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, 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
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 June 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 June 30, 2000, and the related statements of operations
and changes in cash flow for the three month period ended
June 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, June 30,
2000 2000
Unaudited
CURRENT ASSETS:
Cash $ 71,205 $120,784
Receivables - current portion 95,573 78,974
Inventories 52,455 58,382
Prepaid expenses 6,380 8,577
Deferred income tax assets 30,481 25,481
Total Current 256,094 292,198
Assets
PROPERTY, PLANT AND EQUIPMENT:
Net of accumulated depreciation 185,381 194,207
OTHER ASSETS
Notes Receivable, less current 181,294 200,243
Idle Equipment 8,750 8,750
Goodwill 124,107 121,687
Trademarks 2,697 2,873
Deposits 6,822 11,822
Work-in-process 5,270 5,270
Deferred Loan Fees 1,130 1,472
Deferred income tax assets 111,184 111,184
Total Other Assets 441,254 463,301
TOTAL ASSETS $882,729 $949,706
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TUNEX INTERNATIONAL, INC.
BALANCE SHEETS
March 31, June 30,
2000 2000
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $17,227 $35,529
Accrued liabilities 38,578 43,071
Income Taxes Payable ---- 1,000
Current Portion of Long-Term Debt 23,758 32,380
Obligations under capital
leases-current portion 1,275 653
Total Current Liabilities 80,838 112,633
Long Term Debt, Net of Current Portion 99,394 119,043
TOTAL LIABILITIES 180,232 231,676
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001,
50,000,000 shares authorized,
1,848,525 shares 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) (3,823,121)
Total Stockholders' Equity 702,497 718,030
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 882,729 $ 949,706
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TUNEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended June 30,
2000 1999
SALES AND OTHER REVENUE:
Service and parts sales $208,710 $204,727
Franchise Royalties 84,204 84,583
Franchise Sale (Net of 18,000 1,000
Costs)
Other Revenue 8,117
Total Revenues 310,914 $298,427
COSTS AND EXPENSES:
Cost of service and parts 139,207 135,238
General and Administrative 138,272 130,624
Depreciation 7,930 4,797
Interest expense 3,971 3,447
Total Costs and 289,380 274,106
Expenses
INCOME BEFORE INCOME TAXES $ 21,534 $ 24,321
Current Income Tax Expense 1,000 1,200
Deferred Income Tax Expense 5,000 5,100
NET INCOME $ 15,534 $ 18,081
NET INCOME PER COMMON SHARE
OR COMMON SHARE EQUIVALENT $.008 $.01
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TUNEX INTERNATIONAL, INC.
STATEMENT OF CHANGES IN CASH FLOW
(Unaudited)
For the Three Months Ended June 30,
2000 1999
CASH FLOW FROM OPERATIONS:
Income $15,534 $ 18,081
Items not requiring cash:
Depreciation 7,930 4,797
23,464 22,878
Decrease (increase) in receivables (2,350) 5,796
Decrease (increase) in inventories (5,927) (8,988)
(Decrease) increase in accounts payable 52,066 17,438
Decrease (increase) in prepaid expenses,
PP&E, capital expenditure in cash (22,054) (3,171)
Decrease in deferred tax benefits 5,000 5,100
Net cash provided (used) in $50,199 $39,053
operation
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on pre-petition debt 0 (19,405)
Principal payments on capital lease
obligations (622) (2,098)
Net cash provided (used) from financing (622) (21,503)
Net cash provided during three months 49,579 17,550
Cash on hand - beginning 71,205 111,110
Cash on hand - ending $120,784 $128,660
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION
Material changes in financial condition.
At June 30, 2000, the Company's financial condition improved
substantially from the 4th quarter of fiscal year ended March 31,
2000. Profitability has been restored improving the Company's
cash position through an increase in cash and a decrease in
receivables, thereby continuing to improve the Company's "current
ratio", and causing working capital to increase from $175,256 on
March 31, 2000 to $179,565 on June 30, 2000.
During the period ended June 30, 2000, the Company acquired
additional working capital through a long-term note from its
banking institution in the amount of $34,000, which is to be used
primarily for facility and leasehold improvements.
These changes, along with an inventory increase and equipment
purchases, have increased Stockholders' equity from $702,497 on
March 31, 2000 to $718,030 on June 30, 2000.
Management believes that the working capital of the Company,
along with a newly acquired $50,000 line of credit, is adequate
for the Company's current and ongoing operations and its
continuing efforts to develop new service centers for conversion
to franchised centers on a gradual and limited basis and the
associated sales efforts for these conversions and franchise
sales.
Results of operations.
During the three months ended June 30, 2000, the Company's total
revenue increased from $298,427 in 1999 to $310,914 in 2000.
This increase is the result of the recent sale of another
franchise license. Sales of service and parts increased slightly
from $204,727 in 1999 to $208,710 during the 2000 period.
Franchise royalties remained about the same during the period at
$84,204, although same-store sales in franchise centers increased
by 5.5%.
For the three-month period ended June 30, 2000 the Company shows
income from operations, before income tax of $21,534 compared to
$24,321 for the same period in 1999. This decrease in income is
the result of a turn around effort in one of the company owned
service centers, involving consultation fees and restructuring of
procedures and personnel, causing higher General & Administrative
expenses, and higher depreciation amounts.
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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, 2000 is $15,534 as compared to
$18,081 for the same period in 1999. Consequently, the Company
had a net income per common share, on a fully diluted basis, of
$0.006 for the three month-period ended June 30, 2000 as compared
to $0.007 for the same period in 1999.
During the three month period ended June 30, 2000, the Company
operated two service centers, which it also owns. No new service
centers have been opened for business during that period. There
are now a total of twenty-five centers in operation the same as
in the same period in 1999. However, there have been licenses
granted for two (2) additional centers scheduled to open in the
4th quarter of the Company's 2001 fiscal year. The Company
continues to identify new locations for either Company
development for turnkey 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 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 dependant on the size of
the areas involved.
Recent Developments
The Company has embarked on a more aggressive National marketing
and franchise communication campaign with the completion of its
upgraded internet web site and the introduction of its intranet
site. The Company has targeted the prospective franchisee, the
consumer, and the improved communication with its franchisees.
The Company expects its new intranet site to not only speed up
communication but also to provide online training, technical
information forum for technicians, technical manuals, analysis
procedures, marketing templates and scripts, and a forum for
franchisee's communication.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS: Attached is the Financial Data Schedule, Exhibit
Reference Number 27
Form 8-K: None
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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 8, 2000 By: /s/ R. Steven Love R. Steven Love, Director
(Principal Executive)
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