U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 - FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM __________ TO _____________
COMMISSION FILE NUMBER 0-25380
ULTRADATA SYSTEMS, INCORPORATED
(Exact name of small business issuer as specified in its charter)
Delaware 43-1401158
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1240 Dielman Industrial Court, St. Louis, MO 63132
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (314) 997-2250
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class Outstanding as of November 1, 2002
_________________________________________________________________________
Common, $.01 par value 3,432,591
Transitional Small Business Disclosure Format Yes [ ] No [X]
File Number
0-25380
ULTRADATA SYSTEMS, INCORPORATED
FORM 10-QSB
September 30, 2002
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets at September 30, 2002 (unaudited)
and December 31, 2001 3.
Statements of Operations for the three month and
nine month periods ended September 30, 2002
and 2001 (unaudited) 4.
Statements of Cash Flows for the nine months ended
September 30, 2002 and 2001 (unaudited) 5.
Notes to Financial Statements 6.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7.
PART II - OTHER INFORMATION 11.
Signatures 11.
Certifications 12.
-2-
ULTRADATA SYSTEMS, INCORPORATED
Balance Sheets
As of September 30, 2002 and December 31, 2001
September 30, December 31,
2002 2001
Assets (Unaudited)
_________________________________________________________________________
Current assets:
Cash and cash equivalents $ 150,240 $ 164,682
Trade accounts receivable, net of
allowance for doubtful accounts of
$132,267 and $365,287, respectively 94,176 376,429
Inventories 766,336 1,346,492
Prepaid expenses and other current assets 12,013 11,649
--------- ---------
Total current assets 1,022,765 1,899,252
--------- ---------
Property and equipment, net 283,234 413,270
--------- ---------
Total property and equipment 283,234 413,270
--------- ---------
Notes receivable - long term 225,394 225,394
Other assets 5,444 5,444
--------- ---------
Total assets $ 1,536,837 $2,543,360
========= =========
Liabilities and Stockholders' Equity
_________________________________________________________________________
Current liabilities:
Accounts payable $ 61,953 $ 96,133
Accrued expenses and other liabilities 146,214 272,146
Notes payable - current 124,185 110,991
--------- ---------
Total current liabilities 332,352 479,270
--------- ---------
Long term liabilities:
Notes payable - long term 514,723 616,007
--------- ---------
Total liabilities 847,075 1,095,277
--------- ---------
Stockholders' equity:
Preferred Stock, $0.01 par value,
4,996,680 shares authorized, none
outstanding - -
Series A convertible preferred stock,
3,320 shares authorized, 16 shares
outstanding with a stated value of $1,000 16,000 16,000
Common stock, $.01 par value; 10,000,000
shares authorized; 3,758,762 shares
issued September 30,2002; 3,698,350
shares issued December 31, 2001 37,588 36,983
Additional paid-in capital 9,578,736 9,573,281
Accumulated deficit (7,872,770) (7,049,202)
Treasury stock (326,171 shares at cost) (942,311) (942,311)
Notes receivable issued for purchase of
common stock (127,481) (186,668)
--------- ---------
Total stockholders' equity 689,762 1,448,083
--------- ---------
Total liabilities and stockholders' equity $ 1,536,837 $ 2,543,360
========= =========
See accompanying summary of accounting policies and notes to financial
statements.
-3-
ULTRADATA SYSTEMS, INCORPORATED
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited)
_____________________________________________________________________________
Net sales: $ 354,123 $ 139,503 $ 1,428,526 $ 835,957
Cost of sales: 333,326 570,422 1,116,611 985,072
--------------------------------------------------
Gross profit 20,797 (430,919) 311,915 (149,115)
--------------------------------------------------
Selling expense 32,840 96,804 93,076 302,786
General and administrative
expenses 208,183 538,056 817,976 1,678,876
Research and development
expense 55,365 81,347 168,734 306,707
--------------------------------------------------
Total operating expenses 296,388 716,207 1,079,786 2,288,369
--------------------------------------------------
Operating loss (275,591) (1,147,126) (767,871) (2,437,484)
Other (expense) income:
Interest and dividend
income 810 215 8,031 59,157
Interest expense (18,220) (18,300) (57,038) (31,199)
Equity in losses of
affiliates - 12,359 - 17,927
Other, net (6,834) (16,657) (6,690) (38,760)
--------------------------------------------------
Total other (expense)
income, net (24,244) (22,383) (55,697) 7,125
Loss before income taxes (299,835) (1,169,509) (823,568) (2,430,359)
Income tax - - - -
-------------------------------------------------
Net loss (299,835) (1,169,509) (823,568) (2,430,359)
Less preferred stock
dividends - (160,610) - (252,279)
-------------------------------------------------
Net loss available to
common shareholders $(299,835) $(1,330,119) $ (823,568) $(2,682,638)
=================================================
Loss per share-basic and
diluted $ (0.09) $ (0.41) $ (0.24) $ (0.83)
=================================================
Weighted Average Shares
Outstanding:
Basic and diluted 3,432,591 3,249,533 3,409,719 3,226,113
===================================================
See accompanying summary of accounting policies and notes to financial
statements.
-4-
ULTRADATA SYSTEMS, INCORPORATED
Statements of Cash Flows
Nine months ended September 30, 2002 and 2001
____________________________________________________________________________
2002 2001
(unaudited)
______________________________
Cash flows from operating activities:
Net loss $ (823,568) $(2,430,359)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 128,784 146,871
Inventory writedown 186,510 613,672
Equity in earnings of unconsolidated
affiliates - (17,927)
Realized loss on investments - 13,046
Loss on disposal of fixed asset 6,873 18,534
Non-cash compensation expense - 2,544
Increase (decrease) in assets and liabilities:
Trade accounts receivable 282,253 507,373
Inventories 393,646 (569,350)
Prepaid expenses and other current assets (365) 10,625
Accounts payable (34,179) (8,634)
Accrued expenses and other liabilities (125,931) (146,403)
Deferred rent - (5,598)
-------- ---------
Net cash provided by (used in) operating
activities 14,023 (1,865,606)
-------- ---------
Cash flows from investing activities:
Investment in affiliated company - -
Deferred compensation trust investments - -
Capital expenditures (5,622) (12,017)
Restricted cash - 765,000
-------- ---------
Net cash (used in) provided by investing
activities (5,622) 752,983
-------- ---------
Cash flows from financing activities:
Proceeds from issuance of redeemable
preferred stock and common stock warrants - -
Costs related to issuance of redeemable
preferred stock and common stock warrants - -
Repayment of notes payable (82,030) (126,269)
Repurchase of preferred shares - (178,000)
Subscription payments 59,187 -
--------- ---------
Net cash used in financing activities (22,843) (304,269)
--------- ---------
Net decrease in cash and cash equivalents (14,442) (1,416,892)
Cash and cash equivalents at beginning of
period 164,682 1,842,983
--------- ---------
Cash and cash equivalents at end of period $ 150,240 $ 426,091
========= =========
Non-cash investing and financing
Redemption of Rabbi Trust $ - $ 87,329
========= =========
Conversion of preferred stock to common
stock $ - $ 28,000
========= =========
Conversion of preferred stock to notes
payable $ 6,060 $ 1,759,860
========= =========
See accompanying summary of accounting policies and notes to financial
statements.
-5-
ULTRADATA SYSTEMS, INCORPORATED
September 30, 2002
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim 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 nine-month periods ended September 30, 2002 and 2001, 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, 2002. It is suggested that
the interim financial statements be read in conjunction with the audited
consolidated financial statements for the year ended December 31, 2001, as
filed with the Securities and Exchange Commission on Form 10-KSB (Commission
File Number 0-25380).
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. Nature of Operations
The principal business activity of Ultradata Systems, Incorporated (the
Company), located in St. Louis, Missouri, is the design, manufacture, and
sale of hand-held electronic information products.
Note 2. Inventories
Inventories consist of the following:
September 30, December 31,
2002 2001
------------- -------------
Raw Materials $ 459,646 $ 831,318
Work in Process - -
Finished Goods 306,690 515,174
--------- ---------
Total Net $ 766,336 $ 1,346,492
========= =========
Obsolete inventory on hand $ 582,482 $ 434,487
========= =========
-6-
Note 3. Prepaid Expenses
Prepaid expenses consist of the following:
September 30, December 31,
2002 2001
------------ -----------
Prepaid insurance $ 10,740 $ 5,179
Other prepaid expenses 1,273 6,470
-------- --------
$ 12,013 $ 11,649
======== ========
Note 4. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following:
September 30, December 31,
2002 2001
------------ -----------
Accrued sales commissions
and royalties $ 54,718 $ 141,811
Payroll and payroll-
related liabilities 36,784 69,061
Accrued interest payable 6,005 -
Other 48,707 61,274
-------- --------
$ 146,214 $ 272,146
======== ========
Note 5. Accounts Receivable
The Company sold accounts receivable of $233,000 from a bankrupt
customer for proceeds of $60,580. The receivable amount had been fully
reserved during 2001, and the proceeds were recorded as an adjustment to the
provision for bad debt expense.
Note 6. Subsequent Event
On October 29, 2002, judgment was entered by the Circuit Court of St.
Louis County, State of Missouri in the action titled "Ultradata Systems, Inc.
vs. E-tegral Partners" (referred to previously as "SmartTime"). The Court
awarded damages to the Company for principal, accrued interest, and legal
fees in the sum of $861,770.65, and dismissed the counterclaim filed against
Ultradata. Any amounts collected will be recorded in the period in which
they are received, as the Company has not been able to determine to what
extent it will be able to collect the judgment.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
YOU SHOULD NOT RELY ON FORWARD LOOKING STATEMENTS
This quarterly report contains a number of forward-looking statements
regarding our future prospects. Among the forward-looking statements are
descriptions of our plans to restructure the marketing program for the Road
Whiz(tm) line of products, to introduce Triplink(tm) and GPS products to the
market, and to develop products based on a GPS/Internet technology. 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 to
thwart Ultradata in its efforts to develop and market its products. Among
these factors are:
* The fact that our limited financial resources may be insufficient to
permit us to develop products and introduce them to the market;
-7-
* The difficulty of attracting mass-market retailers to a seasonal
product like the Road Whiz(tm);
* The breadth and depth of competition in the GPS market, which will
make introduction of our product with a limited marketing budget
difficult;
* The difficulty of attracting qualified engineering and marketing
personnel to our company.
There may also be factors that we have not foreseen which could interfere
with our plans. In addition, changing circumstances may cause us to determine
that a change in plans will be in the best interests of Ultradata. For this
reason, you should not place undue reliance on any of the forward-looking
statements in this report.
Readers are urged to carefully review and consider the various disclosures
made by the Company in this report and in the Company's report Form 10-KSB
filed with the Securities and Exchange Commission.
The analysis of the Company's financial condition, capital resources and
operating results should be viewed in conjunction with the accompanying
financial statements, including the notes thereto.
OVERVIEW
Since 1987 we have been engaged in the business of manufacturing and
marketing handheld computers that provide travel information. The products
are based upon a data compression technology that we developed, portions of
which we have patented. Recent developments in communications technology
have opened up new opportunities for us to use our technology. Therefore,
we still sell our handheld computers, but over the past three years we have
been expanding the scope of our operations:
* In 2001 we introduced, in joint venture with Rand McNally, the Rand
McNally Triplink(tm), a handheld computer that enables the user to
download travel information from the Rand McNally Website.
* In the second quarter of 2002 we shipped the reprogrammed beta-test
units of our Travel*Star 24(tm), which combines our travel information
with a GPS antenna to enable a driver to obtain his location and
directions to his destination while he drives. Improved performance
was obtained, but the tests revealed several software problems that
are being resolved, and production will occur after a new Beta test
is completed. We expect to be in production in early 2003.
* 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 is developing a Talking Road Whiz. This product
is expected to be available early in 2003. The Company is introducing
for the holiday season a very low-cost gift item called Road Rage
Relief that produces one-line voice comments about driving upon the
press of a button. The product provides a simple means of fastening
to an interior surface of the car and can be activated without taking
one's eyes off the road.
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 will be offered at retail for about $400, which should
make it very competitive in the auto aftermarket. Its portability and the
fact that it requires no elaborate installation offer advantages over the
more expensive in-car systems.
RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 2002 Compared to Three and
Nine Months Ended September 30, 2001
Operating results for the third quarter of 2002 were marginally better
than the third quarter of 2001.
-8-
Sales. During the three and nine months ended September 30,2002, net
sales totaled $354,123 and $1,428,526, respectively, compared with $139,503
and $835,957, respectively for the same periods in 2001. These figures
represent increases of 154% and 70.1% for the three- and nine-month periods,
respectively. The increase is primarily due to the very low value in 2001
due to the delay of orders usually received in the third quarter.
Gross Profit. Gross profit margin for the three- and nine-month periods
ending September 30, 2002 were 5.9% and 21.8%, respectively. There was a
September 2002 write-off of obsolete inventory of $90,000, which affected
both numbers adversely. Without the September write-down, gross margins
would have been 31.3% and 28.1% for the three- and nine-month period,
respectively. The write-off was warranted due to the age and poor sales
performance of the inventory in question.
SG&A Expense. Selling expenses for the three- and nine-month periods ended
September 30, 2002 were $32,840 and $93,076, respectively, compared with $96,804
and $302,786, respectively, for the corresponding periods in 2001. These
figures represent decreases of 66.1% and 69.2%, respectively, for the three-
and nine-month periods in 2002 versus 2001 in spite of higher sales volume
in each period. The primary reason for the decrease is the fact that most
of the sales came from a returning customer without significant sales expense
to service the orders. General and administrative expenses for the three-
and nine-month periods ended September 30, 2002 were $208,183 and $817,976,
respectively, compared with $538,056 and $1,678,876, respectively, for the
corresponding periods in 2001. These figures represent decreases of 74.5%
and 68.0%, respectively, for the three- and nine-month periods in 2002 versus
2001. The primary reasons for the decrease are the reduction in force in the
third quarter of 2001, the reduction in office space starting in November of
2001, and the tight controls on operating expenses instituted in 2002.
Success in reducing these costs is important to the continuing survival of
the Company pending improved sales due to new products.
R&D Expense. Research and development expense in the three-month period
ended September 30,2002 decreased 31.9%, and for the nine-month period they
decreased 45.0% compared with corresponding periods in 2001. These reductions
reflect a continuing effort to reduce expenses. In addition to continuing
development of the TRAVEL*STAR 24( initial software release, we are continuing
amortization of the capitalized software tools developed over the last 2+
years, as well as pursuing the development of a version of our hand-held data
reference product that speaks to the user.
The Company posted a net loss from operations of ($275,591) and
($767,871) for the three- and nine-month periods ended September 30, 2002,
respectively, compared to a net loss from operations of ($1,147,126) and
($2,437,484) for the corresponding periods in 2001.
Other Income. Other income (expense) for the three- and nine-month
periods ended September 30, 2002 totaled ($24,244) and ($55,697),
respectively, compared with ($22,383) and $7,125, respectively, for the
corresponding periods of 2001. The reduction has come about through reduced
dividend and interest income on reduced cash assets.
As a result of the foregoing, the Company posted a net loss available to
common shareholders of ($299,835), or ($0.09) per basic and diluted common
share, for the three-month period ended September 30, 2002, compared to a net
loss available to common shareholders of ($1,330,119), or ($0.41) per basic
and diluted common share, for the three-month period ended September 30, 2001.
The Company posted a net loss available to common shareholders of ($823,568),
or ($0.24) per basic and diluted common share, for the nine-month period
ended September 30, 2002, compared to a net loss available to common
shareholders of ($2,682,638), or ($0.83) per basic and diluted common share,
for the nine-month period ended September 30, 2001. The Company was required
to record an imputed dividend as a result of its sale of Series A redeemable
convertible preferred stock in May of 2000 of $160,610 and $252,279 during
the three- and nine-month periods ended September 30, 2001, respectively.
No such dividend was required in 2002 due to the conversion of the preferred
shares to debt in the third quarter of 2001.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 2002, the Company had $150,240 in cash and cash
equivalents, compared to $164,682 at December 31, 2000. The Company's
operating activities in the nine months ended September 30, 2001, provided
cash totaling $14,023. Losses for the first nine months of the year of
$840,795 included non-cash losses due to depreciation and amortization,
amounting to $128,784, and were offset by reductions in accounts receivable
of $282,253 due to collections on sales in the first half of 2002 and
reductions of inventory of $393,646. Accounts receivable were reduced
during the quarter by our sale of our Kmart receivable. As an unsecured
creditor in the Kmart bankruptcy, the Company could have been forced to wait
years for payment, and might never have been paid. Accordingly, with
approval of the Board of Directors, the Company sold its Kmart receivable
of $233,000 from December 2001 to a financial institution for 26% of the
total in order to have near-term cash.
-9-
Net cash used in investing activities for the nine-month period ended
September 30, 2002 totaled $5,622 for capital expenditures. In the same
period of 2001 investing activities provided $752,983 as the Company
recovered $765,000 which had been pledged to secure a letter of credit in
favor of Talon.
Net cash used in financing activities for the three-month period ended
September 30, 2002 was ($22,843) compared with ($304,269) used in the same
period of 2001. During 2002 cash used to pay down our convertible debt was
offset in part by payments made to fund the purchase of common stock.
During 2001 we used 178,000 in cash to repurchase 58 shares of Series A
Preferred Stock.
Our operating losses over the past three years have had an adverse
effect on our working capital. At September 30, 2002, we had $690,413 in
working capital, which Management believes will be sufficient, together with
self-generated funds, to finance the purchase orders for the remainder of
2002 as well as the first quarter of 2003, when new products are expected to
begin to generate revenues. We expect, therefore, to have sufficient capital
resources to fund our operations for the next year and the foreseeable future,
given appropriate terms with suppliers and customers.
We have reduced staff, office space, and consulting expenses to bring
our costs of doing business more in line with revenues. The Company is now
able to function on much lower sales per year and is in a position to be
profitable quickly, given the required market acceptance of the new products.
Lack of quick acceptance of the new products by customers may result in
insufficient funds to continue operations.
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 within 90 days prior to the filing date of this
report. Based on their evaluation, they concluded that the controls and
procedures in place are sufficient to assure that material information
concerning the Company which could affect the disclosures in the Company's
quarterly and annual reports is made known to them by the other officers and
employees of the Company, and that the communications occur with promptness
sufficient to assure the inclusion of the information in the then-current
report.
There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect those controls subsequent
to the date on which Messrs. Ross and Clarke performed their evaluation.
-10-
ULTRADATA SYSTEMS, INCORPORATED
10QSB
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
On October 29, 2002, judgment was entered by the Circuit Court of St.
Louis County, State of Missouri in the action titled "Ultradata Systems, Inc.
vs. E-tegral Partners." (In prior filings we have identified the defendant
as "SmartTime", which was the predecessor to E-tegral Partners.) The
judgment awarded damages to Ultradata in the sum of $861,770.65, and
dismissed the counterclaim filed against Ultradata. The Company has not
determined the extent to which it will be able to collect the judgment.
Item 2. Changes in Securities:
None
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:
None
Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 1, 2002 /s/ Monte Ross
-----------------------
Monte Ross, CEO
(Chief executive officer)
/s/ Ernest S. Clarke
------------------------
Ernest S. Clarke, President
(Principal financial and accounting
officer)
-11-
CERTIFICATIONS
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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly 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 quarterly report;
4. The registrant'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 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
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 1, 2002 /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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements and other financial
information included in this quarterly 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 quarterly report;
4. The registrant'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 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
quarterly report is being prepared;
-12-
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 1, 2002 /s/ Ernest S. Clarke
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Ernest Clarke, Chief Financial Officer
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