U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM ______________TO_______________
COMMISSION FILE NUMBER 0-25380
ULTRADATA SYSTEMS, INCORPORATED
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 43-1401158
----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1240 Dielman Industrial Court, St. Louis, MO 63132
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (314) 997-2250
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities 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.
Class Outstanding as of November 3, 2003
-----------------------------------------------------------------------
Common, $.01 par value 5,394,645
Transitional Small Business Disclosure Format Yes [ ] No [X]
File Number
0-25380
ULTRADATA SYSTEMS, INCORPORATED
FORM 10-QSB
September 30, 2003
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets at September 30, 2003 (unaudited) and
December 31, 2002 3.
Statements of Operations for the three month and nine
month periods ended September 30, 2003 and 2002
(unaudited) 4.
Statements of Cash Flows for the nine months ended
September 30, 2003 and 2002 (unaudited) 5.
Notes to Financial Statements 6.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8.
PART II - OTHER INFORMATION 11.
Signatures 11.
Certification 12.
-2-
ULTRADATA SYSTEMS, INCORPORATED
Balance Sheets
As of September 30, 2003 and December 31, 2002
September 30, December 31,
2003 2002
-------------------------------
Assets (Unaudited)
Current assets:
Cash $ 23,295 $ 37,842
Trade accounts receivable, net of
allowance for doubtful accounts of
$16,103 131,922 141,599
Inventories, net 159,603 102,486
Prepaid expenses 13,507 4,562
--------- ---------
Total current assets 328,327 286,489
Property and equipment, net 30,310 45,432
Notes receivable - long term - 247,933
Other assets 5,444 5,444
--------- ---------
Total assets $ 364,081 $ 585,298
========= =========
Liabilities and Stockholders' Deficiency
Current liabilities:
Accounts payable $ 220,207 $ 277,828
Accrued liabilities 149,353 188,825
Notes payable - current 519,389 126,064
--------- ---------
Total current liabilities 888,949 592,717
Long term liabilities:
Notes payable - long term - 434,202
--------- ---------
Total liabilities 888,949 1,026,919
Stockholders' deficiency:
Preferred Stock, $0.01 par value,
4,996,680 shares authorized, none
outstanding - -
Series A convertible preferred stock,
3,320 shares authorized with a stated
value of $1,000, none and 16 shares
outstanding - 16,000
Common stock, $.01 par value;
10,000,000 shares authorized;
5,153,281 and 4,224,456 shares issued
and outstanding 51,533 42,244
Additional paid-in capital 8,857,770 9,631,750
Accumulated deficit (9,415,612) (9,086,935)
Treasury stock (326,171 shares at cost) - (942,311)
Notes receivable issued for purchase
of common stock (18,559) (102,369)
--------- ---------
Total stockholders' deficiency (524,868) (441,621)
--------- ---------
Total liabilities and stockholders' deficiency $ 364,081 $ 585,298
========= =========
See accompanying summary of accounting policies and notes to financial
statements.
-3-
ULTRADATA SYSTEMS, INCORPORATED
Condensed Statements of Operations
For the three and nine months ended September 30, 2003 and 2002 (unaudited)
Three months Nine months
ended ended
September 30, September 30
2003 2002 2003 2002
---------------- ---------------
(unaudited) (unaudited)
Net sales $ 314,763 $ 354,123 $1,112,576 $1,428,526
Cost of sales 193,499 333,326 576,705 1,116,611
--------------------- ---------------------
Gross profit 121,264 20,797 535,871 311,915
Operating Expenses:
Selling expense 48,557 32,840 100,584 93,076
General and administrative
expenses 186,235 208,183 665,784 817,976
Research and development
expense 6,561 55,365 42,066 168,734
--------------------- ---------------------
Total operating expenses 241,353 296,388 808,434 1,079,786
--------------------- ---------------------
Operating loss (120,089) (275,591) (272,563) (767,871)
Other income (expense):
Interest and dividend income 39 810 6,390 8,031
Interest expense (28,048) (18,220) (138,085) (57,038)
Loss on early retirement of
note receivable - - (57,813) -
Settlement of legal dispute 127,012 - 127,012 -
Other, net 25 (6,834) 6,382 (6,690)
--------------------- ---------------------
Total other income
(expense), net 99,028 (24,244) (56,114) (55,697)
Loss before income taxes (21,061) (299,835) (328,677) (823,568)
Income tax - - - -
--------------------- ---------------------
Net loss (21,061) (299,835) (328,677) (823,568)
Less preferred stock dividends (8,790) - (8,790) -
--------------------- ---------------------
Net loss available to common
shareholders $ (29,851) $ (299,835) $ (337,467) $ (823,568)
===================== =====================
Loss per share-basic and
diluted $ (0.01) $ (0.09) $ (0.07) $ (0.24)
===================== =====================
Weighted Average Shares
Outstanding:
Basic and diluted 4,865,974 3,432,591 4,665,004 3,409,719
===================== =====================
See accompanying summary of accounting policies and notes to financial
statements.
-4-
ULTRADATA SYSTEMS, INCORPORATED
Condensed Statements of Cash Flows
Nine months ended September 30, 2003 and 2002 (unaudited)
2003 2002
---------------------------
(unaudited)
Cash flows from operating activities:
Net loss $ (328,677) $ (823,568)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities
Depreciation and amortization 25,272 128,784
Provision for doubtful accounts 225 -
Inventory reserved for obsolescence 17,018 186,510
Stock issued for services 4,500 -
Loss on disposal of fixed asset - 6,873
Loss on early settlement of notes receivable 57,813 -
Non-cash accrued interest receivable (12,397) -
Increase (decrease) in cash due to changes
in operating assets and liabilities:
Trade accounts receivable 9,452 282,253
Inventories (74,135) 393,646
Prepaid expenses and other current assets (8,945) (365)
Accounts payable (57,621) (34,179)
Accrued expenses (39,472) (125,931)
--------- ---------
Net cash (used in) provided by operating
activities (406,967) 14,023
--------- ---------
Cash flows from investing activities:
Proceeds from early settlement of notes
receivable 202,517 -
Capital expenditures (10,150) (5,622)
--------- ---------
Net cash provided by (used in) investing
activities 192,367 (5,622)
--------- ---------
Cash flows from financing activities:
Proceeds from stock issued for cash and
options exercised 91,910 -
Proceeds from notes payable issued 91,600 -
Preferred dividends paid (8,790) -
Subscription payments 83,810 59,187
Principal payments on notes payable (58,477) (82,030)
--------- ---------
Net cash provided by (used in) financing
activities 200,053 (22,843)
--------- ---------
Net decrease in cash and cash equivalents (14,547) (14,442)
Cash and cash equivalents at beginning of
period 37,842 164,682
--------- ---------
Cash and cash equivalents at end of period $ 23,295 $ 150,240
========= =========
Non-Cash Investing and Financing Activities:
During the nine months ended September 30, 2003, the Company issued 683,076
shares of common stock to satisfy convertible debt aggregating to $90,000
See accompanying summary of accounting policies and notes to condensed
financial statements.
-5-
ULTRADATA SYSTEMS, INCORPORATED
September 30, 2003
Summary of Significant Accounting Policies
Note 1. Basis of Presentation and Significant Accounting Policies
(A) Basis of Presentation
The accompanying unaudited condensed financial statements of Ultradata
Systems, Incorporated (the "Company") have been prepared pursuant to the
rules of the Securities and Exchange Commission (the ?SEC?) for quarterly
reports on Form 10-QSB and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
condensed financial statements and notes herein are unaudited, but in the
opinion of management, include all the adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the Company?s
financial position, results of operations, and cash flows for the periods
presented. These financial statements should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 2002 as filed with the
SEC on March 28, 2003. Interim operating results are not necessarily
indicative of operating results for any future interim period or for
the full year.
(B) Revenue Recognition
During 2003, the Company began performing consulting services for another
company that operates in a different field. The consulting services are being
performed by a few of the Company's personnel in order to generate additional
revenue and amounted to approximately $80,000 for the nine months ended
September 30, 2003. The Company recognizes revenue from these services
as the services are performed. Segment information has not been provided
because it is not practical at this early stage and the consulting revenue
is less that that required for segment reporting.
(C) Concentrations
During the nine months ended September 30, 2003, the Company relied on
two customers for approximately 61% of sales.
Note 2. Inventories
Inventories consist of the following:
September 30, December 31,
2003 2002
------------ ------------
(Unaudited)
Raw Materials, net of obsolete
inventory $ 38,758 $ 46,015
Finished Goods, net of obsolete
inventory 20,844 56,471
----------- ----------
Total inventory $ 159,602 $ 102,486
========== =========
Obsolete inventory on hand $ 867,216 $1,110,684
========== =========
Note 3. Notes Payable
In January 2003, the Company authorized a private debt offering of
secured 12% promissory notes limited to $200,000 with a due date of July 31,
2003. For each dollar loaned to the Company, the lender was also entitled to
purchase two shares of the Company?s common stock for $.01 per share. These
shares are restricted for one year from the date of issue. In January
2003, the Company issued an aggregate of $165,000 of promissory notes and
received $3,300 from the sale of 330,000 common shares for aggregate proceeds
of $168,300. The shares were treated as a discount to the private offering,
and the shares were valued at $76,700 based on the market price on the dates
the funds were received (See Note 4 (B)). Accordingly, $91,600 is deemed to
have been received for the promissory notes. The $73,400 discount from the
face value of the promissory notes is being amortized over the life of the
promissory notes as additional interest expense.
All of the proceeds raised under the offering are to be maintained in an
escrow account maintained by the Company's attorney. Once the Company receives
a purchase order from either of two specified customers, the Company can draw
down 70% of the purchase-order amount from the escrow account in order to
purchase the product from a vendor. Once the revenue from the sale is
received, the "draw down" funds are to be returned to the escrow account and
the Company retains the balance of the sales proceeds.
On July 31, the notes were retired or extended at the option of the
lender. Accordingly, $15,000 of principal was repaid and all accrued interest
was paid in cash to lenders. The balance of $150,000 was extended for 3
months at the same interest rate (12% per annum) and an additional share of
stock at a price of $.01 per dollar loaned. Accordingly, $136,500 is deemed
to have been received for the promissory notes. The $13,500 discount from
the face value of the promissory notes is being amortized over the life of
the promissory notes as additional interest expense. During the nine months
ended September 30, 2003, the Company recognized interest expense of $84,011.
Note 4. Stockholder's Deficiency
(A) Preferred Stock
The preferred shares, including accumulated dividends, were eligible for
conversion into common shares on or before May 13, 2003 at 75% of the 5-day
average closing bid price. As of that date, the preferred shares had
accumulated dividends of $8,790. Per an agreement with the sole preferred
stockholder, the conversion right was exchanged for a note payable in the
amount of $24,790 and was paid in full by September 30, 2003 in order to
avoid the burden to the share price from the further dilution of
approximately 400,000 shares.
(B) Common Stock
During the nine months ended September 30, 2003, the Company issued
30,000 shares of common stock for services having a fair market value of
$4,500.
During the nine months ended September 30, 2003, convertible debt holders
converted $90,000 of convertible notes payable into 741,996 shares of common
stock.
During the nine months ended September 30, 2003, options were exercised
to purchase 3,000 shares of common stock for gross proceeds of $210.
During the nine months ended September 30, 2003, the Company issued
480,000 shares of common stock having a fair market value of $91,700 based on
the closing market price on the date the shares were issued. The shares were
issued as part of a private debt offering (See Note 3).
(C) Subscriptions Receivable
During the nine months ended September 30, 2003, the Company
received $83,810 towards subscription receivables due from employees of the
Company.
(D) Treasury Stock
During the nine months ended September 30, 2003, the Company retired all
326,171 shares of its treasury stock having a cost of $942,311. Accordingly,
the amount has been reclassified to Additional paid-in capital.
-6-
Note 5. Going Concern
As shown in the accompanying condensed financial statements, the Company
has a net loss of $328,677, a negative cash flow from operations of $406,967,
a working capital deficiency of $561,622 and a stockholders' deficiency of
$524,868 as of and for the nine months ended September 30, 2003. These
factors raise substantial doubt about the Company?s ability to continue as a
going concern.
The Company has continued its product design and development efforts to
introduce new products in 2003 and introduced its Talking Road Whiz in March
2003 and the AAA Talking Road Navigator in August 2003. The Company also c
ontinues its efforts to expand into new markets. In addition, the Company
has obtained short-term loans from investors to fund operations during the
launching of this new product until revenues from its sales are received
(See Note 3 of the accompanying condensed financial statements). Management
believes that actions presently taken to obtain additional funding provide
the opportunity for the Company to continue as a going concern.
Note 6. Subsequent Events
A. On October 1, 2003 the Company amended the terms of outstanding
convertible notes by agreement with the note holders. The Company agreed to
pay a lump sum of $100,000 by January 6, 2004 and another by February 15,
2004 and to retire the entire balance by June 30, 2004. In exchange for that
commitment, the note holders agreed to waive the 10% prepayment penalty in
the notes. The amendment was made to facilitate the Company's plan, which
is to retire the notes at the earliest opportunity in order to avoid further
dilution of the common stock and reduce interest expense.
B. Since September 30, 2003, convertible debt holders converted $25,120
of convertible notes payable into 241,364 shares of common stock.
C. Since September 30, 2003, the Company has paid off the notes payable
(See Note 3 above) in the amount of $154,700, including all principal and
interest.
-7-
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
YOU SHOULD NOT RELY ON FORWARD LOOKING STATEMENTS
This quarterly report contains a number of forward-looking statements
regarding our future prospects. Among the forward-looking statements are
descriptions of our plans to introduce new products to the market, to expand
our customer base, to develop products based on a GPS/Internet technology,
and to return our company to profitability. These forward-looking statements
are a true statement of our present intentions, but are neither predictions
of the future nor assurances that any of our intentions will be fulfilled.
Many factors beyond our control could act against Ultradata in its efforts to
develop and market its products. Among these factors are:
* The fact that our financial resources are minimal and will not
sustain us past this year unless our new products are successful;
* The fact that our lack of capital severely limits our ability to
market our products. As a result, the loss of a significant
customer could imperil the marketing of an entire product line;
* The difficulty of attracting mass-market retailers to seasonal
products like the Road Whiz(tm) product line; and
* The breadth and depth of competition in the GPS market, which will
make introduction of our product with a limited marketing budget
difficult.
There may also be factors that we have not foreseen which could
interfere with our plans. In addition, changing circumstances may cause us
to determine that a change in plans will be in the best interests of
Ultradata. For this reason, you should not place undue reliance on any of
the forward-looking statements in this report, as there is a significant risk
that we will not be able to fulfill our expectations for Ultradata.
-7-
OVERVIEW
Since 1987 we have been engaged in the business of manufacturing and
marketing handheld computers that provide travel information. The products
are based upon a data compression technology that we developed, portions of
which we have patented. Recent developments in communications technology have
opened up new opportunities for us to use our technology. The following
paragraphs outline the scope of our operations:
* The Company has sold over 3 million of its low-cost handheld
travel computers, demonstrating that there is a market for travel
information products. To re-awaken that market with an improved
product that speaks, the Company has developed a Talking Road
Whiz. Deliveries of this product began in March of 2003, and the
Company expects to receive significant revenue in 2003 from sales
of this new addition to its product line. It has a contract with
a major distributor providing exclusivity in certain channels if
300,000 units are purchased and delivered by March 31, 2004.
Fulfillment of this agreement with delivery of 300,000 units
would ensure good profitability for the Company and sufficient
cash and earnings to solve our liquidity issues.
* In 2002 we shipped the reprogrammed beta-test units of our
Travel*Star 24(tm), which combines our travel information with a
GPS antenna to enable a driver to obtain his location and
directions to his destination while he drives. Improved
performance was obtained, but the tests revealed several software
problems that have to date prevented marketing of the product.
The software issues have been addressed, and the Company plans
to test the market acceptability of the product prior to year end.
* The Company continues to sell its line of both branded and private-
labeled, low-cost travel computers. In the third quarter of 2003,
the Company launched its new AAA Talking Road Navigator that adds
a voice to its traditional unit for prompting the user and for
providing the data. The marketing agreement with AAA for this
branded product was signed in August 2003.
Each of our consumer products is designed to allow the consumer to
access useful information stored in a convenient manner. Our handheld
computers generally sell at retail prices between $19.95 and $49.95 per unit.
The products have been in retail mass-market chains plus many other locations.
The new TRAVEL*STAR 24 is expected to be offered at retail for under $400,
which should make it very competitive in the auto aftermarket. Its
portability and the fact that it requires no elaborate installation offer
advantages over the more expensive in-car systems.
-8-
RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 2003 Compared to Three and
Nine Months Ended September 30, 2002
Operating results for the third quarter of 2003 were comparable to
the third quarter of 2002.
Sales. During the three and nine months ended September 30,2003,
net sales totaled $314,763 and $1,112,576, respectively, compared with
$354,123 and $1,428,526, respectively for the same periods in 2002. These
figures represent decreases of 11.1% and 22.1% for the three- and nine-month
periods, respectively. The decrease is primarily due to the delay in
introducing the AAA Talking Road Navigator, resulting in lower-than expected
third-quarter sales in 2003 for that new product.
Backlog. As of September 30,2003, the backlog for delivery in the
fourth quarter 2003 was $692,730, as compared with $5,087 as of September 30,
2002.
Gross Profit. Gross profit for the three- and nine-month periods
ending September 30, 2003 were 38.5% and 48.2%, respectively as compared to
5.9% and 21.8%, respectively, for the corresponding periods in 2002. There
was a September 2002 write-off of obsolete inventory of $90,000, which
affected both numbers adversely for 2002. Without the September write-down,
gross margins would have been 31.3% and 28.1% for the three- and nine-month
period, respectively. The 2003 numbers reflect improvements due to the
introduction of a new product and continuing reductions in component prices.
SG&A Expense. Selling expenses for the three- and nine-month periods
ended September 30, 2003 were $48,557 and $100,584, respectively, compared
with $32,840 and $93,076, respectively, for the corresponding periods in 2002.
These figures represent increases of 47.9% and 25.0%, respectively, for the
three- and nine-month periods in 2003 versus 2002. As a percent of sales,
selling expenses for the periods in 2003 were 15.4% and 9.0%, respectively as
compared to 9.3% and 6.5% for the same periods in 2002. The primary reason
for the increase is the expense of designing new packaging materials for the
new products, AAA Talking Road Navigator and Talking Road Whiz. General and
administrative expenses for the three- and nine-month periods ended September
30, 2003 were $186,235 and $665,784, respectively, compared with $208,183 and
$817,976, respectively, for the corresponding periods in 2002. These figures
represent decreases of 10.5% and 21.30%, respectively, for the three- and
nine-month periods in 2003 versus 2002. The Company has been continuing its
effort to reduce expenses. Success in reducing these costs is important to
the continuing survival of the Company.
R&D Expense. Research and development expense in the three-month
period ended September 30,2003 decreased 88.1%, and for the nine-month period
they decreased 75.1% compared with corresponding periods in 2002. These
reductions reflect a continuing effort to reduce expenses and the completion
in 2002 of the amortization of the TRAVEL*STAR 24? capitalized software tools
and the completion of the AAA Talking Road Navigator development.
The Company posted a net loss from operations of ($120,089) and
($272,563) for the three- and nine-month periods ended September 30, 2003,
respectively, compared to a net loss from operations of ($275,591) and
($767,871) for the corresponding periods in 2002, illustrating our progress
toward profitability.
Other Income. Other income (expense) for the three- and nine-month
periods ended September 30, 2003 totaled $99,028 and ($56,114), respectively,
compared with ($24,244) and ($55,697), respectively, for the corresponding
periods of 2002. The large improvement in the current quarter is due to a
one-time arbitration settlement received from auditors who withdrew in 2001.
As a result of the foregoing, the Company posted a net loss
available to common stockholders of ($29,851), or ($0.01) per basic and
diluted common share, for the three-month period ended September 30, 2003,
compared to a net loss available to common stockholders of ($299,835), or
($0.09) per basic and diluted common share, for the three-month period ended
September 30, 2002. The Company posted a net loss available to common
stockholders of ($337,467), or ($0.07) per basic and diluted common share,
for the nine-month period ended September 30, 2003, compared to a net loss
available to common stockholders of ($823,568), or ($0.24) per basic and
diluted common share, for the nine-month period ended September 30, 2002.
-9-
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 2003, the Company had $23,295 in cash, compared to
$37,842 at December 31, 2002. The Company's operating activities in the nine
months ended September 30, 2003, used cash totaling $406,967. Losses for the
first nine months of the year of $328,677 included non-cash items for
depreciation and amortization amounting to $25,272, loss on early retirement
of notes receivable from Talon of $57,813, and in inventory reserve for
obsolescense of $17,018. Losses were offset by reductions in accounts
receivable of $9,452. Inventory increases of $74,135, reductions in accounts
payable of $57,621, increases in accrued expenses of 39,471 and in prepaids
of $8,945 added to the cash used in the period.
Net cash provided by investing activities included $202,517 from
early pay-off of the Talon notes offset by $10,150 in capital expenditures.
Net cash provided by financing activities for the nine-month period
ended September 30, 2003, was $200,053 compared with ($22,843) used in the
same period of 2002. During 2003, proceeds from the sale of stock and
exercise of options amounted to $91,910, $91,600 from short- term notes and
$83,810 in payments from employees for loans to buy company stock. These
payments are offset by payments against notes payable of $58,477.
Our operating losses over the past four years have eliminated our
working capital. In the first quarter of 2003 we completed a private offering
of debt and equity, and obtained $168,300 in proceeds. These funds are held
in escrow pending receipt of purchase orders from certain of the Company's
customers. Up to 70% of the value of these purchase orders is available for
use by the Company, and funds must be placed back in escrow upon receipt by
the Company in payment for the orders. Management expects these funds to be
sufficient to support operations until sales of the Talking Road Whiz begin
producing significant cash flow in the latter half of the year. The notes
were due and payable July 31, 2003. The Company offered the note holders the
opportunity to extend their loans to October 31, 2003 with the same interest
terms and the right to purchase an additional share per dollar loaned for
$.01. Over 90% of the value of the notes has been extended. These notes
were repaid in full on October 31, as planned, from proceeds of fourth-
quarter sales.
Because the Company has reduced its costs of doing business and
expects significant sales in the fourth quarter, Management expects the
financial picture to continue to improve greatly over the course of 2003.
However, if the anticipated sales for the rest of 2003 fail to materialize,
we will not have sufficient financial resources to carry the Company into
2004.
As shown in the accompanying condensed financial statements, the
Company has a net loss available to common stockholders of $337,467, a
negative cash flow from operations of $406,967, a working capital deficiency
of $561,622 and a stockholders' deficiency of $524,868 as of and for the nine
months ended September 30, 2003. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
The Company has continued its product design and development efforts
to introduce new products in 2003 and introduced its Talking Road Whiz in
March 2003 and the AAA Talking Road Navigator in August 2003. The Company
also continues its efforts to expand into new markets. In addition, the
Company has obtained short-term loans from investors to fund operations during
the launching of this new product until revenues from its sales are received
(See Note 3 of the accompanying condensed financial statements). Management
believes that actions presently taken to obtain additional funding provide
the opportunity for the Company to continue as a going concern.
Item 3. Controls and Procedures
Monte Ross, our Chief Executive Officer, and Ernest Clarke, our Chief
Financial Officer, performed an evaluation of the Company's disclosure
controls and procedures as of September 30, 2003. Based on their evaluation,
they concluded that the controls and procedures in place are sufficient to
assure that material information concerning the Company which could affect
the disclosures in the Company's quarterly and annual reports is made known
to them by the other officers and employees of the Company, and that the
communications occur with promptness sufficient to assure the inclusion of
the information in the then-current report.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect those controls subsequent
to the date on which Messrs. Ross and Clarke performed their evaluation.
-10-
ULTRADATA SYSTEMS, INCORPORATED
10QSB
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities and Use of Proceeds:
On July 31, 2003, the Company sold 150,000 shares of common stock
to eleven individuals who hold promissory notes issued by the
Company. The shares were sold for $.01 per share and the agreement
of the note holders to extend the maturity date of their notes from
July 31, 2003 to October 31, 2003. The shares were sold in reliance
on Section 4(2) and Section 4(6) of the Securities Act, since the
note holders were accredited investors and the offer was made
privately to them.
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:
Exhibits:
31 Rule 13a-14(a) Certification
32 Rule 13a-14(b) Certification
Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 1, 2003 /s/ Monte Ross
-----------------------------------
Monte Ross, CEO
(Chief executive officer)
/s/ Ernest S. Clarke
-----------------------------------
Ernest S. Clarke, President
Principal financial and accounting
officer)
-11-
EXHIBIT 31: Rule 13a-14(a) CERTIFICATION
I, Monte Ross, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ultradata
Systems, Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements and other
financial information included in this report fairly present in all material
respects the financial condition, results of operations and cash flows of the
small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the small
business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
5. The small business issuer's other certifying officers and I have
disclosed, based on our most recent evaluation of internal controls over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons p
erforming the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which
are reasonably likely to adversely affect the small business
issuer's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal controls over financial reporting.
Date: November 1, 2003 /s/ Monte Ross
-----------------------------------
Monte Ross, Chief Executive Officer
I, Ernest Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ultradata
Systems, Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements and other
financial information included in this report fairly present in all material
respects the financial condition, results of operations and cash flows of the
small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the small
business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
5. The small business issuer's other certifying officers and I have
isclosed, based on our most recent evaluation of internal controls over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which
are reasonably likely to adversely affect the small business
issuer's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business
issuer's internal controls over financial reporting.
Date: November 1, 2003 /s/ Ernest S. Clarke
-------------------------------
Ernest Clarke, President and Chief
Financial Officer
* * * * *
EXHIBIT 32: Rule 13a-14(b) CERTIFICATION
The undersigned officers certify that this report fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934, and
that the information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of Ultradata
Systems Incorporated.
A signed original of this written statement required by Section 906 has been
provided Ultradata Systems, Incorporated and will be retained by Ultradata
Systems, Incorporated and furnished to the Securities and Exchange Commission
or its staff upon request.
November 1, 2003 /s/Monte Ross
--------------------------
Monte Ross
(Chief executive officer)
/s/ Ernest S. Clarke
----------------------------
(President and Chief financial
officer)
-12-