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, 2000
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[ ] 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
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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)
1216 South 1580 West, #A
Orem, Utah 84058
- ---------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 434-7250
--------------
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, 2000
- ------------------------------------ ----------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 35,102,500 SHARES
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
2
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UNIDYN, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------------- ---------------------
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 1,067,531 $ 461,239
Accounts receivable 412,546 431,857
Stock subscription 0 207,000
Deferred tax benefit 14,500 14,500
Prepaid expense 11,850 11,850
Receivable - employees 30,557 0
Inventory 371,736 333,551
---------------------- ---------------------
TOTAL CURRENT ASSETS 1,908,720 1,459,997
PROPERTY, PLANT & EQUIPMENT 558,758 560,642
OTHER ASSETS
Deposits and other 8,184 8,184
Goodwill (less amortization of $21,100) 1,245,005 1,266,105
Deferred tax benefit 181,500 181,500
Derritron Technology (less amortization
of $22,269) 3,986,131 4,008,400
---------------------- ---------------------
5,420,820 5,464,189
---------------------- ---------------------
$ 7,888,298 $ 7,484,828
====================== =====================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 207,705 $ 290,485
Accrued expenses 31,576 31,835
Loans payable 0 314,680
Deposits 421 21,956
Payable - related party 89,619 119,369
---------------------- ---------------------
TOTAL CURRENT LIABILITIES 329,321 778,325
LONG-TERM LIABILITIES
Long-term debt and interest - related party 1,002,300 0
---------------------- ---------------------
TOTAL LIABILITIES 1,331,621 778,325
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 35,102,500 shares 35,103 34,700
(34,700,000 in 1999)
Additional paid-in capital 6,882,030 6,558,382
Retained earnings (deficit) (353,870) 120,007
Accumulated other comprehensive loss (6,586) (6,586)
---------------------- ---------------------
TOTAL STOCKHOLDERS' EQUITY 6,556,677 6,706,503
---------------------- ---------------------
$ 7,888,298 $ 7,484,828
====================== =====================
</TABLE>
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UNIDYN, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
----------------- -----------------
<S> <C> <C>
Net sales $ 698,646 $ 401,200
Cost of sales 340,978 121,588
----------------- -----------------
GROSS PROFIT 357,668 279,612
General and administrative expenses 831,545 317,055
----------------- -----------------
831,545 317,055
----------------- -----------------
NET INCOME (LOSS)
BEFORE INCOME TAXES (473,877) (37,443)
Income tax expense 0 4,564
----------------- -----------------
NET INCOME (LOSS) (473,877) (42,007)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments 0 (6,586)
----------------- -----------------
TOTAL COMPREHENSIVE INCOME (LOSS) $ (473,877) $ (48,593)
================= =================
Net income (loss) per weighted average share $ (.01) $ (.00)
================= =================
Weighted average number of common shares used to
compute net income (loss) per weighted average share 34,901,250 32,000,000
================= =================
</TABLE>
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UNIDYN, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
----------------- -----------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (473,877) $ (42,007)
Adjustments to reconcile net income (loss) to cash provided
(required) by operating activities:
Depreciation and amortization 58,026 3,602
Non-cash interest expense 54,500 0
Deferred taxes 0 1,604
Foreign currency translation 0 (6,586)
Changes in assets and liabilities:
Accounts receivable (11,246) 99,572
Inventory (38,185) (327)
Prepaid expenses 0 4,643
Accounts payable (82,780) (88,360)
Accrued expenses (259) (30,958)
Payable - related party (31,950) 14,799
Deposits (21,535) 0
Income taxes payable 0 (50)
----------------- -----------------
NET CASH PROVIDED (REQUIRED)
BY OPERATING ACTIVITIES (547,306) (44,068)
INVESTING ACTIVITIES
Purchase of equipment / cost adjustment (12,773) 8,699
----------------- -----------------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (12,773) 8,699
FINANCING ACTIVITIES
Sale of common stock 531,051 0
Loan principal payments (314,680) 0
Loan proceeds 950,000 0
----------------- -----------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 1,166,371 0
----------------- -----------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 606,292 (35,369)
Cash and cash equivalents at beginning of year 461,239 138,936
----------------- -----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,067,531 $ 103,567
================= =================
Cash paid for income taxes $ 0 $ 2,960
Cash paid for interest 427 0
</TABLE>
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UNIDYN, CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
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 for March 31, 2000 contain the
accounts of the Company and its wholly-owned subsidiaries
Derritron and Avalon Manufacturing Co.
The financial statements for March 31, 1999 contain the
accounts of the Company and its former wholly- owned
subsidiary, Unidyn (Europe) Limited.
Dividend Policy
The Company has not yet adopted any policy regarding payment
of dividends in cash.
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
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.
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.
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UNIDYN, CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
March 31, 2000
NOTE 2: ORGANIZATION AND HISTORY
The Company was incorporated under the laws of the State of
Utah on May 2, 1986 as Macaw Capital, Inc. 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. The Company manufactures
and sells computer products that perform vibration testing to
assure product stability.
NOTE 3: 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 4: 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 the rights to patent the
Sterling Project from Universal. The patent rights 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 and other general electronic devices. Sterling will
allow the electronics manufacturer to access the workmanship
of their manufactured electronics and improve the estimated
projected life of the printed circuit board or other items
under test. Sterling will reduce the manufacturer warranty
return rate. Estimates show that the manufacturer can improve
the warranty return rate down to perhaps 1 percent based on
workmanship errors. Sterling will actually quantify the
reliability of the manufactured part and indicate the
workmanship areas of concern, even though the electronics pass
functional testing.
The Company has current arrangements with IEC Electronics
(IECE) of New York to review the product for contract
manufacturing at one of their facilities. The Company expects
to have sales later in 2000.
NOTE 5: 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 business and associated technology known as
Derritron. Derritron is a well known business involving
vibration shakers and other related technology. This
technology is perfectly integrated with the NorthStar
vibration control systems acquired from Universal Dynamics.
The technology will be amortized over 15 years. The Company
will need to spend some money to arrange for production of
such a massive product line, even in its reduced set. The
Company is now making sales of this product. With this
acquisition, the Company receives patent, products, know how,
drawings, trade name, manufacturing equipment, and an
established market presence in England and other parts of
Europe, Asia, South America, India, and China.
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ITEM 2. MANAGEMENTS 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
10-KSB FOR THE YEAR ENDED DECEMBER 31, 1999.
OVERVIEW
UniDyn, Corp. (referred to as "UniDyn" or 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. The Common Shares of UniDyn, Corp.
are currently traded on the NASDAQ OTCBB under the symbol "UNDY".
The business of the Company is focused on developing, manufacturing,
assembling and distributing specialized engineering products. The current
product lines, including the vibration stress screening ("VSS") machinery
manufactured under the NorthStar and Derritron brands and the on-line inspection
products being developed at the Avalon facility as the Sterling Product are
directed principally to testing electronic and mechanical components and
providing on-line quality control testing for printed circuit boards. In January
2000, the Company introduced and recognized its first revenues from the
Derritron line of products and expects to introduce the Sterling Product line
during the third quarter of 2000. In addition to these product introductions,
the Company plans to continue its emphasis on developing and distributing
specialized engineering and testing products and to also consider ancillary
technology opportunities that build on its existing capacity as a builder of
manufacturing equipment as well as its engineering and testing capacities.
On December 31, 1999 the Company completed the acquisition of Avalon
Manufacturing Company, a private entity based in Phoenix, Arizona, with
significant experience in providing the equipment for the manufacture of printed
circuit boards. The Company is focusing the development and initial
manufacturing of the Sterling Product line at the Avalon facility. The Avalon
technology, including its automatic board handling machinery will be integrated
in the Sterling production process. The availability of the Avalon facility,
staff, and assets has been an important factor in allowing the Company to
accelerate the Sterling project and to attract engineers and other technical
personnel for the project.
The Company's traditional core business, through its NorthStar brand
and more recently through the Derritron and Avalon lines, offers vibration
testing and VSS products that are used to check the integrity of printed circuit
boards and other components for automotive and electronics applications. The
NorthStar vibration control system uses a Microsoft-based Windows product
acquired in 1997 which is fully integrated into the Company's proprietary
control system software package. The NorthStar and Derritron products include
the vibration hardware or "shaker" units which mechanically vibrate the test
platform, the vibration control system which measures output and regulates
shaker intensity, and the amplifier unit which provides power to the shaker
unit. The VSS products are marketed directly by the Company under the trade name
Derritron, and are also manufactured by the Company on an OEM basis and offered
for repackaging and sale for use in the aerospace, automotive and semiconductor
industries.
In a production environment, the VSS test equipment can identify latent
defects not readily recognizable through visual inspection or during the
development and design process. The use of on-line VSS testing for electronic
and mechanical components, such as printed circuit boards, saves rework time
during production, reduces
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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.
Through 1999, essentially all of the Company's revenues came from its
NorthStar line. Early in 1998, the Company acquired the production, engineering,
patents, drawings and intellectual property and other rights and assets for the
shaker and amplifiers, which had been manufactured in England for more than 30
years under the trade name Derritron. At the time of the Company's acquisition
of Derritron, the active production of the Derritron line had been suspended by
the prior owners. During 1999, the Derritron operations were reorganized at a
facility in Riverside, California; production at the plant commenced on January
2, 2000 and the first shipments of the Company's Derritron products were made in
the first quarter of 2000. During the end of the first quarter and in April,
2000, the Company transferred its NorthStar production to the Riverside facility
to allow the Company to offer turnkey vibration test products from its Riverside
facility.
Currently, the transfer of the NorthStar product into the Derritron
operations in Riverside, California is complete and the Company is completing
its pre-production and commercial developments efforts for the Sterling Product
line at its Avalon facility, the underlying aspects of which were originally
acquired from Universal Dynamics in 1998. Management anticipates that commercial
production of the Sterling Product line will be undertaken during the summer of
2000 with delivery of the first products scheduled for the third quarter of this
year. The Sterling Product has been designed as a stand alone piece of equipment
that will provide for a fully integrated, on-line quality control testing of
printed circuit boards. The Company expects to offer the product principally on
an OEM basis, with first introductions anticipated to be made through a Japanese
consortium. Initial production commitments are expected to increase to the rate
of approximately 20 Sterling Units per month with production to be scaled and
maintained, initially based on the requirements of the Japanese consortium and
subsequently based on market of other customers.
As described above, to date, the Company has acquired a substantial
portion of its technology and its production assets through arrangements with
third parties. The Company intends to continue to consider strategic
acquisitions and to use its expanding internal product development and
production capacity to enhance the assets acquired from third parties. In
addition, the Company will continue to develop new equipment and technology
internally as circumstances warrant and as capital resources and technical
talent are available.
RESULTS OF OPERATIONS
For the quarter ended March 31, 2000 compared to the quarter ended
March 31, 1999
For the three months ending March 31, 2000, the Company reported, on a
consolidated basis, a loss of $473,877 on revenues of $698,646 as compared to a
loss of $42,007 on revenues of $401,200 for the same quarter in 1999. The losses
resulted from a combination of the investment which the Company is continuing to
make in bringing the Derritron facility to full production, the costs incurred
in connection with the transfer of the NorthStar operations to the Derritron
facility and the continuing development, engineering and other pre-production
costs attributable to the Sterling Products line. Management anticipates that
during the remainder of the current fiscal year, the Company will move toward
customary production level costs, revenues and expenses as the Derritron
production expands, the NorthStar production continues and the Sterling Product
line is introduced.
Prior to the first quarter of 2000, substantially all of the Company's
revenues were generated from the NorthStar product. During the first quarter of
2000, the Company recorded revenues of approximately $180,000 and $330,000 from
the initial shipments and services earned at the Derritron and Avalon facilities
respectively.
While the Company's product lines are not subject to inherent seasonal
shifts, with the relatively low level of sales of the Company's products to
date, the Company's sales have been sensitive to small shifts in revenues and
9
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production which have resulted in material monthly fluctuations. In addition,
the Company's results to date have been impacted by the financial effect of
acquisitions, changes in facilities, modification of operations, introduction of
new product lines and shifts in the existing customer base.
Cost of Goods Sold. For the three months ended March 31, 2000 the costs
of goods sold was $340,978 with a gross profit margin of $357,668 as compared to
$121,588 of costs of goods sold and a $279,612 gross margin for the same quarter
of 1999, resulting in gross margins for the period ended March 31, 2000 of 51%
as compared to a 70% gross margin for the first quarter in 1999 (when the sales
were primarily of the NorthStar product). Management anticipates that as its
production expands and the product mix is diversified, it will achieve a blended
gross margin of approximately 40-50% on its products, including direct labor and
customary allocated manufacturing overhead. However, until the new product lines
have been introduced, and the Company has developed an operating history, there
is significant uncertainty about future gross margins, particularly since gross
margins are highly dependent on product prices, sales volumes, materials cost
and allocation of manufacturing overhead.
Research and Development. For the three months ending March 31, 2000,
the Company's research and development efforts were conducted at the Company's
Engineering and Development Centers in Orem, Utah and Phoenix, Arizona. Although
the NorthStar production activities have been transferred to the Derritron
facility, the research and development efforts will continue to be based in
Utah. Research and Development costs were a significant portion of the total
operations at both the Utah and Arizona facilities and were recorded as a
portion of the selling, general and administrative costs.
Selling, General and Administrative Costs. For the three months ended
March 31, 2000, selling, general, and administrative costs were $831,545, as
compared to $317,055 in the first quarter of 1999. The significant increase in
general and administrative cost was attributed to the additional staff and
facilities needed to establish the Derritron facility, the cost of the efforts
for the development of the Sterling Product line, and principally to the fact
that to date, the Company has included staff, facilities, and related overhead
of the production managers, engineers, research and development efforts and the
labor and overhead costs in Orem, Utah and Riverside, California as selling,
general and administrative costs and has not attributed them to the direct costs
of goods sold or the research and development efforts for the various product
lines.
The Company's workforce consists of 44 leased personnel all located in
the United States. Management believes that by leasing its primary workforce,
the Company has controlled its fixed overhead costs and has been able to provide
its staff with advantages of improved benefits package and access to retirement
plans which can be provided through the larger group status of a leasing
arrangement. Management will continue to review this structure as conditions
require.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had a total cash availability of
$1,067,531 including $950,000 which was the net proceeds of a $1 million loan
received during the first quarter from a long time UniDyn shareholder. The
principal of the loan and interest is payable in full in three years at an
annual interest rate of 6%. The lender was granted warrants to acquire 150,000
Common Shares at an exercise price equal to 85% of the market price on the
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date of grant. The proceeds of the loan are available for general working
capital requirements of the Company. Management intends to apply the proceeds of
the loan, along with other working capital, to support its ongoing operating
requirements, to accelerate the beta testing of the Sterling Product units and
to fund the costs related to filing for patents, principally those related to
the Sterling Product line.
Also, during the first quarter of 2000, the Company issued 402,500
Common Shares for net cash received after fees of $324,051 of which 390,000
Common Shares were newly issued and 12,500 Common Shares were issued on the
exercise of previously outstanding warrants. (See Item 2 below).
In addition, the Company intends to continue to seek additional working
capital to meet its operating requirements and to provide further capital for
expansion, acquisition of strategic technologies and direct costs related to the
introduction of the Sterling Product line. While additional capital will be
needed to maintain the growth plans of the Company and the costs related to the
identification and protection of intellectual property through patents and other
protections, management believes that the working capital now available to it
along with funds generated from operations will be sufficient to meet capital
requirements for the next 12 months even if substantial additional working
capital does not become available. 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 Product line.
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.
YEAR 2000 STATEMENT
The Company has verified that all internal software used in the
operations of the Company and related developments are Year 2000 compliant. The
Company sees no risk at this time pertaining to Year 2000, and internal company
operations. Products currently manufactured by the Company have also been Year
2000 verified. All previous Company customers have the ability to purchase both
hardware and software upgrades from the Company which will certify their
products as Year 2000 compliant. The amount of needed hardware and software
depends on the associated production model in question.
PART 2. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended March 31, 2000, 390,000 restricted Common
Shares were sold at $1.00 per share for $390,000 of cash. Warrants were
exercised at $.60 per share from which cash of $7,500 was received for 12,500
shares of restricted common stock. Fees of $73,449 were paid in cash, resulting
in net proceeds to the Company of $324,051. The transactions were undertaken as
private placements without any public offering to institutions and investors,
including current shareholders, who were accredited investors or had a prior
business relationship with the Company. The issuances were made in reliance on
the exemption from registration provided by rule 506 of Regulation D.
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ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On May 2, 2000, the Company announced that it had entered into a
memorandum of understanding with Clean Energy Technologies, Inc., a privately
held company, under which the companies would pursue a possible merger and shift
a significant portion of the Company's focus into the fuel cell energy business.
On May 5, 2000, the Company announced that the possible merger plans had been
terminated by mutual agreement, although the companies would consider other
possible working arrangements and UniDyn would continue to consider a possible
entry into the fuel cell arena. Copies of the May 2 and May 5, 2000 press
releases are attached to this report as Exhibits.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Press releases dated May 2 and May 5, 2000
(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: May 15, 2000
Ira Gentry, President and Director
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Company Press Release
UniDyn Corp. Plans Merger With CET as Entry Into
Worldwide Fuel Cell Energy Business
PHOENIX--(BUSINESS WIRE)--May 2, 2000--UniDyn Corp, (OTCBB: UNDY - news), a
leading manufacturer of "Quality Assurance Testing Equipment" announced today
that they have signed a Memorandum of Understanding (MOU) to merge with Clean
Energy Technologies, Inc, (CET) a privately held Nevada corporation. The merger
with CET will give UniDyn entry into the fuel cell energy business through a
worldwide exclusive license to use fuel cell technology being developed at the
Jet Propulsion Laboratories (JPL) of the California Institute of Technology.
UniDyn's ability and obligation to consummate the transaction is subject to
securities and regulatory filings and UniDyn shareholder approval at a meeting
called for that purpose.
Separately, CET has reported that it has signed a Letter of Intent for a one
hundred million-dollar equity investment by a Korean group.
Fuel cell technology is clean and "green" producing electricity from a chemical
reaction involving oxygen and hydrogen, with no polluting emissions or
byproducts. A recent Business Week article (May 8, 2000) indicated that fuel
cell technology could be a major source of electricity by 2010.
When the merger is completed, UniDyn shareholders will hold approximately
eighteen million shares of UniDyn stock (after giving effect to a two for one
reverse stock split being submitted to the UniDyn shareholders for approval).
Simultaneously, UniDyn will seek shareholder approval to increase its common
stock to 500,000,000 shares and to authorize 25,000,000 preferred shares. CET
shareholders, with approximately 61,500,000 total shares, will receive two and
one half shares of UniDyn common stock for each CET share tendered (20% of which
shall be registered in the offering and the remainder of which will be offered
as restricted shares). UniDyn plans to change its name to "Fuel Cell Industries,
Inc." and its trading symbol to "FCEL".
Malcolm Bricklin, Chairman and Chief Executive Officer of CET is expected to be
the new Chairman and CEO of the merged company. Malcolm Bricklin, stated, "We
expect the merged company, Fuel Cell Industries, to become a world leader in the
fuel cell industry. Our team is already pursuing other fuel cell technologies
and additional strategic partners. However, we will continue to build on the
UniDyn core business including the "Sterling" product line. We expect the Avalon
subsidiary to produce key equipment for the manufacturing of the fuel cells. The
merger will provide access to significant additional capital, which will benefit
the current UniDyn products and customers".
Ira Gentry, currently Chairman of UniDyn, is expected to become Vice Chairman of
the merged company and the existing UniDyn COO, John Provazek, and division
officers are expected to remain in their current roles.
Ira Gentry, UniDyn's CEO stated, "Since our acquisition of Avalon in December
1999, UniDyn has been seeking new applications for the Avalon line of equipment
that manufactures printed circuit bare-board technology. This merger will give
us the opportunity to integrate the existing Avalon manufacturing knowledge and
machinery with the CET fuel cell technology environment as a basis of being one
of the first enterprises to ever mass-produce fuel cells. This equipment will be
available for our use and for sale and license to third parties worldwide, with
royalties generated on each fuel cell produced". For more information on UniDyn,
please visit the company's Website at http://www.unidyn.com or call The
Investors Relation Group in New York at 212-736-2650.
13
<PAGE>
About UniDyn Corporation
UniDyn is a leader in the quality assurance testing market with emphasis on
fully automated testing of printed circuit boards. UniDyn has recently completed
a corporate reorganization in preparation for substantial growth. The Company
will have three production divisions: the Phoenix, Arizona Avalon plant to
produce the Sterling products, the Orem, Utah plant to produce the NorthStar and
MorningStar products and during the first quarter of 2000, the Los Angeles plant
to produce Derritron products. In addition, the Company has a separate research
and development division located in Orem, Utah.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: Except for historical information contained herein, the matters discussed
in this press release are forward-looking statements that involve risks and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets, products
and prices and other factors discussed in the Company's various filings with the
Securities and Exchange Commission.
14
<PAGE>
Company Press Release
UniDyn and CET Terminate Possible Merger Plans
UniDyn Will Continue To Explore Production Of Fuel Cells And
Equipment Through Avalon
PHOENIX--(BUSINESS WIRE)--May 5, 2000--UniDyn, Corp. (OTCBB: UNDY - news)
announced today that its memorandum of understanding with Clean Energy
Technologies, Inc. ("CET") announced on May 2 has been terminated by mutual
agreement.
Ira Gentry, UniDyn's chairman and CEO, stated, "I want to assure our
shareholders that our intentions, at all times, are to increase shareholder
value. Although we are no longer pursuing this transaction, we will continue to
consider ancillary technologies and opportunities that build on our Company's
product lines, including the wide range of strategies that are emerging in the
fuel cell arena".
A spokesperson for CET noted, "Our discussions with UniDyn have given us an
opportunity to understand its manufacturing and engineering talents and we hope
to continue to work with them through contractual and other non-equity
structures".
For more information on UniDyn, please visit the company's Website at
http://www.unidyn.com or call The Investor Relations Group, Inc., in New York
City at 212.736.2650.
About UniDyn, Corp.
UniDyn is a leading manufacturer of specially engineered production equipment
and of testing equipment, principally for the electronics industry and the
quality assurance testing market. The Company has three production facilities:
the Phoenix, Arizona Avalon plant to produce the Sterling products; the Southern
California plant to produce the Derritron and NorthStar products; and the Orem,
Utah facility to produce the MorningStar products. The Company also maintains a
research and development facility in Orem, Utah.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: Except for historical information contained herein, the matters discussed
in this press release are forward-looking statements that involve risks and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets, products
and prices and other factors discussed in the Company's various filings with the
Securities and Exchange Commission.
15
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This schedule contains summary financial information extracted
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