SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 2-93668-FW
UNIVIEW TECHNOLOGIES CORPORATION
(Exact name of Registrant as specified in its charter)
Texas 75-1975147
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10911 Petal Street, 75238
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(214) 503-8880
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has 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 Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES X NO
At September 30, 1998, there were 11,312,551 shares of Registrant's
common stock outstanding.
<PAGE>
GENERAL INDEX
Page
Number
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II.
OTHER INFORMATION
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
EXHIBIT INDEX 12
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
and Subsidiaries
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
A. BASIS OF INTERIM FINANCIAL STATEMENT PREPARATION
The interim financial statements and summarized notes included
herein were prepared, without audit, in accordance with generally
accepted accounting principles for interim financial information,
pursuant to rules and regulations of the Securities and Exchange
Commission. Because certain information and notes normally included in
complete financial statements prepared in accordance with generally
accepted accounting principles were condensed or omitted pursuant to such
rules and regulations, it is suggested that these financial statements be
read in conjunction with the Consolidated Financial Statements and the
Notes thereto, included in the Company's Annual Report on Form 10-K for
the preceding fiscal year. These interim financial statements and notes
hereto reflect all adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods
presented. Such financial results, however, should not be construed as
necessarily indicative of future earnings.
UNIVIEW TECHNOLOGIES CORPORATION
Consolidated Balance Sheets (Unaudited)
September 30 June 30
1998 1998
------------ -----------
ASSETS
Current Assets
Cash and cash equivalents $ 207,693 $ 2,284,988
Accounts receivable 2,054,445 1,726,900
Notes receivable 29,245 129,902
Inventory 808,046 943,048
Prepaid expenses and other 173,023 166,003
------------ -----------
Total current assets 3,272,452 5,250,841
------------ -----------
Long-term notes receivable 68,208 70,653
Software development 7,368,691 7,368,691
Less amortization (5,075,319) (4,747,694)
Licenses 1,130,120 1,130,120
Less amortization (90,167) (75,417)
Property and equipment 5,861,738 5,831,917
Less depreciation (2,710,553) (2,526,468)
Goodwill, Trademark 6,924,095 6,664,341
Less amortization (1,373,434) (1,285,908)
Other assets 47,585 47,586
------------ -----------
TOTAL ASSETS $ 15,423,416 $17,728,662
============ ===========
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
Consolidated Balance Sheets (Unaudited) - Continued
September 30 June 30
1998 1998
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 4,064,077 $ 3,644,729
Current maturities of obligations under
capital leases 52,218 50,666
Trade accounts payable 3,814,957 4,224,897
License fees payable 673,920 673,920
Accrued and other current liabilities 1,188,174 1,379,753
Deferred income 69,889 69,889
------------ -----------
Total Current Liabilities 9,863,235 10,043,854
------------ -----------
Long-Term Debt
Obligations under notes payable,
less current maturities - 15,495
Obligations under capital leases,
less current maturities 120,846 124,425
Warranty Provision 128,165 244,657
------------ -----------
Total Liabilities 10,112,246 10,428,431
------------ -----------
Stockholders' Equity
Preferred stock, cumulative, $1.00 par value;
1,000,000 shares authorized:
Series A, 140,000 shares (liquidation
preference of $140,000) $ 140,000 $ 140,000
Series H, 3 and 3 shares (liquidation
preference of $75,000 and $75,000) 3 3
Series Q, 60 shares issued June 1998
(liquidation preference $1,200,000
and $1,500,000) 48 60
Series 1998-A1, 80 shares issued June 1998
(liquidation preference $1,700,000
and $2,000,000) 68 80
Common stock, $.10 par value; 80,000,000 shares
authorized; 11,312,551 and 10,032,669 shares
issued and outstanding at September 30,
and June 30, 1998 1,131,255 1,003,267
Additional paid-in-capital 42,358,236 42,480,261
Accumulated deficit, since July 1, 1993 quasi
reorganization in which an accumulated
deficit of $4,140,595 was eliminated (38,318,440) (36,323,440)
------------ -----------
Total Stockholders' Equity $ 5,311,170 $ 7,300,231
------------ -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 15,423,416 $17,728,662
============ ===========
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
Consolidated Statements of Operations (Unaudited)
Three Months Ended
September 30 September 30
1998 1997
------------ -----------
REVENUE
Sales Revenues $ 4,391,991 $ 74,070
------------ -----------
TOTAL REVENUE 4,391,991 74,070
------------ -----------
COSTS OF SALES 3,456,529 65,878
------------ -----------
Gross Profit 935,462 8,192
OPERATING EXPENSES 2,818,558 2,362,551
------------ -----------
Operating Loss (1,883,096) (2,354,359)
------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (105,965) (11,414)
------------ -----------
INCOME/(LOSS) FROM CONTINUING OPERATIONS (1,989,061) (2,365,773)
Income Tax Benefit - -
NET INCOME/(LOSS) $ (1,989,061) $(2,365,773)
------------ -----------
NET INCOME/(LOSS) Per Share Cont. Operations,
Basic and Diluted $ (0.19) $ (0.61)
------------ -----------
NET INCOME/(LOSS) Per Share,
Basic and Diluted $ (0.19) $ (0.61)
------------ -----------
WEIGHTED AVERAGE SHARES OUTSTANDING,
Basic and Diluted
(adjusted for reverse stock split of 04/24/98) 10,243,171 3,907,626
------------ -----------
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
September 30 September 30
1998 1997
------------ -----------
CASH FLOW FROM OPERATING ACTIVITIES
Net Income/(Loss) $ (1,989,061) $(2,365,773)
Adjustments to reconcile net profit/(loss)
to net cash used by operating activities
Depreciation and Amortization 613,986 232,058
Provision for bad debts - 18,417
Increase (decrease) in accounts payable,
accrued and other liabilities (443,702) 76,130
Decrease (increase) in accounts receivable (327,545) (19,858)
Decrease (increase) in inventory 135,002 (299,717)
Decrease (increase) in prepaid expense (7,020) 164,894
Increase (decrease) in other liabilities - 95,220
------------ -----------
Cash provided (used) by operating
activities (2,018,340) (2,289,069)
------------ -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (29,821) (681,283)
Payments on notes receivable 103,103 -
Software Development - (1,008,030)
Proceeds from sale of marketable securities - 135,190
------------ -----------
Cash provided by investing activities 73,282 (1,554,123)
------------ -----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from long term debt - -
Payments on long-term debt (130,180) (4,374)
Principal payments on capital lease obligations (2,057) 412
Issuances of preferred and common stock for cash - 3,290,000
Dividends paid through issuance of common stock - (6,937)
------------ -----------
Cash provided (used) by financing activities (132,237) 3,279,101
------------ -----------
NET INCREASE (DECREASE) IN CASH (2,077,295) (564,091)
CASH AT BEGINNING OF PERIOD 2,284,988 800,346
------------ -----------
CASH AT END OF PERIOD $ 207,693 $ 236,255
------------ -----------
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This report may contain "Forward Looking Statements," which are
Company expectations, plans, and projections which may or may not
materialize, and which are subject to various risks and uncertainties.
When used in this report, the words "plans," "expects," "anticipates,"
"estimates" and similar expressions are intended to identify forward-
looking statements. For a discussion of risk factors associated with
some of these expectations, please refer to the section entitled "Risk
Factors" contained in the Company's most recent S-3 Registration
Statement, as well as the Company's other SEC filings, which contain
additional discussion about those factors which could cause actual
results or events to differ from management's expectations. These
forward-looking statements speak only as of the date of this report. The
Company expressly disclaims any obligation or undertaking to release
publicly any updates or change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any
such statement may be based, except as may be otherwise required by the
securities laws.
Overview
The following discussion provides information to assist in the
understanding of the Company's financial condition and results of
operations for the fiscal quarter ended September 30, 1998. It should be
read in conjunction with the Consolidated Financial Statements and Notes
thereto appearing in the Company's Annual Report on Form 10-K for fiscal
year ended June 30, 1998.
Results of Operations
Revenues. The Company reports revenues of $4,392,000 in the first
fiscal quarter, compared to $74,000 for the same quarter last year. This
increase resulted primarily from the Company's strategic acquisitions and
its expanded network design and integration capabilities.
Gross Profit. Gross Profit equals net sales less cost of goods sold
(both labor and material), non-direct, fixed manufacturing costs (such as
salaries, leasing costs, and depreciation charges related to production
operations), and non-direct, variable manufacturing costs (such as
supplies and employee benefits). In the first fiscal quarter, the
Company reports gross profit of $935,000, compared to $8,000 for the same
quarter last year. This increase resulted primarily from the Company's
strategic acquisitions and its expanded network design and integration
capabilities.
Operating Expenses. The Company reports $2,818,000 in operating
expenses for the first fiscal quarter, compared to $2,363,000 for the
same quarter last year. The Company anticipates that operating expenses
will remain fairly consistent as the Company continues to develop and
expand its business.
<PAGE>
Liquidity and Capital Resources
Cash Flows From Operations. Cash flows from operations for the
fiscal quarters ended September 30, 1998 and 1997 were ($2,018,000) and
($2,289,000), respectively. Major components of cash flows from operations
for the current quarter included: $614,000 for depreciation and
amortization, and the effects of a ($1,989,000) loss from operations.
Cash Flows From Investing Activities. During the first quarter,
the Company purchased $30,000 of property, plant, and equipment as
compared to the purchase for cash of approximately $681,000 during the
same period last year. The Company also collected $103,000 from payments
on notes receivable.
Cash Flows from Financing Activities. The Company used cash to
reduce long term debt in the amount of $132,000 during the quarter ended
September 30, 1998, compared to $3,300,000 provided by the issuance of
preferred stock during the same quarter last year.
The Company continues to rely on available credit arrangements and
continued sales of its common and preferred stock to supplement its
ongoing financial needs. It continues to be evident that to fully
realize the expected financial returns on its current business model, it
will be necessary for the Company to join with one or more major
financial business partners which have the means to fund the Company's
operations until it becomes self-supporting. Until the Company becomes
self-supporting or links with a substantial financial business partner,
additional equity or debt financing will be required. Management
continually evaluates opportunities with various investors to raise
additional capital, without which, the Company's operations, growth and
profitability would be restricted. Management has in the past been able
to raise necessary financing to fund ongoing operations, however, there
can be no assurance that such resources will continue to be available to
the Company or that they will be available upon terms favorable to the
Company. A lack of sufficient financial resources to fund operations
until the Company's business plan begins to produce the expected returns
could have a material adverse effect on the Company's business, operating
results and financial condition.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Common Stock is currently listed on the Nasdaq SmallCap Market
("Nasdaq"). In order to continue to be listed on Nasdaq, the Company
must maintain $2,000,000 in net tangible assets (total assets less total
liabilities and goodwill) or market capitalization of $35,000,000 or
$500,000 in net income for two of the last three years, a $1,000,000
market value for the public float, two market-makers, and a minimum bid
price of $1.00 per share. The Company has been notified that it complies
with all of the above listing criteria except the minimum bid price of
its Common Stock. The Company has been further notified that its Common
Stock price is not in compliance with the minimum bid price requirement,
pursuant to NASD Marketplace Rule 4310(c)(04). The Company has been
provided ninety (90) calendar days, which expires January 13, 1999, to
regain compliance with this standard. The Company regains compliance
after its Common Stock price closes at or above the minimum requirement
for at least ten (10) consecutive trade days prior to January 13, 1999.
<PAGE>
Prior to January 13, 1999 and in the future, if the Company fails to
meet the minimum maintenance criteria it may result in the delisting of
the Company's securities from Nasdaq, and trading, if any, of the
Company's securities would thereafter be conducted in the non-Nasdaq over-
the-counter market. If the Company's securities are delisted, an
investor could find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to remain below
$5.00 per share, trading in the Common Stock would also be subject to the
requirements of certain other rules promulgated under the Securities
Exchange Act of 1934, as amended. Such rules require additional
disclosure by broker-dealers in connection with any trades involving a
stock defined as a "penny stock," i.e., any non-Nasdaq equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions. Such rules further require the delivery of a disclosure
schedule explaining the penny stock market and the risks associated
therewith prior to entering into any penny stock transaction, and impose
various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited
investors (generally institutions.) For these types of transactions, the
broker-dealer must make a special suitability determination for the
purchaser and must receive the purchaser's written consent to the
transaction prior to the sale. The additional burdens imposed upon
broker-dealers by such requirements could discourage broker-dealers from
effecting transactions in the Common Stock, which could severely limit
the market liquidity of the Common Stock and the ability of purchasers in
this offering to sell the Common Stock in the secondary market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Reference is made to the Exhibit Index beginning on page 12 of
this Form 10-Q for a list of all exhibits filed with and
incorporated by reference in this report.
(b) Reports on Form 8-K
During the three months ended September 30, 1998 the Company
filed an amended Current Report on Form 8-K/A, dated September
1, 1998 reporting the required financial information concerning
the Company's acquisition of Video Management, Inc. (including
wholly owned subsidiaries Network America, Inc. and CompuNet
Support Systems, Inc.).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
uniView Technologies Corporation
(Registrant)
By: /s/ Patrick A. Custer
Patrick A. Custer, President
(Principal Financial and Duly
Authorized Officer)
Date: November 3, 1998
<PAGE>
UNIVIEW TECHNOLOGIES CORPORATION
and Subsidiaries
EXHIBIT INDEX
Exhibit Number Description of Exhibits Sequential Page Number
3(i) Articles of Incorporation of the Company, as amended
(filed as Exhibit "4.1" to the Company's Registration
Statement on Form S-3 filed with the Commission on May 13,
1998 and incorporated herein by reference.) N/A
3(ii) Bylaws of the Company, as amended (filed as Exhibit
"3(ii)" to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 1997 and
incorporated herein by reference.) N/A
4.1 Form of Common Stock Certificate of the Company (filed as
Exhibit "4.2" to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 and incorporated
herein by reference.) N/A
4.2 Series A Preferred Stock terms and conditions (filed as
Exhibit "4.3" to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 and incorporated
herein by reference.) N/A
4.3 Series H Preferred Stock terms and conditions (filed as
Exhibit "4.4" to the Company's Registration Statement on
Form S-3 originally filed with the Commission on June 20,
1996 and incorporated herein by reference.) N/A
4.4 Series Q Preferred Stock terms and conditions (filed
as Exhibit "4.6" to the Company's Current Report on Form 8-
K dated June 12, 1998 and incorporated herein by
reference.)
4.5 Series 1998-A1 Preferred Stock terms and conditions
(filed as Exhibit "4.5" to the Company's Registration
Statement on Form S-3 filed with the Commission on July
20, 1998 and incorporated herein by reference.) N/A
4.6 Form of warrant issued in connection with Series 1998-A1
Preferred Stock (filed as Exhibit "4.7" to the Company's
Registration Statement on Form S-3 filed with the
Commission on July 20, 1998 and incorporated herein by
reference.) N/A
4.7 Form of warrant issued in connection with the J.P. Carey
Agreement (filed as Exhibit "4.8" to the Company's
Registration Statement on Form S-3 filed with the
Commission on July 20, 1998 and incorporated herein by
reference.) N/A
4.8 Form of warrant issued in connection with the Pacific
Continental Agreement (filed as Exhibit "4.9" to the
Company's Registration Statement on Form S-3 filed with
the Commission on July 20, 1998 and incorporated herein by
reference.) N/A
<PAGE>
27* Financial Data Schedule. 14
_______________
* Filed herewith.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR FISCAL QUARTER ENDED
SEPTEMBER 30, 1998.
</LEGEND>
<S> <C>
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<PERIOD-TYPE> 3-MOS
<CASH> 207,693
<SECURITIES> 0
<RECEIVABLES> 2,054,445
<ALLOWANCES> 16,570
<INVENTORY> 808,046
<CURRENT-ASSETS> 3,272,452
<PP&E> 5,861,738
<DEPRECIATION> 2,710,553
<TOTAL-ASSETS> 15,423,416
<CURRENT-LIABILITIES> 9,863,235
<BONDS> 0
0
140,119
<COMMON> 1,131,255
<OTHER-SE> 4,039,796
<TOTAL-LIABILITY-AND-EQUITY> 15,423,416
<SALES> 4,391,991
<TOTAL-REVENUES> 4,391,991
<CGS> 3,456,529
<TOTAL-COSTS> 3,456,529
<OTHER-EXPENSES> 2,818,558
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,965
<INCOME-PRETAX> (1,989,061)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,989,061)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,989,061)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
