UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-QSB
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[X]
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Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
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For
the
quarterly period ended September
30, 2005
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[
]
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Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
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For
the
transition period ___________ to __________
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Commission
File
Number: 000-27621
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United
American Corporation
(Exact
name of small business issuer as specified in its charter)
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Florida
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95-4720231
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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1080
Beaver Hall, Suite 1555, Montreal, Quebec, Canada H2Z
1S8
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(Address
of principal executive offices)
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514-313-6010
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(Issuer’s
telephone number)
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220
Mount Saint Hilaire, Quebec, Canada J3H 5Z6
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(Former
name, former address and former fiscal year, if changed since last
report)
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Check
whether the issuer (1) 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 issuer was required to file such reports),
and
(2) has been subject to such filing requirements for the past 90 days [X] Yes
[
] No
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act [ ] Yes [X] No
State
the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 49,915,159 common shares as of September 30,
2005.
Transitional
Small Business Disclosure Format (check one): Yes [ ] No [X]
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Page
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PART
I - FINANCIAL INFORMATION
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PART
II - OTHER INFORMATION
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PART
I - FINANCIAL INFORMATION
Our
unaudited financial statements included in this Form 10-QSB are as
follows:
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These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-QSB. In the opinion
of
management, all adjustments considered necessary for a fair presentation have
been included. Operating results for the interim period ended September 30,
2005
are not necessarily indicative of the results that can be expected for the
full
year.
UNITED
AMERICAN CORPORATION
(A
Development Stage Company)
As
at September 30, 2005
(Amounts
expressed in United States Dollars)
(Unaudited)
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ASSETS
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Current
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Cash
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$
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241,267
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Accounts
receivable
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42,031
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Sales
tax receivable
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48,831
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Loan
receivable- Director
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292,736
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Inventory
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93,956
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Pre-paid
expenses & deposits
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24,424
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743,245
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Internet
telecommunications equipment, net of accumulated
depreciation
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688,253
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1,431,498
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LIABILITIES
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Current
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Bank
indebtedness
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7,266
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Accounts
payable
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241,561
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Loans
payable
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186,776
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Debentures
payable
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100,000
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Advance
from shareholders
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-
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Total
Liabilities
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535,603
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STOCKHOLDERS'
DEFICIENCY
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Capital
stock
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45,465
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Capital
in excess of par value
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2,158,345
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Additional
paid up capital (discount)
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53,557
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Comprehensive
income(loss)
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206,373
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Deficit
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(1,567,845)
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Total
stockholders' deficit
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895,895
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Total
liabilities and stockholders' deficit
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1,431,498
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UNITED
AMERICAN CORPORATION
(A
Development Stage Company)
For
the Three Months and Nine Months Period Ended September 30, 2005
(Amounts
Expressed in United States Dollars)
(Unaudited)
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Three
Months September 30,
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Nine
Months September
30,
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2005
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2004
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2005
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2004
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Sales
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1,611,110
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235,829
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2,840,067
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1,302,890
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Cost
of sales
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1,487,356
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2,452,318
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Inventory,
beginning of period
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101,981
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25,952
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Purchases
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39,533
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209,969
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141,514
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2,688,239
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Inventory,
end of year
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91,705
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25,134
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89,411
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25,134
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1,537,165
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227,468
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2,598,828
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566,227
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Gross
profit
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73,946
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8,361
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241,239
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736,663
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Operating
expenses
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Sales
and promotion
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(1,667)
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14,921
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186,132
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14,921
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Professional
and consulting fees
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59,469
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84,275
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239,845
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84,775
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Travel
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1,903
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8,073
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5,061
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8,073
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Telecommunication
and network costs
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33,580
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64,004
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88,760
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281,122
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Salaries
and wage levies
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19,176
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25,448
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88,760
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281,122
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Interest
on long term debt
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-
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-
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-
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-
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Delivery
and transport
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1,211
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4,801
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13,289
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4,801
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Telephone
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1,703
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-
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4,995
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-
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Interest
and service charges
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6,991
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2,221
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18,041
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2,221
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Office
and general
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5,696
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12,844
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30,362
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12,844
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Amortization
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52,519
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-
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43,057
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-
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Loss
on foreign exchange
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-
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(43,129)
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-
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(43,129)
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Recovery
of expenses
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(49,112)
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(47,883)
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131,470
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173,418
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645,768
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410,801
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Earnings
(loss) before minority interests
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(13,819)
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(165,057)
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(404,528)
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352,862
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Minority
interest
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-
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-
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-
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-
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Net
earnings (loss)
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(13,819)
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(165,057)
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(404,528)
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352,862
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Net
earnings (loss) per share
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-
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-
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-
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-
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Weighted
average number of shares outstanding
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49,915,159
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40,658,000
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49,915,159
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40,658,000
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UNITED
AMERICAN CORPORATION
(A
Development Stage Company)
For
the Nine Months Period Ended September 30, 2005
(Amounts
Expressed in United States Dollars)
(Unaudited)
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2005
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2004
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Operating
activities
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Net
earnings (loss)
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(404,528)
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325,862
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Add:
Amortization
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73,057
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Increase
(decrease) in accounts receivable
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(11,393)
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(46,422)
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Increase
(decrease) in sales tax
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(31,100)
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Increase
(decrease) in inventory
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(10,225)
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(25,134)
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Increase
(decrease) pre-paids & deposits
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(24,424)
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Increase
in accounts payable
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149,742
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25,009
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Net
cash used in operating activities
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(288,871)
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279,315
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Investing
activities
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Variation
in assets
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273,261
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(479,093)
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Net
cash provided by (used by) investing activities
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273,261
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(479,093)
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Financing
activities
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Increase
(decrease) in advances to Director
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412,419
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(34,063)
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Variation
in bank indebtedness
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(409,641)
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159,553
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Increase
in loan payable
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(240,229)
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78,830
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Increase
in debentures payable
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100,000
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Issuance
of capital stock
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186,623
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26,340
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49,172
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230,660
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Effect
of foreign currency exchange rate on cash and cash
equivalents
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163,316
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Net
increase (decrease)
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196,878
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30,882
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Cash
and cash equivalents beginning of year
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44,389
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-
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Cash
and cash equivalents end of year
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241,267
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30,882
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UNITED
AMERICAN CORPORATION
(A
Development Stage Company)
September
30, 2005
(Amounts
Expressed in United States Dollars)
(Unaudited)
1. Basis
of consolidation
The
consolidated financial statements include accounts of United American
Corporation and its wholly owned subsidiary 3894517 Canada Inc. and its majority
owned subsidiary OSK Capital II Corp. for the three and nine month period ended
September 30, 2005.
2. Interim
reporting
While
the
information presented in the accompanying consolidated interim three months
financial statements is unaudited, it includes all adjustments, which are in
the
opinion of management necessary to present fairly the consolidated financial
position, results of operations for the interim consolidated periods presented.
All adjustments are normal recurring nature.
3. Capital
stock
Authorized
The
Company is authorized to issue 50,000,000 shares of common stock at $0.001
par
value. As at September 30, 2005, 49,915,159 shares were issued and
outstanding.
There
are
no warrants or options outstanding to issue any additional shares of common
stock.
Forward-Looking
Statements
Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of
the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
materially from those included in the forward-looking statements. The Company
intends such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes
of
complying with those safe-harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,”
or similar expressions. The Company’s ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on the operations and future prospects
of
the Company on a consolidated basis include, but are not limited to:
unanticipated
problems relating to exploration, hazards such as pollution, or other hazards
which cannot be insured against or predicted, changes in economic conditions,
availability of capital, competition, and generally accepted accounting
principles.
These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company’s financial results, is
included herein and in the Company’s other filings with the SEC.
Overview
We
were
incorporated on July 17, 1992, under the laws of the state of Florida. Since
our
inception, we sought out various business opportunities, none proved successful
over a sustained period of time. We explored opportunities to acquire products
or businesses that had the potential for profit.
On
July
18, 2003, we entered into a share exchange agreement with 3874958 Canada Inc.
whereby we agreed to transfer to 3874958 Canada Inc. 26,250,000 common shares
of
our common stock in exchange for the transfer of 100 shares of American United
Corporation, a Delaware corporation (“AUC”). The 100 shares of AUC represent all
of the issued and outstanding shares of the company. The agreement was
contingent on the parties’ due diligence and completion of several conditions
prior to sale. On October 6, 2003, these conditions were satisfied and the
sale
was consummated. Following the consummation of this sale, AUC became a
wholly-owned subsidiary of our company. AUC was later dissolved.
Benoit
Laliberté, our CEO, CFO, and Director at the time, was also the sole officer,
director, and shareholder of American United Corporation at the time that the
share exchange agreement was entered into and when the sale was consummated.
In
addition, Mr. Laliberté was the sole officer, director, and shareholder of
3874958 Canada, Inc. As a result, Mr. Laliberté was the beneficial holder of the
100 shares of AUC held by 3874958 Canada, Inc. and is now the beneficial holder
of the 26,250,000 shares we issued to 3874958 Canada, Inc. in the transaction
described above.
On
February 3, 2004, a majority of the shareholders approved a change in the name
of our company to United American Corporation. Management considered it in
the
best interests of the company to change our name to reflect the acquisition
of
American United Corporation shares and the new direction of our business.
Description
of Business
Following
the acquisition of AUC, we revised our business plan and implemented the
business plan of AUC. AUC began its operations in 2002 as a holding company
focused on the acquisition of network-centric technology and telecommunication
companies. Given the rapid changes in the telecommunications marketplace, and
the strong need for a competitive edge, they revised their business plan and
set
out on a new course in 2003 to provide Voice over Internet Protocol (VoIP)
solutions.
VoIP
means that the technology used to send data over the Internet is now being
used
to transmit voice as well. The technology is known as packet switching. Instead
of establishing a dedicated connection between two devices (computers,
telephones, etc.) and sending the message "in one piece," this technology
divides the message into smaller fragments, called 'packets'. These packets
are
transmitted separately over a decentralized network and when they reach the
final destination, they're reassembled into the original message.
VoIP
allows a much higher volume of telecommunications traffic to flow at much higher
speeds than traditional circuits do, and at a significantly lower cost. VoIP
networks are significantly less capital intensive to construct and much less
expensive to maintain and upgrade than legacy networks or what is commonly
referred to as traditional circuit-switched networks. Since VoIP networks are
based on internet protocol, they can seamlessly and cost-effectively interface
with the high-technology, productivity-enhancing services shaping today's
business landscape. These networks can seamlessly interface with web-based
services such as virtual portals, interactive voice response (IVR), and unified
messaging packages, integrating data, fax, voice, and video into one
communications platform that can interconnect with the existing
telecommunications infrastructure.
Initially,
we sought to provide retail
consumers and small and medium sized companies with
a
mobile or landline phone that utilizes VoIP as opposed to traditional cell
phone
technology. A mobile phone that is connected to a Wi-Fi router, which is
interconnected to a hi-speed Internet modem, cable or ADSL transmits telephone
calls by connecting to the Internet using a high-speed Internet connection.
Use
of this technology offers large savings to consumers because a majority of
the
telephone call is now being transmitted over the Internet replacing what was
previously an established telecommunication line. When a VoIP network is
utilized, an established telecommunication line is only utilized to transmit
the
call from our servers to the termination point of a call. The VoIP network
is
utilized with intellectual property to transmit the call from its origination
point to our servers. The ability to minimize the use of established
telecommunication lines reduces the cost of transmitting telephone calls. As
a
result, our ability to strategically establish computer servers in specified
geographical areas will maximum the cost-savings benefit to those that utilize
our service.
We
constructed our first VoIP network which we refer to as CaribbeanONE. To
construct this network, we established servers in Haiti that utilize our
intellectual property to connect with our servers located in Montreal, Quebec,
Canada. Following the successful testing of our servers in Haiti, the
CaribbeanONE network was completed in March 2004. The establishment of the
CaribbeanONE network was critical in that it enables us to charge significantly
less than other providers that exclusively utilize established telecommunication
lines for calls that originate in North America and terminate in any country
in
the Caribbean. When one of our consumers originates a call in North America,
our
VoIP network will receive the call and transmit the call to our server in Haiti
and an established telecommunication line will only be utilized to transmit
the
call from our server in Haiti to the termination point of the call in the
Caribbean. The establishment of the CaribbeanONE network was our first step
in
strategically
establishing computer servers in specified geographical areas
to
construct
an international VoIP network. Since the establishment of the CaribbeanONE
network, we have worked to improve this VoIP network by added additional
capacity.
In
August
2004, we incorporated Teliphone, Inc. (“Teliphone”), a Canadian corporation,
which became a wholly-owned subsidiary of our company. We formed Teliphone
as a
wholly-owned subsidiary for the purpose handling the origination, management,
and billing of calls. Teliphone also handles servicing and providing
businesses
and individuals with a mobile or landline phone to access our VoIP network.
The
management of calls refers to the routing of calls from the origination point
to
the termination point. The billing of calls refers to the collection of charges
for utilization of our VoIP network.
At
this
stage our of business plan, we were successfully able to provide businesses
and
individuals with the ability to utilize our VoIP
network to transmit communications through the use of a mobile and landline
phone that connects to the Internet. Our ability to grow beyond the Montreal,
Quebec geographical area was inhibited at this point because we were only were
able to provide our consumers with telephone numbers that contained Canadian
area codes. Consumers generally desire area codes for the telephone numbers
they
are assigned which are consistent with the geographical area where they
primarily conduct business or reside.
In
recognition of this limitation, our management entered into a carrier agreement
with XO Communications, Inc.(“XO”), a Delaware corporation, on October 12, 2004.
This carrier agreement with XO provides us with the ability to purchase
telephone numbers in any of thirty seven (37) major metropolitan markets in
the
United States. As a result, we are capable of providing our service to consumers
in any of these major metropolitan markets in the United States and each
consumer could now be assigned a telephone number with a local area
code.
Also
under the terms of this carrier agreement with XO, we acquired the ability
to
purchase
and utilize voice channels that
XO
maintains within the United States. The ability to purchase and utilize these
voice channels is beneficial to our consumers that originate calls that
terminate in the United States. Use of these voice channels enables us route
calls to their termination point without utilizing carriers outside of our
network that would likely charge higher fees to route the call to its
termination point. This completion of the carrier agreement with XO further
established our VoIP network and positioned us with the ability to compete
with
other providers of VoIP in certain major metropolitan markets in the United
States.
Our
management identified that another limitation of our service is that access
to
our VoIP network requires individuals or businesses to utilize a mobile and
landline phone that connects to the Internet. Traditional cellular phones do
not
require an Internet connection for their utilization. As a result, users of
traditional cellular phones can physically be more mobile while maintaining
telephone service. In contrast, the mobility of our consumers is limited to
areas where an Internet connection can be maintained. Our management concluded
that the appeal of our service will be enhanced by broadening the physical
areas
in which our consumers can utilize their mobile phone while maintaining service.
To broaden the physical areas in which our consumers can utilize their mobile
phone, our management began to negotiate agreements with retail establishments
that
have
a Wi-Fi router. A Wi-Fi router is interconnected to a hi-speed Internet modem,
cable or ADSL enabling telephone calls made in their retail establishment to
connect to the Internet. As a result, our consumers would be able access our
VoIP network through the use their mobile phone when physically present in
a
particular retail
establishment.
On
November 13, 2004, we entered into an agreement with Ta-Daa High Speed Wireless.
(Ta-Daa), a provider of wireless Internet access in various retails
establishments located in Montreal, Quebec. At
the
present time, our consumers do not incur any additional cost for originating
calls from these cafés. Additional agreements were entered into for the same
purpose on substantially the same terms with other providers of wireless
Internet access in various retails establishments throughout Montreal, Quebec.
On November 30, 2004, we entered into a similar agreement with Eye-In Inc.
and
also on March 10, 2005 we entered into a similar agreement with Experience
Wifi
Inc.
In
an
attempt to further broaden the physical areas in which our consumers can utilize
their mobile phone, we entered into a telecommunications services agreement
on
November 3, 2004 with Kore Wireless Canada Inc. (“Kore”), a supplier of global
systems for mobile communications (“GSM”). This agreement will enable us to
offer a mobile phone that is compatible with both our VoIP network and a GSM
network utilized for traditional cellular phone use. Our consumers will benefit
because they will now be able to utilize one mobile phone that integrates the
use of both a VoIP and GSM network resulting in an expanding coverage area
for
mobile phones which we provide service to. When an Internet connection cannot
be
maintained, calls can still be placed using traditional cellular phone
technology. For our consumers that utilize this service, we have the ability
to
integrate into a single bill charges for calls placed utilizing both the VoIP
and GSM networks. Prior to this agreement with Kore, we were unable to offer
phone service to consumers at times when they did not maintain an Internet
connection.
Once
the
requisite infrastructure was in place and operational, we sought to establish
agreements and incentives for retailers of telephone products to make available
to retail
consumers and small and medium sized companies a
mobile
or landline phone that utilizes our VoIP network. In furtherance of this
objective to provide our target market with a product that is compatible with
our VoIP network, we entered
into a distribution agreement with Distribution Car-Tel, Inc.
(“Car-Tel”) on July 28, 2004. During Q4 2004, unfortunately, our agreement with
Car-Tel did not result in the volume of increased sales of our service that
was
originally contemplated. As a result, we terminated our agreement with Car-Tel,
and sought to renew our efforts to build our retail distribution network in
the
Montreal, Quebec area.
We
succeeded in meeting our objectives when we entered into a distribution
agreement with MSBR Communication Inc. (“MSBR”) on March 1, 2005, for the
purpose accessing the retail consumer portion of our target market through
retail and Internet-based sales. Under the terms of this agreement, MSBR was
granted the exclusive right to distribute mobile or landline phones that utilize
our VoIP network via Internet-based sales or direct sales to retail
establishments in the territory consisting of the Province of Quebec in Canada
exclusive of Sherbrooke, Quebec. This agreement was entered into for a term
of
two (2) years with automatic renewals for additional one year terms unless
either party provides notice within 90 days of the initial two year term. This
agreement is subject to termination upon the occurrence of specified events
triggering default. MSBR will receive a pre-determined commission based upon
sales of mobile or landline phones that utilize our VoIP network and revenues
derived from retailer consumers who activated their VoIP service through
distribution channels used by MSBR. As
a
result of this agreement, MSBR Communications Inc. has succeeded in building
a
distribution network of over 70 points of retail sale, telemarketing sales
partners and small business telecommunications interconnect companies. This
distribution network is the current driver of our new customer acquisition
in
the retail segment of our business.
On
March
11, 2005, we continued our attempt to build an international VoIP network by
entering into a marketing and distribution agreement with Podar Enterprise
(“Podar”) of Mumbai, India. Podar is a distributor of telecommunications that
will make mobile or landline phones that utilize our VoIP network available
to
consumers in Central, South, and East Asia, Eastern Europe, and parts of the
Middle East. Under the terms of this agreement, Podar was granted the exclusive
marketing and distribution rights for our products and services in India, China,
Sri Lanka, United Arab Emirates, and
Russia.
The term of this agreement is five (5) years subject to early termination with
60 days notice following any default under the agreement.
Accounts
activated in any of the geographical markets serviced by Podar will be assigned
a North American telephone number. For this reason, we anticipate that our
target market in these geographical areas will be small and medium sized
businesses that frequently transact business in North America.
As
part
of our growth plan in 2005, we expanded our long distance VoIP termination
services outside of the Caribbean and into additional routes in South and
Central America, as well as Africa.
Subsidiary
Spin-off
In
March
2005, our management proposed to spin-off one of our subsidiaries, Teliphone,
Inc., subject to the approval of the stockholders. At the time of this proposal,
we owned 100 common shares of the 104 common shares issued and outstanding
in
Teliphone. Under the terms of this proposal, our shareholders would have
received 1 share of Teliphone for each share of our company they owned.
Our
board
of directors believed that spinning-off Teliphone would accomplish an important
objective. The spin-off would enable Teliphone to focus on handling
the origination, management, and billing of calls and allow us to concentrate
on
building an international VoIP focused primarily on call termination.
This
will
allow both companies that have operations that are focused on different
objectives to better prioritize the allocation of their management and their
financial resources for achievement of their corporate objectives.
In
April
2005, our management was presented with an opportunity where Teliphone would
enter into a merger with a wholly-owned subsidiary of OSK Capital II Corp.
(“OSK”), a public reporting company under Section 12(g) of the Securities
Exchange Act of 1934. As a result of this opportunity, we did not present our
original proposal to the shareholders for their consideration and approval.
On
April
28, 2005, OSK completed its acquisition of Teliphone, pursuant to an Agreement
and Plan of Merger and Reorganization. At the effective time of the merger,
OSK
acquired all of the outstanding shares of Teliphone and Teliphone merged with
OSK II Acquisition Corp., a Florida corporation and wholly-owned subsidiary
of
OSK Capital II, Corp. Following the merger, Teliphone was the surviving
corporation. OSK issued 25,000,000 common shares in exchange for all of the
issued and outstanding shares of Teliphone and these shares of OSK were issued
to the shareholders Teliphone shareholders on a pro rata basis. We owned 100
common shares of the 104 common shares issued and outstanding in Teliphone.
As a
result, we received 24,038,462 shares of OSK. Following the effectiveness of
the
merger, OSK had 30,426,000 common shares issued and outstanding. Consequently,
Teliphone became a wholly owned subsidiary of OSK and OSK is currently a
majority-owned subsidiary of our company.
Our
management proposed to spin-off our majority-owned subsidiary, OSK. To complete
the spin-off, we propose to distribute the 24,038,462 shares of OSK that we
own
on a pro rata basis to our shareholders.
Change
in Management
On
November 8, 2005, Mr. Benoit Laliberte resigned as our Chief Executive Officer,
Chief Financial Officer and as a member of our board of directors. There was
no
known disagreement with Mr. Laliberte on any matter relating to our operations,
policies or practices.
On
November 8, 2005, Mr. Gilles Poliquin resigned as a member of our board of
directors. There was no known disagreement with Mr. Poliquin on any
matter
relating to our operations, policies or practices.
On
November 8, 2005, Mr. Simon Lamarche was appointed as our Chief Executive
Officer, Chief Financial Officer and as a member of our board of
directors.
Results
of Operations for Three and Nine Months Ending September 30,
2005
For
the
three month period ended September 30, 2005, we generated total revenue of
$1,611,110, compared to revenue of $235,829 for the same three month period
in
the prior year. For the nine month period ended September 30, 2005,
we
generated total revenue of $2,840,067, compared to revenue of $1,302,890 for
the
same ninth month period in the prior year. Our revenue was generated
by
sales of retail domestic and international voice and data products and services
using VoIP. Our increase in revenue for the three and nine month period
ended September 30, 2005 when compared to the same reporting periods in the
prior year is primarily attributable to increases in sales of VoIP termination
services in our CaribbeanONE network, along with the sales results of our
subsidiary OSK Capital II Corp./Teliphone.
Our
cost
of revenues for the three months ended September 30, 2005 increased to
$1,537,165 from the same reporting period in the prior year when cost of
revenues was $227,468. Our cost of revenues for the nine months ended
September 30, 2005 increased to $2,598,828 from the same reporting period in
the
prior year when cost of revenues was $566,227. The increase in our
cost of
revenues is attributable to increased purchases of terminating minutes within
countries of termination, along with purchases of inventory of hardware
attributed to new customer acquisition for OSK Capital II Corp./Teliphone.
Gross
profit for the three months ended September 30, 2005 was $73,946 compared to
$8,361 for the three months ended September 30, 2004. The increase
in
gross profit for the three months ended September 30, 2005 when compared to
the
same reporting period in the prior year is attributable to us increasing our
sales volume of VoIP termination services. Gross profit for the nine months
ended September 30, 2005 was $241,239, compared to $736,663 for nine months
ended September 30, 2004. The decrease in gross profit for the nine months
ended
September 30, 2005 when compared to the same reporting period in the prior
year
is attributable to increased costs associated with the purchase of terminating
minutes both in the aggregate and on a per unit basis.
For
the
three month period ended September 30, 2005, we incurred operating expenses
in
the amount of $131,470 compared to operating costs of $173,418 in the same
three
month period in the prior year. The decrease in operating expenses for the
three
months ended September 30, 2005 when compared to the same reporting period
in
the prior year is attributable to lower consulting fees and lower networking
costs to transmit calls over other carriers’ networks. For the nine month period
ended September 30, 2005, we incurred operating expenses in the amount of
645,768, compared to operating costs of $410,801 in the same nine month period
in the prior year. The increase in operating expenses for the nine
months
ended September 30, 2005 when compared to the same reporting period in the
prior
year is attributable to significantly higher consulting fees incurred during
the
first and second quarter of 2005.
For
the
three month period ended September 30, 2005, we had a net loss of $13,819.
We had a net loss of $165,057 for the three month period ended September 30,
2004. For the nine month period ended September 30, 2005, we had a
net
loss of $404,528. We had a net profit of $352,862 for the nine month
period ended September 30, 2004.
Liquidity
and Capital Resources
As
of
September 30, 2005, we had total current assets of $743,245 of which $241,267
consisted of cash on hand. Our total current liabilities as of September 30,
2005 were $535,603. We had a working capital of $207,642 as of September 30,
2005.
We
believe that we have sufficient capital to support our operations at their
current level over the next twelve months. We anticipate that our revenue will
continue to increase and this will be sufficient to maintain our operations
at
their current level.
The
success of our long-term business plan beyond the next 12 months is contingent
upon us obtaining additional financing. We do not have any formal commitments
or
arrangements for the sales of stock or the advancement or loan of funds at
this
time.
Off
Balance Sheet Arrangements
As
of
September 30, 2005, there were no off balance sheet arrangements.
Disclosure
controls and procedures are controls and other procedures that are designed
to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
We
carried out an evaluation of the effectiveness of the design and operation
of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2005. This evaluation was carried
out under the supervision and with the participation of our board of directors.
Based upon that evaluation, our board of directors concluded that, as of
September 30, 2005, our disclosure controls and procedures are not effective.
This
conclusion was reached as a result of our failure to include certain financial
information in the consolidated financial statements for the periods ended
September 30, 2004, December 31, 2004, and March 31, 2005. We erred in failing
to include in the consolidated financial statements for the periods set forth
above financial information from the operations of our subsidiary, Teliphone,
Inc. Teliphone, Inc. was incorporated in Canada on August 28, 2004. We erred
by
failing to account for the convertible debenture that was issued to Strathmere
Associates International Limited for the principal sum of $100,000 on October
18, 2004 in the audited financial statements included in the annual report
on
Form 10-KSB for the year ended December 31, 2004 and the unaudited financial
statements included in the quarterly report on Form 10-QSB for the period ended
March 31, 2005. We also erred by failing to include in the consolidated
financial statements certain disbursements from banking accounts maintained
by
3894517 Canada Inc., an entity that became a wholly owned subsidiary of ours
in
July 2004.
On
August
31, 2005, we dismissed our former independent public accounting firm, Madsen
& Associates, CPA’s Inc., and engaged Schwartz Levitsky Feldman LLP
("Schwartz") as our new independent public accounting
firm.
We
restated our financial statements and amended our quarterly report on Form
10-QSB for the period ended September 30, 2004. We will restate our financial
statements for the affected periods and amend our annual report on Form 10-KSB
for the year ended December 31, 2004 and our quarterly report on Form 10-QSB
for
the period ended March 31, 2005. We will also take action to correct any errors,
omissions, or misrepresentations brought to our attention by Schwartz.
Our
board
of directors are currently working towards implementing significant changes
in
our internal controls over financial reporting that are expected to materially
affect such controls. Our board of directors is seeking to retain a consultant
to recommend for implementation specific disclosure controls and procedures
to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and
forms.
PART
II - OTHER INFORMATION
We
are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
None.
None.
No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the three month period ended
September 30, 2005.
None.
|
Exhibit
Number
|
Description
of Exhibit
|
|
10.1
|
Distribution
Agreement with MSBR Communications, Inc. executed on March 1, 2005
2
|
|
10.2
|
Distribution
Agreement with PODAR Enterprises executed on March 11, 2005 2
|
|
10.3
|
Term
Sheet Entered into with NCTel Inc. 2
|
|
10.4
|
Letter
of Intent with 9151-4877 Quebec Inc. (doing business under the name
Dialek
or NCTel) 2
|
|
10.5
|
Proposed
Exchange of Shares of OSK Capital II and Teliphone, Inc. 2
|
|
10.6
|
Agreement
and Plan of Merger and Reorganization by and among Teliphone, Inc.
and OSK
Acquisition Corp. and OSK Capital II Corp. 2
|
|
10.7
|
Carrier
Services Agreement with XO Communications 2
|
|
10.8
|
Distribution
Agreement with Car-Tel Inc. executed on July 28, 2004 2
|
|
10.9
|
Wholesale
Agreement with 9151-4877 Quebec Inc., also known as Dialek Telecom
2
|
|
10.10
|
Share
Exchange Agreement with 3874958 Canada Inc. on July 18, 2003 1
|
|
1
|
Previously
filed as an exhibit to current report on Form 8-K filed on January
15,
2004
|
| 2 |
Previously
filed as an exhibit to quarterly report on Form 10-QSB filed on September
22, 2005
|
SIGNATURES
In
accordance with the requirements of the Securities and Exchange Act of 1934,
the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
United
American Corporation
|
|
|
Date:
|
November
22, 2005
|
|
By: /s/
Simon Lamarche
Simon
Lamarche
Title: Chief
Executive Officer, Chief Financial Officer &
Director
|