UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 33-55254-31
UNIDYN, CORP.
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 87-0438639
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
8621 North Seventy Ninth Avenue
Peoria, Arizona 85345
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (602) 979-2800
Indicate by check mark whether the Issuer (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 Issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 1998
- ------------------------------------ --------------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 32,000,000 SHARES
1
<PAGE>
ITEM 1. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH
RESPECT TO THE COMPANY'S FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS
DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE
SUB-HEADING, "BUSINESS RISKS." SEE ALSO THE COMPANY'S ANNUAL REPORT ON FORM 10K
FOR THE YEAR ENDED DECEMBER 31ST, 1997.
OVERVIEW
The Company was incorporated in the State of Utah in 1986 as Macaw
Capital, Inc. and was reincorporated in 1993 in the State of Nevada. In December
of 1997, Macaw Capital, Inc. acquired a portion of the assets of Universal
Dynamics, Inc., a private manufacturer of environmental vibration testing
equipment formed in December 1989, and was renamed UniDyn, Corp. No material
relationship exists between the former management and directors of Macaw
Capital, Inc. and the current management and directors of UniDyn, Corp. UniDyn,
Corp. shares are currently traded under the symbol UNDY on the NASDAQ Electronic
Bulletin Board System.
Vibration Stress Screening (VSS) requires three basic elements; the
vibration hardware or "shaker" unit which mechanically vibrates the test
platform, the software control system which measures output and regulates
intensity, and the amplifier unit which provides power to the shaker. On the
production line, VSS can identify latent defects not readily identified through
visual inspection or during the development and design process. Vibration Stress
Screening of electronic and mechanical components, such as printed circuit
boards saves rework time during production, reduces warranty exposure and can
enhance product quality and longevity. VSS is most effective in detecting
intermittent defects such as loose connections, broken parts, cracked traces,
poor solder joints and mechanical flaws. As manufacturers in a variety of
industry have embraced miniaturization and technological complexity, demand has
increased for more sophisticated quality control testing factory product.
The Company currently markets its controller product under the
Northstar brand and to other OEM's to be repackaged for use in the aerospace,
automotive and semiconductor industries. The Company is also in the process of
filing patents on a new testing process called Sterling. The Sterling process
provides for completely automated quality control testing of printed circuit
boards. It is expected that the Sterling process can significantly reduce
warranty liability for a variety of industries, including manufacturers of
computers, consumer electronic products, and aerospace and military systems, by
anticipating hidden defects.
To meet the objectives of its business plan and reach an economy of
scale in the short-term, the Company has entered into several asset acquisition
agreements. In December of 1997, the Company closed a transaction with Universal
Dynamics, Inc. an Arizona corporation, for the transfer of certain assets
including equipment, inventory, accounts receivable, software and other
intangible assets related to the business of vibration testing systems. These
systems are Microsoft Windows-based and have been integrated in the Company's
proprietary control systems software.
2
<PAGE>
The Company also entered into an agreement to acquire an 80% interest
in Derritron, a United Kingdom based manufacturer of vibration testing
equipment. With this acquisition, the Company will receive patents, products,
manufacturing equipment and an established market presence internationally.
Derritron is currently 1 of 4 shaker manufacturers worldwide and holds patents
on 30 variations of shaker models.
RESULTS OF OPERATIONS
For the three months ending March 31st, 1998, the Company posted
earnings of $113,158 on revenues of $623,798. For the three months ending March
31st, 1997, the Company generated no revenues or income. Substantially all sales
were generated from the NorthStar product. NorthStar is composed of off the
shelf items and has minimal assembly requirements.
For the three months ending March 31st, 1998, the Company has filled 73
purchase orders for Northstar product ranging in price from $15,000 to $28,000
for both OEM and direct customers such as FUJITSU, Ford General Motors, AT&T,
Donnely, McDonnell Douglas, Kodak, MIT and NASA. Approximately 440 Northstar
units have been sold to date over the preceding two years, primarily through
Universal Dynamics, Inc. prior to the December, 1997 asset purchase.
Sales are subject to materially monthly fluctuations as the Company
integrates recent acquisitions, modifies operations, introduces new product
lines, and modifies its existing customer base. There can be no assurance that
the Company will have the capital resources necessary to complete the
introduction of the Sterling Process in a timely manner in accordance with the
Company's business plan.
Cost of Goods Sold for the three months ended March 31st, 1998 were
$186,466 with a resultant gross profit of $437,332. Gross margin for the period
was in excess of 70%. Until new products are introduced, including the Sterling
Process, there is significant uncertainty about future gross margins. Gross
margin percentage is highly dependent upon product prices, sales volumes,
materials cost and allocation of manufacturing overhead.
Selling, General and Administrative costs for the period were $270,124.
The Company currently employs a total of 34 people in the United States and the
United Kingdom. Of those employed, approximately 18 are on contract lease
agreements. Management believes that by leasing its primary workforce, the
Company has substantially limited fixed overhead costs and provided for a larger
free-cash flow for the Company's growth phase.
For the three months ending March 31st, 1998 the majority of the
Company's research was conducted at the Company's Engineering and Development
Center in American Fork, Utah. Substantial research and development costs were
incurred by Universal Dynamics for the development of the Northstar and Sterling
Process products prior to the December, 1997 asset purchase.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently seeking additional working capital to meet its
short term growth planning. Management believes, although there can be no
assurance, that the Company will have sufficient cash needs for the next 12
months regardless of its success in attracting additional capital investment.
However,
3
<PAGE>
management also believes that a lack of additional working capital over the
remainder of the current fiscal year would substantially curtail the roll-out of
the Sterling Process product line. As of the three months ending March 31st,
1998, the Company has approximately $258,079 in working capital.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has adopted several notices
with regard to the treatment of interim financial statements. These issues are
presented in the Company's interim financial statements. As discussed in the
notes to the interim financial statements, the implementation of these new
pronouncements is not expected to have a material effect on the financial
statements.
BUSINESS RISKS
While management believes, but there can be no assurance, that the
Company is sufficiently capitalized to continue operations for the remainder of
the fiscal year, management is currently seeking additional capital investment
to fulfill inventory requirements and outstanding purchase orders which could
have a material impact on short-term growth objectives.
This report contains a number of forward-looking statements which
reflect the Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. In this report, the words
"anticipates", "believes", "expects", "intends", "future" and similar
expressions identify forward-looking statements. Readers are cautioned to
consider the specific risk factors described in the Company's Annual Report on
Form 10-K for the year ended December 31st, 1997 and not to place undue reliance
on the forward-looking statements contained herein, which speak only as of the
date hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements, to reflect events or circumstances that may arise
after the date hereof.
ITEM 2. LEGAL PROCEEDINGS
Legal proceedings are outlined in detail in the Company's 10K filing
for the year ending December 31st, 1997.
On January 7, 1994, the Bureau of Securities of the State of New Jersey
filed a complaint in the matter of Capital General Corporation, David R. Yeaman
and 74 other named defendants, Nevada and Utah corporations including the
Company, which complaint proposed that civil monetary penalties totaling
$30,000.00 be assessed against Capital General Corporation for alleged
violations of the Uniform Securities Law (1967), N.J.S.A. 49:3-47 et. seq. by
(1) selling to 24 New Jersey residents between April 1986 and May 1991,
securities in 25 of the 74 respondent corporations named in the proceeding,
including the Company, which were neither registered nor exempt from
registration, and (2) making untrue statements of material fact and omitting to
state material facts in connection with the New Jersey sales in 6 of the 74 to
resident corporations named in the proceeding, not including the Company. Also
on January 7, 1994, the Bureau of Securities of the State of New Jersey based on
substantially similar allegations as in the above referred complaint, issued its
Order Denying Exemptions and to Cease and Desist. This order summarily denied
the exemptions contained in N.J.S.A. 49:3-50(b), (1), (2), (3), (9), (11) and
(12) of the securities of Capital General Corporation and the other 74
respondent corporations, including the Company, except that excluded from the
summary denial of the exemption contained in N.J.S.A. 49-3-50(b)(12) is the
Offer of Rescission by Capital General Corporation
4
<PAGE>
to 24 New Jersey residents pursuant to the offer of rescission which began about
April 28, 1993. This order also ordered Capital General Corporation and David
Yeaman to Cease and Desist from offering or selling any securities in blind pool
corporations into, or from the State of New Jersey.
Capital General and David Yeaman filed answers denying the material
allegations of the complaint and resisting the imposition of the civil monetary
penalties, and the Order Denying Exemptions and to Cease and Desist.
Subsequently the issues raised in the complaint and order were settled by
agreement between the Bureau of Securities and Mr. Yeaman and Capital General
Corporation in a consent order dated July 11, 1994 and approved by an
administrative law judge of the State of New Jersey Office of Administrative Law
September 2, 1994. Under the terms of the consent order, all claims in the
complaint against all named respondents were settled by the payment of $3,000
civil penalty, and the order was modified so that it does not apply to 27 of the
respondent companies; however the order does still apply to the Company.
During 1986 and 1987, Capital General gifted small amounts of stock
(usually 100 shares to each giftee) in 48 subsidiary companies, which included
the Company, to approximately 1,000 persons or entities. Capital General did not
register the gifts of shares in these companies with the Securities Division of
the State of Utah or with the Securities Exchange Commission because it believed
these gifts to be outside the scope of the Utah Uniform Securities Act and the
Securities Act of 1933 in as much as such acts require registration for sales
and do not require registration of gifts. Nevertheless, in connection with the
distribution of shares of its subsidiaries, Capital General was found by the
Utah Securities Advisory Board, in two decisions affirmed by the Utah State
Courts, to have violated the registration provisions of the Utah Uniform
Securities Act. See In re Amenity Inc., No. SD-86-11 (Utah Sec. Adv. Bd.
February 18, 1987) aff'd C87-2625 (3d Dist. Ct. September 18, 1987) aff'd sub
nom Capital General Corp. v. Utah Dep't of Business Reg., 777 P.2d 494, 498
(Utah Ct. App.) cert. denied, 781 P.2d 873 (Utah S. Ct. 1989); In re H&B
Carriers Inc., No. 87-09-28-01 (Utah Sec. Adv. Bd., Apr. 15, 1988) aff'd No.
88-5900053 (3d Dist. Ct. Sept 10, 1990) aff'd sub nom Capital General Corp. v.
Utah Dep't of Business Reg., Case No 91-196 (Utah Ct. App. February 10, 1992.
All of the subsidiary companies, including the company, were parties to the H&B
Carriers order.
Both of these actions sought suspension of transactional exemptions
respecting the shares of these companies pursuant to Section 14 (3) of the Utah
Uniform Securities Act. Capital General defended both actions on the grounds
that the Utah Uniform Securities Act did not apply to gifts of securities, that
the gifts were good faith gifts specifically exempted by the Act, and that in
any event even if it had "sold" shares in violation of the Act, suspension of
transactional exemptions was not an authorized remedy under the statute. These
defenses were rejected at the administrative agency level, and upon judicial
review at the District Court level and by the Utah Court of Appeals.
Management does not feel that the legal problems of the former officers
and directors will have an adverse effect on the Company in the future.
Management intends to comply with all applicable securities laws in the future.
On February 8, 1996, David R. Yeaman was charged in the United States
District Court for the Eastern District of Pennsylvania with conspiracy, wire
fraud and fraud in the offer, purchase and sale of securities, in violation of
18 U.S.C. Sections 2, 371 and 1343; 15 U.S.C. Sections 77q(a), 77x, 78j(b), and
78ff; and Rule 10b-5 promulgated by the Securities and Exchange Commission,
Title 17, Code of Federal Regulations, Section 240.10b-5 (1986).
On February 22, 1996, Mr. Yeaman entered his not guilty plea to all
charges. The allegations against Mr. Yeaman are based on the government's claims
that he and five of the other defendants named in the proceeding violated the
aforesaid laws by inflating the apparent worth of certain reinsurance companies
by leasing them alleged worthless securities. Specifically, it is alleged that
Mr. Yeaman, with other defendants, engaged in practices which falsely increased
the quoted prices of the securities and misrepresented restricted securities as
free trading securities.
5
<PAGE>
Based on these allegations, the charges against Mr. Yeaman include one count of
conspiracy, seven counts of wire fraud, six counts of securities fraud, and
aiding and abetting with respect to each count. On April 16, 1997, Mr. Yeaman
was convicted on one count of conspiracy, five counts of wire fraud, and three
counts of Securities Fraud.
The U.S. Securities and Exchange Commission, Securities Act of 1933
Release No. 7008 and Securities Exchange Act of 1934 Release No. 32669 announced
that on July 23, 1993, it ordered David R. Yeaman and Capital General
Corporation to permanently cease and desist from committing or causing further
violations of Section 5(a) and (c) and 17(a) of the Securities Act of 1933 and
Sections 10(b) and 13(g) of the Securities Exchange Act of 1934 and Rules 10b-5,
12b-20 and 13d-1(c) thereunder.
Krista Nielson was ordered to permanently cease and desist from
committing or causing further violations of Section 17(a) of the Securities Act
and Section 10(b) of the Exchange Act and Rules 10b-5 and 12b-20 thereunder. In
addition, the Commission ordered the revocation of the registration of the
common stock of Altara International, Inc., Arrow Management, Inc., Atlas
Equity, Inc., Dynamic Associates, Inc., Energy Systems, Inc., Four Star Ranch,
Inc., Panorama Industries, Inc., Partisan Corporation, Quiescent Corporation,
Saber, Inc., Upsilon, Inc., Vicuna, Inc., Why Not?, Inc., Xebec Galleon, Inc.,
Zebu, Inc., and Zeus Enterprises, Inc. pursuant to Section 12(j) of the Exchange
Act. The Commission found that each of the issuers had filed a registration
statement on Form 10 that contained materially false and misleading statements
in violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Each of the respondents had submitted an Offer of Settlement consenting
to the entry of the Order without admitting or denying the allegations in the
Order. Prior to the submission of the Offers of Settlement, Capital General, on
behalf of the above mentioned companies, except for Panorama Industries, Inc.,
filed a registration statement on Form S-1 during December of 1992 to register
the common stock of those companies under the Securities Act of 1933.
Concurrently with the signing of the Offers of Settlement, the Registration
Statement was declared effective on June 30, 1993. A Post Effective Amendment
was filed and declared effective September 2, 1993. Although the registration of
the common stock under Section 12(g) of the 1934 Act was revoked on July 23,
1993, the companies are now registered and reporting under the Securities Act of
1933 by virtue of the filing of Form S-1 as indicated by Commission File No.
33-55254.
Management does not feel that the legal problems of the former officers
and directors will have an adverse effect on the Company in the future.
Any outstanding legal proceedings relate only to the operational
activities of the Company prior to the December 1997 activities which changed
control of the Company and are not a reflection of current management and/or
business strategy. No material relationship existed or now exists between
current management and any former director, officer, or affiliate of the
Company. Management does not feel that the legal problems of the former officers
and directors will have an adverse effect on the Company in the future. However,
no assurance can be given that costs, expenses or any awards of damages will not
exceed the expectations of management, which could have a material adverse
impact on the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Financial statements as of March 31, 1998
(b) Reports on Form 8-K
None
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIDYN, CORP.
Dated: May 20, 1998 /s/ Ira Gentry
Ira Gentry, President and Director
7
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
UniDyn, Corp.
The accompanying balance sheet of UniDyn, Corp. as of March 31, 1998, and the
related statements of operations, and cash flows for the three months ended
March 31, 1998 and 1997, and the period from inception to March 31, 1998 were
not audited by us and, accordingly, we do not express an opinion on them.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
May 8, 1998
F - 1
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1998
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash in bank $ 48,057
Accounts receivable 282,538
Inventory 54,191
----------------------
TOTAL CURRENT ASSETS 384,786
----------------------
$ 384,786
======================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 36,707
Income taxes payable 54,000
Loan payable - related party (Note 4) 36,000
----------------------
TOTAL CURRENT LIABILITIES 126,707
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding
32,000,000 shares 32,000
Additional paid-in capital 172,653
Treasury stock (20,992)
Earnings accumulated during the
development stage 74,418
----------------------
TOTAL STOCKHOLDERS' EQUITY 258,079
----------------------
$ 384,786
======================
</TABLE>
F - 2
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
5/2/86
Three Months Ended (Date of
March 31, inception) to
1998 1997 3/31/98
----------------- ----------------- -----------------------
<S> <C> <C> <C>
Net sales $ 623,798 $ 0 $ 623,798
Cost of sales 186,466 0 186,466
----------------- ----------------- -----------------------
GROSS PROFIT 437,332 0 437,332
General and administrative expenses 270,124 0 280,864
----------------- ----------------- -----------------------
NET INCOME
BEFORE INCOME TAXES 167,208 0 156,468
Income tax expense 54,050 0 54,050
----------------- ----------------- -----------------------
NET INCOME $ 113,158 $ 0 $ 102,418
================= ================= =======================
Net income per weighted
average share $ .00 $ .00
================= =================
Weighted average number of common
shares used to compute net income
per weighted average share 32,000,000 1,000,000
================= =================
</TABLE>
F - 3
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
5/2/86
(Date of
Three Months Ended March 31, Inception) to
1998 1997 3/31/98
---------------- --------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 113,158 $ 0 $ 102,418
Adjustments to reconcile net income to cash provided
by operating activities:
Amortization 0 0 50
Stock issued for expenses 0 0 196
Changes in assets and liabilities:
Accounts receivable (169,751) 0 (169,751)
Inventory 0 0 (13,513)
Accounts payable 13,652 0 36,707
Income taxes payable 54,000 0 54,000
---------------- --------------- ---------------
NET CASH PROVIDED
BY OPERATING ACTIVITIES 11,059 0 10,107
INVESTING ACTIVITIES
Organization costs 0 0 (50)
---------------- --------------- ---------------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES 0 0 (50)
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 0 2,000
Loans - related party 36,000 0 36,000
---------------- --------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 36,000 0 38,000
---------------- --------------- ---------------
INCREASE IN CASH
AND CASH EQUIVALENTS 47,059 0 48,057
Cash and cash equivalents at beginning of year 998 0 0
---------------- --------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 48,057 $ 0 $ 48,057
================ =============== ===============
Cash paid for income taxes $ 50 $ 0 $ 50
</TABLE>
F - 4
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the accrual method
of accounting.
Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends in cash.
Organization Costs
The Company amortized its organization costs over a five year period.
Inventory
Inventory consists of items for resale and is valued at the lower of
cost (first-in, first-out basis) or market.
Allowance for Uncollectible Accounts
The Company provides an allowance for uncollectible accounts based upon
prior experience and management's assessment of the collectability of
existing accounts.
Revenue Recognition
Revenue is recognized upon shipment of products.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or less
when purchased to be cash equivalents.
Earnings (loss) per share
Earnings or loss per common and common equivalent share is computed by
dividing net earnings (loss) by the weighted average common shares
outstanding during each year.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses during the reporting period.
Estimates also affect the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results
could differ from these estimates. Such estimates of significant
accounting sensitivity are allowance for doubtful accounts.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its future employee stock options
rather than adopting the alternative fair value accounting provided for
under Financial Accounting Standards Board ("FASB") FASB Statement No.
123, Accounting for Stock Based Compensation (SFAS 123).
Income Taxes
The Company records the income tax effect of transactions in the same
year that the transactions enter into the determination of income,
regardless of when the transactions are recognized for tax purposes.
Tax credits are recorded in the year realized. Since the Company has
not yet realized income as of the date of this report, no provision for
income taxes has been made.
In February, 1992, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which supersedes substantially all existing authoritative
literature for accounting for income taxes and requires deferred tax
balances to be adjusted to reflect the tax rates in effect when those
amounts are expected to become payable or refundable. The Statement was
applied in the Company's financial statements for the fiscal year
commencing January 1, 1993.
F - 5
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (continued)
March 31, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
At December 31, 1997 a deferred tax asset was not recorded due to the
Company's lack of profitable operations to provide income to use the
net operating loss carryover of $10,740 which expires as follows:
Year Ended Expires Amount
December 31, 1986 December 31, 2001 $ 1,950
December 31, 1987 December 31, 2002 10
December 31, 1988 December 31, 2003 10
December 31, 1989 December 31, 2004 10
December 31, 1990 December 31, 2005 10
December 31, 1991 December 31, 2006 10
December 31, 1997 December 31, 2012 8,740
-------------
$ 10,740
=============
The Company expects to use the net operating loss on its 1998 income
tax return.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Utah on May
2, 1986 as Macaw Capital, Inc. and has been in the development stage
since incorporation. On December 30, 1993, the Company was dissolved as
a Utah corporation and reincorporated as a Nevada corporation. On
December 3, 1997, the name was changed to UniDyn, Corp.
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of its
common stock to Capital General Corporation for $2,000 cash for an
average consideration of $.002 per share. The Company's authorized
stock includes 100,000,000 shares of common stock at $.001 par value.
See also Note 6.
NOTE 4: RELATED PARTY TRANSACTIONS
During 1998, the Company borrowed $36,000 from its largest shareholder.
The amount is non-interest bearing and expected to be repaid during
1998.
NOTE 5: OTHER 1997 EVENTS
On December 1, 1997, the Company constructed a multi-party agreement
with the following entities; Universal Dynamics, Inc. an Arizona
Corporation, and Unidyn Inc. a company orgainzed under the laws of the
Bahamas. Pursuant to the agreement, the Company acquired from Universal
Dynamics, Inc. certain assets including equipment, inventory, accounts
receivable, software, and other intangible assets all pertaining to the
vibration control system known as "NorthStar". The Company also entered
into formal negotiations for the acquisition of the Derritron shaker
product, and entered into an agreement for the acquisition of 80% of
DVCS, LTD, a UK company in the business of Derritron shaker
remanufacturing and related shaker services in the UK.
In consideration for the NorthStar assets and to publicly disclose its
shares for the pending acquisitions, the Company issued 3,000,000
authorized but unissued shares of its common stock, with the following
distribution. Universal Dynamics, Inc. received 982,000 shares for the
NorthStar product. The structure was concluded December 31, 1997. The
Company also issued 1,822,000 shares for the pending acquisition of the
Derritron product and 80% ownership of DVCS, LTD. Unidyn Inc. agreed to
be the trustee of the shares as required for the pending acquisitions
of both Derritron and DVCS, LTD and subsequently returned the shares to
the Company as specific share transfer instructions were received
pursuant to the individual acquisition agreement. Other interested
parties received 196,000 shares.
F - 6
<PAGE>
UNIDYN, CORP.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (continued)
March 31, 1998
The Company also generated a $2,000,000 promissory note in the event it
would be required for the pending acquisitions. This note was
subsequently destroyed, and not required for the acquisition, and
represents no liability to the Company.
NOTE 6: FORWARD STOCK SPLIT
Effective December 3, 1997, pursuant to written action adopted
unanimously by the Board of Directors and a majority of the
shareholders, the Company changed its name to UniDyn, Corp., and
approved an eight-for-one forward stock split on the Company's common
stock as follows: each outstanding share was converted into eight
shares. Before the change, the Company was authorized to issue
100,000,000 shares of $.001 par value common stock; after the forward
stock split the Company shall continue to be authorized to issue
100,000,000 shares of $.001 par value common stock. The number of
outstanding shares of common stock affected by the forward split was
4,000,000. The number of issued and outstanding shares of common stock
of the Company after the forward stock split is 32,000,000.
NOTE 7: SUBSEQUENT EVENTS
On April 2, 1998 the Company announced it intends to issue 14,000,000
shares of its common stock to acquire Derritron, a leading manufacturer
of shakers and amplifiers for environmental testing.
F - 7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Unidyn, Corp. March 31, 1998 financial statements and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000894542
<NAME> Unidyn, Corp.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 48,057
<SECURITIES> 0
<RECEIVABLES> 282,538
<ALLOWANCES> 0
<INVENTORY> 54,191
<CURRENT-ASSETS> 384,786
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 384,786
<CURRENT-LIABILITIES> 126,707
<BONDS> 0
0
0
<COMMON> 32,000
<OTHER-SE> 226,079
<TOTAL-LIABILITY-AND-EQUITY> 384,786
<SALES> 623,798
<TOTAL-REVENUES> 623,798
<CGS> 186,466
<TOTAL-COSTS> 186,466
<OTHER-EXPENSES> 270,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 167,208
<INCOME-TAX> 54,050
<INCOME-CONTINUING> 113,158
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 113,158
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
