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 September 30, 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
incorporation or organization) Number)
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 September 30, 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.
The current company is in the business of providing products involving
quality control of manufactured electronics. These products fall under two
categories, A) Vibration Stress Screening (VSS) and B) Sterling inspection
products for on-line printed circuit board inspection.
A) The vibration test products are used to check the integrity of printed
circuit boards and other physical items eventually used in automotive and
electronics. This core business primarily consists of 1) the vibration hardware
or "shaker" unit which mechanically vibrates the test platform, 2) the vibration
control system which measures output and regulates shaker intensity, and 3) 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.
The Company currently markets its Vibration Control System product
under the NorthStar brand and to other OEM's to be repackaged for use in the
aerospace, automotive and semiconductor industries. The Company has also
purchased a complete line of shaker and amplifiers known in the industry under
the trade name "Derritron". Derritron has had a 30 year history in the shaker
business, and is considered a premier shaker product. This combined with the
Company's world class vibration control system, puts UniDyn in the position to
become a first tier provider of turn-key vibration test products.
B) UniDyn's flagship in new products is a product called "Sterling". The
Sterling product was completely acquired from Universal Dynamics in the second
quarter after the patent search showed
2
<PAGE>
no prior art, and open for patent filing. UniDyn is currently in the process of
filing patents on this new testing process. The company also has firm
commitments with a large Japanese company with a 45 year history of providing
various products for the printed circuit board industry. The company will
provide product to the Japanese company under an exclusive OEM arrangement in
Japan. The quantity will be approximately 20 Sterling units a month during the
first year, and relating to the initial discovered demands of the Japanese
customer. The company is in the process of engineering a "Production Model" for
delivery in 1999. The product technique is already tested at IBM and Delco
Electronics. The Company is constructing the production model for delivery.
The Sterling process provides for completely automated on-line 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.
OVERVIEW ACQUISITIONS
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 NorthStar vibration control system business.
These systems are Microsoft Windows-based and have been integrated in the
Company's proprietary control systems software.
The Company also entered into an agreement to acquire a 100% interest
in the Derritron product of shakers and amplifiers, previously known as a United
Kingdom based manufacturer of vibration shakers and amplifiers. The Company
completed that acquisition in the second quarter of 1998. With this acquisition,
the Company will receive patents, products, manufacturing equipment and an
established market presence internationally. Derritron is currently 1 of only 4
shaker manufacturers worldwide with a full range of electrodynamic shakers, and
has a full selection of shaker models.
The Company also finished the acquisition of the "Sterling" product
rights from Universal Dynamics, Inc., an Arizona corporation, in the second
quarter of 1998. This acquisition was completed after the "Sterling" process was
discovered clear on the patent search during the second quarter.
The Company also entered into an agreement to purchase 80% of DVCS
limited in the UK. DVCS was to be integrated with the "Derritron" product
acquisition. After review of the DVCS debt and lack of accounting compliance,
the Company opted to form a new 100% owned UK subsidiary, "Derritron Limited" to
incorporate the Derritron business for UK operations.
RESULTS OF OPERATIONS
All operations for 1997 relate to Universal. For the three months
ending September 30, 1998, the Company posted a loss of $129,915 on revenues of
$167,269 ($(47,136) and $544,474 for the same period in 1997). Included in the
loss for the quarter is a loss of about $57,000 from
3
<PAGE>
UniDyn (Europe), the Company's European subsidiary. The subsidiary first
recorded sales in October, 1998. Substantially all sales were generated from the
NorthStar product. NorthStar is composed of off the shelf items and has minimal
assembly requirements. For the nine months ending September 30, 1998, the
Company posted earnings of $92,600 on revenues of $1,418,998 ($79,718 and
$1,744,992 for 1997).
Sales are subject to material 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. The Company is currently involved with various funding
potentials for Sterling.
Cost of Goods Sold for the three months ended September 30, 1998 were
$84,256 with a resultant gross profit of $83,013 ($231,964 and $312,510 for
1997). Cost of goods sold for the nine months ended September 30, 1998 were
$467,975 with a gross profit of $951,023 ($588,703 and $1,156,289 in 1997).
Gross margin for the period ended September 30, 1998 was 67% (66% in 1997).
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 three months ended
September 30, 1998 were $329,316, and for the nine months were $1,075,661
($409,646 and $1,045,571 in 1997). The Company currently employs or leases a
total of 24 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. It also allows for a better benefit base through managed 401K and
health plans already established in the employee leasing companies.
For the nine months ending September 30, 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 including the acquisition of a potential supplier for
the Sterling system. 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,
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 and the acquisition of a key supplier
involving Sterling. As of September 30, 1998, the Company has approximately
$130,911 in working capital.
4
<PAGE>
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 31, 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
The Company has no current legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Financial statements as of September 30, 1998
(b) Reports on Form 8-K
None
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: November 13, 1998
--------------------------------------------
Ira Gentry, President and Director
5
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30,
1998
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash in bank $ 82,426
Accounts receivable 81,725
Deferred tax benefit 18,000
Prepaid expense 365
Inventory 49,856
----------------------
TOTAL CURRENT ASSETS 232,372
PROPERTY, PLANT & EQUIPMENT 63,161
OTHER ASSETS
Sterling Patent (Note 7) 0
Deferred tax benefit 258,000
Derritron Technology (Note 8) 4,008,400
----------------------
4,266,400
----------------------
$ 4,561,933
======================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 52,939
Accrued expenses 19,522
Income taxes payable 29,000
----------------------
TOTAL CURRENT LIABILITIES 101,461
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 4,341,669
Retained earnings 86,803
----------------------
TOTAL STOCKHOLDERS' EQUITY 4,460,472
----------------------
$ 4,561,933
======================
</TABLE>
F-1
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------------ ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 167,269 $ 544,474 $ 1,418,998 $ 1,744,992
Cost of sales 84,256 231,964 467,975 588,703
------------------ ------------------ ----------------- -----------------
GROSS PROFIT 83,013 312,510 951,023 1,156,289
Other Income 0 0 212,900 0
Bad debt adjustment (30,000) 0 0 0
Gain on disposal of net assets
of Universal (11,388) 0 (11,388) 0
General and administrative
expenses 329,316 409,646 1,075,661 1,045,571
------------------ ------------------ ----------------- -----------------
287,928 409,646 1,064,273 1,045,571
------------------ ------------------ ----------------- -----------------
NET INCOME (LOSS)
BEFORE INCOME TAXES (204,915) (97,136) 99,650 110,718
Income tax expense (benefit) (75,000) (50,000) 7,050 31,000
------------------ ------------------ ----------------- -----------------
NET INCOME (LOSS) $ (129,915) $ (47,136) $ 92,600 $ 79,718
================== =================== ================= =================
Net income (loss) per weighted
average share $ (.00) $ .(05) $ .00 $ .08
================== =================== ================= =================
Weighted average number
of common shares used to
compute net income (loss)
per weighted average share 32,000,000 1,000,000 26,762,667 1,000,000
================== ================== ================= =================
</TABLE>
F-2
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
----------------- -----------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 92,600 $ 79,718
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 3,230 777
Gain on Universal disposal (11,388) 0
Bad debts 30,000 0
Deferred taxes (276,000) 0
Changes in assets and liabilities:
Accounts receivable 76,748 (12,339)
Inventory 4,335 15,751
Prepaid expenses (38,791) 4,413
Accounts payable and accrued expenses 42,689 10,805
Income taxes payable 263,000 17,990
----------------- -----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 186,423 117,115
INVESTING ACTIVITIES
Loans (28,325) 0
Purchase of equipment (91,119) (1,538)
----------------- ------------------
NET CASH (USED)
BY INVESTING ACTIVITIES (119,444) (1,538)
FINANCING ACTIVITIES
Line of credit repayments 0 (151,223)
Cash remaining with Universal (14,300) 0
Repayments - related parties 0 (21,482)
Loan principal payments (74,775) (19,039)
Loan proceeds 0 100,000
----------------- -----------------
NET CASH (USED) BY
FINANCING ACTIVITIES (89,075) (91,744)
----------------- -----------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (22,096) 23,833
Cash and cash equivalents at beginning of year 104,522 72,695
----------------- -----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 82,426 $ 96,528
================= =================
Cash paid for income taxes $ 50 $ 5,673
Cash paid for interest 2,544 10,870
</TABLE>
SUPPLEMENTAL INFORMATION
During the nine months ended September 30, 1998, the Company issued 14,576,000
shares of restricted common stock for Derritron technology with a value of
$4,008,400. The value was based on a discounted value of free-trading stock on
the date of issuance.
F-3
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the
accrual method of accounting.
Principals of Consolidation
The financial statements contain the accounts of the Company
and Universal Dynamics, Inc. ("Universal"). Universal could be
considered an entity under common control as at one time, the
President of the Company and the president of Universal were
the same person. Also the Company issued common stock to
Universal to acquire the NorthStar operations from Universal.
NorthStar is currently the main line of business for the
Company. All significant intercompany transactions have been
eliminated on consolidation.
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 period.
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
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).
F-4
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)
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.
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.
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.
F-5
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 1998
NOTE 4: RELATED PARTY TRANSACTIONS
During 1998, the Company received $126,000 from Universal. The
amount was reimbursement for expenses paid by the Company on
behalf of Universal. The amount is reflected as a reduction of
general and administrative expenses on the Company's books and
eliminated on consolidation.
NOTE 5: 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
organized 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 and for
the Sterling technology. The structure was concluded December
31, 1997 with the remaining shares being issued in the second
quarter of 1998 for all rights in the Sterling product. 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. These shares were
issued in the second quarter of 1998 for the Derritron
product. Other interested parties received 196,000 shares.
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.
F-6
<PAGE>
UNIDYN, CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
September 30, 1998
NOTE 7: STERLING PATENT
During the quarter ended June 30, 1998, the Company issued
6,416,000 shares of restricted common stock, previously held
as treasury stock, to acquire a patent on the Sterling Project
from Universal. The patent will be amortized over fifteen
years for income tax purposes. For financial statement
purposes, the asset has no cost basis as it was acquired from
Universal. The Sterling Project will allow the testing of
printed circuit boards. Sterling will estimate the projected
life of each solder connection on the printed circuit board,
which will quantify the reliability of the manufactured part.
The Company expects to have a working production model by the
end of 1998 with sales expected in the second quarter of 1999.
NOTE 8: DERRITRON TECHNOLOGY
Effective June 30, 1998, the Company issued 14,576,000 shares
of restricted common stock, previously held as treasury stock,
to acquire the technology. The technology will be amortized
over five years. The Company will need to spend some money to
upgrade the technology and expects sales to begin in the
second quarter of 1999. With this acquisition, the Company
receives patents, products, manufacturing equipment, and an
established market presence in England and other parts of
Europe.
NOTE 9: DISCONTINUATION OF CONSOLIDATION WITH UNIVERSAL
Effective July 1, 1998, the Company acquired the remaining
inventory of Universal. This left Universal with no
operations. Universal intends to explore new business
operations apart from the Company and these new operations
will not be consolidated with the Company.
NOTE 10: WARRANTS AND OPTIONS
The Company granted warrants to an investment advisory firm to
purchase 150,000 shares of the Company's common stock at $.50
per share after September 3, 1998. On September 3, 1998, the
exercise price was above market price for the Company's stock.
The Company has granted 100,000 options to three directors to
purchase stock at $.43 per share. The options vest 25% per
year beginning April 1, 1999.
The Company has granted a total of 700,000 options for
advisory board members at an exercise price of $.43 per share.
The options vest 25% per year beginning April 1, 1999.
The Company has granted a total of 700,000 options to its
engineering staff at an exercise price of $.43 per share. The
options vest 25% per year beginning April 1, 1999.
No compensation expense has been recorded as the exercise
price was equal to or exceeded the market price on the grant
dates.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from UniDyn, Corp. and Subsidiary September 30, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 82,426
<SECURITIES> 0
<RECEIVABLES> 81,725
<ALLOWANCES> 0
<INVENTORY> 49,856
<CURRENT-ASSETS> 232,372
<PP&E> 63,391
<DEPRECIATION> (230)
<TOTAL-ASSETS> 4,561,933
<CURRENT-LIABILITIES> 101,461
<BONDS> 0
0
0
<COMMON> 32,000
<OTHER-SE> 4,428,472
<TOTAL-LIABILITY-AND-EQUITY> 4,561,933
<SALES> 1,418,998
<TOTAL-REVENUES> 1,418,998
<CGS> 467,975
<TOTAL-COSTS> 467,975
<OTHER-EXPENSES> 1,064,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,544
<INCOME-PRETAX> 99,650
<INCOME-TAX> 7,050
<INCOME-CONTINUING> 92,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,600
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>