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UNIV.OB > SEC Filings for UNIV.OB > Form 10-Q on 16-Oct-2009All Recent SEC Filings

Show all filings for UNIVERSAL INFOTAINMENT SYSTEMS CORP | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for UNIVERSAL INFOTAINMENT SYSTEMS CORP


16-Oct-2009

Quarterly Report


Item 2. Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

The following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, the Financial Statements of the Company and Notes thereto included elsewhere in this Report. Historical results and percentage relationships among any amounts in these financial statements are not necessarily indicative of trends in operating results for any future period. The statements, which are not historical facts contained in this Report, including this Plan of Operations, and Notes to the Financial Statements, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available operating, financial and competitive information, and are subject to various risks and uncertainties. Future events and the Company's actual results may differ materially from the results reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, dependence on existing and future key strategic and strategic end-user customers, limited ability to establish new strategic relationships, ability to sustain and manage growth, variability of operating results, the Company's expansion and development of new service lines, marketing and other business development initiatives, the commencement of new engagements, competition in the industry, general economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the service requirements of its clients, the potential liability with respect to actions taken by its existing and past employees, risks associated with international sales, and other risks described in the Company's other SEC filings.

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Reform Act are unavailable to us.

Overview

We are a development stage company. We have generated no revenues to date. Our auditors have raised substantial doubt as to our ability to continue as a going concern. Although we will need only approximately $200,000 to $250,000 to remain in business during the next 12 months with minimal operations, we will need approximately $6,395,385 during the next 12 months to implement our business plan to sell what we call UIS Infotainment Systems for use in passenger, commercial and government agency vehicles. These systems combine our proprietary GPS Navigation and Display Engine, combining aerial and satellite imagery/photographs rather than traditional grid map displays, with communications capabilities for 3G Communications Audio/Video, Internet Browsing, E-mail, Fax, Text messaging and similar functions available today on many cellular telephones. We call this combination of services "Infotainment."

Since our inception, we have devoted our activities to the following:

|_| Securing our agreements with the necessary third party data providers with regards to our Product
|_| Developing our marketing strategy |_| Created our prototype hardware equipment necessary to the UIS concept |_| Securing the required manufacturing planning and implementation of our proprietary hardware in Taiwan ROC |_| Determining the market for our products and our manufacturing activities;
|_| Developing a marketing plan; and |_| Networking and indentifying future customers and projects.

Results of Operations

We have generated no revenues during the period from inception on April 14, 2008 to July 31, 2009.

Development stage operating expenditures during the period from inception on April 14, 2008 to July 31, 2009 were $505,068, which consisted of general and administrative expenses related to our formation and legal, accounting and other start-up costs of $226,769, compensation expense of $219,746, and research and development expense of $39,500.

Other expenses aggregated $19,053 (net) and consisted primarily of interest expense of $19,265.

Liquidity and Capital Resources

Our principal capital resources have been acquired through the sale of $137,456 of our common stock, net of offering costs and net advances from our founder aggregating $87,448.

At July 31, 2009, we had total assets of $58,008 consisting of cash, prepaid expenses, property and equipment, deposits and intangibles.

At July 31, 2009, our total liabilities were $213,562, consisting primarily of accounts payable of $33,309, accrued compensation of $52,497, amounts due to officer aggregating $88,823, and a note payable of $21,828.

We anticipate taking the following actions during the next 12 months, assuming we receive the required funding:

                                                            Time After
                              Expected Manner of            Receiving
                              Occurrence or                 Funding When Step
                              Method of                     Should be
Milestone or Step             Achievement                   Accomplished                     Cost of Completion
-------------------------     -------------------------     -------------------------     -------------------------
Purchase office furniture     Hire employees and begin              2 Months
      and computers                    training                                           $                  60,000

Software from Microsoft          Locate appropriate                2-3 Months
    and GIS software           vendors to purchase the
   providers including            software's needed.
    Advance Graphics
 Corporate editions from
 Maya, Adobe, and others.                                                                 $                 470,000

Formation and set up of       Find and lease location               4 Months
   company and lab in           for company offices &
        Taiwan ROC               laboratory purchase
                                 equipment, and hire
                                      employees.
Contract out the various      Choose among the 30 OEM               5 Months
  Components needed in         factories those that can
    creating the UIS           produce the UIS Hardware
  Hardware in Taiwan ROC          in our time table.                                      $                 540,000

Start Operations on the           Sign Imagery and                 2-4 Months                     $ 647,385
 development of the North      Navigable Data contracts                                    (This cost covers staff
  America module of UIS          with vendors, begin                                          labor on the USA
                                      processing                                               images and USA
                                                                                              office expenses)

  Start Marketing Phase       Develop Sales Materials,              6 Months
                                 Start Mailings and
                                Product Presentations                                     $                 450,000


  Begin testing of the           Test hardware and                  7 Months
          North                 software, prepare the
   America UIS Module           UIS calling centers,
                               field test UIS, present
                                   UIS to the OEMs.                                       $                  10,000

  Begin production of            Test Hardware Load                6-7 months
 Hardware for the Middle       software and deliver to
      East in Taiwan               the Distributor
                                 In the Middle East                                       $               1,368,000

Order UIS Hardware from        Finish and Ship UIS to               8 Months
   UISC TW for the USA                   USA
 market, begin by placing     Work with distributors -
   3,000 units in the           set the logistics for
     market via pre-              the distribution                                            Cost for initial
 contracted Electronics         Channel, begin trade                                             3000 Units
       Distributors            shows presence, media,                                        To USA expected at:
                                and print advertising.                                           $2,750,000

 Contract with national          Offers premiums in                 6 Months
   brands distributors         marketing and sales to
                               each major Electronics
                                 Distributor in each
                                State so that market
                               penetration be achieved.                                   $                 100,000

Cash Requirements

We intend to provide funding for our activities, if any, through a combination of the private placement of our equity securities and the public sales of equity securities. At July 31, 2009, our Chairman had net advances to us aggregating $87,448. He has indicated that he does not intend to make additional advances to us in the future. These funds were obtained by him through loans from his parents pursuant to an oral agreement which bears no interest and is repayable as mutually agreed with no due date. However, the advances from our Chairman to us bear interest at the rate of 5%, and thus our Chairman will receive additional compensation as a result. At July 31, 2009, the accrued interest owed our Chairman was 4,305.

We are a development stage company. We have generated no revenues to date. Our auditors have raised substantial doubt as to our ability to continue as a going concern. Although we will need only approximately $200,000 to $250,000 to remain in business during the next 12 months with minimal operations, we need approximately $6,395,385 during the next 12 months to implement our business plan as described above. The Company is in the process of attempting to raise an additional $200,000 through the sale of its common stock in a private placement offering. The offering is scheduled to run through November 30, 2009. If the offering is successful and the targeted equity goal is raised, this additional funding will permit us to sustain minimal operations until approximately August, 2010. We have no agreement, commitment or understanding to secure any such funding from any other source.

There is uncertainty regarding our ability to commence operations or implement our business plan without additional financing. We have a history of operating losses, limited funds and no agreements, commitments or understandings to secure additional financing. Our future success is dependent upon our ability to commence operations, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to commence operations, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse affect on our ability to continue in business and implement our business plan.

Commitments

On July 15, 2008, we entered into a sub-lease agreement with Universal Global Corp. whose President is Emanuel Pavlopoulos, our Chairman, for corporate offices under terms of a non-cancelable operating lease. The lease term is from July 16, 2008 through October 31, 2013 and requires an escalating monthly lease payment over the term of the lease ranging from $3,149 to $3,615. The lease required a $7,231 security deposit. The landlord has orally agreed to allow us to assume the obligations under the lease directly following the dissolution of Universal Global Corp.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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