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, 1998, 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 June 30, 1998, the Issuer had outstanding
1,248,525 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 June 30, 1998, and the related statements of operations
and changes in cash flow for the three month period ended
June 30, 1998. 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.
<PAGE>
TUNEX INTERNATIONAL, INC
BALANCE SHEETS
March 31, June 30,
1998 1998
Unaudited
CURRENT ASSETS:
Cash $ 66,263 $ 105,079
Receivables - current portion 123,001 110,081
Parts inventories 50,489 39,528
Prepaid expenses 19,135 4,692
Deferred income tax benefit 62,000 62,000
Total Current Assets 320,888 321,380
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation 194,527 163,026
OTHER ASSETS
Notes Receivable, less current 133,488 248,196
Idle Equipment 13,350 13,350
Trademarks 3,489 3,466
Deposits 12,946 12,946
Deferred income tax benefits 128,900 128,900
Total Other Assets 292,173 406,858
TOTAL ASSETS $807,588 $891,264
<PAGE>
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, June 30,
1998 1998
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $22,398 $11,071
Accrued liabilities 50,809 37,528
Income taxes payable ----- 4,500
Obligations under capital
leases-current portion 11,031 10,539
Pre-petition liabilities - 51,323 51,323
current portion
Total Current Liabilities 135,561 114,961
LONG TERM DEBT:
Obligations under capital leases -
net of current portion 17,972 16,056
Pre-petition liabilities, net of 46,973 28,195
current portion
TOTAL LIABILITIES 200,506 159,212
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,248,525 shares issued & outstanding 1,249 1,249
Preferred Stock, Class A, par value $.50,
600,000 shares authorized, issued & 300,000 300,000
outstanding
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 3,748,640 3,748,640
Accumulated Deficit (3,940,069) (3,815,099)
Total Stockholders Equity 607,082 732,052
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 807,588 $ 891,264
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended June 30,
1998 1997
SALES AND OTHER REVENUE:
Service and parts sales $192,603 $264,175
Franchise Royalties 74,729 62,883
Franchise Sale (Net of Costs) 19,000 17,000
Other Revenue 110,662 8,884
Total Revenues 396,994 352,942
COSTS AND EXPENSES:
Cost of service and parts 132,026 168,045
General and Administrative 135,110 139,794
Depreciation 3,261 5,267
Interest expense 1,627 4,073
Total Costs and Expenses 272,024 317,179
INCOME BEFORE INCOME TAXES $ 124,970 $ 35,763
Current Income Tax Expense 6,200 1,750
Deferred Income Tax Expense 14,500 8,800
NET INCOME $ 104,270 $ 25,213
NET INCOME PER COMMON SHARE OR
COMMON SHARE EQUIVALENT $.05 $.012
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Three Months Ended June 30,
1998 1997
CASH FLOW FROM OPERATIONS:
Income $104,270 $ 25,213
Items not requiring cash:
Depreciation 3,261 5,267
107,531 30,480
Decrease (increase) in receivables (101,788) 24,301
Decrease (increase) in inventories 10,961 (5,493)
(Decrease) increase in accounts payable (20,108) 13,209
Decrease (increase) in prepaid expenses,
PP&E, capital expenditure in cash 48,906 (7,531)
Decrease in deferred tax benefits 14,500 8,800
Net cash provided (used) in operation $60,002 $ 63,766
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt (18,778) (19,829)
Principal payments on capital lease
obligations (2,408) (1,698)
Net cash provided (used) from financing (21,186) (21,527)
Net cash provided during three months 38,816 42,239
Cash on hand - beginning 66,263 61,262
Cash on hand - ending $105,079 $ 103,501
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material changes in financial condition.
At June 30, 1998, the company's financial condition continued to
improve, primarily as the result of an increase in cash and a
decrease in payables, causing the working capital to increase
from $185,327 on March 31, 1998 to $206,419 on June 30, 1998.
Further reduction of long-term debt, and in particular pre-
petition liabilities, along with an increase in long-term
receivables has increased stockholders' equity from $607,082 on
March 31, 1998 to $732,052 on June 30, 1998.
Management believes that the working capital of the Company is
adequate for its current and ongoing operations and its
continuing efforts to develop new service centers for conversion
to franchised centers on a gradual basis and the associated sales
efforts for these conversions and franchise sales.
Results of operations.
During the three months ended June 30, 1998, the Company's total
revenue increased from $352,942 in 1997 to $396,994 in 1998.
This increase is the result of the sale and the conversion to a
franchise of a company owned center during the quarter ended June
30, 1998. The same explains the increase in franchise royalties
from $62,883 in 1997 to $74,729 in 1998. Along with the decrease
in sales of service and parts from $264,175 in 1997 to 192,603 in
1998.
For the three month period ended June 30, 1998 the company shows
an income from operations, before income tax of $124,970 compared
to income of $35763 for the same period in 1997. This increase
in income is in large part the result of the revenues realized in
the sale and conversion to a franchise of a company owned center
during the 1998 period.
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, 1998 is $104,270, as compared to
$25,213 for the same period in 1997. Consequently, the Company
had net income per common share, on a fully diluted basis, of
$0.05 for the three month period ended June 30, 1998 as compared
to $0.01 for the same period in 1997.
During the three month period ended June 30, 1998, the Company
operated two service centers, with one center having been taken
back due to mismanagement of the franchise. During this period
the Company opened one more franchise center in Roy, Utah. This
new center follows a new format and building lay-out where the
Tunex program is co-branded with a fast lube operation. This
newly opened center increases the total amount of centers in the
Tunex system to twenty-five (25) compared to Twenty-three (23) at
the same period in 1997.
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 and 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: August 12, 1998 By: Rudolf Zitzmann (Signature)
President (Duly Authorized and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 105,079
<SECURITIES> 0
<RECEIVABLES> 358,277
<ALLOWANCES> 5,056
<INVENTORY> 39,528
<CURRENT-ASSETS> 321,380
<PP&E> 163,026
<DEPRECIATION> 274,621
<TOTAL-ASSETS> 891,264
<CURRENT-LIABILITIES> 114,961
<BONDS> 0
0
797,262
<COMMON> 1,249
<OTHER-SE> (66,459)
<TOTAL-LIABILITY-AND-EQUITY> 891,264
<SALES> 192,603
<TOTAL-REVENUES> 396,994
<CGS> 132,026
<TOTAL-COSTS> 135,110
<OTHER-EXPENSES> 4,888
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 124,970
<INCOME-TAX> 6,200
<INCOME-CONTINUING> 118,770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 14,500
<NET-INCOME> 104,270
<EPS-PRIMARY> .08
<EPS-DILUTED> .05
</TABLE>
