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
September 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) Identification
Number)
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 September 30, 1996, the Issuer had outstanding 1,246,005
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 September 30,
1996, and the related statements of operations and changes in
stockholders' equity and cash flow for the six month period ended
September 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, September 30,
1996 1996
(Unaudited)
CURRENT ASSETS:
Cash $206,280 $ 91,718
Receivables - current 115,865 125,306
portion
Parts inventories 85,377 76,971
Prepaid expenses 6,828 5,916
Deferred income tax benefit 18,900 18,900
Total Current Assets 433,250 318,811
PROPERTY, PLANT AND
EQUIPMENT:
Net of accumulated 174,646 189,016
depreciation
OTHER ASSETS
Notes Receivable, less 46,664 118,957
current
Idle Equipment 8,910 8,910
Goodwill, net of 245,627 135
amortization
Trademarks 1,319 1,274
Deposits 41,086 46,175
Deferred income tax 170,100 152,100
benefits
Total Other Assets 513,706 327,551
TOTAL ASSETS $1,121,602 $835,378
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, September
1996 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $29,952 $33,296
Accrued liabilities 107,320 75,362
Income taxes payable 3,100 3,202
Note payable - line of 35,000 ------
credit
Notes payable - related
parties - 34,141 ------
current portion
Obligations under capital
leases 8,500 11,623
- current portion
Pre-petition liabilities -
current portion 56,963 56,963
Total Current Liabilities 274,976 180,546
LONG TERM DEBT:
Commitments 60,000 -------
Notes payable - related
parties; 128,139 -------
net of current portion
Obligations under capital
leases; 16,970 45,724
net of current portion
Pre-petition liabilities,
net of 186,030 145,537
current portion
TOTAL LIABILITIES 666,115 372,386
STOCKHOLDERS' EQUITY:
Common Stock, par value
$.001,
50,000,000 shares
authorized, 1,326 1,246
1,246,005 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
authorized, 501,917 501,917
501,917 shares issued &
outstanding
Additional paid-in capital 3,783,908 3,743,987
Accumulated Deficit (4,131,664) (4,083,579)
Total Stockholders Equity 455,487 463,571
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,121,602 $835,378
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months Ended
Ended
September 30 September 30
1996 1995 1996 1995
SALES AND OTHER REVENUE:
Service and parts sales $390,22 $532,536 946,595 $ 997,202
4
Franchise Royalties 52,115 43,005 100,474 79,797
Franchise Sales ------- -------- 19,000 26,500
(Net of Costs) - -
Other Revenue 14,073 9,200 57,732 16,501
Total Revenue 456,412 584,741 1,123,80 1,120,000
1
COSTS AND EXPENSES:
Cost of service and 259,447 334,629 618,462 619,222
parts
General and 182,806 194,763 400,993 393,817
Administrative
Depreciation 8,107 14,036 19,003 28,071
Interest expense 7,114 9,957 16,340 19,360
Total Costs and 457,474 553,385 1,054,21 1,060,470
Expenses 6
INCOME (LOSS)BEFORE (1,062) $ 31,356 69,003 $ 59,530
INCOME TAXES
Current Income Tax (100) -------- 3,500 --------
Expense
(Credit)
Deferred Income Tax (4,000) 8,041 18,000 14,842
Expense
(Credit)
NET INCOME $3,038 $ 23,315 $47,503 $ 44,688
NET INCOME PER COMMON $ $ $ $
SHARE 0.0 .01 .02 .02
OR COMMON SHARE
EQUIVALENT
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Six Months Ended
September 30,
1996 1995
CASH FLOW FROM OPERATIONS:
Income Before Income Taxes $ 69,003 $ 59,531
Items not requiring cash:
Depreciation 19,003 28,071
88,006 87,602
Decrease (increase) in (9,441) (2,826)
receivables
Decrease (increase) in 8,406 (12,406)
inventories
(Decrease) increase in (28,233) 71,810
accounts
payable
Decrease (increase) in
prepaid
expenses,
PP&E, capital expenditure in (18,547) (44,131)
cash
Net cash provided (used) in
operation 40,191 100,049
CASH FLOW FROM FINANCING
ACTIVITIES:
Principal payments on pre-
petition (40,493) (41,101)
debt
Principal payments on capital
lease (17,401) (76,575)
obligations
(Decrease) Increase in long
term (96,859) ---------
notes
Sale of Stock ---------- 8,125
Net cash provided (used)
from (154,753) (109,733)
financing
Net cash provided (used )
during (114,562) (9,684)
six month
Cash on hand - beginning 206,280 270,738
Cash on hand - ending $ 91,718 $ 261,054
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material Changes in Financial Condition.
At September 30, 1996, the Company had considerable changes in
its financial condition. Total current assets have decreased from
$433,250 to $318,811 on September 30, 1996. This reduction is
largely due to the decrease in cash from $206,280 on March 31,
1996 to $91,718 on September 30, 1996, which is the result of
costs associated with the operation of a recently opened center,
an unusual loss in income for the three months ended September
30, 1996, and the reversal in cash flow associated with the
resale of two company-owned centers to its former owner and
franchisee. The re-sale has also affected other assets by
increasing long-term receivable from $46,664 on March 31, 1996 to
$118,957 on September 30, 1996 and reducing goodwill from
$245,627 on March 31, 1996 to $135 on September 30, 1996. The
overall result is a decrease in total assets from $1,121,602 on
March 31, 1996 to $835,378 on September 30, 1996.
Current liabilities are reduced from $274,976 on March 31, 1996
to $180,546 on September, 1996 due to a reduction in accrued
liabilities, the pay-off on a $35,000 line of credit and the
cancellation of $34,141 in notes payable to related parties.
Total liabilities are reduced from $666,115 on March 31, 1996 to
$372,386 on September 30, 1996 also through the cancellation of
long term debt, like notes payable to related parties and
commitments in the amount of $60,000. The net result is that
total Stockholders' Equity has increased from $455,487 on March
31, 1996 to 463,571 on September 30, 1996.
Management believes that the working capital of the company is
adequate for its current and ongoing operations and the
development of another new service center for conversion to a
franchised center.
Results of Operations.
During the six months period ended September 30, 1996, the
Company's total revenue remained basically the same, although
revenue for the three months period ended September 30, 1996 came
partially from three service centers versus five centers in the
prior three months period. Income before income taxes for the
three months ended September 30, 1996 resulted in a loss of
$1,062 compared to a gain of $31,356 for the same period in 1995.
This loss is primarily the result of lower than usual sales
during the summer months and other isolated operational problems,
which have since been dealt with.
Income before income taxes, for the six months period ended
September 30, 1996, is $69,003 compared to $59,530 for the same
period in 1995. This increase in general is the result of
increased royalties due to a systemwide same-store sales increase
of more than 10% in franchised centers plus the royalty income
from three new franchised centers, and other revenue as the
result of the sales of company-owned centers to franchises.
After giving effect to income tax credits, and the change as a
result of deferred tax benefits, the net income for the three
month period ended September 30, 1996 is $3,038 as compared to
$23,315 for the same period in 1995. Consequently, the company
had zero income per common share, on a fully diluted basis for
the three month period ended September 30, 1996, as compared to $
.01 for the same period in 1995. Net income for the six month
period ended September 30, 1996 is $47,503 as compared to $44,688
for the same period in 1995. Income per common share, on a fully
diluted basis, for the six month period ended September 30, 1996
is $0.02, which is the same as for that same period in 1995.
On September 1, 1996 the company reversed it purchase of two
franchised centers and resold these two centers to its Vice
President and Director of Operations, who is now again the owner
of these franchises. This brings the total amount of franchised
centers in the Tunex system to nineteen (19) plus three centers,
which are company owned.
In looking ahead, construction on a new center is well underway
with an opening for business scheduled for mid-January 1997. The
Company is actively advertising its franchise opportunities and
expects to find qualified individuals that will either buy any of
the newly developed and operational centers or purchase
individual franchise licenses for development by the franchise
licensee. The company is concentrating its efforts primarily in
the mountain 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
area involved.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS: None
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: November 12, 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 QUARTER
ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 91,718
<SECURITIES> 0
<RECEIVABLES> 244,263
<ALLOWANCES> 10,000
<INVENTORY> 76,971
<CURRENT-ASSETS> 318,673
<PP&E> 189,016
<DEPRECIATION> 313,673
<TOTAL-ASSETS> 835,378
<CURRENT-LIABILITIES> 180,546
<BONDS> 0
0
1,101,917
<COMMON> 1,246,005
<OTHER-SE> 463,571
<TOTAL-LIABILITY-AND-EQUITY> 835,378
<SALES> 946,594
<TOTAL-REVENUES> 1,123,801
<CGS> 618,462
<TOTAL-COSTS> 400,993
<OTHER-EXPENSES> 35,343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 69,003
<INCOME-TAX> 3,500
<INCOME-CONTINUING> 65,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 18,000
<NET-INCOME> 47,503
<EPS-PRIMARY> .038
<EPS-DILUTED> .02
</TABLE>
