-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W0VSCoAaZ0sjw8Zskfd2BKIRKs7V9zFz67RcPnDE+PyNJHseW1X7YL27OQyCvjId i65UL4sqgcqaRLQeNKCbMw== 0001016295-99-000057.txt : 19990506 0001016295-99-000057.hdr.sgml : 19990506 ACCESSION NUMBER: 0001016295-99-000057 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIDYN CORP CENTRAL INDEX KEY: 0000894542 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870438639 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-55254-31 FILM NUMBER: 99610801 BUSINESS ADDRESS: STREET 1: 7201 E. CAMELBACK ROAD, SUITE 250 STREET 2: SUITE 460 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 6029705500 MAIL ADDRESS: STREET 1: 3098 S HIGHLAND DR STE 460 CITY: SALT LAKE CITY STATE: UT ZIP: 84106 FORMER COMPANY: FORMER CONFORMED NAME: MACAW CAPITAL INC DATE OF NAME CHANGE: 19940706 10QSB 1 QUARTERLY FILING 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, 1999 ------------------------------------------------- [ ] 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 Identificatio 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 March 31, 1999 - ------------------------------------ ---------------------------------- $.001 PAR VALUE CLASS A COMMON STOCK 32,000,000 SHARES 1 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 10KSB FOR THE YEAR ENDED DECEMBER 31, 1998. 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 of 1998 after the patent 2 search showed 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. RESULTS OF OPERATIONS For the three months ending March 31, 1999, the Company posted a loss of $42,007 on revenues of $401,200 ($165,895 earnings and $737,415 for the same period in 1998). Substantially all sales were generated from the NorthStar product. NorthStar is composed of off the shelf items and has minimal assembly requirements. The Company was profitable for the quarter ($36,553) but its subsidiary lost $78,560. 3 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 March 31, 1999 were $121,588 with a resultant gross profit of $279,612 ($198,421 and $538,994 for 1998). Gross margin for the period ended March 31, 1999 was 70% (73% in 1998). 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 March 31, 1999 were $317,055, ($332,049 in 1998). The Company currently leases a total about 40 people in the United States and the United Kingdom. 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 three months ending March 31, 1999 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. As of March 31, 1999, the Company has approximately $103,050 in working capital. 4 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-KSB for the year ended December 31, 1998 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. IMPACT OF THE YEAR 2000 ISSUE The "Year 2000 Problem" arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly recognize a year that begins with "20" instead of the familiar "19". If not corrected, many computer applications could fail or create erroneous results. The extent of the potential impact of the Year 2000 Problem is not yet known, and if not timely corrected, it could affect the global economy. Y2K Statement The Company has verified that all internal software used in the operations of the Company and related developments are Y2K compliant. The Company sees no risk at this time pertaining to Y2K, and internal company operations. Products currently manufactured by the Company have also been Y2K verified. All previous Company customers have the ability to purchase both hardware and software upgrades from the Company which will certify their products as Y2K compliant. The amount of needed hardware and software depends on the associated production model in question. ITEM 2. LEGAL PROCEEDINGS Not applicable. 5 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Financial statements as of March 31, 1999 (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 4, 1999 Ira Gentry, President and Director 6 UNIDYN, CORP. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET (Unaudited)
March 31, 1999 ---------------------- ASSETS CURRENT ASSETS Cash in bank $ 103,567 Accounts receivable 145,740 Deferred tax benefit 12,896 Prepaid expense 12,921 Inventory 34,500 ---------------------- TOTAL CURRENT ASSETS 309,624 PROPERTY, PLANT & EQUIPMENT 82,986 OTHER ASSETS Deferred tax benefit 196,500 Derrition Technology 4,008,400 ---------------------- 4,204,900 ---------------------- $ 4,597,510 ====================== LIABILITIES & EQUITY CURRENT LIABILITIES Accounts payable $ 84,778 Accrued expenses 16,327 Payable - related party 105,469 ---------------------- TOTAL CURRENT LIABILITIES 206,574 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 4,341,832 Retained earnings 23,690 Accumulated other comprehensive loss (6,586) ---------------------- TOTAL STOCKHOLDERS' EQUITY 4,390,936 ---------------------- $ 4,597,510 ======================
F-1 UNIDYN, CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
Three Months Ended March 31, 1999 1998 ----------------- ----------------- Net sales $ 401,200 $ 737,415 Cost of sales 121,588 198,421 ----------------- ----------------- GROSS PROFIT 279,612 538,994 Other Income 0 30,000 General and administrative expenses 317,055 332,049 ----------------- ----------------- 317,055 332,049 ----------------- ----------------- NET INCOME (LOSS) BEFORE INCOME TAXES (37,443) 236,945 Income tax expense 4,564 71,050 ----------------- ----------------- NET INCOME (LOSS) (42,007) 165,895 OTHER COMPREHENSIVE LOSS Foreign currency translation adjustments (6,586) 0 ----------------- ----------------- TOTAL COMPREHENSIVE INCOME (LOSS) $ (48,593) $ 165,895 ================= ================= Net income (loss) per weighted average share $ (.00) $ .01 ================= ================= Weighted average number of common shares used to compute net income (loss) per weighted average share 32,000,000 30,600,000 ================= =================
F-2 UNIDYN, CORP. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 1999 1998 ----------------- ----------------- OPERATING ACTIVITIES Net income (loss) $ (42,007) $ 165,895 Adjustments to reconcile net income (loss) to cash provided (required) by operating activities: Depreciation 3,602 990 Deferred taxes 1,604 0 Foreign currency translation (6,586) 0 Changes in assets and liabilities: Accounts receivable 99,572 (119,254) Inventory (327) (37,777) Prepaid expenses 4,643 (1,492) Accounts payable (88,360) 13,677 Accrued expenses (30,958) 0 Payable - related party 14,799 0 Income taxes payable (50) 71,000 ----------------- ----------------- NET CASH PROVIDED (REQUIRED) BY OPERATING ACTIVITIES (44,068) 93,039 INVESTING ACTIVITIES Loans 0 (61,000) Purchase of equipment / cost adjustment 8,699 0 ----------------- ----------------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 8,699 (61,000) FINANCING ACTIVITIES Line of credit repayments 0 (35,000) Repayments - related parties 0 0 Loan principal payments 0 (74,775) Loan proceeds 0 78,500 ----------------- ----------------- NET CASH (USED) BY FINANCING ACTIVITIES 0 (31,275) ----------------- ----------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (35,369) 764 Cash and cash equivalents at beginning of year 138,936 104,522 ----------------- ----------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 103,567 $ 105,286 ================= ================= Cash paid for income taxes $ 2,960 $ 50 Cash paid for interest 0 1,370
F-3 UNIDYN, CORP. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1999 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, 1999 contain the accounts of the Company and its wholly-owned subsidiary, Unidyn (Europe) Limited. The financial statements for March 31, 1998 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 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. F-4 UNIDYN, CORP. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued) March 31, 1999 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued) Income Taxes (continued) 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. 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: 1998 EVENTS 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. 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. 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 third 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 5: SEGMENT INFORMATION The Company's subsidiary had sales in Europe of $36,145, cost of sales of $23,926, general and administrative expenses of $90,779, and a net loss of $78,560. Included in cost of sales is $16,533 paid to the Company for inventory to sell. F-5 EX-27 2 FDS - 1ST QUARTER
5 This schedule contains summary financial information extracted from UniDyn, Corp. March 31, 1999 financial statements and is qualified in its entirety by reference to such financial statements. 0000894542 UniDyn, Corp. 3-MOS DEC-31-1999 MAR-31-1999 103,567 0 145,740 0 34,500 309,624 92,485 (9,499) 4,597,510 206,574 0 0 0 32,000 4,358,936 4,597,510 401,200 401,200 121,588 121,588 317,055 0 0 (37,443) 4,654 (42,007) 0 0 0 (42,007) .00 .00
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