10-Q 1 a6075382.txt UNIVERSAL INFOTAINMENT SYSTEMS CORPORATION 10-Q ================================================================================ -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT UNDER SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2009 |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ______________ to ______________ Universal Infotainment Systems Corporation ------------------------------------------ (Name of small business issuer in our charter) Nevada 3670 80 018 7018 (State or other jurisdiction of (Primary Standard IRS I.D. incorporation or organization) Industrial Classification Code Number) East West Corporate Center 1771 Diehl Road, Suite 330 Naperville, Illinois 60563 60563 Registrant's telephone number: 630-390-7674 SEC File No. 333-154227 N/A -------------------------------------------------------------------------------- (Former name, former address and former three months, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| 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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_| 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 |_| No |X| As of October 15, 2009 there were 29,244,246 shares issued and outstanding of the registrant's common stock. -------------------------------------------------------------------------------- ================================================================================

PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Consolidated Balance Sheets ASSETS July 31, 2009 (unaudited) April 30, 2009 --------------- --------------- Current assets Cash $ 1,797 $ 1,206 Other receivables 2,000 - Prepaid expenses 61 4,061 --------------- --------------- Total current assets 3,858 5,267 Property and equipment, net 46,369 48,619 Other assets Deposits 7,231 7,231 Intangibles 550 550 --------------- --------------- Total other assets 7,781 7,781 --------------- --------------- Total assets $ 58,008 $ 61,667 =============== =============== LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Current maturity of note payable $ 9,520 $ 7,753 Accounts payable 33,309 33,461 Accrued compensation 52,497 34,998 Accrued interest 7,437 6,441 Due to officer - related party 88,823 100,385 --------------- --------------- Total current liabilities 191,586 183,038 Note payable, less current maturities 12,308 14,645 Deferred rent 9,668 9,798 --------------- --------------- Total liabilities 213,562 207,481 --------------- --------------- Commitments and Contingencies (Note 8) Stockholders' equity (deficit) Preferred stock, $0.0001 par value; 50,000,000 shares authorized; no shares issued and - - outstanding at July 31, 2009 and April 30, 2009, respectively Common stock, $0.0001 par value; 100,000,000 shares authorized; 29,244,246 and 28,557,246 2,925 2,856 shares issued and outstanding at July 31, 2009 and April 30, 2009, respectively Common stock Issuable, 115,000 and 125,000 shares at July 31, 2009 and April 30, 2009, respectively 11 12 Additional Paid in Capital 346,578 252,671 Deficit accumulated during the development stage (505,068) (401,353) --------------- --------------- Total stockholders' equity (deficit) (155,554) (145,814) --------------- --------------- Total liabilities and stockholders' deficit $ 58,008 $ 61,667 =============== =============== See Accompanying Unaudited Condensed Consolidated Notes to Financial Statements 2 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Consolidated Statements of Operations Period from April 14, Three Months Three Months 2008 Ended Ended (Inception) July 31, July 31, to July 31, 2009 2008 2009 (unaudited) (unaudited) (unaudited) ------------ ------------- ------------ Revenues $ - $ - $ - Operating expenses General and administrative expenses 46,680 34,901 226,769 Compensation expense 52,249 - 219,746 Research and Development expense - - 39,500 ------------ ------------- ------------ Total operating expenses 98,929 34,901 486,015 ------------ ------------- ------------ Loss from operations (98,929) (34,901) (486,015) Other income (expense) Interest income - - 57 Interest expense (4,786) (525) (19,265) Miscellaneous income - 155 155 ------------ ------------- ------------ Total other (expense) (4,786) (370) (19,053) ------------ ------------- ------------ Net loss $ (103,715) $ (35,271) $ (505,068) ============ ============= ============ Basic and diluted net loss per share $ - $ - $ (0.02) ============ ============= ============ Basic and diluted weighted average common shares outstanding 29,099,235 27,819,074 28,541,462 ============ ============= ============ See Accompanying Unaudited Condensed Consolidated Notes to Financial Statements 3

See Accompanying Unaudited Condensed Consolidated Notes to Financial Statements 4 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Consolidated Statements of Cash Flows Period from April 14, Three Months Three Months 2008 Ended Ended (Inception) July 31, July 31, to July 31, 2009 2008 2009 (unaudited) (unaudited) (unaudited) -------------- ------------- -------------- Cash flows from Operating activities: Net loss $ (103,715) $ (35,271) $ (505,068) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 2,250 - 8,245 Impaiment of intangibles - - 825 Common stock issued for services 13,500 808 14,308 Officers's non-cash contributed services 28,750 28,750 143,750 Non-cash contributed research & development services - - 39,500 Common stock issuable for services - - 12,500 Changes in operating assets and liabilities: Prepaid expenses 4,000 (16,000) (61) Deposits - (7,231) (7,231) Accounts payable (152) - 33,309 Accrued expenses 18,495 - 59,934 Deferred rent (130) 740 9,668 -------------- ------------- -------------- Net cash used in operating activities (37,002) (28,204) (190,321) -------------- ------------- -------------- Cash flows from Investing activities: Purchase of property - (2,000) (30,709) -------------- ------------- -------------- Net cash used in investing activities - (2,000) (30,709) -------------- ------------- -------------- Cash flows from Financing activities: Proceeds from officer loans 3,838 58,068 110,891 Repayment of officer loans (15,400) - (23,443) Repayment of note payable (570) - (2,077) Proceeds from sale of common stock 49,725 97,947 137,456 -------------- ------------- -------------- Net cash provided by financing activities 37,593 156,015 222,827 -------------- ------------- -------------- Net increase in cash 591 125,811 1,797 Cash, beginning of period 1,206 - - -------------- ------------- -------------- Cash, end of period $ 1,797 $ 125,811 $ 1,797 ============== ============= ============== Supplemental disclosures of cash flow information Cash paid during the period for: Interest paid $ 2,629 $ - $ 7,523 ============== ============= ============== Income taxes paid $ - $ - $ - ============== ============= ============== Supplemental schedule of non-cash investing and financing activities Officer's payment of intangible costs $ - $ - $ 1,375 ============== ============= ============== Acquisition of property through issuance of long-term debt $ - $ - $ 23,905 ============== ============= ============== See Accompanying Unaudited Condensed Consolidated Notes to Financial Statements 5 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 1 - Nature of Operations and Summary of Significant Accounting Policies -------------------------------------------------------------------------------- Nature of Operations -------------------- Universal Infotainment Systems Corporation (UISC, we, us, our or, the Company) is a Nevada corporation with its principal corporate offices in Naperville, Illinois. Presently, the Company has acquired its completed UNS Infotainment Systems technology from an affiliated entity (Note 6) and is focusing its efforts on raising sufficient additional capital to allow it to enter into production agreements with potential manufacturing partners in order to begin the commercializing of its technology and products. The UNS Infotainment Systems technology combines the Company's proprietary GPS system with aerial photographs, and audio and video communications capabilities for internet, e-mail, text messaging and similar functions available on many cellular telephones for use in passenger, commercial and governmental agency vehicles. The Company is organizing its technology offerings into three main product lines: (1) UNS Infotainment and Navigation System for personal use, (2) UNS Fleet Management and Tracking Application for corporate use, and (3) Stealth and Covert Monitoring Systems for approved governmental agency use. On June 17, 2009, the Company incorporated Global UNS Labs, Inc. as a wholly-owned subsidiary in the State of Nevada. The subsidiary will be responsible for the Company's research and development efforts. Summary of Significant Accounting Policies ------------------------------------------ Basis of presentation of interim financial statements The Company is presented as in the development stage from inception through July 31, 2009. To-date, the Company's business activities during its development stage consist solely of corporate formation, technology acquisition, and raising capital. The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. Accordingly, these interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Form 10-K/A for the year ended April 30, 2009. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments and certain non-recurring adjustments) have been made that are necessary for a fair financial statement presentation. The results for the three-month period ended July 31, 2009 are not necessarily indicative of the results that may be expected for the year ending April 30, 2010. Use of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported 6 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 1 - Nature of Operations and Summary of Significant Accounting Policies (continued) -------------------------------------------------------------------------------- Summary of Significant Accounting Policies (continued) ------------------------------------------------------ Use of estimates (continued) 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 periods. Accordingly, actual results could differ from those estimates used in the preparation of these consolidated financial statements. Significant estimates in the accompanying consolidated financial statements include the estimation of depreciable lives and valuation of property and equipment, valuation of intangible assets, valuation of common stock issued for services, valuation of non-cash contributed services, and deferred income tax valuation allowance. Fair Value of Financial Instruments The Company's financial instruments, including cash and cash equivalents, accounts receivable, notes payable, accounts payable and accrued expenses, are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiary, Global UNS Labs, Inc. All material inter-company balances and transactions have been eliminated in consolidation. Recent Accounting Pronouncements In April 2009, the FASB released FSP FAS No. 107-1 and APB 28-1, Interim Disclosures About Fair Value of Financial Instruments, which amends SFAS No. 107, Disclosures About Fair Value of Financial Instruments, and Accounting Principles Board ("APB") Opinion No. 28, Interim Financial Reporting, to require disclosures about the fair value of financial instruments for interim reporting periods, effective for reporting periods ending after June 15, 2009. We have incorporated required disclosures effective for the July 31, 2009, consolidated financial statements with no effect on our financial position, results of operations or cash flows. In May 2009, the FASB issued SFAS No. 165, Subsequent Events ("SFAS 165"). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, SFAS 165 sets forth the period after the balance sheet date during which management should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and the disclosures that should be made about such events or transactions. SFAS 165 is effective for reporting periods ending after June 15, 2009, and should not result in significant changes in subsequent events that an entity reports, either through recognition or disclosure, in financial statements. Among other things, this statement requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. We have incorporated required disclosures effective for 7 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 1 - Nature of Operations and Summary of Significant Accounting Policies (continued) -------------------------------------------------------------------------------- Summary of Significant Accounting Policies (continued) ------------------------------------------------------ Recent Accounting Pronouncements (continued) the July 31, 2009 financial statements, which has had no effect on our financial position, results of operations or of cash flows. -------------------------------------------------------------------------------- Note 2 - Going Concern -------------------------------------------------------------------------------- The accompanying unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. For the three months ended July 31, 2009 the Company had a net loss of $103,715 and net cash used in operations of $37,002. In addition, as of July 31, 2009 the Company was a development stage company with no revenues and a deficit accumulated during the development stage of $505,068. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These unaudited consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. In order to execute its business plan, the Company will need to raise additional working capital and generate revenues. There can be no assurance that the Company will be able to obtain the necessary working capital or generate revenues to execute its business plan. Management's plan in this regard, include completing product development, generating marketing agreements with product distributors and raising additional funds through a private placement offering of Company common stock within the first and second quarters of fiscal 2010. Management believes its business development and capital raising activities will provide the Company with the ability to continue as a going concern. -------------------------------------------------------------------------------- Note 3 - Concentrations -------------------------------------------------------------------------------- Our financial instruments that are potentially exposed to credit risk consist primarily of cash. At certain times during the year our demand deposits held in banks exceeded federally insured limits. As of July 31, 2009, there were no amounts in excess of FDIC insured limits. 8 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 4 - Property and equipment -------------------------------------------------------------------------------- Property and equipment consisted of the following: July 31, 2009 (unaudited) April 30, 2009 --------------- --------------- Office furniture and equipment $ 33,423 $ 33,423 Computer equipment 17,328 17,328 Telephone 3,863 3,863 --------------- --------------- 54,614 54,614 Less: accumulated depreciation 8,245 5,995 --------------- --------------- Property and equipment, net $ 46,369 $ 48,619 =============== =============== Depreciation expense was $2,250 during the three month period ended July 31, 2009 and $5,995 during the year ended April 30, 2009. -------------------------------------------------------------------------------- Note 5 - Note Payable -------------------------------------------------------------------------------- Note payable consisted of the following: July 31, 2009 (unaudited) April 30, 2009 --------------- --------------- Note payable - furniture payable in monthly installments for principal and interest of $1,600 through February 2011 with a final payment of $5,000 due by February 28, 2011. The debt is secured by the furniture acquired. $ 21,828 $ 22,398 Less: current maturity 9,520 7,753 --------------- --------------- Long-term debt $ 12,308 $ 14,645 =============== =============== Interest expense was $3,626 during the three month period ended July 31, 2009 and $11,334 during the year ended April 30, 2009. 9 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 5 - Note Payable (continued) -------------------------------------------------------------------------------- Future maturities of long-term debt are as follows for the periods ending July 31: Total --------------- 2010 $ 12,308 2011 9,520 --------------- Total $ 21,828 =============== -------------------------------------------------------------------------------- Note 6 - Related Party Transactions -------------------------------------------------------------------------------- On April 16, 2008, the Company acquired its UNS system and underlying technology from Universal Global Corporation, an entity wholly-owned by the Company's Chairman. Under the assignment agreement, Universal Global assigned all rights, title and interest in the UNS system to the Company for its further development and commercialization. There was no consideration required to be paid by the Company in exchange for the UNS system. The assets were recorded by the Company at their historical cost basis to Universal Global Corporation of zero. On July 15, 2008, the Company entered into a sub-lease agreement with an affiliate entity whose President is also the Chairman of our Company, for its 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. Deferred rent aggregated $9,668 as of July 31, 2009. The lease required a security deposit of $7,231. As of July 31, 2009, the Company owed one of its officers an aggregate of $88,823, which was comprised of initial startup costs, cash advances and other expenses the officer paid on behalf of the Company net of repayments. The balance of the Due to Officer account bears interest at a rate of 5%. Total accrued interest as of July 31, 2009, amounted to $4,305 and is included in "Due to officer - related party" in the accompanying consolidated financial statements. -------------------------------------------------------------------------------- Note 7 - Stockholders' Equity (Deficit) -------------------------------------------------------------------------------- Capital structure On April 14, 2008, the Company was originally incorporated with 500,000,000 shares of common stock authorized with a $.0001 par value and 500,000,000 shares of preferred stock with a $.0001 par value. Subsequently, on July 17, 2008, the Company amended its articles to 100,000,000 shares of common stock authorized with a $.0001 par value and 50,000,000 shares of preferred stock with a $.0001 par value. All references in the accompanying unaudited consolidated financial statements to the number of common and preferred shares, par values and per share amounts have been retroactively adjusted to reflect these amendments. 10 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 7 - Stockholders' Equity (Deficit) (continued) -------------------------------------------------------------------------------- Shares issued for cash During the period from May 1, 2009 through July 31, 2009, the Company issued 542,000 shares of its common stock at $0.10 per share in a private placement, raising $51,725, net of $2,475 of associated offering costs. Additionally, the Company had subscribed for, as of July 31, 2009, an additional 20,000 shares of its common stock for $2,000 which is included in the accompanying consolidated balance sheets as other receivable as the amounts were received during the first week of August. Issuance of Common Stock for Services - Employment Agreement Effective May 2, 2009, the Company entered into an employment agreement with an individual which provides for cash compensation upon the Company successfully raising a predetermined amount of capital. The agreement also provides an execution bonus of 60,000 vested shares of Company common stock. The stock was valued at $0.10, based on the contemporaneous cash sale price, resulting in a total valuation and expense of $6,000. Issuance of Common Stock for Services - Legal agreement In May 2009, the company entered into an agreement requiring it to issue 300,000 common shares of its common stock in exchange for legal services for fiscal year ending April 30, 2010. The shares are issuable quarterly in advance. 75,000 shares were issued during the quarter ended July 31, 2009 pursuant to this agreement. The stock valued at $.10 or $7,500 based on the contemporaneous cash sale price. Contributed capital For the three months ended July 31, 2009, the Company's Chairman of the board and founding shareholder has provided services to the Company without the expectation of receiving any compensating payment. The value of these services was estimated at $28,750, based upon an existing compensation contract with the director in which he has forgiven payments until such time as the Company has sufficient operating funds. Accordingly, the Company has recorded the value of these services as a charge to operations and a corresponding credit to Additional Paid in Capital in these accompanying consolidated financial statements. The agreement is renewable for additional five year periods, subject to certain conditions, and the initial fee is refundable to the distributor if certain minimum quotas are met. -------------------------------------------------------------------------------- Note 8 - Commitments and Contingencies -------------------------------------------------------------------------------- Distribution Agreement On April 20, 2009, the Company established a five-year distribution agreement with Low Rider Establishment (LRE), a United Arab Emirate-domiciled entity. The agreement provides LRE with the right to distribute future Company products as they become available. The initial fee is approximately $21,500 and includes product training and related materials, software, an advertising allowance, and customer support. The agreement provides for a 5% royalty fee on gross sales per year beginning with the second year of the agreement. The agreement is effective upon its signing, however, payment of the initial fee has been deferred verbally between the parties until the availability and delivery of the Company's first products. 11 Universal Infotainment Systems Corporation and Subsidiary (a development stage company) Condensed Notes to Consolidated Financial Statements Three Months Ended July 31, 2009 (unaudited) -------------------------------------------------------------------------------- Note 8 - Commitments and Contingencies (continued) -------------------------------------------------------------------------------- Employment Agreements Effective May 2, 2008, the Company entered into various employment agreements with its Chairman of the Board, Chief Executive Officer, Chief Operating Officer, and Executive Vice President. These agreements were amended on May 5, 2008 to defer the effective date of the employment agreement to a time when the Company is a publically-traded entity and has secured a predetermined amount of capital. Guarantee and Share Pledge Agreement Pursuant to a Guarantee and Share Pledge agreement dated May 12, 2009, the Company's Chairman guarantees the payment of a Company account payable aggregating $12,000 as of April 30, 2009 by the extended due date, February 2, 2010. As security for the Company's liability, the Company's Chairman pledges a first security interest in all of the rights, title, and interest in and to 1,000,000 shares of Company's Common Stock owned by the Company's Chairman. -------------------------------------------------------------------------------- Note 9 - Subsequent Events -------------------------------------------------------------------------------- Issuance of Common stock for Cash Subsequent to July 31, 2009, the Company issued 30,000 shares of its common stock at 0.10 per share in a private placement raising an aggregate of $3,000. Issuance of Common Stock for Services - Legal agreement In August 2009, the company is required to issue 75,000 shares of its common stock in exchange for legal services for quarter ending October 31, 2009. These shares will be issued in the second quarter of 2010. Management evaluated all activity of the Company through October 15, 2009 (the issue date of the Company's consolidated financial statements) and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements. 12 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. 13 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:

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. 15 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. Item 3. Quantitative and Qualitative Disclosure about Market Risk Not applicable. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures ------------------------------------------------ We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer/principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act (defined below)). Based upon that evaluation, our principal executive officer/ principal financial 16 officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer/principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management, including our principal executive officer/principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented. Changes in Internal Control Over Financial Reporting ---------------------------------------------------- In addition, our management with the participation of our Principal Executive Officer/Principal Financial Officer have determined that no change in our internal control over financial reporting occurred during or subsequent to the quarter ended July 31, 2009 that has materially affected, or is (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) reasonably likely to materially affect, our internal control over financial reporting. PART II -- OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. (a) Unregistered Sales of Equity Securities. ---------------------------------------- From May 1st, 2009 to July 31st, 2009, the Company sold 542,000 common shares for net proceeds of 51,725 and company issued 135,000 common shares for services rendered. (b) Use of Proceeds. ---------------- From May 1st, 2009 to July 31st, 2009 Registrant used sale of common share proceeds for general operating purposes. 17 Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders. The Registrant did not submit any matters to a vote of its security holders during the three-months ended July 31, 2009. Item 5. Other Information. Not applicable. Item 6. Exhibits. (a) Exhibits. Exhibit No. Document Description ------- -------------------- 31.1 CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. 32.1 CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. --------------------- * This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. 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. Universal Infotainment Systems Corporation

18 EXHIBIT INDEX Exhibit No. Document Description ------- -------------------- 31.1 CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. 32.1 CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. --------------------- * This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. 19

UNIVERSAL INFOTAINMENT SYSTEMS CORP 10-Q