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, 2000, 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 he Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of September 30, 2000, the Issuer had outstanding 1,848,525
shares of common stock.
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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, 2000, and the related statements of operations and changes in
stockholders' equity and cash flow for the six-month period ended
September 30, 2000. 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.
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TUNEX INTERNATIONAL, INC
BALANCE SHEETS
March 31, September 30,
2000 2000
(Unaudited)
CURRENT ASSETS:
Cash $ 71,205 $116,163
Receivables - current portion 95,573 80,890
Parts inventories 52,455 54,012
Prepaid expenses 6,380 7,430
Deferred income tax benefit 30,481 20,481
Total Current 256,094 278,976
Assets
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation 185,381 188,360
OTHER ASSETS
Receivables - long term 181,294 192,187
Idle Equipment 8,750 8,750
Trademarks 2,697 6,450
Deposits 8,843 11,822
Work-in-process 5,270 5,270
Goodwill 124,107 119,268
Deferred loan fees 1,130 1,472
Deferred income tax benefits 111,184 111,184
Total Other Assets 441,254 456,403
TOTAL ASSETS $882,729 $923,739
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TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, September 30,
2000 2000
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 17,227 $ 17,381
Accrued liabilities 38,578 39,093
Income taxes payable ------ 2,000
Obligations under capital 1,275 ----
leases - current portion
Current portion of long term debt 23,758 23,758
Total Current 80,838 82,682
Liabilities
LONG TERM DEBT:
Long-term debt, net of current portion
99,394 120,591
TOTAL LIABILITIES 180,232 203,273
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,848,525 issued & outstanding.
1,849 1,849
Preferred Stock, Class B, par value
$1.00, 1,000,000 shares authorized,
497,262 shares issued & outstanding 497,262 497,262
Additional paid-in capital 4,048,040 4,048,040
Accumulated Deficit (3,844,654) (3,826,685)
Total Stockholders Equity 702,497 720,466
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 882,729 $ 923,739
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TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months
Ended Ended
September 30 September 30
2000 1999 2000 1999
SALES AND OTHER REVENUE:
Service and parts sales $ 224,988 $ 214,153 $ 433,697 $ 418,880
Franchise Royalties 85,530 87,133 169,734 171,716
Franchise Sales (Net of Costs) ------ ------ 18,000 1,500
Other Revenue 3,842 5,194 5,273 13,312
Total Revenue 314,360 306,480 626,704 605,408
COSTS AND EXPENSES:
Cost of service and parts 152,381 138,957 291,587 274,195
General and Administrative 138,770 131,222 276,089 259,927
Depreciation / Amortization 10,349 9,347 20,698 16,564
Interest expense 4,375 3,024 8,346 6,471
Total Costs and Expenses 305,875 282,550 596,720 557,157
INCOME BEFORE INCOME TAXES 8,485 23,930 29,984 48,251
Current Income Tax Expense 1,000 1,200 2,000 2,400
Deferred Income Tax Expense 5,000 3,600 10,000 8,700
NET INCOME $ 2,485 $ 19,130 $ 17,984 $ 37,151
NET INCOME PER COMMON SHARE .001 .01 .01 .02
OR COMMON SHARE EQUIVALENT
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TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Six Months Ended September 30,
2000 1999
CASH FLOW FROM OPERATIONS:
Income $ 29,984 $ 48,251
Items not requiring cash:
Depreciation / Amortization 20,698 16,564
50,682 64,815
Decrease (increase) in receivables 3,790 36,217
Decrease (increase) in inventories (1,557) (9,243)
(Decrease) increase in accounts payable 604 (11,907)
Decrease (increase) in prepaid expenses,
goodwill, PP&E, capital expenditure in 2,714 (23,893)
cash
Decrease in deferred tax benefits (10,000) (8,700)
46,233 47,289
Net cash provided (used) in operation
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt ----- (30,712)
Principal payments on capital lease obligations (1,275) (3,829)
Net cash provided (used) from financing (1,275) (34,541)
Net cash provided (used) during six month 44,958 12,748
Cash on hand - beginning 71,205 111,110
Cash on hand - ending $116,163 $123,858
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material Changes in Financial Condition.
At September 30, 2000, the Company's financial condition
moderately improved, primarily as the result of an increase in
cash and a decrease in receivables, causing the working capital
to increase from $175,256 on March 31, 2000 to $179,565 on
September 30, 2000.
Management believes that the working capital of the Company is
adequate for its current and ongoing operations and its ongoing
efforts to develop franchised centers on a gradual and limited
basis and new service centers for the conversion to franchised
centers on a gradual and limited basis and the associated sales
efforts for these conversions and the granting of franchise
licenses.
Results of Operations.
During the six months period ended September 30, 2000, the
Company's total revenue increased from $605,408 in 1999 to
$626,704 in 2000. This increase is attributed to increased sales
in the two company-owned centers as well as an increase in
royalties due to a 3% increase in sales of franchised centers.
During the three months period ended September 30, 2000, total
revenue increased from $306,480 in 1999 to $314,360 in 2000.
This increase, as in the six months ended September 30, 2000 was
due to an increase in sales in the two company-owned centers as
well as an increase in royalties from franchised centers.
For the six-month period ending September 30, 2000 the Company
shows as income, before income tax, $29,984 compared to an income
of $48,251 for the same period in 1999. This decrease in income
is the result of the costs involved due to the retirement of
Rudolf Zitzmann, the past President/CEO of the Company, and the
transition to Steve Love, the new President and CEO. Mr.
Zitzmann has consulted on a retainer basis during the six months
ended September 30, 2000. There has also been investment in
facility and equipment upgrades, resulting in an increase in
depreciation. These upgrades will continue to improve our
position and programs for attracting new franchises in the near
future. After giving effect to income tax credits, and the
change as a result of deferred tax benefits, the net income for
the three months period ended September 30, 2000 is $2,485
compared to $19,130 for the same period in 1999. Consequently,
the Company had $.001 income per common share, on a fully diluted
basis for the three month period ended September 30, 2000, as
compared to $.01 for the same period in 1999. Net income for the
six months period ended September 30, 2000 is $17,984 as compared
to $37,151 for the same period in 1999. Income per share on a
fully diluted basis, for the six months period ended September
30, 2000 is $.01 as compared to $.02 for the same period in 1999.
During the six months period ended September 30, 2000, the
Company operated two service centers, which it also owns, and is
supporting the operations of twenty-three franchised service
centers. No new service centers have been opened for business
during that period. There are now twenty-five (25) centers in
operation.
In looking ahead, the Company continues to identify new locations
for either development by the Company for turnkey conversions to
franchises or for development by qualified franchise owners,
depending on circumstances and the availability of cash or other
financing to the Company. In addition to two
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franchises already under development and construction, the
Company has signed a letter of intent on property in Tooele, Utah
to build a new Center. This Center is being developed by the
Company with the intent to sell as a franchise. It is projected
to open for business May 1, 2001.
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. The Company has
recently sold two franchises in Utah scheduled to open in 2001.
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.
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PART II. OTHER INFORMATION
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 10, 2000 By R. Steven Love (Signature)
President (Duly Authorized and
Principal Financial Officer)
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