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, 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 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, 1997, the Issuer had outstanding
1,248,215 share 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 December 31, 1997, and the related statements of
operations and changes in stockholders' equity and cash flow
for the nine-month period ended December 31, 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.
<PAGE>
TUNEX INTERNATIONAL, INC
BALANCE SHEETS
March 31, Dec. 31,
1997 1997
(Unaudited)
CURRENT ASSETS:
Cash $ 61,262 $ 62,207
Receivables - current portion 133,588 122,083
Parts inventories 62,863 66,479
Prepaid expenses 10,230 10,394
Deferred income tax benefit 18,900 18,900
Total Current Assets 286,843 280,063
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation 214,757 213,996
OTHER ASSETS
Notes Receivable, less current 117,991 117,991
Idle Equipment 9,210 9,210
Trademarks 1,229 3,249
Deposits 6,386 10,209
Deferred income tax benefits,
less current 151,200 151,200
Total Other Assets 286,016 291,859
TOTAL ASSETS $ 787,616 $ 785,918
<PAGE>
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, Dec. 31,
1997 1997
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $21,730 $ 17,774
Accrued liabilities 59,791 50,459
Obligations under capital
leases-current portion 18,153 10,122
Pre-petition liabilities - 52,196 50,324
current portion
Total Current Liabilities 151,878 128,679
LONG TERM DEBT:
Obligations under capital leases -
net of current portion 22,964 20,395
Pre-petition liabilities, net of
current portion 114,587 46,364
TOTAL LIABILITIES: 289,429 195,438
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,248,215 issued & outstanding 1,248 1,248
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 3,748,641 3,748,641
Accumulated Deficit (4,048,964) (3,956,671)
Total Stockholders Equity 498,187 590,480
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $787,616 $787,616
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended
December 31 December 31
1997 1996 1997 1996
SALES AND OTHER REVENUE:
Service and parts sales $ 295,254 $ 224,371 $756,102 $1,170,966
Franchise Royalties 76,317 53,027 183,484 153,501
Franchise Sales(Net of costs) 19,000 7,750 36,000 26,750
Other Revenue 27,236 7,866 40,855 65,598
Total Revenue 417,807 293,014 1,016,441 1,416,815
COSTS AND EXPENSES:
Cost of service and parts 198,374 150,095 488,398 768,557
General and Administrative 180,257 128,518 407,210 529,511
Depreciation 7,022 3,751 15,800 22,754
Interest expense 3,849 4,433 10,194 20,773
Total Costs and Expenses 389,502 286,797 921,602 1,341,595
INCOME BEFORE INCOME TAXES 28,305 6,217 94,839 75,220
Current Income Tax Expense 1,400 310 4,700 3,750
(credit)
Deferred Income Tax Expense 6,300 2,000 22,600 15,400
(credit)
NET INCOME (LOSS) $ 20,605 $ 3,907 $ 67,539 $ 59,445
NET INCOME PER COMMON SHARE $ .01 $ .001 $ .03 $ .02
OR COMMON SHARE EQUIVALENT
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Nine Months Ended December 31,
1997 1996
CASH FLOW FROM OPERATIONS:
Income $ 94,839 $ 47,170
Items not requiring cash:
Depreciation 15,800 22,754
110,639 69,924
Decrease (increase) in receivables 11,505 (81,045)
Decrease (increase) in inventories (3,615) 7,873
(Decrease) increase in accounts payable (15,714) (48,398)
Decrease (increase) in prepaid expenses (164) -
PP&E, capital expenditure in cash (22,884) (23,298)
Decrease in deferred income tax benefits - 24,300
Net cash provided (used) in operations 79,767 (50,644)
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt (68,223) (54,299)
Principal payments on capital lease (10,600) (26,907)
obligations
(Decrease) increase in long term note - (19,494)
Net cash provided (used) from financing (78,823) (100,700)
Net cash provided (used) during nine 944 (151,344)
months
Cash on hand - beginning 61,263 206,280
Cash on hand - ending $ 62,207 $ 54,936
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF PLAN OF
OPERATION
Material changes in financials condition.
At December 31, 1997 the Company continues to improve its
financial condition. Total assets remained basically the same at
$785,918 in December 31 1997, with a slight decrease in total
current assets from $286,843 on March 31, 1997 to $280,063 on
December 31, 1997. This change is primarily the result of an
decrease in receivables.
Current liabilities are reduced from $151,878 on March 31, 1997
to $128,679 on December 31, 1997, through reductions of over
$21,000 in accounts payable, accrued liabilities, and current
lease obligations. Total liabilities are reduced from $289,429 on
March 31, 1997 to $195,438 on December 31, 1997. Total
Stockholders' Equity has increased from $498,187 on March 31,
1997 to $590,480 on December 31, 1997.
Management believes that the working capital of the company is
adequate for its current and ongoing operations. Development of
additional new service centers, for conversion to franchised
centers, is dependent on the sale and conversion of newly
developed and opened centers or the sale of an established
center.
Results of Operations.
During the nine months period ended December 31, 1997, the
Company's total revenue declined from $1,416,815 to $1,016,441.
This is primarily the result of service and parts sales from
three centers versus five, and at times six centers, over the
first five month period of the nine month period, ending December
31, 1996. Income before income taxes for the three months ended,
December 31, 1997 resulted in a gain of $28,305 compared to a
gain of $6,217 for the same period in 1996.
Income before income taxes, for the nine month period ended
December 31, 1997, is $94,839 compared to $75,220 for the same
period in 1996. This increase, in general, is the result of
increased royalties due to a systemwide same-store sales increase
of 5.5 % in franchised centers plus the royalty income from two
additional franchised centers, and other revenue as the result of
additional interest income and reduction in some pre-petition
liabilities.
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, 1997 is $20,605 as compared to
$3,907 for the same period in 1996. Consequently, the company
had $.01 income per common share, on a fully diluted basis for
the three month period ended December 31, 1997, as compared to
$.001 for the same period in 1996. Net income for the nine month
period ended December 31, 1997 is $67,539 as compared to $59,445
for the same period in 1996. Income per common share, on a fully
diluted basis, for the nine month period ended December 31, 1997
is $0.03, as compared to $0.02 for that same period in 1996.
In looking ahead, construction on a new franchised center has
just been completed and the center is now open and operating.
Another franchised center is presently under construction, with
an opening for business scheduled for April 1998. The Company
will actively advertise its franchise opportunities in business
publications and on its Internet website and expects to find
qualified individuals that will either buy 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, 1998 By Rudolf Zitzmann (Signature)
President (Duly Authorized and
Principal Financial Officer)
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<PERIOD-END> DEC-31-1997
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<RECEIVABLES> 240,074
<ALLOWANCES> 5,056
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<PP&E> 213,996
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797,262
<COMMON> 1,248
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<CGS> 488,398
<TOTAL-COSTS> 407,210
<OTHER-EXPENSES> 25,994
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<INCOME-TAX> 4,700
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