current liabilities 447,890
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par value; 50,000,000
shares authorized,8,858,842 shares issued
and outstanding 88,588
Additional paid-in capital 2,521,366
Accumulated deficit (2,850,284)
----------
Total stockholders' deficit (240,330)
----------
Total liabilities and stockholders' deficit $ 207,560
==========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-2
<TABLE>
<CAPTION>
UNITED TRANS-WESTERN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<S> <C> <C>
1999 1998
---- ----
REVENUES $ - $ -
GENERAL AND ADMINISTRATIVE EXPENSES 135,464 205,039
------- -------
LOSS FROM OPERATIONS (135,464) (205,039)
OTHER EXPENSE:
Loss on equity investment (295,440) -
Interest expense, net - (83)
--------- --------
Total other expense (295,440) (83)
--------- --------
LOSS FROM CONTINUING OPERATIONS (430,904) (205,122)
DISCONTINUED OPERATIONS
-gain on disposal of subsidiary - 104,885
--------- --------
NET LOSS $ (430,904) $ (100,237)
========= =========
LOSS PER SHARE (Basic and diluted):
Continuing operations $ (.05) $ (.02)
========= ==========
Net loss $ (.05) $ (.01)
========= ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 8,858,842 8,858,842
========== ==========
</TABLE>
See accompanying notes to these consolidated financial statements.
F-3
UNITED TRANS-WESTERN, INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' DEFICIT
YEARS ENDED
DECEMBER 31, 1999 AND 1998
Common Stock Additional
------------- Paid in Accumulated
Shares Amount Capital Deficit Total
------ ------ ---------- -------- ------
BALANCES,
January 1,
1998 8,858,842 $88,588 $1,903,986 $(2,319,143) $(326,569)
Contributed
Capital - - 14,380 - 14,380
Net loss - - - (100,237) (100,237)
--------- -------- ----------- ----------- ----------
BALANCES, 8,858,842 85,588 1,918,366 (2,419,380) (412,426)
December 31,
1998
Receipt of cash
and stock of
LandStar, Inc.
for transfer
of technology
rights - - 387,000 - 387,000
Effect of equity
transactions of
non-consolidated
subsidiary - - 216,000 - 216,000
Net loss - - - (430,904) (430,904)
--------- --------- --------- ----------- ---------
BALANCES, 8,858,842 $88,588 $2,521,366 $(2,850,284) $(240,330)
December 31, ========= ========= ========== ============ =========
1999
See accompanying notes to these consolidated financial statements.
F-4
<TABLE>
<CAPTION>
UNITED TRANS-WESTERN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED December 31, 1999 and 1998
<S> <C> <C>
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (430,904) $ (100,237)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Loss on equity investment 295,440 -
Gain on disposal of subsidiary - (104,885)
Change in other current assets - 75,000
Change in accounts payable
and accrued expenses (17,912) 113,195
--------- --------
Net cash used in operating
activities (153,363) (16,927)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) of advances from
related parties 53,363 (3,985)
Proceeds from transfer of joint
venture rights 100,000 -
Capital contributions, including
collection of receivable - 20,680
---------- ---------
Net cash provided by
financing activities 153,363 16,695
NET DECREASE IN CASH (13) (232)
CASH AT BEGINNING OF YEAR 13 245
---------- ----------
CASH AT END OF YEAR $ - $ 13
========== ==========
NON-CASH TRANSACTIONS:
Increase in value of investment
in LandStar, Inc. resulting from
sales of common stock at amounts
in excess of the Company's basis $ 216,000 $ -
Stock of LandStar, Inc. received
from transfer of joint venture rights $ 287,000 $ -
</TABLE>
See accompanying notes to these consolidated financial statements.
F-5
UNITED TRANS-WESTERN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations and Basis of Presentation
United Trans-Western, Inc. ("UTW" or "the Company") emerged
from bankruptcy on August 29, 1986. The Company is incorporated in
Delaware and until January 1994 was engaged in oil and gas producing
activities. In January 1994, the Company sold all of its oil and gas
properties and paid most of its liabilities. In January 1997, an 80%
owned subsidiary UTW-China, was created to purchase and develop
properties owned by the government of the People's Republic of China.
The Company did not proceed beyond the initial phase of this project
and sold its rights in 1998 to rework certain oil fields in China.
Rebound Rubber Corporation ("RRC") was a wholly owned subsidiary of
the Company during 1997. RRC has acquired technology from the Guangzhou
Research Institute for Utilization of Reclaimed Resources (Guangzhou
Institute) for the recycling and reactivation of used rubber. The
Guangzhou Institute is located in the People's Republic of China and
is registered there as a research development unit for developing waste
material recycling methods. During 1998, the Company returned its
ownership interest in RRC to the party from which it had been acquired
and retained certain rights to the technology. During 1999, the
Company sold its rights to the technology to LandStar, Inc. in exchange
for $100,000 and 8,500,000 shares of LandStar, Inc. stock.
2. Summary of Significant Accounting Policies
Income Taxes
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the financial
and income tax reporting bases of assets and liabilities. The deferred
tax assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible when
the assets and liabilities are recovered or settled.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiary until its disposal in 1998. All significant
inter-company accounts and transactions are eliminated in consolidation.
Long-Lived Assets
In the event that facts and circumstances indicate that the cost of
long-lived assets may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset would be compared to
the asset's carrying amount to determine if a write-down to market
value or discounted cash flow is required.
Equity Investment
At December 31, 1999, UTW owned approximately 22.8% of the issued and
outstanding shares of LandStar, Inc. The Company accounts for the
investment in LandStar, using the equity method of accounting and
records its share of LandStar's income or losses in the statement of
operations and as an adjustment to the carrying value of the investment.
UTW's investment in LandStar was recorded at the book value of LandStar
due to common control of the two entities.
Statements of Cash Flows
For purposes of the statement of cash flows, the Company considers
cash on deposit and all highly liquid investments with original
maturities of three months or less to be cash equivalents.
F-6
UNITED TRANS-WESTERN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net Loss Per Common Share
Basic earnings or loss per share (EPS) is calculated by dividing
the income or loss available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted
EPS, of which there are none, reflects the potential dilution that
could occur if securities or other contracts to issue common stock
were exercised or converted into common stock.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. AS discussed
above, in January 1994 the Company sold substantially all of its
oil and gas properties. Subsequent to the sale, the Company has
been without significant assets or business operations, which raises
substantial doubt about its ability to continue as a going concern.
Management intends to attempt to acquire businesses or assets by
issuing Company stock or by arranging financing with third parties
in order to return the Company to the status of an operating business
concern. As described in Note 1, the Company sold its joint venture
rights to the technology during 1999. Funding received by the
Company in 1999 and 1998 has been provided primarily by a related
party.
Use of Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes.
Actual results could differ from those estimates.
3. Investment in LandStar
As described in Note 1, the Company has an investment in LandStar,
which was acquired in March 1999. LandStar is involved in the
development of certain technology rights for the recycling of
rubber. The summarized financial information for LandStar is
as follows:
<TABLE>
<S> <C>
As of
December 31, 1999
------------------
Total assets $ 1,475,327
==================
Total liabilities $ 563,129
==================
Total stockholders' equity $ 912,198
==================
Year Ended
December 31, 1999
------------------
Total revenues $ -
==================
Net loss $ (1,474,531)
==================
</TABLE>
As discussed in Note 1, UTW has recognized a loss on equity
investments for its share of LandStar losses during 1999, which
amounted to $295,440.
The quoted market value of the Company's investment in LandStar
stock at December 31, 1999 was approximately $4,000,000. However,
since there is not a significant market for the stock, management
believes the actual value may be substantially different than the
quoted value.
F-7
UNITED TRANS-WESTERN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Interest in UTW-China
The Company had an interest in rights to rework certain oil fields
in China through a subsidiary as described in Note 1. The Company
sold its interest in the subsidiary in 1998 and recorded a gain on
discontinued operations of $104,885.
5. Related Party Transactions
Related parties (directors and stockholders) made advances in 1999
and 1998 to the Company for operating expenses and are due to certain
amounts for directors fees and management fees. The total due to
related parties at December 31, 1999 was $329,543. These advances
are non-interest bearing and contain no specific repayment terms.
6. Common Stock
In 1997, certain stockholders of the Company sold shares of
the Company for which rules of the Securities and Exchange Commission
deemed there to be profits totaling approximately $21,000 which were
required to be contributed to the Company. Of this amount, $14,380
was reflected as a capital contribution in 1998.
7. Income Taxes
The components of the Company's deferred tax assets and
liabilities at December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
December 31
------------------
<S> <C> <C>
1999 1998
---- ----
Deferred tax asset - net operating
loss carry forward $ - $ 225,000
Less valuation allowance $ - (225,000)
--------- ------------
Net deferred tax $ - $ -
========= ============
</TABLE>
F-8
