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, 1997, 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 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, 1997, the Issuer had outstanding
1,248,215 shares of common stock.
<PAGE>
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, 1997, and the related statements of
operations and changes in stockholders' equity and cash flow
for the six month period ended September 30, 1997. 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
1997 30,
1997
(Unaudited)
CURRENT ASSETS:
Cash $ 61,262 $ 86,700
Receivables - current portion 133,588 109,361
Parts inventories 62,863 67,118
Prepaid expenses 10,230 6,458
Deferred income tax benefit 18,900 18,900
Total Current Assets 286,843 288,537
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation 214,757 214,969
OTHER ASSETS
Notes Receivable, less current 117,991 117,991
Idle Equipment 9,210 9,210
Trademarks 1,229 2,272
Deposits 6,386 7,386
Deferred income tax benefits 151,200 151,200
Total Other Assets 286,016 288,059
TOTAL ASSETS $ 787,616 $ 791,566
<PAGE>
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, September
1997 30,
1997
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 21,730 $ 10,717
Accrued liabilities 59,791 49,891
Income taxes payable ------- 800
Obligations under capital 18,153 13,767
leases -current portion
Pre-petition liabilities - 52,196 52,196
current portion
Total Current Liabilities 151,878 127,371
LONG TERM DEBT:
Obligations under capital leases -
net of current portion 22,964 21,289
Pre-petition liabilities, net of 114,587 75,271
current portion
TOTAL LIABILITIES 289,429 223,931
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,248,215 shares issued & outstanding 1,248 1,248
Preferred Stock, Class A, par value $.50,
600,000 shares authorized, issued
& outstanding 300,000 300,000
Preferred Stock, Class B, par value
$1.00, 700,000 shares authorized,
497,262 shares issued & outstanding 497,262 497,262
Additional paid-in capital 3,748,641 3,743,641
Accumulated Deficit (4,048,964) (3,979,516)
Total Stockholders Equity 498,187 567,635
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $787,616 $791,566
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months
Ended Ended
September 30 September 30
1997 1996 1997 1996
SALES AND OTHER REVENUE:
Service and parts sales $273,165 $390,224 $537,340 $946,595
Franchise Royalties 63,440 52,115 126,323 100,474
Franchise Sales
(Net of costs) ------- -------- 17,000 19,000
Other Revenue 8,062 14,073 16,946 57,732
Total Revenue 344,667 456,412 697,609 1,123,801
COSTS AND EXPENSES:
Cost of service and parts 172,780 259,447 340,825 618,462
General and Administrative 127,081 182,806 266,876 400,993
Depreciation 5,267 8,107 10,533 19,003
Interest expense 3,308 7,114 7,381 16,340
Total Costs and Expenses 308,436 457,474 625,615 1,054,216
INCOME (LOSS)BEFORE INCOME $36,231 (1,062) 71,994 69,003
TAXES
Current Income Tax Expense 1,800 (100) 3,600 3,500
(Credit)
Deferred Income Tax Expense 9,100 (4,000) 18,300 18,000
(Credit)
NET INCOME 25,311 $ 3,038 50,094 $47,503
NET INCOME PER COMMON SHARE $ 0.012 $ 0.0 $ 0.024 $ .022
OR COMMON SHARE EQUIVALENT
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Six Months Ended September 30,
1997 1996
CASH FLOW FROM OPERATIONS:
Income Before Income Taxes $ 71,994 $ 69,003
Items not requiring cash:
Depreciation 10,533 19,003
82,527 88,006
Decrease (increase) in receivables 24,227 (9,441)
Decrease (increase) in inventories 679 8,406
(Decrease) increase in accounts payable (22,342) (28,233)
Decrease (increase) in prepaid expenses,
PP&E, capital expenditure in cash (15,951) (18,547)
Net cash provided (used) in operation 69,140 40,191
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt (39,317) (40,493)
Principal payments on capital lease (4,386) (17,401)
obligations
(Decrease) increase in long term notes -------- (96,859)
Net cash provided (used) from financing (43,703) (154,753)
Net cash provided during six month 25,437 (114,562)
Cash on hand - beginning 61,263 206,280
Cash on hand - ending $ 86,700 $ 91,718
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material Changes in Financial Condition.
At September 30, 1997, the company's financial condition
continued to improve, primarily as the result of a decrease in
accounts payable, accrued liabilities and capital lease
obligations, causing the working capital to increase from
$134,065 on March 31, 1997 to $161,166 on September 30, 1997.
Further reduction of long-term debt, and in particular pre-
petition liabilities, has increased stockholders' equity from
$498,187 on March 31, 1997 to $567,635 on September 30, 1997.
Management believes that the working capital of the Company is
adequate for its current and on-going operations and its
continuing development of new service centers for conversion to
franchised centers on a gradual basis.
Results of operations.
During the six months period ended September 30, 1997, the
Company's total revenue decreased from $1,123,801 in 1996 to
$697,609 in 1997. This decrease is the direct result of reduced
services and parts sales due to the sale and the conversion to
franchises of three company owned centers during the year ended
March 31, 1997. The same explains the increase in franchise
royalties from $100,474 in 1996 to $126,323 in 1997. The
decrease in other revenue from $57,732 in 1996 to $16,946 in 1997
is attributable to the sale of one company owned center in that
period of 1996 and represents mostly the sale of goodwill from
that center.
For the six month period September 30, 1997 the company shows as
income from operations, before income tax, of $36,231 compared to
a loss of $1,062 for the same period in 1996. This increase in
income is the result of higher profits in the company owned
centers and additional franchise royalties due to a system-wide
same-store sales increase of almost 9% in franchised centers plus
the royalty income from two new franchised centers, during the
1997 period.
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, 1997 is $25,331 as compared to
$3,038 for the same period in 1996. Consequently, the company
had $.012 income per common share, on a fully diluted basis for
the three month period ended September 30, 1997, as compared to
zero income for the same period in 1996. Net income for the six
month ended September 30, 1997 is $50,094 as compared to $47,503
for the same period in 1996. Income per common share, on a fully
diluted basis, for the six month period ended September 30, 1997
is $0.024 as compared to $0.022 for that same period in 1996.
During the six month period ended September 30, 1997, the company
operated three of its own centers and one center that is
franchised to an investment entity. During this period the
company had a new franchised center open in the Hunter area of
West Valley City, Utah. This makes the total amount of centers
in the Tunex system twenty-four (24) compared to twenty-two (22)
at the same period in 1996.
In looking ahead, the company continues to identify new locations
for either development by the company for turn-key conversions to
franchises or for development by qualified franchise owners,
depending on circumstances and the availability of cash to the
company.
The company is also actively promoting, through printed
advertising and the company's newly established website
(www.tunex.com), and is offering individual franchise licenses
for development by the franchise licensees, primarily in 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 fees 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: November 12, 1997 By Rudolf Zitzmann (Signature)
President (Duly Authorized and
Principal Financial Officer)
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<PERIOD-END> SEP-30-1997
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797,262
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