Form 10-Q
Securities and Exchange Commission
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTON 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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Commission file number 0-17080
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UNITRONIX CORPORATION
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(Exact name of registrant as specified in its charter)
New Jersey 22-2086851
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Newbury Street, Peabody, MA 01960
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(Address of principal executive offices)
(Zip Code)
(508) 535-3912
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(Registrant's telephone number, including area code)
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Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
----- -----
1
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
9,456,932 shares of common stock, no par value, as of November 1, 1996
2
UNITRONIX CORPORATION
INDEX
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Page Number
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Part I. Financial Information (Unaudited)
Item 1:
Balance Sheets-
September 30, 1996 and June 30, 1996 4
Statements of Income -
Three Months Ended September 30, 1996 and 1995 5
Statement of Changes in Stockholders' Equity (Deficit)-
Three Months Ended September 30, 1996 6
Statements of Cash Flows -
Three Months Ended September 30, 1996 and 1995 7
Notes to Financial Statements 8
Item 2:
Management's Discussion and Analysis of Results of 10
Operations and Financial Condition for the Three Months
Ended September 30, 1996
Part II. Other Information 11
3
UNITRONIX CORPORATION
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
September 30,
1996 June 30,
(Unaudited) 1996 (1)
ASSETS ----------- --------
CURRENT ASSETS
Cash $36,682 $13,382
Accounts receivable, net 195,048 130,453
Prepaid expenses and other current assets 43,873 52,639
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TOTAL CURRENT ASSETS 275,603 196,474
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PROPERTY, PLANT AND EQUIPMENT, NET 88,798 88,013
---------- ---------
OTHER ASSETS
Capitalized software development costs, net 21,246 28,328
Other 4,521 4,850
---------- -------
TOTAL OTHER ASSETS 25,767 33,178
--------- -------
TOTAL ASSETS $390,168 $317,665
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable - related party $495,924 $337,424
Notes payable 6,323 6,323
Accounts payable 79,293 116,595
Accounts payable - related party 57,100 57,100
Accrued expenses 139,048 161,122
Deferred revenue 144,668 117,631
-------- -------
TOTAL CURRENT LIABILITIES 922,356 796,195
NOTE PAYABLE 11,065 12,646
-------- --------
TOTAL LIABILITIES 933,421 808,841
======== ========
STOCKHOLDERS' DEFICIT
Common stock, no par value, 12,000,000 shares
authorized, 9,456,932 shares issued and
outstanding 3,485,412 3,485,412
Undesignated capital shares, 3,000,000 shares
authorized, none outstanding ---- ----
Accumulated deficit (4,028,665) (3,976,588)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (543,253) (491,176)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $390,168 $317,665
========= ========
(1) Derived from audited financial statements.
See notes to financial statements.
4
UNITRONIX CORPORATION
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30,
1996 1995
------ ------
REVENUES:
Computer systems and
software licenses $143,029 $252,697
Services 174,587 243,837
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TOTAL REVENUES 317,616 496,534
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COSTS AND EXPENSES:
Cost of computer systems
and software licenses 13,796 135,151
Cost of services 78,235 94,270
Product development costs 148,625 184,440
Selling expenses 71,762 62,474
General and administrative
expense 46,557 45,465
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TOTAL COSTS AND EXPENSES: 358,975 521,800
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LOSS FROM OPERATIONS (41,359) (25,266)
INTEREST INCOME (EXPENSE),NET (10,718) (3,190)
OTHER INCOME (EXPENSE),NET 0 26
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LOSS BEFORE INCOME TAXES (52,077) (28,430)
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PROVISION FOR INCOME TAXES 0 0
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NET LOSS $(52,077) $(28,430)
======= =======
LOSS PER COMMON SHARE $(0.01) $(0.00)
======= =======
Weighted average number of common
shares outstanding 9,456,932 9,456,932
See notes to financial statements.
5
UNITRONIX CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended September 30, 1996
Common Stock
------------------
Shares Accumulated Stockholders'
Issued Amount Deficit Deficit
------ ------ ------- -------
Balance, June 30, 1996 9,456,932 $3,485,412 $(3,976,588) $(491,176)
Net loss for the period ---- ---- (52,077) (52,077)
-------- -------- --------- --------
Balance,
September 30, 1996 9,456,932 $3,485,412 $(4,028,665) $(543,253)
========= ========= =========== =========
See notes to financial statements.
6
UNITRONIX CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September 30,
--------------------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(52,077) $(28,430)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Depreciation and amortization 14,736 51,890
(Increase) decrease in:
Accounts receivable (64,595) (54,915)
Prepaid expenses and other current assets 8,766 (4,310)
Other assets 329 1,673
Increase (Decrease) in:
Accounts payable (37,302) 10,688
Accrued expenses (22,074) 62,313
Deferred revenues 27,037 (3,605)
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Net cash provided (used) by operating activities (125,180) 35,304
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CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (Purchase) of Equipment, net (8,439) (8,701)
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Net cash used by investing activities (8,439) (8,701)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 158,500 0
Payments on debt (1,581) (1,580)
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Net cash provided (used) by financing activities 156,919 (1,580)
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Net increase (decrease) in cash 23,300 25,023
Cash at beginning of period 13,382 44,450
------- -------
Cash at end of period $36,682 $69,473
======= =======
See notes to financial statements.
7
UNITRONIX CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
BASIS OF PRESENTATION:
The accompanying financial statements are unaudited. In the opinion of manage-
ment, all adjustments, which include only normal recurring adjustments necessary
to present fairly the financial position, results of operations, and cash flows
for all periods presented, have been made. The result of operations for interim
periods are not necessarily indicative of the operating results for the full
year.
Footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles has been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's June
30, 1996 Annual Report on Form 10-K.
2 - Related Party Transactions:
During the three month period ended September 30, 1996, the Company's
principal shareholder loaned the Company $83,500 under a $400,000 line
of credit agreement which bears interest at the time funds are loaned at
the greater of either 10% or the bank's prime interest rate plus 2%. These
notes bear interest at the rate of 10% per annum. Interest expense on these
notes and other borrowings amounted to $10,390 in the three month period ended
September 30, 1996. The $400,000 line of credit has been exhausted; at Septem-
ber 30, 1996, the Company owed $420,924 plus accrued interest against the
lending agreement. Although no assurances can be given, management believes that
the principal shareholder does not intend to demand repayment of the amounts
owed in the foreseeable future. During the same period, two of the Company's
shareholders loaned the Company $75,000 under a lending arrangement that has the
same interest terms as the lending agreement with the principal shareholder.
There is no guarantee that the Company's shareholders will continue to provide
funds under the lending arrangement. The Company is attempting to secure
additional sources of funding.
During fiscal 1993 and 1992, the Company had a consulting management
agreement with a related entity controlled by its principal shareholder.
The amount owed to this related entity was $57,100, at September 30, 1996,
and is included in accounts payable-related party in the accompanying
financial statements.
Effective July 1, 1993 a new agreement became effective in which
substantially all of the employees of the related entity became
employees of the Company. Under the new agreement, the Company charges
8
the related entity for services it provides as well as fifteen percent
of the company's rent expense for space occupied by the related entity.
As of September 30, 1996, approximately $48,100 is owed to the Company
under the new agreement. This amount is included in accounts receivable
in the Company's balance sheet.
3 - Supplemental Disclosures of Cash Flow Information:
Cash paid for interest and income taxes for the periods indicated were
as follows:
Three Months Ended
September 30,
----------------
1996 1995
-------- --------
Interest, net $326 $424
Taxes $1,706 $3,842
9
UNITRONIX CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The analysis of the Company's financial condition, capital resources
and operating results should be viewed in conjunction with the accompanying
financial statements, including the notes thereto.
RESULTS OF OPERATIONS
- ---------------------
First Quarter Ended September 30, 1996, Compared to the First Quarter
- ---------------------------------------------------------------------
Ended September 30, 1995
- ------------------------
For the three month period ended September 30, 1996, software licenses accounted
for 44% of sales and software maintenance accounted for 47%. The remaining
revenue was generated by sales of hardware and professional services. Total
sales for the three month period decreased by approximately $179,000 from the
like period in 1995. All product catagories experienced decreased revenue from
1995 to 1996.
The cost of computer systems and software licenses decreased by approximately
$121,000 from the first quarter of fiscal 1995 to the 1996 period, due to no
new computer systems being sold during the 1996 period and lower amortization
costs for software development expenses that were capitalized in prior years.
Services costs decreased from year to year because no major consulting engage-
ments were performed during the 1996 period. The decrease in product develop-
ment costs was due to the Company not having a consulting firm assisting with
the development of new products in the 1996 period. Selling expenses increased
in 1996 because of higher sales commission and trade show expenses.
The increase in accounts receivable of approximately 50% during the period was
caused by a significant amount of the sales for the period being made in the
last month of the quarter. The age of the Company's accounts receivable as
measured in number of days of sales outstanding and the Company's bad debt
experience continue to be satisfactory.
Notes payable increased by approximately $158,000 during the period due to
borrowings from three of the Company's shareholders. Management anticipates
that further borrowing will be required to fund product development costs.
Financial Condition and Liquidity
- ---------------------------------
At September 30, 1996, the Company had a working capital deficit of $646,753
as compared to deficits of $599,721 at June 30, 1996, and $302,851 at September
30, 1995.
10
Management projects that capital from sources other than operations will be
needed to fund the Company in fiscal 1997. The line of credit that was avail-
under a lending agreement with the Company's principal shareholder has been
exhausted. Additional funds have been provided, in the form of loans, by two
other shareholders. There is no guarantee that the shareholders will continue
to provide funds. The Company is attempting to secure additional sources of
funding.
Management has not projected the realization of a significant amount of revenue
from sales of the new product that is under development, PRAXA/OMS, in fiscal
1997. There can be no assurance that the product will be developed, or if it
is developed, that it will be accepted by the market.
Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
The Company did not file any reports on Form 8-K during this quarter.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Unitronix Corporation
Date: November 1, 1996
By: /s/Sean F. Abad
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Sean F. Abad
President
By: /s/William C. Wimer
-------------------
William C. Wimer
Vice President, Operations
12
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<FISCAL-YEAR-END> JUN-30-1997
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