6
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
December 31, 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 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 of 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 December 31, 1996, the Issuer had outstanding:
1,246,005 share 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
December 31, 1996, and the related statements of operations and
changes in stockholders' equity and cash flow for the nine-month
period ended December 31, 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, Dec. 31,
1996 1996
(Unaudited)
CURRENT ASSETS:
Cash $206,280 $ 54,936
Receivables - current 115,865 124,618
portion
Parts inventories 85,377 77,504
Prepaid expenses 6,828 3,428
Deferred income tax benefit 18,900 18,900
Total Current 433,250 279,386
Assets
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated 174,646 196,255
depreciation
OTHER ASSETS
Notes Receivable, less 46,664 118,957
current
Idle Equipment 8,910 8,910
Goodwill, net of 245,627 ---
amortization
Trademarks 1,319 1,251
Deposits 41,086 46,175
Deferred income tax 170,100 170,100
benefits, less
current
Total Other Assets 513,706 345,393
TOTAL ASSETS $1,121,602 $ 821,034
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, Dec. 31,
1996 1996
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $29,952 $15,594
Accrued liabilities 107,320 73,280
Income taxes payable 3,100 3,750
Note payable - line of credit 35,000 -----
Notes payable - related
parties - current portion 34,141 -----
Obligations under capital
leases-current portion 8,500 7,403
Pre-petition liabilities -
current portion 56,963 56,963
Total Current 274,976 157,371
Liabilities
LONG TERM DEBT:
Commitments 60,000 -----
Notes payable - related
parties - 128,139 -----
net of current portion
Obligations under capital
leases - 16,970 44,974
net of current portion
Pre-petition liabilities, net
of 186,030 131,731
current portion
TOTAL LIABILITIES: 666,115 334,076
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,246,005 issued & 1,326 1,246
outstanding
Preferred Stock, Class A, par
value $.50,
600,000 shares authorized, 300,000 300,000
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 capital 3,783,908 3,743,988
Accumulated Deficit (4,131,664) (4,085,195)
Total Stockholders Equity 455,487 461,956
TOTAL LIABILITIES AND
STOCKHOLDERS' $1,121,602 $ 796,032
EQUITY
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine
Months
Ended Ended
December 31 December 31
1996 1995 1996 1995
SALES AND OTHER REVENUE:
Service and parts sales $ $ $1,170,9 $
224,371 430,472 66 1,427,674
Franchise Royalties 53,027 37,762 153,501 117,559
Franchise Sales (Net of 7,750 1,000 26,750 27,500
Costs)
Other Revenue 7,866 16,024 65,598 32,525
Total Revenue 293,014 485,258 1,416,81
5 1,605,258
COSTS AND EXPENSES:
Cost of service and parts 150,095 275,030 768,557 894,252
General and Administrative 128,518 190,900 529,511 584,717
Depreciation 3,751 14,036 22,754 42,107
Interest expense 4,433 9,335 20,773 28,695
Total Costs and 286,797 489,301 1,341,59 1,549,771
Expenses 5
INCOME BEFORE INCOME TAXES 6,217 ( 75,220 55,487
4,043)
Current Income Tax Expense
(credit) 250 ----- 3,750 -----
Deferred Income Tax
Expense 2,300 ----- 24,300 12,000
(credit)
NET INCOME (LOSS) $ 3,667 $ $ $ 43,487
(4,043) 47,170
NET INCOME PER COMMON SHARE
OR COMMON SHARE EQUIVALENT $ $ ( $ $
.001 .001) .02 .02
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Nine Months Ended
December 31,
1996 1995
CASH FLOW FROM OPERATIONS:
Income $ 47,170 $ 43,487
Items not requiring cash:
Depreciation 22,754 42,107
69,924 85,594
Decrease (increase) in receivables (81,045) (7,759)
Decrease (increase) in inventories 7,873 (13,349)
(Decrease) increase in accounts (48,398) (2,394)
payable
Decrease (increase) in prepaid
expenses,
PP&E, capital expenditure in cash (23,298) (58,191)
Decrease in deferred income tax 24,300 12,000
benefits
Net cash provided (used) in (50,644) $ 15,901
operation
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition (54,299) (55,494)
debt
Principal payments on capital
lease (26,907) -0-
obligations
(Decrease) increase in long term (19,494) (20,027)
note
Sale of Stock ----------- 10,750
Net cash provided (used) from (100,700) (64,771)
financing
Net cash provided (used )
during nine (151,344) (48,870)
months
Cash on hand - beginning 206,280 270,738
Cash on hand - ending $ 54,936 $221,868
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF PLAN OF
OPERATION
Material changes in financial condition.
At December 31, 1996 the Company had considerable changes in its
financial condition. Total current assets decreased from
$433,250 to $279,386 in December 31, 1996. This is largely due
to the decrease in cash from $206,280 on March 31, 1996 to 54,936
on December 31, 1996. These changes are the result from costs
associated with the development, outfitting and operation of two
newly opened centers, an unusual loss in income during the second
quarter period 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 December 31, 1996 and reducing goodwill from $245,627
on March 31, 1996 to zero on December 31, 1996. The overall
result is a decrease in total assets from $1,121,602 on March 31,
1996 to $796,032 on December 31, 1996.
Current liabilities are reduced from $274,976 on March 31, 1996
to $157,371 on December 31, 1996, through a reduction of over
$48,000 in accounts payable and 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 $334,076 on December
31, 1996, additionally through the cancellation of long term
debt, such as notes payable to related parties and commitments in
the amount of $60,000. Total Stockholders' Equity has increased
from $455,487 on March 31, 1996 to $461,956 on December 31, 1996.
Management believes that the working capital of the company is
adequate for its current and ongoing operations. Development of
additional new service center, for conversion to a franchised
center, is dependent on the sale and conversion of these newly
opened centers or the sale of a more established center.
Results of Operations.
During the nine months period ended December 31, 1996, the
Company's total revenue declined from $1,605,258 to $1,416,815,
this is solely the result of service and parts sales from the
three centers versus five centers over the last five month
period. Income before income taxes for the three months ended,
December 31, 1996 resulted in a gain of $6,217 compared to a loss
of $4,043 for the same period in 1995.
Income before income taxes, for the nine month period ended
December 31, 1996, is $75,220 compared to $55,487 for the same
period in 1996. This increase in general is the result of
increased royalties due to a system wide same-store sales
increase of almost 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 December 31, 1996 is $3,667 as compared to a
loss of $4,043 for the same period in 1995. Consequently, the
company had $.001 income per common share, on a fully diluted
basis for the three month period ended December 31, 1996, as
compared to a loss $.001 for the same period in 1995. Net income
for the nine month period ended December 31, 1996 is $47,170 as
compared to $43,487 for the same period in 1995. Income per
common share, on a fully diluted basis, for the nine month period
ended December 31, 1996 is $0.02, which is the same for that same
period in 1995.
In looking ahead, construction on a new center has just been
completed with an opening for business scheduled for March 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 continues 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.
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: February 11, 1997 By Rudolf Zitzmann (Signature)
President (Duly Authorized and
Principal Financial Officer)
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<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
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<SECURITIES> 0
<RECEIVABLES> 243,575
<ALLOWANCES> 10,000
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<PP&E> 196,255
<DEPRECIATION> 317,267
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801,917
<COMMON> 1,246
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<CGS> 768,557
<TOTAL-COSTS> 529,511
<OTHER-EXPENSES> 43,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 75,220
<INCOME-TAX> 3,750
<INCOME-CONTINUING> 71,470
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<EXTRAORDINARY> 0
<CHANGES> 24,300
<NET-INCOME> 47,170
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