10-Q/A: United Express Inc. Files Amended Quarterly Report After Identifying Material Misstatements

United Express Inc. has filed an amended quarterly report for the period ended December 31, 2023, to correct material misstatements related to the acquisition of Jebour Two Ltd and related transactions.

Summary

• United Express Inc. filed an amendment to its quarterly report for the period ending December 31, 2023, due to material misstatements in the original filing.
• The restatement includes the reclassification of a $13,098,890 acquisition of intangibles, previously disclosed as an investment in a subsidiary, and the acquisition of $1,058,209 in production and stage equipment from Jebour Two Ltd.
• Total assets were restated to $14,185,056, up from $13,125,947, and total liabilities increased to $1,073,875 from $1 due to the Jebour Two Ltd acquisition.
• The accumulated deficit increased from $2,062,865 to $2,077,630, and the net loss increased from $1,988,662 to $2,003,427 due to the inclusion of operational expenses from Jebour Two Ltd.
• Cash increased slightly from $27,947 to $27,957 due to $10 cash held by Jebour Two Ltd.
• The company issued 12,380,951 shares to acquire intangibles and equipment.
• The company also issued 1,400,000 shares for advisory and consultancy services.
• The company's revenue for the three months ended December 31, 2023, was $48,285, a decrease from $114,342 in the same period of 2022.
• The company had a net loss of $2,003,427 for the six months ended December 31, 2023.

Sentiment

Score: 3

Explanation: The document reveals significant financial issues, including a restatement due to material misstatements, a substantial net loss, declining revenue, and a weak cash position. The company also has a material weakness in internal controls and is uncertain about its ability to raise capital. These factors indicate a negative outlook.

Positives

• The acquisition of Jebour Two Ltd. brought valuable assets, including a Nevada State Athletic Commission Professional Promoter license, Producers Lifetime rights, and production and stage equipment.
• The company has a unique license in Nevada to produce live Kickboxing, Boxing, and MMA shows.
• The company has lifetime broadcast TV and production rights for 40 shows previously held by Fighting Leagues.

Negatives

• The company experienced a significant net loss of $2,003,427 for the six months ended December 31, 2023.
• Revenue decreased from $114,342 to $48,285 for the three months ended December 31, 2023, compared to the same period in 2022.
• The company's cash balance is low at $27,957, and they believe it is unlikely to be sufficient to meet working capital requirements without additional revenue or capital.
• The company identified a material weakness in its internal control over financial reporting.
• The company has a limited customer base and has not been able to diversify it.

Risks

• The company's low cash balance of $27,957 may not be sufficient to meet working capital and capital expenditure requirements.
• The company may not be successful in obtaining additional capital on acceptable terms.
• The company's ability to generate revenue from combat sports events is uncertain and may take 6-9 months to realize.
• The company has a material weakness in its internal control over financial reporting.
• The company has a limited customer base and has not been able to diversify it.
• The company is subject to fluctuations in oil prices which can impact the freight and logistics industry.

Future Outlook

The company is assessing the viability of promoting combat sports events in Nevada, but it requires significant planning and capital, and any potential earnings may not be realized for 6-9 months. The company believes its current cash on hand is unlikely to be sufficient to meet working capital and capital expenditure requirements without additional revenue or capital.

Management Comments

• Management concluded there was a material weakness in our internal control over financial reporting as of December 31, 2023.
• Management believes the ultimate resolution of any current legal proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.

Industry Context

The company operates in the transportation and logistics industry, which is subject to fluctuations in oil prices. The acquisition of Fighting Leagues and its assets positions the company to potentially enter the combat sports promotion industry, which is a separate and distinct market.

Comparison to Industry Standards

• The company's revenue of $48,285 for the quarter is significantly lower than many established logistics companies, which often report revenues in the millions or billions.
• The company's net loss of $2,003,427 for the six months is substantial for a company of its size, indicating significant operational challenges.
• The company's cash balance of $27,957 is very low compared to industry standards, where companies typically maintain a cash reserve to cover operating expenses and potential risks.
• The company's internal control weakness is a significant concern, as most public companies are expected to have robust internal controls to ensure accurate financial reporting. This is a major red flag compared to industry best practices.
• The company's reliance on a limited customer base is a risk, as most successful logistics companies have a diversified customer portfolio to mitigate risk.

Stakeholder Impact

• Shareholders are negatively impacted by the restatement, net loss, and uncertainty about the company's future.
• Employees may be concerned about the company's financial stability and future prospects.
• Customers may be concerned about the company's ability to provide reliable services.
• Creditors may be concerned about the company's ability to repay its debts.

Next Steps

• The company needs to assess the profitability and time required to hold combat sports events in Nevada.
• The company needs to secure additional capital to meet its working capital and capital expenditure requirements.
• The company needs to address the material weakness in its internal control over financial reporting.

Key Dates

Keywords

restatement, acquisition, financial statements, Jebour Two Ltd, intangibles, production equipment, promoter license, net loss, revenue, internal control, logistics, combat sports