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, 1999, 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
As of December 31, 1999, 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 December 31, 1999, and the related statements of
operations and changes in stockholders' equity and cash flow
for the nine-month period ended December 31, 1999. 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.
2
<PAGE>
TUNEX INTERNATIONAL, INC
BALANCE SHEETS
March 31, December 31,
1999 1999
(Unaudited)
CURRENT ASSETS:
Cash $ 111,110 $ 113,350
Receivables - current portion 112,645 78,325
Parts inventories 46,870 54,855
Prepaid expenses 6,352 5,268
Deferred income tax benefit 32,500 32,500
Total Current Assets 309,477 284,298
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated
depreciation 174,445 183,624
OTHER ASSETS
Notes Receivable, less current 205,304 212,648
Idle Equipment 8,785 8,750
Trademarks 3,534 3,465
Deposits 8,843 8,843
Goodwill 134,490 126,232
Deferred income tax benefits, 115,154 115,154
less current
TOTAL OTHER ASSETS 475,075 475,092
TOTAL ASSETS 960,997 943,014
3
<PAGE>
TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, December 31,
1999 1999
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $21,268 $10,292
Accrued liabilities 49,666 37,379
Income tax payable 3,721
Obligations under capital
leases-current portion 5,272 1,802
Pre-petition liabilities 30,712 -------
Total Current Liabilities 106,918 53,194
LONG TERM DEBT:
Notes payable - related parties 120,670 111,478
Obligations under capital leases -
Net of current portion 1,742 -------
TOTAL LIABILITIES: 229,330 164,672
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,248,525 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 & 497,262 497,262
outstanding
Additional paid-in capital 3,748,640 3,748,640
Accumulated (Deficit) (3,815,484) (3,768,809)
Total Stockholders Equity 731,667 778,342
TOTAL LIABILITIES AND STOCKHOLDERS' $ 960,997 $ 943,014
EQUITY
4
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended
December 31 December 31
1999 1998 1999 1998
SALES AND OTHER REVENUE:
Service and parts sales $ 171,693 $ 187,189 $590,573 $ 602,509
Franchise Royalties 71,277 70,049 242,992 233,362
Franchise Sales (Net of costs) - 1,000 1,500 39,000
Other Revenue 2,706 14,553 16,017 131,814
Total Revenue 245,676 272,791 851,082 1,006,685
COSTS AND EXPENSES:
Cost of service and parts 111,781 130,171 385,976 403,649
General and Administrative 123,400 119,673 383,325 377,001
Depreciation 9,347 6,152 25,911 15,564
Interest expense 2,724 3,664 9,195 8,526
Total Costs and Expenses 247,252 259,660 804,407 804,740
INCOME (LOSS) BEFORE INCOME TAXES (1,576) 13,131 46,675 201,945
Current Income Tax Expense (100) 700 2,350 10,000
Deferred Income Tax Benefits (900) 1,900 9,800 62,000
NET INCOME (LOSS) $ (576) $ 10,531 $ 34,525 $ 129,945
NET INCOME PER COMMON SHARE
OR COMMON SHARE EQUIVALEN $ .00 $ .005 $ .02 $ .06
5
<PAGE>
TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Nine Months Ended December 31,
1999 1998
CASH FLOW FROM OPERATING ACTIVITIES:
Income Before Income Taxes 46,675 201,945
Items not requiring cash:
Depreciation / Amortization 25,911 15,564
72,586 217,509
Decrease (increase) in receivables 34,320 (67,671)
Decrease (increase) in inventories (7,985) 3,936
(Decrease) increase in accounts payable (23,263) (25,424)
Decrease (increase) in prepaid expenses 1,084
Goodwill, PP&E, capital expenditure in
cash (38,578) (18,776)
Net cash provided (used) in operation 38,164 123,268
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt (30,712) (67,207)
Principal payments on capital lease
obligations (5,212) (21,111)
Net cash provided (used) from financing (35,924) (88,318)
Net cash provided (used) during nine
months 2,240 34,950
Cash on hand - beginning 111,110 66,263
Cash on hand - ending $ 113,350 $ 101,213
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition
At December 31, 1999 the Company's financial condition continues
to improve. Although total Assets decreased from $960,997 on
March 31, 1999 to $943,014 at December 31, 1999, the total
liabilities decreased from $229,330 on March 31, 1999 to $164,672
at December 31, 1999, resulting in an increase in stockholder's
equity from $731,667 on March 31, 1999 to $778,342 at December 1,
1999.
Working capital of the Company increased from $202,559 on March
31, 1999 to $231,104 on December 31, 1999. Management believes
that the working capital of the company is adequate for its
current and ongoing operations. Development of additional new
service centers is dependent on the sale and conversion of such
centers to franchise licensees and the sale of franchise licenses
for development by the licensees.
Results of Operations.
During the nine months period ended December 31, 1999, the
Company's total revenue declined from $1,006,685 to $851,092.
This result is primarily caused by the fact that the Company sold
and converted two of its Company owned service centers, which is
reflected by the $39,000 of Franchise Sales and by the $131,814
of Other Revenue during the 1998 period, as compared to $1500 of
Franchise Sales and $16,017 of Other Revenue during the 1999
period. Income before income taxes for the three months ended,
December 31, 1999 shows a $1,576 loss compared to a $13,131
income for the same period in 1998. This was mainly due to
greater Other Revenue of $14,553 in 1998 compared to $2,706 of
Other Revenue in 1999, a decrease in service and parts sales and
a percentage increase in administrative expenses due to
additional staffing for operational support in that same three
month period
Income before income taxes, for the nine month period ended
December 31, 1999, is $46,675 compared to $201,945 for the same
period in 1998. This decrease in income is again the result of
lower total Revenue, caused by the fact that no Company owned
centers were converted to franchises during this period as
opposed to the period ended December 31, 1998.
After giving effect to income tax expenses, and the change as a
result of deferred tax benefits, the net income or loss for the
three-month period ended December 31, 1999 is a loss of $576 as
compared to income of $10,531 for the same period in 1998.
Consequently, the company had no income per common share, on a
fully diluted basis for the three month period ended December 31,
1999, as compared to $.005 for the same period in 1998. Net
income for the
7
<PAGE>
nine-month period ended December 31, 1999 is $34,525 as compared
to $129,945 for the same period in 1998. Income per common
share, on a fully diluted basis, for the nine-month period ended
December 31, 1999 is $0.02, as compared to $0.06 for that same
period in 1998.
The Company is actively advertising its franchise opportunities
in business publications, internet web sites and on its own web
site and has qualified and expects to qualify individuals and
entities that will either buy newly developed and operational
centers or purchase individual franchise licenses for development
by the franchise licensee. The Company is presently planning to
add six more licenses to its system over the next twelve-month
period for development, training and business start-up. 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.
8
<PAGE>
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, 2000 By R. Steven Love (Signature)
President (Duly Authorized and
Principal Financial Officer)
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 113,350
<SECURITIES> 0
<RECEIVABLES> 290,973
<ALLOWANCES> 5,056
<INVENTORY> 54,855
<CURRENT-ASSETS> 284,298
<PP&E> 183,624
<DEPRECIATION> 303,360
<TOTAL-ASSETS> 943,014
<CURRENT-LIABILITIES> 53,193
<BONDS> 0
0
797,262
<COMMON> 1,249
<OTHER-SE> (20,169)
<TOTAL-LIABILITY-AND-EQUITY> 943,014
<SALES> 590,573
<TOTAL-REVENUES> 851,082
<CGS> 385,976
<TOTAL-COSTS> 383,325
<OTHER-EXPENSES> 35,106
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 46,675
<INCOME-TAX> 2,350
<INCOME-CONTINUING> 44,325
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 9,800
<NET-INCOME> 34,525
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.02
</TABLE>
