UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended June 30, 1996, or
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from to
Commission file No. 0-15369
TUNEX INTERNATIONAL, INC.
(Name of Small Business Issuer as specified in its charter)
Utah 87-0416684
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identiffication No.)
556 East 2100 South, Salt Lake City, Utah 84106
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (801) 486-8133
Check whether the issuer (1) filed all reports required
to be filed by sections 13 or 15(3) of the 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 [ ]
Check whether the issuer filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of
the Exchange Act after the distribution of securities under
a plan confirmed by a court. Yes [X] No [ ]
As of June 30, 1996, the Issuer had outstanding
1,326,005 shares of common stock.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Tunex International, Inc. ("Issuer" or "Company"),
files herewith an unaudited balance sheet of the Issuer as
of June 30, 1996, and the related statements of operations
and changes in stockholders' equity and cash flow for the
three month period ended June 30, 1996. In the opinion of
management of the Company, the financial statements fairly
present the financial condition of the Company. Management
is not aware of any adjustments that are necessary to a fair
presentation of the results for the interim periods
disclosed.
TUNEX INTERNATIONAL, INC
BALANCE SHEETS
March 31, June 30,
1996 1996
Unaudited
CURRENT ASSETS:
Cash $206,280 $193,173
Receivables - current 115,865 140,686
portion
Parts inventories 85,377 108,968
Prepaid expenses 6,828 6,765
Deferred income tax 18,900 18,900
benefit
Total Current 433,250 468,492
Assets
PROPERTY, PLANT AND
EQUIPMENT:
Net of accumulated 174,646 230,598
depreciation
OTHER ASSETS
Notes Receivable, less 46,664 46,137
current
Idle Equipment 8,910 8,910
Goodwill, net of 245,627 240,502
amortization
Trademarks 1,319 1,297
Deposits 41,086 41,750
Deferred income tax 170,100 148,100
benefits
Total Other 513,706 486,696
Assets
TOTAL ASSETS $1,121,602 $1,185,786
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, June 30,
1996 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $29,952 $49,058
Accrued liabilities 107,320 126,411
Income taxes payable 3,100 3,600
Note payable - line of 35,000 - - -
credit
Notes payable - related
parties - current 34,141 27,576
portion
Obligations under
capital - leases current 8,500 21,293
portion
Pre-petition liabilities 56,963 56,963
- - - current portion
Total Current 274,976 284,901
Liabilities
LONG TERM DEBT:
Commitments 60,000 60,000
Notes payable - related
parties - net of 128,139 128,139
current
portion
Obligations under
capital leases - net of 16,970 46,443
current
portion
Pre-petition 186,030 165,767
liabilities, net of current
portion
TOTAL LIABILITIES 666,115 685,250
STOCKHOLDERS' EQUITY:
Common Stock, par value
$.001,
50,000,000
shares authorized, 1,326 1,326
1,326,005
shares issued &
outstanding
Preferred Stock, Class A, par
value $.50,
600,000 shares 300,000 300,000
authorized, issued &
outstanding
Preferred Stock, Class B, par
value $1.00,
700,000 shares 501,917 501,917
authorized, 501,917
shares issued
& outstanding
Additional paid-in 3,783,908 3,783,908
capital
Accumulated Deficit (4,131,664) (4,086,617)
Total Stockholders 455,487 500,536
Equity
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,121,602 $1,185,786
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter
Ended June 30,
1996
1995
SALES AND OTHER REVENUE:
Service and parts sales $556,371 $464,666
Franchise Royalties 48,359 36,792
Franchise Sale (Net of 19,000 26,500
Costs)
Other Revenue 43,659 7,301
Total Revenues 667,389 535,259
COSTS AND EXPENSES:
Cost of service and 359,015 284,593
parts sales
General and 217,605 199,054
Administrative expenses
Depreciation 10,896 14,035
Interest expense 9,226 9,403
Total Costs 596,742 507,085
and Expenses
INCOME BEFORE INCOME TAXES $70,647 $28,172
Current Income Tax Expense 3,600 1,500
Deferred Income Tax Expense 22,000 6,300
NET INCOME $ 45,047 $ 20,372
Net Income for Common Share $.02 $.01
or
Common Share Equivalent
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Three
Months Ended June 30,
1996
1995
CASH FLOW FROM OPERATIONS:
Net Income $ 45,047 $ 20,372
Items not requiring 10,896 14,035
cash: depreciation
55,943 34,407
Decrease (increase) in (24,821) (12,505)
receivables
Decrease (increase) in (23,592) ( 7,678)
inventories
(Decrease) increase in 38,697 18,166
accounts payable
Decrease (increase) in
prepaid expenses,
PP&E, capital (9,003) (22,233)
expenditure in cash
Decrease in deferred tax 22,000 6,300
benefits
Net cash $59,224 $ 16,457
provided (used) in operation
CASH FLOW FROM FINANCING
ACTIVITIES:
Principal payments on (20,263) (23,352)
pre-petition debt
Principal payments on
capital lease (10,413) (10,264)
obligations
(Decrease) increase I (41,565) - - - -
Long-term notes
Net cash
provided (used) from (72,241) (33,616)
financing
Net cash provided during (13,017) (17,159)
three months
Cash on hand - beginning 206,280 270,738
Cash on hand - ending $193,173 $253,579
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material Changes in Financial Condition.
At June 30, 1996, the Company had some changes in its financial
condition. Parts inventories have increased from $85,377 on
March 31, 1996 to $108,968 as of June 30, 1996. This increase in
inventories is primarily due to stocking inventories in a newly
opened company-owned service center and newly acquired
inventories in the Company's warehouse for sale to franchised
centers. This parts inventories increase, along with paying off
a bank note (line of credit) has resulted in an improvement of
the Company's working capital from $158,274 on March 31, 1996 to
$183,591 on June 30, 1996.
Management believes that the working capital of the Company is
adequate for its current and on going operations and its
development of new service centers for conversion to franchised
centers on a gradual basis.
Results of Operations.
During the three months ended June 30, 1996, the Company's total
revenue increased from $535,259 in 1995 to $667,389 in 1996.
This increase in general, is the result of increased sales in the
company-owned service centers, increased royalties due to a
system-wide, same-store sales increase of more than 13% in
franchised centers plus the royalty income from two new franchise
centers, and additional income as a result of the sale of a
company-owned and developed center to a franchise. For the three
month period ended June 30, 1996, the Company shows an income
from operations before income tax of $70,647, compared to income
of $28,172 for the same period in 1995. This increase in income
is primarily due to the increase in revenue and in particular the
sale of the company-owned center to a franchise.
After giving effect to income tax expenses and the change as a
result of deferred tax benefits, the net income for the three
months period ended June 30, 1996 is $45,047, as compared to
$20,372 for the same period in 1995. Consequently, the Company
had net income per common share, on a fully diluted basis of
$0.02 for the three month period ended June 30, 1996 as compared
to $0.01 for the same period in 1995.
During the three month period ended June 30, 1996 the Company has
developed and opened for operation one new service center in
Northglenn, Colorado. This center is now operated by the Company
and is available for sale and the conversion to a franchise on a
turn-key basis. This brings the total amount of centers in the
Tunex system to twenty-two (22) with five centers company owned.
In looking ahead, two additional locations for new service
centers have been identified with construction on one location to
start this month. The Company plans to continue the development
of new centers on a schedule that is based on the frequency of
the sales and conversions to franchises of these company-
developed centers.
In addition to these turn-key conversions the Company expects to
sell individual franchise licenses for development by the
franchise licensee, primarily in states where Tunex franchises
are already in operation and continue to offer master franchises
for areas, cities or states in other parts of the country.
Individual franchise licenses cost $19,000 with 5% royalty on
gross sales. The cost of master franchises is dependent on the
size of the areas involved.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS: Attached is the Financial Data Schedule, Exhibit
Reference Number 27
FORM 8-K: None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TUNEX INTERNATIONAL, INC.
Date: August 10, 1996 By Rudolf Zitzmann (Signature)
President(Duly Authorized and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF TUNEX INTERNATIONAL, INC., FOR THE PERIOD
ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 193,173
<SECURITIES> 0
<RECEIVABLES> 186,623
<ALLOWANCES> 10,000
<INVENTORY> 108,968
<CURRENT-ASSETS> 468,492
<PP&E> 230,598
<DEPRECIATION> 360,426
<TOTAL-ASSETS> 1,185,786
<CURRENT-LIABILITIES> 284,091
<BONDS> 0
0
1,101,917
<COMMON> 1,326,005
<OTHER-SE> 500,536
<TOTAL-LIABILITY-AND-EQUITY> 1,185,786
<SALES> 556,371
<TOTAL-REVENUES> 667,389
<CGS> 359,015
<TOTAL-COSTS> 217,605
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<INCOME-TAX> 3,600
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<CHANGES> 22,000
<NET-INCOME> 45,047
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