U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM ______________TO_______________
COMMISSION FILE NUMBER 0-25380
ULTRADATA SYSTEMS, INCORPORATED
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 43-1401158
-------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1240 Dielman Industrial Court, St. Louis, MO 63132
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (314) 997-2250
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class Outstanding as of August 3, 2004
-----------------------------------------------------------------------
Common, $.01 par value 6,187,187
Transitional Small Business Disclosure Format Yes [ ] No [X]
File Number
0-25380
ULTRADATA SYSTEMS, INCORPORATED
FORM 10-QSB
June 30, 2004
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Condensed Unaudited Financial Statements
Condensed Balance Sheets at
June 30, 2004 and December 31, 2003 3.
Condensed Statements of Operations for the three
months and six months ended June 30, 2004 and 2003 4.
Condensed Statements of Cash Flows
for the six months ended June 30, 2004 and 2003 5.
Notes to Condensed Financial Statements 6.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9.
PART II - OTHER INFORMATION 13.
Signatures 13.
Exhibits 13.
-2-
ULTRADATA SYSTEMS, INCORPORATED
Condensed Balance Sheets
As of June 30, 2004 and December 31, 2003
June 30, December 31,
2004 2003
Assets (Unaudited)
--------------------------
Current assets:
Cash $ 552,823 $ 2,926
Trade accounts receivable, net of allowance
for doubtful accounts of $100 and $14,703,
respectively 631,843 627,490
Inventories, net 104,782 55,594
Prepaid expenses 12,681 5,166
--------- ---------
Total current assets 1,302,129 691,176
--------- ---------
Property and equipment, net 27,248 25,958
Other assets 5,444 5,444
--------- ---------
Total assets $ 1,334,821 $ 722,578
========= =========
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
Accounts payable 369,560 460,701
Accrued liabilities 69,211 90,792
Notes payable - current - 173,802
--------- ---------
Total current liabilities 438,771 725,295
Stockholders' equity (deficiency)
Preferred Stock, $0.01 par value,
4,996,680 shares authorized, none
outstanding - -
Series A convertible preferred stock,
3,320 shares authorized with a stated
value of $1,000, none outstanding - -
Common stock, $.01 par value;
10,000,000 shares authorized; 6,187,187
shares issued and outstanding June
30,2004; 5,783,840 shares issued and
outstanding December 31, 2003 61,872 57,838
Additional paid-in capital 8,949,312 8,916,685
Accumulated deficit (8,115,134) (8,977,240)
--------- ----------
Total stockholders' equity (deficiency) 896,050 (2,717)
--------- ----------
Total liabilities and stockholders' equity
(deficiency) $ 1,334,821 $ 722,578
========= ==========
See accompanying summary of accounting policies and notes to condensed
financial statements.
-3-
ULTRADATA SYSTEMS, INCORPORATED
Condensed Statements of Operations
For the three and six months ended June 30, 2004 and 2003
(unaudited)
Three months Six months
ended June 30, ended June 30,
2004 2003 2004 2003
--------------------- ---------------------
(unaudited) (unaudited)
Net sales $ 1,454,556 $ 445,857 $3,208,055 $ 797,813
Cost of sales 755,912 186,661 1,651,520 383,206
--------------------- ---------------------
Gross profit 698,644 259,196 1,556,535 414,607
Selling expense 108,272 26,991 156,865 52,027
General and administrative expenses 217,181 235,514 477,389 479,549
Research and development expense 35,315 13,077 54,984 35,505
--------------------- ---------------------
Total Operating Expenses 360,768 275,582 689,238 567,081
--------------------- ---------------------
Operating profit (loss) 337,876 (16,386) 867,297 (152,474)
Other income (expense):
Interest and dividend income 338 115 338 6,351
Interest expense (454) (59,228) (5,711) (110,037)
Loss on early retirement of note
receivable - (57,813) - (57,813)
Other, net 51 (11,496) 182 6,357
--------------------- ---------------------
Total other expense, net (65) (128,422) (5,191) (155,142)
Income (loss) before income taxes 337,811 (144,808) 862,106 (307,616)
Income tax expense - - - -
--------------------- ---------------------
Net income (loss) $ 337,811 $ (144,808) $ 862,106 $ (307,616)
===================== ====================
Income (loss) per share:
Basic $ 0.05 $ (0.03) $ 0.14 $ (0.07)
===================== ====================
Income (loss) per share:
Fully diluted $ 0.05 $ (0.03) $ 0.14 $ (0.07)
===================== ====================
Weighted Average Shares
Outstanding:
Basic 6,172,209 4,637,850 6,114,567 4,562,854
===================== =====================
Weighted Average Shares
Outstanding:
Fully diluted 6,438,901 4,637,850 6,381,259 4,562,854
===================== =====================
See accompanying summary of accounting policies and notes to condensed
financial statements.
-4-
ULTRADATA SYSTEMS, INCORPORATED
Condensed Statements of Cash Flows
Six months ended June 30, 2004 and 2003 (unaudited)
2004 2003
---------- ---------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss) $ 862,106 $ (307,616)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 6,916 17,654
Provision for doubtful accounts 143 106
Inventory reserved for obsolescence - 15,193
Stock issued for services - 4,500
Loss on early settlement of notes receivable - 57,813
Non-cash preferred stock dividends and
interest payable - 65,175
Non-cash accrued interest receivable - (12,397)
Increase (decrease) in cash due to changes
in operating assets and liabilities:
Trade accounts receivable (4,496) 37,515
Inventories (49,188) (20,831)
Prepaid expenses and other current
assets (7,515) (7,235)
Accounts payable (91,140) 1,476
Accrued expenses (21,582) (51,339)
-------- --------
Net cash provided by (used in)
operating activities 695,244 (199,986)
-------- --------
Cash flows from investing activities:
Proceeds from early settlement of notes
receivable - 202,517
Capital expenditures (8,206) (10,150)
-------- --------
Net cash (used in) provided by investing
activities (8,206) 192,367
-------- --------
Cash flows from financing activities:
Proceeds from stock issued for cash and
options exercised 9,061 76,910
Proceeds from notes payable issued - 91,600
Subscription payments - 54,475
Note payable - Short term 165,000 -
Principal payments on notes payable (311,202) (68,357)
-------- --------
Net cash provided by (used in) financing
activities (137,141) 154,628
-------- --------
Net increase in cash and cash equivalents 549,897 147,009
Cash and cash equivalents at beginning
of period 2,926 37,842
Cash and cash equivalents at end of -------- --------
period $ 552,823 $ 184,851
======== ========
During the six months ended June 30, 2004, the Company
issued 273,906 shares of common stock to satisfy
convertible debt aggregating to $27,600
See accompanying summary of accounting policies and notes to condensed
financial statements.
-5-
ULTRADATA SYSTEMS, INCORPORATED
Notes to Condensed Financial Statements
June 30, 2004 (Unaudited)
Basis of Presentation
The accompanying interim condensed financial statements included herein
have been prepared by Ultradata Systems, Incorporated (the "Company"),
without audit in accordance with generally accepted accounting principles and
pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial information. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Company
believes that the disclosures made are adequate to make the information
presented not misleading.
In the opinion of management, the information furnished for the three-
month and six-month periods ended June 30, 2004 and 2003, respectively,
includes all adjustments, consisting solely of normal recurring accruals
necessary for a fair presentation of the financial results for the respective
interim periods and is not necessarily indicative of the results of operations
to be expected for the entire fiscal year ending December 31, 2004. It is
suggested that the interim financial statements be read in conjunction with
the audited financial statements for the year ended December 31, 2003, as
filed with the Securities and Exchange Commission on Form 10-KSB (Commission
File Number 0-25380), from which these statements were derived.
Use of Estimates
The financial statements have been prepared in conformity with generally
accepted accounting principles and, as such, include amounts based on informed
estimates and adjustments by management, with consideration given to
materiality. Actual results could vary from those estimates.
Note 1. Inventories
Inventories consist of the following:
June 30, December 31,
2004 2003
----------- --------------
Raw Materials, net of obsolete $ 95,445 $ 3,738
Finished Goods, net of obsolete 9,337 51,856
------- --------
Total $ 104,782 $ 55,594
======= ========
Obsolete inventory on hand $ 747,967 $ 816,150
Note 2. Prepaid Expenses
Prepaid expenses consist of the following:
June 30, December 31,
2004 2003
----------- --------------
Prepaid insurance $ 12,681 $ 5,166
------- --------
$ 12,681 $ 5,166
Note 3. Convertible Notes Payable
At December 31, 2003 the Company had outstanding convertible debt in
the principal amount of $173,802. A portion of the notes payable in the amount
of $27,600 was converted to 273,906 shares of common stock during the first
week of January 2004. Subsequently, during the quarter ending March 31, 2004,
the convertible debt was retired by payment in full of the outstanding balance
of $146,202 plus all accrued interest.
-6-
Note 4. Income (Loss) Per Share
Three months Six months
ended June 30, ended June 30,
2004 2003 2004 2003
--------------------- ---------------------
(unaudited) (unaudited)
Basic
Numerator:
Net income (loss) $ 337,811 $ (144,808) $ 862,106 $ (307,616)
Numerator for basic income
(loss) per share $ 337,811 (144.808) $ 862,106 $ (307,616)
=================== =====================
Denominator:
Weighted average common shares 6,172,209 4,637,850 6,114,567 4,562,854
Denominator for basic income
(loss) per share 6,172,209 4,637,850 6,114,567 4,562,854
Basic income (loss) per share $ 0.05 $ (0.03) $ 0.14 $ (0.07)
Fully Diluted
Numerator:
Net income (loss) $ 337,811 $ (144,808) $ 862,106 $ (307,616)
Numerator for fully diluted
income (loss) per share $ 337,811 $ (144,808) $ 862,106 $ (307,616)
=================== =====================
Denominator:
Weighted average common shares 6,172,209 4,637,850 6,114,567 4,562,854
Common stock equivalents 266,692 - 266,692 -
Denominator for fully diluted
income (loss) per share 6,438,901 4,637,850 6,381,259 4,562,854
Fully diluted income (loss)
per share $ 0.05 $ (0.03) $ 0.14 $ (0.07)
-7-
Note 5. Notes Payable
During 2004, the Company sold a nine-month note payable in the amount of
$150,000 to a shareholder of the Company. The note earned interest at 12% APR
and was unsecured. The unpaid balance at March 31, 2004, was $100,000.
During April 2004, the Company paid off the remainder of the note payable.
Note 6. Loans Payable - Related Parties
During 2004, the Company received a loan of $15,000 from its Chief
Executive Officer to fund operations. The outstanding balance of the loan
was paid in full as of March 31, 2004.
Note 7. Common Stock
A. Employee Stock Options
During the six-month period ended June 30, 2004, employees exercised
stock options to purchase 100,441 shares of common stock for $7,031.
-8-
B. Director Stock Options
During the six-month period ended June 30, 2004, directors exercised
stock options to purchase 29,000 shares of common stock for $2,030.
Note 8. AAA Agreements
In January 2004, the Company reached an agreement with AAA National to
terminate the existing agreement for private branding of the AAA Talking Road
NavigatorTM as of March 27, 2004. This termination occurred at the request of
AAA National for internal business reasons and not for cause or non-performance
by the Company, in accordance with the terms for cancellation of the
agreement by either party.
In May 2004, AAA notified the Company that it does not intend to renew
the marketing agreement on the AAA TripWizard. The Company, per terms of the
agreement, can continue to market the product and divest itself of its
inventory well into 2005.
Note 9. Sales Concentrations
For the six-month period ended June 30, 2004, the Company had a
concentration of sales with two customers of 68.2% and 17.5%, respectively.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
-9-
YOU SHOULD NOT RELY ON FORWARD LOOKING STATEMENTS
-------------------------------------------------
This quarterly report contains a number of forward-looking statements
regarding our future prospects. Among the forward-looking statements are
descriptions of our plans to introduce new products to the market, to expand
our customer base, to develop products based on a GPS/Internet technology,
and to continue the Company's profitability. These forward-looking statements
are a true statement of our present intentions, but are neither predictions
of the future nor assurances that any of our intentions will be fulfilled.
Many factors beyond our control could act against Ultradata in its efforts
to develop and market its products. Among these factors are:
* The fact that our financial resources are limited and will likely not
sustain us for more than one year without continued success of the Talking
Road WhizTM product line;
* The fact that our lack of capital severely limits our ability to
market our products. As a result, the loss of a significant customer could
imperil the marketing of an entire product line;
* The difficulty of attracting mass-market retailers to a seasonal product
like the Talking Road Whiz(tm).
There may also be factors that we have not foreseen which could
interfere with our plans. In addition, changing circumstances may cause us to
determine that a change in plans will be in the best interests of Ultradata.
For the reasons given, there is a significant risk that we will not be able to
fulfill our expectations for Ultradata.
OVERVIEW
The Company mission is to aid the road traveler with useful information
with products easy to use and affordable in price. Since 1987 we have been
engaged in the business of manufacturing and marketing handheld computers
that provide travel information. The products are based upon a data
compression technology that we developed, portions of which we have patented.
Recent developments in communications and speech technology have opened up
new opportunities for us to integrate our technology and create new products
merging these technologies with our own. The Company is completing
development of several new products which are based on adding significant
features to the successful Talking Road Navigator such as a Spanish-speaking
unit and a voice-recognition unit which allows for hands-free operation.
These new products are consistent with our goal of improved ease of use by
the consumer. We expect to complete development in the third quarter,
and our goal is to reach the marketplace by the end of the year.
-10-
The Company has sold over 3 million of its low-cost handheld travel
computers, demonstrating that there is a market for travel information products.
To re-awaken that market with an improved product that speaks, the Company has
developed a Talking Road WhizTM. Significant deliveries of this product began
in September of 2003 and, the Company received significant revenue in the last
four months of 2003 from sales of this new addition to its product line.
Company earnings in the fourth quarter of 2003 were sufficient to offset
losses in the first three quarters of 2003. This success continued in the
first two quarters of 2004, which have traditionally been weak quarters for
Ultradata. At the present time, our backlog of orders is not significantly
greater than it was at the same time in 2003. However, because we have
already exceeded last year's sales, we expect results for all of 2004 to be
a significant improvement on 2003.
Each of our consumer products is designed to allow the consumer to
access useful information stored in a convenient manner. Our handheld
computers generally sell at retail prices between $19.95 and $49.95 per unit.
The products have been in retail mass-market chains plus many other locations.
The new TRAVEL*STAR 24 is expected to be offered at retail for under $300,
which should make it very competitive in the auto aftermarket. Its
portability and the fact that it requires no elaborate installation offer
advantages over the more expensive in-car systems.
The goals of the Company's research and development investments are
targeted at attaining the right product at the right price. There are over
125 million drivers in the U. S., and there is a great demand for useful,
easy-to-access information for convenience and safety on the road. Low-cost
products that achieve these benefits have a significant niche in the
marketplace. Thus far, Management feels the Company has barely penetrated
this huge, largely untapped market. The Company expects to continue to
exploit this niche over the next few years by bringing the results of merged
technologies to bear on the goals stated above with significant impact on
Company sales and profits.
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2004 Compared to Three and Six
Months Ended June 30, 2003
Operating results for the six-month period ended June 30, 2004, as
compared the same period in 2003, differed primarily due to the fact that the
Talking Road Whiz was available for sale in 2004, and was still under
development in 2003.
Sales. During the three and six months ended June 30,2004, net sales
totaled $1,454,556 and $3,208,055, respectively, compared with $445,857 and
$797,813, respectively for the same periods in 2003. These figures represent
an increase of 226.2% for the three-month period and an increase of 302.1%
for the six-month period.
Our sales revenue continues to come, primarily, from a small number of
mass market retailers. For example, in the first six months of 2004 over
85% of our revenue came from two customers. This concentration of our
business among a few customers means that our historical results are not a
reliable predictor of future results. Until we develop a broader customer
base, our quarter-to-quarter operating results are likely to vary considerably,
depending on when our customers choose to place their orders. In view of the
fact that none of these major customers have placed significant orders for
delivery in the third quarter, we anticipate low sales in that period.
Backlog. As of June 30, 2004, the Company had a backlog of $520,447.
This backlog was for purchase orders to be fulfilled in the fourth quarter of
2004. On June 30, 2003 we had a backlog of $469,801 for shipment through
the remainder of 2003.
Gross Profit. Gross profit margin for the three- and six-month
periods ending June 30, 2004 were 48.0% and 48.5%, respectively, representing
a slight reduction over gross margin in corresponding periods of 2003 of 58.1%
and 51.9%, respectively. Gross profit in 2004 was slightly lower due to the
pricing that applies to the high-volume sales contracts that were fulfilled
in 2004.
S,G&A Expense. Selling expenses for the three- and six-month periods
ended June 30, 2004 were $108,272, or 7.4% of sales, and $156,865, or 4.9% of
sales, respectively, compared with $26,991, or 5.9% of sales, and $52,027,or
6.5% of sales, respectively, for the corresponding periods in 2003. These
figures mirror the sales levels of the respective periods. General and
administrative expenses for the three- and six-month periods ended June 30,
2004 were $217,181 and $477,389, respectively, compared with $235,514 and
$479,549, respectively, for the corresponding periods in 2003. These figures
are comparable for the respective periods and reflect continued success in
our on-going effort to maintain efficiency in our control of overhead costs.
-11-
R&D Expense. Research and development expenses in the three- and
six-month periods ended June 30,2004 were $35,315 and $54,984, respectively,
as compared to $13,077 and $35,505, respectively, for the same periods in
2003. These increases reflect a step-up in new-product development involving
the voice-technology devices incorporated in our newest products.
The Company recognized a profit from operations of $337,876 and
$867,297 for the three- and six-month periods ended June 30, 2004,
respectively, compared to a loss from operations of ($16,386) and ($152,474)
or the corresponding periods in 2003.
Other Expense. Other expense for the three- and six-month periods
ended June 30, 2004 totaled ($65) and ($5,191), respectively, compared with
($128,422) and ($155,142), respectively, for the corresponding periods of
2003. The 2003 numbers represented significant interest expense due to the
necessity of securing short-term loans at high interest and taking a loss on
the sale of our share of Talon ownership in order to raise needed cash in
2003. These debts are now paid off, and our interest expenses in 2004 have
been virtually eliminated.
As a result of the foregoing, the Company realized a net income of
$337,811, or $0.05 per basic common and diluted share, for the three-month
period ended June 30, 2003, compared to a net loss of ($144,808), or ($0.03)
per basic and diluted common share, for the three-month period ended June 30,
2003. The Company realized a net income of $862,106, or $0.14 per basic
common and diluted share, for the six-month period ended June 30, 2004,
compared to a net loss of ($307,616), or ($0.07) per basic and diluted common
share, for the six-month period ended June 30, 2003.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 2004, the Company had $552,823 in cash, compared to
$2,926 at December 31, 2003. The Company's operating activities in the six
months endedJune 30, 2004, provided cash totaling $695,244 primarily from
sales of Talking Road Whiz.
Net cash used in investing activities for the six-month period ended
June 30, 2004 totaled ($8,206) for capital equipment, compared to cash provided
of $192,367 due to the early pay-off of the notes receivable acquired in the
sale of the Company's interest in Talon in the same period in 2003.
Net cash used in financing activities for the six-month period ended
June 30, 2004 was ($137,141) compared to cash provided of $154,628 in the
same period in 2003. The 2004 amount resulted from paying off debt with
proceeds of sales in the last quarter of 2003 (see Note 5 of the accompanying
condensed financial statements), and the 2003 amount resulted from short-term
loans secured in the first quarter of 2003.
The Company's current ratio at June 30, 2004 was 2.97:1 and its
working capital was $863,358.
ITEM 3. Controls and Procedures
Monte Ross, our Chief Executive Officer, and Ernest Clarke, our Chief
Financial Officer, performed an evaluation of the Company's disclosure
controls and procedures as of June 30, 2004. Based on their evaluation,
they concluded that the controls and procedures in place are sufficient to
assure that material information concerning the Company which could affect
the disclosures in the Company's quarterly and annual reports is made known
to them by the other officers and employees of the Company, and that the
communications occur with promptness sufficient to assure the inclusion of
the information in the then-current report.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect those controls
subsequent to the date on which Messrs. Ross and Clarke performed their
evaluation.
-12-
ULTRADATA SYSTEMS, INCORPORATED
10QSB
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities and Small Business Issuer Purchases of
Equity Securities:
From January 2004 through June 2004 the Company employees and
directors exercised a total of 129,441 stock options for 129,441
shares of common stock. The shares were sold for $9,061 cash, upon
the exercise of options previously granted to the individuals.
The sales were exempt pursuant to Section 4(2) of the Act since
the sales were not made in a public offering and were made to
individuals who had access to detailed information about the
Company and who were acquiring the shares for their own accounts.
There were no underwriters.
Item 3. Defaults upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
Exhibits:
31 Rule 13a-14(a) Certification.
32 Rule 13a-14(b) Certification.
Reports on Form 8-K:
Report dated May 10, 2004 - reporting online broadcast of interview
by the Company's Chairman.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 5, 2004 /s/ Monte Ross
----------------------
Monte Ross, CEO
(Chief executive officer)
/s/ Ernest S. Clarke
----------------------
Ernest S. Clarke, President
(Principal financial and accounting
officer)
-13-
* * * * *
EXHIBIT 31: Rule 13a-14(a) CERTIFICATION
I, Monte Ross, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ultradata
Systems, Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements and other
financial information included in this report fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business
issuer's internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting.
5. The small business issuer's other certifying officers and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal controls over financial reporting.
Date: August 5, 2004 /s/ Monte Ross
------------------------------------
Monte Ross, Chief Executive Officer
I, Ernest Clarke, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ultradata
Systems, Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements and other
financial information included in this report fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business
issuer's internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting.
5. The small business issuer's other certifying officers and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal controls over financial reporting.
Date: August 5, 2004 /s/ Ernest S. Clarke
--------------------------------------
Ernest Clarke, Chief Financial Officer
EXHIBIT 32: Rule 13a-14(b) CERTIFICATION
The undersigned officers certify that this report fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934, and
that the information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of Ultradata
Systems Incorporated.
A signed original of this written statement required by Section 906 has been
provided to Ultradata Systems, Incorporated and will be retained by Ultradata
Systems, Incorporated and furnished to the Securities and Exchange Commission or
its staff upon request.
August 5, 2004 /s/ Monte Ross
---------------------------
Monte Ross
(Chief executive officer)
/s/ Ernest S. Clarke
---------------------------
Ernest S. Clarke
(Chief financial officer)