Attached files
| file | filename |
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| EX-32.1 - EXHIBIT312 - UNIVERSAL TRACKING SOLUTIONS, INC | exhibit312.htm |
| EXCEL - IDEA: XBRL DOCUMENT - UNIVERSAL TRACKING SOLUTIONS, INC | Financial_Report.xls |
| EX-31.1 - EXHIBIT311 - UNIVERSAL TRACKING SOLUTIONS, INC | exhibit311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011
o Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number 0-131224
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Universal Tracking Solutions, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
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NEVADA
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20-5249860
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification No.)
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3317 S. Higley Road, Suite 114-475
Gilbert, AZ 85297
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(Address of Principal Executive Offices)
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(480) 855-8877
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(Issuer's Telephone Number, Including Area Code)
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N/A
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(Former Name, Former Address and Former Fiscal Year, If changed since Last Report)
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Indicate by check mark whether the issuer (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 for the past 90 days. Yes o No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares outstanding of each of the Registrant’s classes of common stock, as of June 30, 2011 was 22,124,373 shares, all of one class, $0.0001 par value per share.
UNIVERSAL TRACKING SOLUTIONS, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011
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PART I
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| Item 1. Financial Statements | F - 1 |
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F-1
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F-2
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F-3
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F-4
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4
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5
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| Item 4. Controls and Procedures | 5 |
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PART II
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Item 1. Legal Proceedings
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6
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Item 1A. Risk Factors
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6
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| tem 2. Unregistered Sale of Equity Securities and Use of Proceeds |
6
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Item 3. Defaults Upon Senior Securities
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6
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Item 4. Removed and Reserved
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6
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Item 5. Other Information
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6
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Item 6. Exhibits
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6
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PART I
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL TRACKING SOLUTIONS, INC.
JUNE 30, 2011 AND DECEMBER 31, 2010
(Unaudited)
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2011
(unaudited)
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2010
(unaudited)
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|||||
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Current Assets:
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||||||
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Cash
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$
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12,002
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$
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12,045
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Accounts Receivable
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105,001
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71,193
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Inventory
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9,556
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740
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Other Current Assets
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4,869
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Total Current Assets
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126,559
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88,847
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Property and Equipment, net
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1,738
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1,738
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Other Assets:
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15,120
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35,069
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Total Assets
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143,417
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125,654
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Current Liabilities:
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Accounts Payable
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41,951
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42,051
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Notes Payable, Short Term
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36,136
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30,718
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Unearned Access Revenue
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76,556
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75,884
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Accrued Liabilities
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7,972
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10,331
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Total Current Liabilities
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162,615
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158,984
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Long Term Liabilities
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Notes payable, Long term
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19,500
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20,000
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Unearned Access Revenue
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29,840
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32,984
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Total Long Term Liabilities
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49,340
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52,984
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Total Liabilities:
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211,955
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211,968
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Stockholders’ Equity (Deficit):
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Common stock at $0.0001 par value; 100,000,000 shares authorized; issued and outstanding: 22,124,373 shares June 30, 2011; 20,124,373 December 31, 2010
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2,212
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2,012
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Additional pay-in capital
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552,187
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551,087
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Accumulated deficit
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(622,937
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)
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(639,413
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)
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Stockholders’ Equity
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(68,538
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)
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(86,314
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)
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Total Liabilities and Stockholders’ Equity:
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$
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143,417
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125,654
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See accompanying notes to these financial statements.
UNIVERSAL TRACKING SOLUTIONS, INC.
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(Unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2011
(unaudited)
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2010
(unaudited)
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2011
(unaudited)
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2010
(unaudited)
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Revenue
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$ | 166,259 | $ | 144,113 | $ | 284,151 | $ | 314,948 | |||||
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Cost of Revenue
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81,019 | 106,404 | 163,640 | 219,550 | |||||||||
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Gross Profit
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85,240 | 37,709 | 120,511 | 95,398 | |||||||||
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Operating Expenses:
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General and Administrative
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48,996 | 34,930 | 96,614 | 75,704 | |||||||||
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Professional Fees
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1,429 | 600 | 3,447 | 2,648 | |||||||||
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Miscellaneous Expense
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139 | 3,452 | 244 | 3,734 | |||||||||
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Total Operating Expenses
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50,564 | 38,982 | 100,305 | 82,086 | |||||||||
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Other Income (Expense)
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Miscellaneous Income
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|||||||||||||
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Interest Income (Expense)
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(980 | ) | (2,954 | ) | (3,730 | ) | (4,434 | ) | |||||
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Total Other Income (Expense)
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(980 | ) | (2,954 | ) | (3,730 | ) | (4,434 | ) | |||||
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Net Income (Loss)
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33,696 | (4,227 | ) | 16,476 | 8,878 | ||||||||
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Basic and diluted loss per share
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$ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
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Weighted average number of common shares outstanding
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22,124,373 | 20,124,373 | 21,791,040 | 20,124,373 | |||||||||
See accompanying notes to these financial statements.
UNIVSERSAL TRACKING SOLUTIONS, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(Unaudited)
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2011
(unaudited)
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2010
(unaudited)
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Net income (loss)
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$
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16476
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$
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8,878
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Adjustments to reconcile net loss to net cash flows from operating activities:
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Accounts receivable
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(33,808
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)
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(6,195
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)
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Inventory
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(8,816
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)
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10,487
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Other current assets
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4,869
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1,106
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Accounts payable
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(100
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(16,171
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)
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Notes payable, short term
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5,418
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(800
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)
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Unearned access revenue
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672
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15,288
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Accrued liabilities
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(2,359
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(13,789
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)
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Total adjustments
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(34,124
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(10,074
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)
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Net cash flows from operating activities
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(17,648
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)
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(1,196
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)
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Cash Flows From Investing Activities
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Purchase of property and equipment
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-
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-
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Other assets
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19,949
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-
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Net cash flows from investing activities
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19,949
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-
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Cash Flows From Financing Activities
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Proceeds from notes payable
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(500
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)
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100
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Unearned access revenue
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(3,144
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(6,889
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Proceeds from sale of common stock
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1,300
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Net cash provided by financing activities
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(2,344
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)
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(6,789
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Net Change in Cash
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(43
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(7,985
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)
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Cash, Beginning of the Period
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12,045
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28,983
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Cash, End of the Period
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$
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12,002
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$
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20,998
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See accompanying notes to these financial statements.
UNIVERSAL TRACKING SOLUTIONS, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 2011
Note A - Nature of Operations and Basis of Presentation
The accompanying June 30, 2011 consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the three and six months ended June 30, 2011 and for all periods presented have been made.
Nature of Operations
Universal Tracking Solutions, Inc. was incorporated on July 11, 2006 in the state of Nevada (“UTS”, or the “Company”). UTS is an application based solutions provider of telemetry tracking systems. UTS specialize in fleet management, law enforcement, and finance applications as well as the motorcycle and auto industries.
Merger
On May 2, 2008, the shareholders of UTS entered into a share exchange agreement with Dynamic Merger Shell, Inc. (later amended to substitute Dynamic Merger Sub, Inc.), a wholly-owned subsidiary of the Issuer. The share exchange agreement is included in a 14C filed with the Securities and Exchange Commission on September 18, 2008. The acquisition of UTS as a subsidiary of the Issuer was consummated on October 8, 2008.
The Share Exchange Agreement between Dynamic and the Shareholders of Universal Tracking Solutions, Inc. (the “Plan of Share Exchange”) generally provides for the following:
(1) Universal Tracking Solutions, Inc. will become a wholly-owned subsidiary of Dynamic Natural Resources, Inc. upon the execution of the terms of the Plan of Share Exchange and compliance with the requirements of the laws of Nevada with respect to share exchange transactions;
(2) Dynamic Natural Resources, Inc. shall issue and deliver to UTS shareholders Seven Million Eighty-Two Thousand Five Hundred (7,082,500) shares of Dynamic’s validly issued, fully-paid and non-assessable restricted Common Stock, $0.0001 par value per share in exchange for UTS’ shareholders’ transfer of their 64% ownership interest in UTS or 7,082,500 book entry shares of UTS common stock, $0.0001 par value per share (the "UTS Shares") constituting all of the issued and outstanding capital stock of UTS not owned by Dynamic Natural Resources, Inc., upon the terms, provisions, and conditions and for the consideration hereinafter set forth in the Share Exchange Agreement, and thereby making UTS a wholly-owned subsidiary of the Issuer;
(3) Upon the effectiveness of the Plan of Share Exchange, each outstanding share of Universal Tracking Solutions, Inc. will be converted into a single share of Dynamic Natural Resources, Inc. without any action on the part of the holder thereof;
(4) The Plan of Share Exchange shall be effected by the filing of respective articles and plans of share exchange with the State of Nevada Secretary of State;
(5) Dynamic Common Stock Certificates will be distributed after the Effective Date of the Plan of Share Exchange. The Effective Date will occur at least 20 days after the filing of an Information Statement with the SEC and at least 10 days after mailing of the Information Statement to the Issuer’s shareholders; and
(6) UTS shareholders of record as of May 1, 2008 are eligible to participate in the share exchange.
The determination of the exchange ratio in the share exchange was based on the relative degree of control UTS’ controlling shareholders agreed to relinquish in exchange for the potential benefits that ownership of a public issuer may offer, on the one hand, and, on the other hand, the assurance of continued opportunities to increase the value of Issuer holdings.
At the Effective Date of the share exchange, holders of UTS common stock ceased to be stockholders of UTS and will no longer have any rights as UTS stockholders, other than the right to receive the applicable consideration in the share exchange. After the Effective Date, there will be no transfers on UTS’ stock transfer books of any shares of UTS common stock.
The term sheet also contained a condition precedent to the Share Exchange Agreement that the Issuer shall have effected a reverse split of its common stock and have issued a stock dividend to the September 15, 2006 shareholders of the Issuer. These actions occurred in April 2008.
The merger was accounted for as a reverse acquisition and recapitalization. Universal Tracking Solutions is the acquirer for accounting purposes and Dynamic Natural Resources is the issuer. Accordingly, Universal Tracking Solutions’ historical financial statements for periods prior to the acquisition become those of the acquirer retroactively restated for the equivalent number of shares issued in the merger.
Basis of Presentation
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Product and service revenue and the related labor costs and payroll are recorded in the period in which services are performed or products are delivered. All revenues are accounted for once they are earned. Units Sales are reported upon delivery of the product and the month maintenance fees are recognized when service is provided. Customers typically pay for monitoring services on a monthly basis.
Accounts Receivable
UTS’ trade accounts receivable result from the sale of its products and services, and consist of private and public companies. UTS uses the allowance method to account for uncollectible accounts. Bad debt expense for the three months ended June 30, 2011 was $9,062.
Concentration of Credit Risk
Financial instruments, which potentially expose UTS to concentrations of credit risk consist principally of trade accounts receivable.
UTS’ trade accounts receivable result from the sale of its products and services to customers, and customers consist of public and private companies. In order to minimize the risk of loss from these companies, credit limits, ongoing credit evaluation of its customers, and account monitoring procedures are utilized. Collateral is not generally required. Management analyzes historical bad debt, customer concentrations, customer credit-worthiness, current economic trends, and changes in customer payment tendencies, when evaluating the allowance for doubtful accounts. UTS had one customer account for more than 10% of sales in the three month period ended June 30, 2011. That customer was Enterprise GPS, representing 10% of sales. UTS had one customer account for more that 10% of accounts receivable in the three months ended June 30, 2011, Enterprise GPS (10%).
The Company is obligated to pay the salaries, wages, related benefit costs, and expenses. Accordingly, the Company's ability to collect amounts due from customers could be affected by economic fluctuations in its markets or these industries.
Financial Instruments
UTS estimates that the fair value of all financial instruments at June 30, 2011 do not differ materially from the aggregate carrying value of its financial instruments recorded in the accompanying balance sheets.
Property and Equipment
Property and equipment are recorded at historical cost and include expenditures, which substantially increase the useful lives of existing property and equipment. Maintenance and repairs are charged to operations when incurred.
Depreciation of property and equipment is computed primarily using the straight-line method based on estimated useful lives (furniture and fixtures, 6 to 7 years, office equipment 5 to 7 years, and computers and software, 3 to 5 years). Depreciation for income tax purposes is computed principally using the straight line method and estimated useful lives.
Advertising Cost
Advertising costs, except for costs associated with direct-response advertising, are charged to operations when incurred. The costs of direct-response advertising are capitalized and amortized over the period during which future benefits are expected to be received. UTS did not have direct-response advertising costs during the three months ended June 30, 2011.
Accounting for Stock-based Compensation
UTS accounts for and reports its stock-based employee compensation arrangements using the intrinsic value method as prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation ("FIN 44"), and Statement of Financial Accounting Standards No. 148 Accounting for Stock-Based Compensation - Transition and Disclosure (“SFAS 148”). Accordingly, compensation costs for stock options and warrants are measured as the excess, if any, of the fair value of the stock at the date of grant, over the stock option exercise price. Value Consulting accounts for stock issued to non-employees in accordance with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123") Under SFAS No. 123, stock option awards issued to non-employees are accounted for at their fair value on the date issued, where fair value is determined using the Black-Scholes option pricing method.
Income Taxes
UTS records its federal and state income tax liability in accordance with Statement of Financial Accounting Standards Statement No. 109 "Accounting for Income Taxes". Deferred taxes are provided for differences between the basis of assets and liabilities for financial statements and income tax purposes, using current tax rates. Deferred tax assets represent the expected benefits from net operating losses carried forward and general business credits that are available to offset future income taxes.
Income (Loss) Per Share
Net income (loss) per share is computed based upon the weighted average number of outstanding shares of the Company’s common stock for each period presented.
Recent Accounting Pronouncements
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. The statement amends and clarifies accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. This statement is designed to improve financial reporting such that contracts with comparable characteristics are accounted for similarly. The statement is generally effective for contracts entered into or modified after June 30, 2003. The Company currently has no such financial instruments outstanding or under consideration and does not expect the adoption of this standard to effect the Company’s financial position or results of operations.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company currently has no such financial instruments outstanding or under consideration and therefore adoption of this standard currently has no financial reporting implications.
In June 2003, the United States Securities and Exchange Commission adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002. Commencing with our annual report for the year ended September 30, 2010, we will be required to include a report of management on our internal control over financial reporting. The internal control report must include a statement.
· of management’s responsibility for establishing and maintaining adequate internal control over our financial reporting;
· of management’s assessment of the effectiveness of our internal control over financial reporting as of year end; and
· of the framework used by management to evaluate the effectiveness of our internal control over financial reporting.
Furthermore, in the following fiscal year, it is required to file the registered accounting firm’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.
In December 2003, the FASB issued FASB Interpretation No. 46, “Amended Consolidation of Variable Interest Entities” (“FIN No. 46”). This interpretation clarifies rules relating to consolidation where entities are controlled by means other than a majority voting interest and instances in which equity investors do not bear the residual economic risks. This interpretation is effective immediately for variable interest entities created after January 31, 2003 and, for interim periods beginning after December 15, 2003, for interests acquired prior to February 1, 2003. The Company does not currently have relationships with entities meeting the criteria set forth in FIN No. 46 and is not required to include any such entities in its financial statements pursuant to the provisions of FIN No. 46.
Effective as of December 31, 2004, the Company adopted the revised interpretation of Financial Accounting Standards Board (FASB) Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities,” (FIN 46-R). FIN 46-R requires that certain variable interest entities be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Company does not have any investments in entities it believes are variable interest entities for which the Company is the primary beneficiary.
In December 2004, FASB issued SFAS No. 123 (revised 2004) "Share Based Payment" (SFAS No. 123R), a revision to Statement No. 123, Accounting for Stock-Based Compensation which supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. The revised SFAS 123 eliminates the alternative to use Opinion 25's intrinsic value method of accounting and, instead, requires entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. Furthermore, public entities are required to measure liabilities incurred to employees in share-based payment transactions at fair value as well as estimate the number of instruments for which the requisite service is expected to be rendered. Any incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair values before and after the modification. The Company has yet to determine the effect SFAS No. 123R may have on its financial statements, if any.
In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), Business Combinations (“SFAS No. 141(R)”), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending September 30, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on its financial statements.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (“SFAS No. 160”), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet. SFAS No. 160 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending September 30, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 160 will have on its consolidated financial statements.
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133 (“SFAS No. 161”), which changes the disclosure requirements for derivative instruments and hedging activities. Pursuant to SFAS No.161, Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption. The Company will adopt this standard at the beginning of the Company’s year ending September 30, 2009. The Company does not expect the adoption of SFAS No. 161 to have a material impact on the financial results of the Company.
The FASB, the Emerging Issues Task Force and the Securities and Exchange Commission have issued certain other accounting pronouncements and regulations as of September 30, 2008 that will become effective in subsequent periods; however, management of Laufer does not believe that any of those pronouncements would have significantly affected Laufer’s financial accounting measurements or disclosures had they been in effect during 2008, and it does not believe that any of those pronouncements will have a significant impact on Laufer’s financial statements at the time they become effective.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2 to the financial statements includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.
Furthermore, public entities are required to measure liabilities incurred to employees in share-based payment transactions at fair value as well as estimate the number of instruments for which the requisite service is expected to be rendered. Any incremental compensation cost for a modification of the terms or conditions of an award is measured by comparing the fair values before and after the modification. The Company has yet to determine the effect SFAS No. 123R may have on its financial statements, if any.
There are no differences between historical and pro-forma stock based compensation value.
Note B - Income Taxes
For income tax purposes UTS had an accumulated deficit of $622,937 as of June 30, 2011, which can be used to offset future federal and state taxable income. No income tax benefit has been recorded in the accompanying financial statements since the recoverability of such assets is not reasonably assured through known future revenue sources.
Note C- Note Receivable
On October 1, 2006, UTS entered into a short-term, month to month loan with a shareholder for $20,000. As of June 30, 2011 the balance of the loan was $19,500.
Note D - Cash Flow Supplemental Information
Cash paid for interest during the period ended June 30, 2011 amounted to $980.
Note E - Stockholders’ Equity
Issuance of Common Stock
On February 1, 2011, UTS issued 2,000,000 shares of common stock as compensation for consulting services. No shares were issued in the three months ended June 30, 2011.
Common Stock Warrants
As of June 30, 2011, there were no stock warrants outstanding.
Note F - Commitments and Contingencies
Operating Leases
UTS currently has no lease obligations. Our executive offices our located in Gilbert, AZ. Our executive offices are leased on a quarter-by-quarter basis. Payments are made in advance and there are no on-going lease obligations. The current lease rate is $1,200 per month.
Litigation
As of June 30, 2011, UTS did not have any outstanding legal issues outside of the ordinary course of business.
Note G – Consolidated Financials
The merger with Universal Tracking Solutions, Inc. was accounted for as a reverse acquisition and recapitalization. Universal Tracking Solutions is the acquirer for accounting purposes and Dynamic Natural Resources is the issuer. Accordingly, Universal Tracking Solutions’ historical financial statements for periods prior to the acquisition become those of the acquirer retroactively restated for the equivalent number of shares issued in the merger.
Note H - Subsequent Events
There are no subsequent events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Information
This report and other reports, as well as other written and oral statements made or released by us, may contain forward-looking statements. Forward-looking statements are statements that describe, or that are based on, our current expectations, estimates, projections and beliefs. Forward-looking statements are based on assumptions made by us, and on information currently available to us. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but such statements do not predict or assure any future occurrence and may turn out to be wrong. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe," "anticipate," "intend," "expect," "estimate," "project", "predict", "hope", "should", and "may", other words and expressions that have similar meanings, and variations of such words and expressions, among others, usually are intended to help identify forward-looking statements.
Forward-looking statements are subject to both known and unknown risks and uncertainties and can be affected by inaccurate assumptions we might make. Risks, uncertainties and inaccurate assumptions could cause actual results to differ materially from historical results or those currently anticipated. Consequently, no forward-looking statement can be guaranteed. The potential risks and uncertainties that could affect forward looking statements include, but are not limited to the ability to raise needed financing, increased competition, extent of the market demand for and supply of goods and services of the types provided by the Company, governmental regulation, performance of information systems, and the ability of the Company to hire, train and retain qualified employees. In addition, other risks, uncertainties, assumptions, and factors that could affect the Company's results and prospects have been and may further be described in the Company's prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by the Company.
We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this document. The information contained in this report is current only as of its date, and we assume no obligation to update any forward-looking statements.
The financial information set forth in the following discussion should be read in conjunction with, and qualified in its entirety by, the Company's unaudited consolidated financial statements and notes included herein. The results described below are not necessarily indicative of the results to be expected in any future period. Certain statements in this discussion and analysis, including statements regarding our strategy, financial performance and revenue sources, are forward-looking information based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Readers are referred to our Unaudited Financials included on Form 10-K for the fiscal year ended December 31, 2010.
Results of Operations
THREE MONTHS ENDED JUNE 30, 2011
Our net income for three months ended June 30, 2011 was $33,696, compared to a net loss of $4,227 for the three months ended June 30, 2010. A discussion of our results of operations is as follows:
Revenues for the three months ended June 30, 2011 were $166,259. This is an increase of $22,146 compared to the quarter ended June 30, 2010. This increase is attributable to our increased marketing efforts.
Our cost of services for the three months ended June 30, 2011 were $81,019. This represents a decrease of $25,385 over the quarter ended June 30, 2010. This decrease is a result of our increased focus on controlling costs and higher margin products. Cost of sales includes various costs associated with providing our telemetry tracking systems. This includes activations, carrier access, materials, and other various costs associated with providing products and services.
Operating expenses were $50,564 for the three months ended June 30, 2011, compared to $38,982 for the three months ended June 30, 2010. This increase in expense is attributable to various administrative and professional fees.
No provision for income taxes have been reflected or recorded on these financial statements. We incurred a net income of $33,696 for the three months ended June 30, 2011 as a result of the matters discussed above. Losses to date may be used to offset future taxable income.
Liquidity and Capital Resources
As of June 30, 2011. The Company has incurred losses and has been dependent upon the financial support of stockholders, management and other related parties.
Management has successfully obtained additional financial resources, which the Company believes will support operations until profitability can be achieved. These financial resources include financing from both related and non-related third parties, as discussed in the footnotes to the financial statements. There can be no assurance that management will be successful in these efforts. The financial statements do not reflect any adjustments that may arise as a result of this uncertainty.
We expect our operating expenses to continue to increase as we attempt to build our brand and expand. We hope our expenses will be funded from operations and short-term investments from officers, shareholders or others; however, our operations may not provide such funds and we may not be able obtain short-term loans from officers, shareholders or others. Our officers and shareholders are under no obligation to provide additional loans to the company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risk related to interest rates or foreign currencies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
As of June 30, 2011, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of our Principal Executive Officer. Based upon that evaluation, he concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.
Changes in internal controls
There were no changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims, which arise in the ordinary course of its business. UTS is not currently involved with any legal proceedings and is not aware of any threatened actions.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our 2010 Form 10-K filed with the SEC, which could materially affect our business, financial condition or future results. The risks described in our 2010 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
There have been no material changes in the risk factors previously disclosed in “Risk Factors” in Part 1, Item 1A of our 2010 Form 10-K filed with the SEC.
ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
On February 1, 2011, UTS issued 2,000,000 shares of common stock for consulting services. No additional shares were issued in the three months ended June 30, 2011.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
There were no defaults on senior securities for the three months ended June 30, 2011.
ITEM 4. REMOVED AND RESERVED
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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Exhibit No.
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Description
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31.1
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32.1
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(b) Reports of Form 8-K
No reports were filed on Form 8-K during the quarter ended June 30, 2011.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Universal Tracking Solutions, Inc.
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Dated: August 3, 2011
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By: |
/s/Keith A. Tench
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Name:
Title:
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Keith Tench, President
Chief Executive Officer, and Chairman of the Board
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Dated: August 3, 2011
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By: |
/s/ Keith A. Tench
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Name:
Title:
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Keith Tench
Chief Financial Officer
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