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Form 10-K
Securities and Exchange Commission
Washington, DC 20549
ANNUAL REPORT PURSUANT TO SECTON 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2002
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Commission file number 0-17080
UNITRONIX CORPORATION
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(Exact name of registrant as specified in its charter)
New Jersey 22-2086851
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Newbury Street, Peabody, MA 01960
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(Address of principal executive offices)
(Zip Code)
(Registrant's telephone number, including area code)
(978) 535-3912
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[X]
1
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405.)
Based upon the latest sale price of the stock as of September 27, 2002, of
$0.51 per share, the aggregate market value, as of September 30, 2002 of
the shares of common stock held by non-affiliates was $1,642,534. "Non-
affiliates" includes all share owners of the registrant other than its officers,
directors and owners of more than ten percent of its outstanding stock.
APPLICABLE ONLY TO CORPORATE REGISTRANTS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
9,643,718 shares of common stock, no par value, as of September 30, 2002
DOCUMENTS INCORPORATED BY REFERENCE
NONE
2
Forward Looking Statements
In addition to historical information, this Annual Report contains forward
looking statements. These forward looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those reflected in these forward looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
the Section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations". Readers are cautioned not to place undue
reliance on these forward looking statements, which reflect management's
opinions only as of the date hereof. The Company undertakes no obligation
to revise or publicly release the results of any revision to these forward
looking statements. Readers should carefully review the risk factors described
in other documents the Company files from time to time with the Securities and
Exchange Commission, including the Quarterly Reports on Form 10-Q to be filed
by the Company in fiscal year 2003.
PART I
Item 1. BUSINESS
- ------- --------
GENERAL
Unitronix Corporation ("the Company") is a software development and services
company that is currently in transition from being a provider of material
requirements planning (MRP) systems with its PRAXA product to being a provider
of knowledge-based tools for the mineral exploration industry. The cost of
updating PRAXA to utilize current information technologies and the emergence
of several dominant players in the MRP market, such as SAP, Oracle and J.D.
Edwards convinced management that the Company should consider other venues for
its future business endeavors. The ensuing exploration of several technology
based opportunities resulted in the Company focusing on the rapidly expanding
geomatics* industry. Utilizing its in-house project management and software
development experience and the services of several recognized scientists and
geomatics experts, the Company has developed a mineral potential analysis tool.
Unitronix Corporation, ("the Company"), was founded and incorporated in 1975
in the State of New Jersey, and operated as a distributor of computer products
until 1986. During that year the Company purchased the PRAXA software
package from Xerox Corporation. PRAXA is a Manufacturing Resource Planning
(MRPII) system that integrates manufacturing, distribution and financial
applications into one system that monitors and supports material requirements
planning, capacity planning, factory order and cost control, inventory control,
product sales and distribution and financial accounting. Sub-sets of PRAXA
are employed by non-manufacturing firms to help manage specific segments of
their businesses, e.g., wholesale distributors employ the sales, distribution
and financial modules of PRAXA in their firms while some service companies use
only the financial modules.
* Geomatics, as defined by the Geomatics Industry Association of Canada, is "A
technology and service sector focusing on the acquisition, storage, analysis,
dissemination and management of geographically referenced information for
improved decision making."
3
From 1986 until 1998 the Company was in the business of marketing, installing
and supporting turnkey computer systems that incorporated PRAXA and computer
equipment manufactured by DEC. The Company also separately licensed PRAXA
software to existing users of DEC's VAX and Alpha lines of computers. Since
1998 the Company has not sold computer equipment, and the Company's sole source
of revenue has been the sale of PRAXA license upgrades, software support,
consulting services and additional PRAXA modules, to existing customers.
Although PRAXA provides substantial capabilities to small and mid-sized firms,
it is based upon obsolete technology and lacks features that many companies
now demand from their enterprise resource planning systems, such as e-commerce
and customer relationship management. The Company made two attempts to develop
new versions of PRAXA that would have been based upon current technology and
would have provided additional features that customers wanted. Neither attempt
succeeded in producing a completed product.
In 1999 the Company decided that the cost to develop a new system, and the
intense competition in the manufacturing resource planning system market made it
unfeasible to remain in the manufacturing system business. Accordingly, manage-
ment has been attempting to sell the PRAXA business segment since that time,
and has redirected the Company into the geomatics industry.
In September, 1999, the Company and a Canadian mineral exploration firm, Goldsat
Mining, Inc., formed a jointly owned limited liability corporation to develop
a software tool that was intended to analyze geo-scientific data in order to
locate areas that have high potential for containing volcanogenic massive
sulfide (VMS) mineralization. The tool utilizes a deposit model and series of
proprietary algorithms to identify the areas with the most potential within the
area that is examined. The tool, now named "Geo-Sleuth" (trademark is pending
in Canada), is intended to substantially reduce the time and costs currently
incurred by mineral exploration specialists in locating areas that are worthy of
further study. The limited liability corporation was dissolved in May, 2001,
with the Company becoming the sole owner of all rights to the work in progress
and the work that had been completed to date. Since acquiring these sole rights
to Geo-Sleuth, the Company has continued development and testing of the tool.
The Noranda mining camp in Rouyn-Noranda, Quebec, was utilized for Alpha
testing. The tool was Beta tested using the Sturgeon Lake mining camp in
Ontario. The tool was then applied to a "real-world" test in a relatively
unexplored area near James Bay in Quebec. In all cases, the final result was a
mineral potential analysis map. As part of its Beta test in the Sturgeon Lake
area, the Company undertook a "ground truthing" program to verify the tool's
findings. Samples were collected and have been sent to an independent labor-
atory for lithogeochemical and petrographic analysis. Near term, the Company
plans to use the tool in-house through its newly formed subsidiaries.
During the fiscal year ended June 30, 2002, the Company formed two subsidiary
Corporations whose charters are to use the tool to identify properties of merit
for eventual joint venture or sale. The first Corporation, currently named
3936449 Canada, Incorporated, was formed to satisfy the terms of the agreement
that was negotiated with Goldsat Mining to dissolve the jointly owned limited
liability corporation. Goldsat Mining had the right to acquire 25% ownership of
3936449 Canada, Incorporated, in exchange for forgiveness of a debt of $12,639
owed to Goldsat by the dissolved limited liability corporation but did not
exercise its right to convert, resulting in the new corporation being a wholly
owned subsidiary of the Company. This subsidiary will follow-up on areas of
interest identified by the tool during the test near James Bay.
4
This Spring, when a detailed analysis of the mineral potential maps for Sturgeon
Lake was undertaken, it became apparent that there were several areas within and
near the existing mining camp which warranted more detailed investigation. An
Ontario corporation, 1522923 Ontario, Incorporated, was formed as a wholly
owned subsidiary of the Company in May, 2002, to follow-up on the areas of
interest identified by Geo-Sleuth in the Sturgeon Lake area. A group of
investors that includes the two principal shareholders of the Company advanced
$100,000 to 1522923 Ontario, Incorporated, to pay expenses previously incurred
in developing and testing the tool, to pay the costs of staking claims to
several properties in the Sturgeon Lake area that were identified by the tool to
merit further examination, to pay for professional services associated with the
project, and to pay expenses that may be incurred if claims are staked in the
James Bay area of Quebec. In return, the investors retained a 75% undivided
interest in the claims staked in the Sturgeon Lake area and will also retain
a 75% undivided interest in any other claims staked by the subsidiaries through
September 30, 2002. Both subsidiaries are headquartered in Toronto, Ontario.
Both subsidiaries will utilize the Geo-Sleuth tool to identify areas that
are worthy of staking claims in areas being studied prior to conducting
further investigation. The Company will be reimbursed for the costs that it
incurs for the use of the tool by the subsidiaries, and will retain an interest
in any property in which the subsidiary has an interest.
In June, 2002, 1522923 Ontario, Incorporated staked claims to 128 units in the
vicinity of Sturgeon Lake, Ontario, which is a base metal and precious metal
producing region. The areas in which the claims were staked were identified
through the use of Geo-Sleuth as having high potential for mineralization and
therefore being worthy of further investigation, which 1522923 Ontario, Incorp-
orated has begun. Management of 1522923 Ontario, Incorporated is currently
exploring the feasibility of partnering with established exploration and mining
companies to perform on site analysis of the staked areas.
PRODUCTS AND SERVICES
GEO-SLEUTH
----------
Geo-Sleuth is designed to decrease the costs and time typically required when
conducting mineral exploration by automating the early stages of grass roots
exploration. The tool is based on a genetic deposit model and uses commercial
geographic information system (GIS) components, remote sensing techniques
and geo-technical data to select and prioritize areas for further exploration.
Geo-Sleuth organizes the most important characteristics of volcanogenic assoc-
iated massive sulfide deposits and ore forming processes in a unique manner,
using a source-transport-deposition approach. Geo-Sleuth contains a number
of proprietary algorithms that analyze and correlate the various geotechnical
data that are gathered by satellites, aircraft and by hand. The objectives are
to provide substantial cost savings to the user in the exploration process and
to materially increase the probability of mineral discovery by reducing the
number and the size of areas that require ground follow-up.
PRAXA
-----
The Company's manufacturing software product, PRAXA, is a third generation MRPII
system that was well accepted by the marketplace in the late 1980's and early
5
1990's. PRAXA helps manufacturing and distribution firms manage their sales,
distribution, manufacturing and accounting functions. PRAXA is written in COBOL
and operates exclusively on DEC's VAX and Alpha computer systems with the VMS
operating system.
Beginning in the early 1990's the users of commercial computer software began
to demand products that were easier to use, more readily adaptable to their
needs and less expensive to operate and maintain. Systems built around the
client-server paradigm were thought to fulfill those needs, and most existing
and some new suppliers of manufacturing software mounted major development
projects to bring client-server Enterprise Resource Planning (ERP) systems to
market. The demand for conventional MRPII systems fell dramatically to the
point where sales of PRAXA to new customers amounted to only four systems from
1992 to 2002. The Company has been attempting to sell the PRAXA software
business segment since 1999.
CUSTOMER SUPPORT
----------------
The Company provides "hot-line" support to PRAXA users from its office in
Westmont, New Jersey. This support is in the nature of resolving specific
problems that users encounter in using the PRAXA software. The support group
formerly developed enhanced versions of PRAXA that were released periodically.
The current version, which contains the changes needed to handle dates in the
twenty-first century, has been in full production release since the Fall of
1997. The Company has no plans to make additional enhancements to PRAXA.
PROFESSIONAL SERVICES
---------------------
The Company provides consulting and training services to PRAXA users. Since
the Company no longer employs any pre-sales or post-sales consultants, all
consulting and training services are being provided by the Company's customer
support and management personnel. This group also provides custom programming
for PRAXA users.
SALES AND MARKETING
The Company has not yet determined how or when Geo-Sleuth and associated
services will be marketed to the mineral exploration industry. The Company
plans to have its exploration subsidiaries and the Company utilize Geo-Sleuth to
identify areas that merit further study, while expanding and refining the capa-
bilities of the tool and preparing it for possible commercialization.
All PRAXA related sales activities are performed by Company management.
PRODUCT DEVELOPMENT
Geo-Sleuth
- ----------
Development of the mineral potential analysis tool was coordinated by a Montreal
geomatics firm under contract to the Company. The geomatics firm has consider-
able expertise in generating and analyzing geoscience databases. The Company
also utilized three experienced geologists with expertise in ore-forming
processes and characteristics of mineral deposits. The Company may expand the
6
tool to be capable of analyzing other types of data and other forms of deposits,
which will require the services of additional consultants. The capability to
analyze hyperspectral or seismic data is an enhancement that may be made, as
well as the capability to analyze mineralizations other than volcanic massive
sulfide deposits, such as epithermal gold, diamonds and porphyry copper. The
tool, as it currently exists, requires some development to improve its ease of
use and efficiency.
PRAXA
- -----
During the period from 1993 through 1998 the Company made two significant
attempts to develop a new Enterprise Resource Planning (ERP) system to sell into
the mid-market. Neither attempt succeeded in creating a new product for
the Company. Plans to use another software development firm to modernize PRAXA
were curtailed when it was determined that the current PRAXA users had little
interest in purchasing the modernized system because of the lateness to market
and the lack of substantial new capabilities There is no further product
development planned for the PRAXA product.
PRODUCT PROTECTION : TRADEMARKS
As is typical in the software industry, in order to protect its right in the
software, the Company does not "sell" its PRAXA software products, but instead
provides customers with perpetual, fully-paid licenses to use one or more copies
of the software on specifically identified computer systems. The Company also
seeks to protect its proprietary interest in PRAXA through a combination of
copyright laws, trade secret laws, and contractual agreements (including
nondisclosure obligations) with customers, consultants, employees and others.
Existing United States copyright laws provide only limited protection and even
less protection may be available under foreign laws. While the enforceability
of contractual provisions governing confidentiality cannot be assured in all
cases, the Company believes that they tend to deter unauthorized use of the
Company's proprietary information. "PRAXA" and "Unitronix" are registered
federal trademarks of the Company which will expire, unless renewed, on January
14, 2005 and September 20, 2012, respectively. Application for a trademark has
been made in Canada for Geo-Sleuth, and a U.S. trademark will be applied for in
the future.
CUSTOMER DEPENDENCE
No single customer accounted for more than 10% of total revenue for the year.
HISTORY OF LOSSES
The Company incurred net losses of $61,739 in fiscal 2000, $52,913 in fiscal
2001 and $330,733 in fiscal 2002. As of June 30, 2002, the Company had an
accumulated deficit of $5,754,464. There can be no assurance that the Company
will be profitable in the future.
CONTROL BY EXISTING STOCKHOLDERS
The Company's directors and their families together own approximately 78% of
the outstanding shares of the common stock of the Company. As a result, these
stockholders are able to exercise control over matters requiring stockholder
approval, including the election of directors, and mergers, consolidations and
sales of the assets of the Company.
7
EMPLOYEES
At September 1, 2002, the Company employed 3 persons, including 2 in customer
support and 1 in finance and administration. Each of these individuals is a
part-time employee. The Company's subsidiaries currently have no employees.
The subsidiaries are being managed by consultants, and are using consultants to
develop the Geo-Sleuth software and to provide the expertise needed to evaluate
the potential mineral content of the claims that have been staked in the
Sturgeon Lake region.
ITEM 2 PROPERTIES
- ------ ----------
The Company headquarters office occupies 550 square feet of rented office space
in Peabody, Massachusetts, at a rental rate of $695 per month. The Company also
occupies 600 square feet of office space in Westmont, New Jersey, for its PRAXA
software support operation, at a rate of $834 per month. The Company is a
tenant at will in both locations.
ITEM 3 LEGAL PROCEEDINGS
- ------ -----------------
The Company and it's subsidiaries are not currently involved in any legal
proceedings.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
The Company did not submit any matters to a vote of the shareholders during the
last quarter of fiscal year 2002.
8
PART II
Item 5 MARKET FOR THE COMPANY'S COMMON STOCK AND
-----------------------------------------
RELATED SECURITY HOLDER MATTERS
-------------------------------
The Company's common stock is currently listed on the over the counter bulletin
board.
The following table sets forth, for the calendar quarters indicated, the high
and low bid prices reported for the Company's common stock, by the indicated
source. There were 133 holders of record of the Company's Common Stock on
September 12, 2001. The Company believes that there are approximately 450
beneficial shareholders.
Calendar Year Ended December 31, OTC Bulletin Board
- -------------------------------- -------------------------
Bid Prices
----------
High Low
---- ---
2000
Third Quarter 0.2900 0.0625
Fourth Quarter 0.1250 0.0650
2001
First Quarter 0.1250 0.0313
Second Quarter 0.2500 0.0300
Third Quarter 0.0600 0.0200
Fourth Quarter 0.0600 0.0300
2002
First Quarter 0.1900 0.0500
Second Quarter 0.1600 0.0400
DIVIDEND POLICY
No dividends have been declared by the Board of Directors. The Board of
Directors currently plans to retain any future earnings for use in the Company's
business.
9
Item 6 SELECTED CONSOLIDATED FINANCIAL DATA
------------------------------------
Summary Consolidated Financial Information
(in thousands, except per share data)
For fiscal year ending June 30,
-------------------------------
CONSOLIDATED INCOME 2002 2001 2000 1999 1998
STATEMENT DATA: ---- ---- ---- ---- ----
Revenue from Operations $245 $360 $521 $856 $1,076
Gain (Loss) from Operations (268) (211) (332) 16 (15)
Net Loss (331) (53) (62) (20) (252)
Per Share Data:
Basic and Diluted net Loss
Per Share (.03) (.01) (.01) (.00) (.03)
Shares Used in Computing
Per Share Data 9,643,718 9,643,718 9,489,757 9,456,932 9,456,932
CONSOLIDATED BALANCE SHEET DATA:
Working Capital/(Deficit) $(971) $(751) $(748) $(615) $(629)
Total Assets 67 54 310 82 213
Short term debt, including
current maturities of
long-term debt 716 607 687 500 545
Long-term debt, less
current maturities - - - - -
Shareholder's equity
(deficit) (2,263) (1,874) (1,720) (1,616) (1,545)
10
Item 7.
- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
FISCAL YEAR ENDED JUNE 30, 2002 VS. FISCAL YEAR ENDED JUNE 30, 2001
Total revenue for the year ended June 30, 2002, decreased by 32% from the year
ended June 30, 2001. Revenue from the sale of software licenses decreased by
12%, while revenue from services decreased by 27%. This reflects the continued
migration of PRAXA users to other MRP and ERP software systems. Revenue derived
from the sale of tenement maps in the year ended June 30, 2001, ended during
that year with the sale of the Company's majority owned subsidiary, EnerSource
Mapping, Inc. in April, 2001.
The cost of PRAXA software related services decreased by 16% from the year ended
June 30, 2001, to the year ended June 30, 2002, because fewer PRAXA customers
contracted for software maintenance and training services. PRAXA selling ex-
penses decreased by 64% from 2001 t0 2002 because the Company no longer has a
dedicated sales person. Map production costs were eliminated with the sale of
the Company's interest in EnerSource Mapping.
The mineral exploration project in the Sturgeon Lake area of Ontario that was
undertaken by 1522923 Ontario, Incorporated, a wholly owned subsidiary of the
Company, accounted for all of the expenditures in that category. These expenses
are expected to increase significantly in future years as more work is per-
formed to determine the extent and commercial value of the mineralization on
the areas staked by 1522923 Ontario, Incorporated. Also, the Company expects
its other exploration subsidiary, 3936449 Canada, Incorporated, to begin
exploration activities in the James Bay region of Quebec in the future.
Development costs for the Geo-Sleuth mineral potential analysis software tool
increased by 307% from the year ended June 30, 2001, to the year ended June 30,
2002. Geo-Sleuth is now proven to be useful in evaluating certain types of
geological formations, but requires a significant amount of manual manipu-
lation by its users. The Company intends to enhance Geo-Sleuth to reduce the
effort required to use the tool, and to make it useful for other types of
geological formations and mineral deposits.
The decrease of 58% in general and administrative expenses from 2001 to 2002
was due to decreases in personnel that were made during the third and fourth
quarters of 2001, and the assignment of the Company's product development
manager to the Geo-Sleuth development project. Although total expenses de-
creased by 10% from 2001 to 2002, the corresponding decrease in revenue
resulted in a 27% increase in the loss from operations in 2002.
FISCAL YEAR ENDED JUNE 30, 2001 VS. FISCAL YEAR ENDED JUNE 30, 2000
Total revenue for the year decreased by 31% from the year ended June 30, 2000 to
the year ended June 30, 2001. Revenue from software related services decreased
by 33% as customers continue to migrate to other ERP systems, thus eliminating
their need for PRAXA maintenance and support services. Management expects the
11
migration of PRAXA users to other systems to continue. The sale of tenement
maps and related services by EnerSource Mapping, Inc., formerly a majority owned
subsidiary of the Company that started operating on February 1, 2000,
contributed approximately $26,000 to fiscal year 2001 revenues, an 18% decrease
from the previous fiscal year. The Company's interest in this subsidiary was
sold to the minority shareholder in April, 2001.
The cost of software related services decreased by 41% from the year ended June
30, 2000, to the year ended June 30, 2001, because fewer customers were covered
by support agreements so less time was spent on customer support matters. One
customer support person retired in March, 2001, and the remaining two persons
are part-time employees. The cost of map production decreased by 94% from
fiscal 2000 to fiscal 2001.
Software development costs of approximately $52,000 and $41,000 were incurred by
Interactive Mining Technologies, LLC, (IMT) formerly a majority owned subsidiary
of the Company, in fiscal 2000 and fiscal 2001 respectively, in developing the
software that IMT plans to use to sell mineral potential assessment services to
the mineral exploration industry. These expenses were incurred by the firm that
is writing the software, and are exclusive of any costs and expenses incurred
by Company personnel or other consultants on the project, which are included as
administrative expenses. As was previously discussed, Interactive Mining
Technologies was dissolved in May, 2001, and the Company assumed all rights to
the assets of IMT, including the work that had been performed to date on the
mineral potential assessment software.
The Company terminated its full-time Director of Sales in December, 1999, and
retained him as a part-time sales consultant until May, 2000, at which time his
services were totally eliminated. This resulted in a decrease of 79% in selling
expenses from fiscal year 2000 to fiscal year 2001. General and administrative
expenses decreased by 15% from fiscal 2000 to fiscal 2001, primarily due to the
elimination of an administrative person and down-sizing of the Companies
offices.
The Company sustained a loss from operations of $211,006 in fiscal year 2001 as
compared with a loss from operations of $331,522 in fiscal 2000, primarily due
to its 31% decrease in revenues. Interactive Mining Technologies and its
majority-owned subsidiary, EnerSource Mapping, experienced a loss from
operations of approximately $215,000, while the PRAXA software business recorded
an operating profit of $3,500. The Company realized a nonrecurring, non-
operating gain of $214,286 from the sale of IMT's interest in Enersource
Mapping, Inc. This gain is a partial recovery of the funds that the Company
and its shareholders had invested in the start-up and ongoing operation of
Enersource Mapping, Inc.
Interest expense increased from $54,839 in fiscal 2000 to $66,553 in fiscal 2001
due to increased borrowings by the Company and its former subsidiaries. The
Company realized $10,360 in interest income in fiscal 2001 from the periodic
payments that resulted from the settlement of a dispute with InterObjects.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2002, the working capital deficit was $971,398 as compared to
deficits of $750,600 and $748,000 at June 30, 2001 and 2000, respectively.
12
During the year ended June 30, 2000, the Company signed a new lending agree-
ment with its principal shareholder that provides for up to $1,000,000 in loans
and letters of credit. At June 30, 2002, the Company owed $740,934 for
principal and accrued interest for loans that had been provided for by the
lending agreement. These loans bear interest at the rate of 10% per annum.
Management projects that funds from sources other from operations will be needed
to bring the mineral potential assessment software and services to market, and
to further assess the mineral potential of the areas that the Company's subsid-
iaries have identified to date and may identify in the future as being worthy
of further investigation. The Company anticipates raising this capital through
the sale of the PRAXA business sector and the private placement of stock in the
Company. This plan will require that new shares be authorized by the current
shareholders as there is not sufficient stock available to execute the plan.
The shares held by existing shareholders will be diluted to the extent that new
stock is issued. There can be no assurance that the Company will be able to
raise the additional funds and failure to do so may have a material adverse
impact on the Company's business and operations.
Impact of Recently Issued Accounting Pronouncements
- ---------------------------------------------------
The Financial Accounting Standards Board issued Statement No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement requires
changes in comprehensive income to be shown in a financial statement that is
displayed with the same prominence as other financial statements. While not
mandating a specific financial statement format, the Statement requires that
an amount representing total comprehensive income be reported. The Statement
is effective for fiscal years beginning after December 15, 1997. Reclass-
ification of financial statements for earlier periods is required for compar-
itive purposes. There were no other items of comprehensive income in the years
reported on.
The FASB also issued Statement No. 131 ("SFAS 131"), "Disclosures about Seg-
ments of an Enterprise and Related Information". This Statement, which super-
sedes Statement No. 14, "Financial Reporting for Segments of a Business Enter-
prise," changes the way public companies report information about segments.
The Statement, which is based on the management approach to segment reporting,
includes requirements to report segment information quarterly and entity-wide
disclosures about products and services, major customers, and the material
countries in which the entity holds assets and reports revenues. The Statement
is effective for periods beginning after December 15, 1997. Restatement for
earlier years is required for comparative purposes unless impracticable. The
Company adopted SFAS 131 in the year ended June 30, 1999.
In June, 1998, the FASB issued Statement No. 133 ("SFAS 133"), Accounting
for Derivative Instruments and Hedging Activities" which is effective for
fiscal years beginning after June 15, 1999. The statement establishes account-
ing and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability, measured at its
fair value. SFAS No. 133 also requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Adoption of this standard has not had a material
impact on the financial position or results of operations of the Company.
13
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The information required by this Item is submitted as a separate section of this
report commencing on page 1 attached hereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------- ------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The executive officers and directors of Unitronix are as follows:
NAME AGE CURRENT POSITION
- ---- --- ----------------
Jack E. Shaw 68 Chairman of the Board, Chief
Executive Officer, Director
Robert C. Crawford 75 Treasurer, Secretary, Director
Dr. Howard L. Morgan 56 Director
Robert G. Sable 62 Director
William C. Wimer 65 Chief Financial Officer,
Vice President of Operations
BACKGROUND OF EXECUTIVE OFFICERS AND DIRECTORS
JACK E. SHAW is Chairman of the Board and Chief Executive Officer of the
Company. He is also Chairman and CEO of Shaw Resources, Inc., a Greenville,
South Carolina-based investment company and real estate developer. Mr. Shaw is
also a Director of B B & T Corporation, co-owner and a Director of A/R Funding,
Inc., President of Carolina Rentals, Inc., and owner of Resort Golf, which
operates premier miniature golf courses in Myrtle Beach, South Carolina. Mr.
Shaw is also the largest shareholder of Unitronix Corporation, holding approx-
imately 51% of the outstanding common shares.
ROBERT C. CRAWFORD was elected to the Board of Directors in January, 1993, and
was appointed Treasurer and Secretary on July 1, 1993. Mr. Crawford was
formerly President and Chief Executive Officer of the Floor Coverings Division
of Dan River, Inc., and was a Vice President and Director of Dan River Corp-
oration. He recently retired as Chairman of the Board of Greenville Technical
College in Greenville, South Carolina.
DR. HOWARD L. MORGAN was named a Director in January, 1993. Dr Morgan is Vice-
Chairman of idealab! and he is also President and Founder of Arca Group, Inc., a
consulting and venture capital investment firm specializing in the areas of
computer and communications technologies. He has more than 25 years of exper-
14
ience with more than fifty high-tech entrepreneurial ventures, Dr. Morgan was
Professor of Decision Sciences at the Wharton School of the University of
Pennsylvania and Professor of Computer Science at the Moore School at the Uni-
versity of Pennsylvania for almost 15 years. He serves on the boards of
Franklin Electronic Publishers, Inc., Cylink Corporation, Segue Software Corp-
oration, Evolution Robotics, CarsDirect.com and Predictive Systems, Inc. He
received the Entrepreneur of the Year Award in 1997.
ROBERT G. SABLE, ESQ. has been a Director of the Company since February, 1994.
From 1994 to 1998 he was the President of Sable Makoroff & Gusky and in 1999
and 2000 was a Principal of Sable Pusateri Rosen Gordan & Adams LLC, a law
firm located in Pittsburgh, Pennsylvania. Since January 1, 2001, Mr. Sable
has been a Partner in McGuire Woods LLP, a law firm based in Richmond, Virginia
and with offices in a number of cities, including Pittsburgh, Pennsylvania.
WILLIAM C. WIMER was named Vice President of Operations in March, 1992, with
responsibility for Customer Support and Professional Services activities. He
assumed responsibility for all accounting activities in 1993, was named
Assistant Treasurer in July, 1994, and Chief Financial Officer in June, 1997.
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
During the 2002 fiscal year none of the directors, officers or beneficial owners
of more than 10 percent of the Company's common stock failed to file on a timely
basis reports required by Section 16 (a) of the Exchange Act.
Item 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The following table sets forth all compensation awarded to, earned by, or paid
by the Company to the following persons for services rendered in all capacities
to the Company during each of the fiscal years ended June 30, 2002, 2001 and
2000 to: (1)the Company's Chief Executive Officer, and (2) each of the other
officers whose total compensation for the fiscal year ended June 30, 2002,
required to be disclosed in column (c) below exceeded $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
-------------------
(a) (b) (c) (d) (e) (f)
Name and Other Annual All Other
Principal Position Year Salary Compensation Options Compensation
Jack E. Shaw 2002 (1) - - -
Chief Executive 2001 (1) - - -
Officer 2000 (1) - - -
(1) The Company has not paid Mr. Shaw any compensation for his services to date.
COMPENSATION OF DIRECTORS
The Company currently does not compensate directors for their services; it does
reimburse them for reasonable expenses incurred in performing their duties as
directors.
15
1993 STOCK OPTION PLAN
At June 30, 2001, 1,000,000 shares of common stock were reserved for issuance
or grant under the Unitronix Corporation 1993 Stock Option Plan. The options
are granted to employees, officers, directors and consultants to the Company.
The exercise price for incentive options must be at least 100% of the fair
market value of the common stock as determined by the Option Committee of the
Board of Directors on the date of the grant, as are the exercise and expiration
dates of the grant. Options for 120,000 shares were granted and no shares were
exercised during the year ended June 30, 2002. At June 30, 2002, there were
options for 475,000 shares of common stock outstanding, leaving 525,000 shares
available for grant.
SAVINGS AND PROFIT SHARING PLAN
The Company had in effect the Unitronix Corporation Savings and Profit Sharing
Plan (the "Savings Plan"), which allowed the Company to make contributions to
certain employees' Savings Plan accounts from profits, and permitted partici-
pating employees to contribute a portion of their salaries to their plan
accounts under the 401K feature of the plan. There had been no employees
participating in the plan since February, 2002, so in order to eliminate the
expenses incurred in administering the plan, the Board of Directors of the
Company approved the termination of the plan in May, 2002. Management is
currently arranging for the plan participants to transfer their funds into
roll-over accounts.
Item 12. SECURITY OWNERSHIP OF CERTAIN
-----------------------------
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth information regarding the beneficial ownership of
the Company's common stock as of September 1, 2002, by those persons owning
beneficially 5% or more of such shares, by each director, and by all executive
officers and directors as a group. The persons named in the table have sole
voting and investment power with respect to all shares of common stock which
they own of record.
NAME AND ADDRESS OF SHARES OF PERCENTAGE OF
BENEFICIAL OWNER(1) COMMON STOCK COMMON STOCK
- ------------------ ------------ ------------
Jack E. Shaw (2) 4,873,673 50.5%
Robert C. Crawford 199,391 2.1%
Howard L. Morgan (3) 1,350,000 14.0%
All Directors and Officers
as a Group (5 persons) 6,423,064 66.6%
Samuel H. Jones, Jr. 500,000 5.2%
US Route 40
Woodstown, NJ 08098
Jane Shaw (4) 500,000 5.2%
2320 E. North Street
Greenville, SC 29607
16
(1)The address of each officer and director of the Company listed in the table
is in care of the Company, One Newbury Street, Peabody, MA 01960.
(2)Does not include 500,000 shares owned by Jane Shaw, his wife, and a total
of 500,000 shares owned by Ronald Shaw and Donald Shaw, his and her adult
children.
(3)Includes 30,000 shares held in trusts for the benefit of his three children,
Kimberly Morgan, Elizabeth Morgan and Danielle Morgan.
(4)Does not include 4,873,673 shares owned by Jack E. Shaw, her husband, and a
total of 500,000 shares owned by Ronald Shaw and Donald Shaw, his and her adult
children.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The information required by this Item is set forth under Notes to Financial
Statements "Related Party Transactions", page 10 attached hereto.
PART IV
-------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
- -------- ---------------------------------------------------------------
A. The following documents are filed as a part of this report:
1.Financial Statements
-------------------- PAGE
----
Report of Independent Accountants 1
Consolidated Balance Sheets at June 30, 2002 and 2001 2
Consolidated Statements of Operations
- Years ended June 30, 2002, 2001 and 2000 3
Consolidated Statements of Changes in Stockholders' Deficit
-Years ended June 30, 2002, 2001 and 2000 4
Consolidated Statements of Cash Flows
- Years ended June 30, 2002, 2001 and 2000 5
Notes to Consolidated Financial Statements 6
2.Schedules
---------
SCHEDULE II - Valuation and Qualifying Accounts 19
Schedules not listed above have been omitted because they are not applicable or
are not required or the information required to be set forth therein is included
in the Financial Statements or notes thereto.
17
3.EXHIBITS (numbers below reference the Exhibit Table of Item 601 of
Regulation S-K)
(3)Articles of Incorporation and By-Laws *
(4)Specimen Common Stock Certificates *
(10)Material Contracts:
10.1 1993 Stock Option Plan **
*Previously filed with the Securities and Exchange Commission on August 12,
1988, as an exhibit to the Company's S-18 registration statement (File Number
33-22494-NY), such previously filed exhibits incorporated herein by reference.
**Previously filed with the Securities and Exchange Commission on August 29,
1994 as an exhibit to the Company's S-8 registration statement, such previously
filed exhibits incorporated herein by reference.
B. Reports on Form 8-K
The Company did not file any reports on form 8-K during the last quarter of
fiscal year 2002.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
UNITRONIX CORPORATION
BY:/s/William C. Wimer
--------------------
William C. Wimer
Chief Financial Officer and
Vice President, Operations
DATED: September 30, 2002
-------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE POSITION DATE
- --------- -------- ----
/s/Jack E. Shaw
- ------------------ Chairman of the Board and September 27, 2002
Jack E. Shaw Chief Executive Officer
/s/Robert C. Crawford
- --------------------- Secretary/Treasurer and September 27, 2002
Robert C. Crawford Director
/s/Howard L. Morgan
- ------------------- Director September 30,2002
Howard L. Morgan
/s/Robert G. Sable
- --------------------- Director September 23, 2002
Robert G. Sable, Esq.
19
UNITRONIX CORPORATION
---------------------
FINANCIAL STATEMENTS
--------------------
JUNE 30, 2002, 2001 AND 2000
----------------------------
UNITRONIX CORPORATION
---------------------
TABLE OF CONTENTS
-----------------
Page(s)
-------
Independent Auditors' Report 1
Consolidated Balance Sheets as of June 30, 2002 and 2001 2
Consolidated Statements of Operations for the years ended
June 30, 2002, 2001 and 2000 3
Consolidated Statements of Changes in Stockholders' Deficit
for the years ended June 30, 2002, 2001 and 2000 4
Consolidated Statements of Cash Flows for the years ended
June 30, 2002, 2001 and 2000 5
Notes to Consolidated Financial Statements 6-18
Schedule II - Valuation and Qualifying Accounts 19
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders
Unitronix Corporation
In our opinion, the accompanying financial statements listed in the index
appearing under Item 14(a)(1) on page 17 present fairly, in all material
respects, the financial position of Unitronix Corporation at June 30, 2002,
and 2001, and the results of its operations and its cash flows for the
years ended June 30, 2002, 2001, and 2000, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 14(a)(2) on page 17, presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's manage
- -ment; our responsibility is to express an opinion on these financial statements
and financial statement schedule based on our audits. We conducted our audits
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Dan Clasby & Company
September 26, 2002
Page 1
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, 2002 and 2001
ASSETS
------ 2002 2001
---- ----
Current assets:
Cash $12,192 $98
Accounts receivable, net of allowance for doubtful accounts of
$1,865 and $925 at June 30, 2002 and 2001, respectively 38,495 45,306
Subscriptions receivable 11,500 -
Prepaid expenses and other current assets 1,069 3,971
Note receivable, net of reserve for bad debt of $1,827 at June 30, 2002 - -
------ ------
Total current assets 63,256 49,375
Property and equipment, at cost less accumulated depreciation of $315,574
and $314,230 at June 30, 2002 and 2001, respectively 707 2,051
Other assets 2,971 2,892
------- ------
Total assets $66,934 $54,318
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Notes payable - related parties 715,774 606,544
Accounts payable 101,998 35,722
Accrued expenses 25,073 28,018
Accrued interest - related parties 150,430 82,865
Deferred revenue 41,379 46,854
------- -------
Total current liabilities 1,034,654 800,003
------- -------
Commitments and contingencies
Series A preferred stock, $1 par value, 6% convertible
nonvoting; authorized 1,000,000 shares; 956,728 issued and
outstanding at June 30, 2002, and 2001, net of issuance costs of
$1,100 at June 30, 2001, plus undeclared accumulated dividends of
$229,616 at June 30, 2002, and $172,212 at June 30, 2001 1,186,344 1,127,840
Stockholders' deficit:
Common stock, no par value; authorized 14,000,000 shares at June 30, 2002
and 2001; 9,643,718 issued and outstanding at June 30 2002 and 2001 3,487,912 3,487,912
Additional paid-in capital 3,988 4,890
Accumulated deficit (5,754,464)(5,366,327)
--------- ---------
Total stockholders' deficit (2,262,564)(1,873,525)
--------- ---------
Total liabilities and stockholders' deficit $66,934 $54,318
======== =======
See accompanying notes to financial statements.
Page 2
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Years Ended June 30, 2002, 2001 and 2000
2002 2001 2000
---- ---- ----
Revenue:
Software licenses $13,650 $15,556 $14,971
PRAXA software related services 231,071 318,448 473,823
Maps and related services - 26,128 31,970
--------- ------- ---------
Total revenue 244,721 360,132 520,764
--------- -------- ---------
Costs and expenses:
Cost of software licenses - - 1,590
Cost of PRAXA software related services 98,215 116,510 196,641
Cost of map production - 2,894 45,859
Predictive software development costs 167,769 41,221 51,993
PRAXA selling expenses 7,372 20,611 98,303
General and administrative 162,454 389,902 457,900
--------- --------- ---------
Total costs and expenses 512,287 571,138 852,286
--------- --------- ---------
Income (loss) from operations (267,566) (211,006) (331,522)
Interest income (expense), net (66,567) (56,193) (37,706)
Other income (expense), net 3,400 214,286 307,489
-------- -------- --------
Loss before income taxes (330,733) (52,913) (61,739)
-------- -------- --------
Provision for income taxes - - -
Net loss (330,733) $(52,913) $(61,739)
======== ======== ========
Basic and diluted net (loss) per share $(0.03) $(0.01) $(0.01)
======== ======== ========
Shares used in computing basic and diluted net
(loss) per share 9,643,718 9,643,718 9,489,757
========= ========= =========
See accompanying notes to financial statements.
Page 3
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
-----------------------------------------------------------
Years Ended June 30, 2002, 2001 and 2000
Common Stock Additional Total
Shares Paid-In Accumulated Stockholders'
Issued Amount Capital Deficit Deficit
---------------------- ---------- ----------- ------------
Balance, June 30, 1999 9,456,932 $3,485,412 $7,090 $(5,108,500) $(1,615,998)
Balance, majority owned
subsidiary, December 31, 1999 (28,367) (28,367)
Exercise of employee
stock options 20,000 2,500 2,500
Capital contribution to
subsidiary by minority shareowner 42,160 42,160
Purchase of assets of
Glen Jones Enterprises 156,786
Purchase of internet
domain names 10,000
Net loss (61,739) (61,739)
Unpaid accumulated
preferred dividends (57,404) (57,404)
Amortization of preferred
stock issuance costs (1,100) (1,100)
--------- ---------- ------- --------- ---------
Balance, June 30, 2000 9,643,718 $3,487,912 $48,150 $(5,256,010) $(1,719,948)
Net loss (52,913) (52,193)
Return of capital contribution
to minority shareholder (42,160) (42,160)
Unpaid accumulated preferred dividends (57,404) (57,404)
Amortization of preferred
stock issuance costs (1,100) (1,100)
--------- ---------- ------- --------- ---------
Balance, June 30, 2001 9,643,718 $3,487,912 $4,890 $(5,366,327) $(1,873,525)
Net loss (330,733) (330,733)
Unpaid accumulated
preferred dividends (57,404) (57,404)
Amortization of preferred
stock issuance costs (1,100) (1,100)
Capital contributions to
Subsidiaries 198 198
--------- ---------- ------- --------- ---------
Balance, June 30, 2002 9,643,718 $3,487,912 $3,988 $(5,754,464) $(2,262,564)
See accompanying notes to financial statements.
Page 4
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Years Ended June 30, 2002, 2001 and 2000
2002 2001 2000
---- ---- ----
Cash flows from operating activities:
Net loss $(330,733) $(52,913) $(61,739)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 1,344 4,856 9,595
Provision for bad debts 2,767 (7,307) (2,560)
Decreases (increases) in operating assets:
Accounts receivable 5,871 10,016 2,688
Note receivable (1,827) 145,833 (145,833)
Prepaid expenses and other current assets 2,902 368 3,374
Other assets (79) 1,436 (1,433)
Increases (decreases) in operating liabilities:
Accounts payable 66,276 (70,931) 93,811
Accrued expenses (2,945) (26,824) (22,966)
Accrued interest 67,565 48,384 26,981
Deferred revenue (5,475) (30,983) (11,899)
------- ------- -------
Net cash provided (used) by operating activities (205,834) 21,935 (109,981)
------- ------- -------
Cash flows for investing activities:
Purchase of equipment - - (16,805)
Purchase of assets of G.E. Jones Enterprises - - (84,418)
Sale of equipment - 660 -
------- ------- -------
Net cash provided (used) by investing activities - 660 (101,223)
------- ------- -------
Cash flows from financing activities:
Capital contributions to subsidiaries 198 - 42,160
Proceeds from sale of common stock - - 2,500
Proceeds from borrowings 217,730 86,051 440,195
Repayments of borrowings - (144,000) (252,527)
------- ------- -------
Net cash provided (used) by financing activities 217,928 (57,949) 232,328
------- ------- -------
Net increase (decrease) in cash 12,094 (35,354) 21,124
Cash at beginning of year 98 35,452 14,328
------- ------- -------
Cash at end of year $12,192 $98 $35,452
======== ======== ========
See accompanying notes to financial statements.
Page 5
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Presentation and Business
----------------------------------
The consolidated financial statements include the accounts of Unitronix
Corporation, its wholly owned subsidiaries, 3936449 Canada, Incorpor-
ated and 1522923 Ontario, Incorporated, and its former majority-owned
subsidiaries, Interactive Mining Technologies, LLC, and Enersource Mapping,
Inc. All significant inter-company accounts and transactions have been
eliminated.
Unitronix Corporation (the "Company") has historically been in the business
of licensing PRAXA software, which operates on VAX and Alpha Computers manu-
factured by Compaq Computer Corporation, and providing software maintenance,
training, consulting and custom programming services in conjunction with the
PRAXA software. Because of the deficiencies of PRAXA and the projected costs
of developing a new product for the highly competitive manufacturing system
marketplace, the Company recently changed its focus so that it is now concen-
trating on developing products and services for use in the mineral explor-
ation, mining and related industries. This business segment consists of the
business of the Company's former majority owned subsidiary, Interactive
Mining Technologies, LLC. The Company has also formed two subsidiaries, both
of which are wholly owned, to use the Company's mineral potential analysis
tool to identify properties of merit for eventual joint venture or sale.
IMT had been the majority shareholder of EnerSource Mapping, Inc., (ESM) a
Canadian corporation that was engaged in producing and marketing tenement
maps to the mining, exploration and investment communities. IMT's shares of
ESM were sold to Goldsat Mining, Inc., a Canadian corporation engaged in
mineral exploration and development in Canada, who was the only other share-
holder in both IMT and ESM.
The Company has continued to incur losses from operations and has a working
capital deficit as of June 30, 2002 of $(971,398), notes payable to its
principal shareholder of $612,274 and other notes payable of $103,500. As a
result, management anticipates that additional financing will be required in
the very near future to sustain the Company's operations and to repay the
notes. Management's plans for continuing their operations and to repay the
notes include developing new products and services to sell, raising addit-
ional funds from new and existing investors and generating revenues from the
sale of existing products and services. In addition the Company is attempt-
ing to sell the PRAXA software sales and support business. There can be no
assurance that the Company will obtain new products or services to sell, the
financing or the product revenues needed to continue its operations and to
repay the notes. The financial statements do not include any adjustments
that might result from these uncertainties.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
page 6
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. continued
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported periods. Actual results could differ from those estimates.
Risks and Uncertainties
-----------------------
The Company is subject to risks common to companies in the high technology
industry including, but not limited to, development by the Company or its
competitors of new technological innovations, dependence on key personnel,
and protection of proprietary technology. The Company's subsidiaries are
subject to the risks and uncertainties that prevail in the mineral explor-
ation industry.
Economic Dependence
-------------------
In the fiscal year ended June 30, 2002, one customer accounted for 11.5% of
the Company's total revenue. In the fiscal years ended June 30, 2001, and
June 30, 2000, no single customer accounted for more than 10% of total
revenue.
Revenue Recognition
-------------------
Effective December 31, 1997, the Company adopted Statement of Position 97-2
(Software Revenue Recognition) issued by the American Institute of Certified
Public Accountants. This statement provides guidance on when revenue should
be recognized, and in what amounts for licensing, selling, leasing or
otherwise marketing computer software. Software revenue and computer system
revenue are generally recognized upon product shipment, provided that no
significant vendor obligation exists and collection of the related receivable
is deemed probable by management. Revenue from software maintenance
contracts is recognized ratably over the contractual period, and other
service revenue is generally recognized as the services are provided.
Software Costs
--------------
The Company capitalizes certain software costs after technological
feasibility of the product has been established and ceases capitalization
when the product is available for general release to customers. Costs
incurred prior to the establishment of technological feasibility are charged
to product development costs. Such costs are amortized on a straight-line
basis over the estimated useful life of three years or the ratio of current
revenue to the total of current and anticipated future revenue, whichever is
greater. The Company did not capitalize any software costs for the years
ended June 30, 2002, 2001 and 2000. All software development costs that had
been capitalized in prior years were completely amortized prior to the year
ended June 30, 2000.
Page 7
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. continued
Income Taxes
------------
The Company follows the liability method for accounting for income taxes.
Under this method, deferred tax assets and liabilities are recognized based
on temporary differences between the financial statement and tax bases of
assets and liabilities using current statutory tax rates. A valuation
allowance is required to offset any net deferred assets if, based upon
weighted available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized.
Loss per Common Share
---------------------
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings per Share, which requires
disclosure of basic earnings per common share and diluted earnings per
common share for all periods presented. The computation of basic and
diluted earnings per share is presented below.
Basic and diluted net loss per share:
- ------------------------------------
For the Years Ended June 30,
---------------------------
2002 2001 2000
---- ---- ----
Numerator:
Net loss $(330,733) $(52,913) $(61,739)
Preferred dividends - - -
-------- ------- ---------
Income available to common shareholders $(330,733) $(52,913) $(61,739)
========= ========= =========
Denominator:
Weighted average number of shares issued
and outstanding 9,643,718 9,643,718 9,489,757
Assumed exercise of options reduced by the
number of shares which could have been
purchased with the proceeds of those options - - -
Assumed conversion of preferred stock - - -
--------- --------- ---------
Total shares 9,643,718 9,643,718 9,489,757
--------- --------- ---------
Basic and diluted net loss per share $ (.03) $ (.01) $ (.01)
========= ========= =========
As a result of a net loss for all periods presented, common stock equivalents
for the assumed exercise of options and conversion of preferred shares are not
included in the calculation of weighted average shares since their effect would
be antidilutive.
Page 8
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. continued
Property and Equipment
- ----------------------
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
three to five years, for financial reporting, and accelerated methods for income
taxes. Expenditures for repairs and maintenance which do not increase the
useful life of the related assets are expensed as incurred. Upon retirement or
sale, the cost of the assets disposed of and the related accumulated
depreciation are removed from the accounts; any resulting gain or loss is
credited or charged to income.
Recently Issued Accounting Pronouncements
- -----------------------------------------
The Financial Accounting Standards Board has issued Statement No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement requires
changes in comprehensive income to be shown in a financial statement that is
displayed with the same prominence as other financial statements. While not
mandating a specific financial statement format, the Statement requires that
an amount representing total comprehensive income be reported. The Statement
is effective for fiscal years beginning after December 15, 1997. Reclass-
ification of financial statements for earlier periods is required for compar-
ative purposes. There were no other items of comprehensive income in the
years reported on.
The FASB has also issued Statement No. 131 ("SFAS 131"), "Disclosures about
Segments of an Enterprise and Related Information". This Statement, which
supersedes Statement No. 14, "Financial Reporting for Segments of a Business
Enterprise," changes the way public companies report information about seg-
ments. The Statement, which is based on the management approach to segment
reporting, includes requirements to report segment information quarterly and
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
Statement is effective for periods beginning after December 15, 1997. Restate-
ment for earlier years is required for comparative purposes unless impractic-
able. Additional information pertaining to segment reporting is provided in
Note 11.
In June, 1998, the FASB issued Statement No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities", which is effective for
fiscal years beginning after June 15, 1999. The statement establishes account-
ing and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability, measured at
its fair value. SFAS N0. 133 also requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Adoption of this standard has not had a material impact on
the financial position or results of operations of the Company.
Page 9
UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
2. Sale and Dissolution of Former Subsidiaries
-------------------------------------------
On April 27, 2001, Interactive Mining Technologies, LLC, (IMT) which at that
time was a majority owned subsidiary of the Company, finalized the sale of its
majority interest in Enersource Mapping, Inc., a Canadian corporation engaged in
the production and marketing of tenement maps to the mineral exploration and
related industries. IMT's shares in Enersource Mapping were sold to Goldsat
Mining Inc., the minority shareholder in Enersource Mapping. IMT's interest in
Enersource Mapping was sold because IMT management had determined that
Enersource Mapping would not become profitable within a reasonable length of
time. Included in the sale were IMT's rights to The Mining Exchange domain
names and web sites. IMT was granted a one year promissory note for $200,000
Canadian ($136,000 U.S.) by Goldsat Mining with interest thereon at 6% per year.
Goldsat also granted to IMT a warrant to purchase, within 13 months from the
closing date of the sale, 1,000,000 common shares of Goldsat Mining at a price
of $0.20 Canadian per share. Goldsat also committed to deliver to IMT 156,786
shares of the Company's common stock that had been granted to Glen and Sandra
Jones for the purchase of the assets of G.E. Jones Enterprises in fiscal
2000, within 6 months of the closing date of the sale, or to issue to IMT
156,786 shares of Goldsat Mining stock in lieu thereof. Since Goldsat
failed to deliver either the Unitronix stock that had been issued to Glen and
Sandra Jones or an equal number of shares of Goldsat stock to IMT, the Company
is currently taking steps to have the Unitronix stock returned directly from
Glen and Sandra Jones.
The note receivable from Goldsat Mining was assigned to two of the Company's
shareholders that had granted loans to the Company in exchange for the forgive-
ness of a like amount of the loans granted, which was $136,000. The warrants
received for the purchase of Goldsat Mining shares were also assigned to these
shareholders as consideration for their having no recourse if Goldsat should
default on its note. The shares of stock receivable from Goldsat are not
recognized on the Balance Sheets of the Company. The note receivable from
Goldsat and the elimination of the liabilities of Enersource Mapping resulted in
other non-operating income of $214,286 for IMT in the year ended June 20, 2001.
In May, 2001, the Company and Goldsat Mining recognized that Goldsat, the
minority shareholder in IMT, did not fulfill its obligations under the
operating agreement for IMT. Furthermore, the mining properties that had been
granted to IMT by Goldsat as its major contribution to IMT, which were to be
used as test sites for the mineral potential analysis software then being
developed by IMT, were determined to be useless for that purpose. The members
of IMT, being Goldsat Mining and the Company, agreed to liquidate IMT, with the
mining properties being returned to Goldsat and all rights to the mineral
potential analysis software going to the Company. The Company also assumed the
existing assets and liabilities of IMT. The dissolution agreement was finalized
on May 24, 2001, and filed with the State of South Carolina on July 3, 2001.
In June, 2002, the Company's majority shareholder assigned a $10,230 note
receivable from Goldsat Mining and accumulated interest thereon of $937.75
to the Company in exchange for a note and accrued interest thereon in the same
amounts payable by the Company to the majority shareholder. After repeated
attempts to obtain payment of the note, interest thereon and $3,400 that had
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UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
2. continued
been advanced to Goldsat by Unitronix were ignored by Goldsat, the Company
opted to offset an amount payable to Goldsat by Unitronix from the dissolution
of IMT against the note, interest and advances receivable from Goldsat, leaving
$1,632.78 receivable by the Company from Goldsat. Because in all likelihood
this indebtedness will never be paid by Goldsat, a reserve for bad debts was
made for the full amount due.
3. Related Party Transactions:
--------------------------
On October 27, 1993, the Company had entered into a one year agreement that had
provided for its principal shareholder to lend up to $400,000 to the Company.
This agreement was renewed for additional one year periods in 1994 and 1995, but
expired on September 1, 1996, at which time the line of credit had been fully
drawn down. During the period from September 1, 1996, until March 1, 2000, the
principal shareholder continued to provide loans to the Company from time to
time under the terms of the expired agreement, at which time a new lending
agreement that provides for up to $1,000,000 in loans to the Company was signed.
The new agreement expires on March 1, 2005, but can be renewed for successive
one year periods at the option of the shareholder and the Company. At the time
that the new lending agreement was signed, outstanding loans of $338,250 were
owed to the principal shareholder by the Company. At September 1, 2002, the
Company owed $491,541 in principal and accrued interest for loans that had been
provided under the new lending agreement. Loans granted under the new lending
agreement bear interest at the greater of 10% per annum or two points over the
prime rate of interest at the time the loan is granted. All existing loans bear
interest at the rate of 10% per annum.
As further compensation for the risk borne in the past and to be borne in the
future by lending funds to the Company, the new lending agreement provides for
the issuance of immediately exercisable warrants to purchase 338,250 shares of
the common stock of the Company at a price of $0.125 per share. It also
provides for the issuance of immediately exercisable warrants on each
anniversary date of the agreement, such warrants to be for the purchase of the
common stock of the Company at a price that is 25% below the bid price for such
stock on such anniversary date or the most recent trading date for which a bid
price is available, with the number of such warrants so issuable to be equal to
one such warrant for each dollar of total loans outstanding on such anniversary
date.
In July, 1997, a loan of $200,000 was granted to the Company by the Carolina
First Bank. The loan was secured by the pledge of all of the assets of the
Company and by the personal guaranty and pledge of certain personal assets of
the Company's principal shareholder. The loan was renewed on June 20, 1998, for
$199,000 and again on July 28, 1999, for $199,000. On October 29, 1999, the
Company's principal shareholder personally repaid to the bank the principal and
interest due, amounting to $203,202, thereby canceling and discharging all
outstanding obligations from the Company to the bank and creating an obligation
to the principal shareholder in the same amount. On that same date, the Company
issued a note to the principal shareholder in the amount of $203,202, bearing
interest at the rate of 10% per annum. At September 1, 2002, the Company owed
$259,597 for principal and accrued interest for this loan. Although no assur-
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
3. continued
ances can be given, management believes that this shareholder does not intend to
demand repayment of the debt and interest outstanding under this note or the
lending agreement discussed above, in the foreseeable future.
The Board of Directors of the Company had previously voted to grant 200,000
shares of common stock to the principal shareholder for the risk assumed in
guaranteeing the $200,000 bank loan, but such shares were never issued. As
compensation for the risk being borne by the principal shareholder and in
recognition of the fact that the previously approved grant of 200,000 shares of
common stock was not satisfied, the Board of Directors voted to grant warrants
for the purchase of 600,000 shares of the Company's common stock at a price of
$0.125 per share to the principal shareholder, and to grant warrants for an
additional 100,000 shares at the end of each fiscal year, beginning with the
fiscal year ended June 30, 2000, for each year that the note remains unpaid.
Another shareholder of the Company had loaned a total of $103,500 to the
Company as of September 1, 2002. Also, the two principal shareholders of the
Company advanced $108,500 to the exploration subsidiaries of the Company, which
is to be repaid only from profits of the subsidiaries. The Company has no
obligation to make repayment if the subsidiaries are unprofitable.
On June 30, 1998, the Company entered into an agreement to exchange $675,924
of demand notes outstanding and $152,679 in accrued interest to three share-
holders for 828,603 preferred shares (see Note 9).
On June 30, 1998, the Company entered into an agreement to exchange $16,125 in
accounts payable to an entity controlled by a director of the Company for 16,125
shares of preferred stock (see Note 9).
4. Property and Equipment:
----------------------
The major classes of property and equipment are as follows:
June 30,
---------------
2002 2001
---- ----
Computer equipment $299,218 $299,218
Office furniture and fixtures 17,063 17,063
------- -------
316,281 316,281
Less: accumulated depreciation (315,574) (314,230)
------- -------
$ 707 $ 2,051
======= =======
Depreciation expense for the years ended June 30, 2002, 2001 and 2000 was
$1,344, $1,855, and $8,375, respectively.
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UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
5. Income Taxes:
------------
The components of the deferred tax assets and liabilities as of June 30, 2001
and 2000 were as follows:
2002 2001
---- ----
Deferred tax assets:
Net operating loss carryforwards $2,667,807 $ 2,585,124
Tax credits 197,252 197,252
Other 7,189 7,189
--------- ---------
Subtotal 2,872,248 2,789,565
Deferred tax liabilities:
Capitalized software costs - -
Net fixed assets - -
--------- ---------
Subtotal - -
--------- ---------
Valuation allowance $(2,872,248) $(2,789,565)
========= =========
Net deferred tax assets - -
The Company has established a valuation allowance for its net deferred tax
assets due to the uncertainty surrounding their realization.
As of June 30, 2002, the Company has net operating loss carry forwards for
federal income tax purposes of approximately $6,485,000 which expire from the
years 2006 through 2022. The Company also has research and development credits
for federal income tax purposes in the amount of $153,243 available to offset
future income taxes. These credits expire from the years 2007 through 2012.
Due to the Company's issuance of stock, the Company's use of its existing net
operating loss carryforwards may be restricted under Section 382 of the Internal
Revenue Code.
A reconciliation of the provision for income taxes at the federal statutory
income tax rate of 25% for the year ended June 30, 2002, 15% for the year ended
June 30, 2001, and 17% for the year ended June 30, 2000, with the provision
reflected in the financial statements is as follows:
2002 2001 2000
---- ---- ----
Tax expense (benefit) at federal statutory
income tax rate $(82,683) $ 580 $(10,435)
State income taxes, net of federal benefit 1,646 380 (3,828)
Nondeductible business expenses 100 100 700
Other - - -
Credits - - -
Change in valuation allowance 80,937 (1,060) 13,563
------- ------- -------
Total tax provision - - -
========= ======== ========
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UNITRONIX CORPORATION AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
6. Profit Sharing Plan:
-------------------
The Company had a qualified profit-sharing plan that incorporated a "savings"
feature under Section 401(k) of the Internal Revenue Code (IRC), which allowed
participants to make contributions by salary reduction subject to annual
compensation limits as defined by the IRC. Contributions under the profit-
sharing feature of the plan were discretionary and determined annually by
management. No contributions had been made to this plan for any year since
1989. All participation under the 401(k) feature of the plan had ceased as of
February, 2002, after which time the Board of Directors voted to discontinue
the plan in ins entirety because of the expenses being incurred to administer
the plan. As of June 30, 2002, two former employees had funds remaining in
the plan, which management is attempting to have transferred into rollover
accounts.
7. Commitments and Contingencies:
-----------------------------
The Company currently occupies both of its offices as tenants at will.
Total rental expense was $18,484, $50,757 and $42,380 for the years ended
June 30, 2002, 2001 and 2000, respectively.
8. Legal Proceedings:
-----------------
The Company is not currently involved in any legal proceedings.
9. Preferred Stock:
---------------
On June 30, 1998, the Company converted $675,924 in notes payable, $119,525
in accounts payable and $161,279 in accrued interest into 956,728 shares of
mandatory redeemable, convertible, Series A preferred stock $1.00 per share
par value("preferred stock"). The preferred stock had a 6% cumulative
dividend feature and has no voting rights. The Company incurred $4,400 in
issuance costs associated with the preferred stock offering and has netted
them against the preferred stock carrying amount on the balance sheet. These
costs were accreted from the date of issue until the date of the original
mandatory redemption, which was June 30, 2002.
During the quarter ended June 30, 2002, the Board of Directors, acting in what
it believed to be in the best interests of the Company, voted to amend the
cumulative dividend feature, conversion rights and mandatory redemption date of
the preferred shares, subject to approval by a majority of the holders of the
shares. The holders of a majority of the shares subsequently approved the
following amendments to the Series A Convertible Preferred shares:
The mandatory redemption date for the preferred shares is June 30, 2006.
The mandatory redemption price is $1.00 per share plus all dividends accrued
through June 30, 2002.
The cumulative dividend feature was eliminated as of June 30, 2002, so that
any quarterly dividend not declared by the Board of Directors will not accum-
ulate for later payment.
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UNITRONIX CORPORATION AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
9. continued
The conversion terms were made more favorable for the preferred shareholders
so that from July 1, 2002 through June 30, 2006, each share of preferred
stock can be converted into one share of common stock of the Company.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, the holders of the preferred stock are
entitled to be paid an amount equal to the greater of (a) $1.00 per share
plus all accrued but unpaid preferred dividends or (b) the amount that would
be distributable to the shareholders of the preferred stock if those holders
converted the preferred stock as indicated above.
10.Stock Option Plan:
-----------------
During fiscal 1994 the Company adopted the 1993 Stock Option Plan (the
"Plan"), and reserved 1,000,000 shares of common stock for issuance under the
Plan. Under the Company's incentive and nonqualified stock option plan,
incentive stock options can be granted to officers, key employees, directors
or consultants of the Company and any subsidiary, entitling them to
purchase shares of common stock within one to ten years from the date of
grant at option prices equal to or above the fair market value at the date of
grant. Nonqualified stock options are generally granted under the same
terms. The exercise price for incentive stock options may not be less than
the fair market value of the common stock on the date of the grant (or 110%
of fair market value in the case of employees or officers holding 10% or more
of the total combined voting power of all classes of stock of the Company).
The vesting period for the options is determined by the option committee at
the time of the grant.
In October 1995, the FASB issued SFAS NO. 123, "Accounting for Stock-Based
Compensation." SFAS NO. 123 is effective for periods beginning after
December 15, 1995. SFAS NO. 123 requires that companies either recognize
compensation expense for grants of stock, stock options, and other equity
instruments based on fair value, or provide pro forma disclosure of net
income and earnings per share in the notes to the financial statements. The
Company adopted the disclosure provisions of SFAS NO. 123 in 1996 and has
applied APB Opinion 25 and related interpretations in accounting for its
plans. Had compensation costs for the Company's stock-based compensation
plan been determined and recognized based on the fair value at the grant
dates as calculated in accordance with SFAS NO. 123, the Company's net loss
for the years ended June 30, 2001, 2000 and 1999 would have been as follows:
2002 2001 2000
---- ---- ----
Net Loss Net Loss Net Loss
-------- -------- --------
Reported $(330,733) $(52,913) $(61,739)
Pro forma $(330,733) $(52,913) $(62,018)
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UNITRONIX CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
10. continued
The fair value of each stock option was estimated on the date of grant using
the Black-Scholes option-pricing model. The following weighted-average
assumptions were used in the valuation of the options:
June 30, 2002 June 30, 2001 June 30, 2000
Expected life 2 years - 2 years
Expected volatility 150% - 150%
Dividend yield 0% - 0%
Risk-free interest rate 4.62% - 5.72%
During the year ended June 30, 2002, options for 120,000 shares were granted
under the plan. No options were granted during the year ended June 30, 2001.
A summary of the status of the Company's stock option plan as of June 30, 2002,
2001, and 2000,and changes during each of the years then ended, is presented
below:
Weighted
Average
Exercise
Number of Price per
Shares Share
--------- ---------
Options outstanding at June 30, 1999 465,000 0.125
Options granted 0 -
Options exercised (20,000) 0.125
Options canceled (70,000) 0.125
-------
Options outstanding at June 30, 2000 375,000 0.125
Options granted 0 -
Options exercised 0 -
Options canceled (20,000) -
--------
Options outstanding at June 30, 2001 355,000 0.125
Options granted 120,000 .200
Options exercised 0 -
Options canceled 0 -
--------
Options outstanding at June 30, 2002 475,000 0.144
========
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UNITRONIX CORPORATION AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
10. continued
There were 475,000 options exercisable as of June 30, 2002. The following table
summarizes information about stock options outstanding at June 30, 2002
Options Outstanding Options Exercisable
------------------------------------------------ -----------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life Price Exercisable Price
- -------- ----------- ----------- -------- ----------- ----------
$0.125 355,000 3.81 years $0.125 355,000 $0.125
$0.200 120,000 1.77 years $0.200 120,000 $0.200
There are 525,000 options available for grant as of June 30, 2002.
The effects of applying SFAS NO. 123 in this disclosure are not indicative of
future amounts. SFAS NO. 123 does not apply to awards made prior to 1995.
Additional awards in future years are anticipated.
11.Operating Segments
------------------
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," in fiscal 1999. SFAS No. 131 established standards
for reporting information about operating segments in the Company's financial
statements. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker, or decision making group, in
deciding how to allocate resources and in assessing performance. The Company's
chief operating decision maker is the Chief Executive Officer of the Company.
The Company organizes its business units into three reportable segments:
manufacturing software licenses and related services; mineral exploration
products and services; and, mineral exploration activities. The segments'
accounting policies are the same as those described in the summary of
significant accounting policies except that interest expense and non-operating
income and expenses are not allocated to the individual operating segments when
determining segment profit or loss. The Company evaluates performance based on
profit or loss from operations before interest and income taxes not including
nonrecurring gains and losses.
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UNITRONIX CORPORATION AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
11. continued
Reconciliation of Segment Information
-------------------------------------
2002 2001 2000
---- ---- ----
Manufacturing Software Licenses
and Related Services
Revenue $244,721 $334,004 $488,794
Costs and expenses 154,619 197,945 546,464
-------- -------- ---------
Income (Loss) for segment 90,102 136,059 (57,670)
Mineral Exploration Products
and Services:
Revenue - 26,128 31,970
Costs and expenses 245,677 373,193 305,822
-------- -------- ---------
Income for segment (245,677) (347,065) (273,852)
Mineral Exploration Activities
Revenue - - -
Costs and expenses 111,991 - -
-------- -------- ---------
(Loss) for segment (111,991) - -
------- ------- -------
Total income (loss) for segments $(267,566) $(211,006) $(331,522)
======= ======== =========
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UNITRONIX CORPORATION AND SUBSIDIARIES
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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
---------------------------------------------
Col. A Col. B Col. E Col. D Col. E
- ------ ------ ------ ------ ------
Balance at Charged to
Beginning Costs and Balance at
Description of Period Expenses Deductions* End of Period
----------- ----------- ---------- ---------- -------------
Year ended June 30, 2002:
Allowance for doubtful
accounts $925 $24,538 $(23,598) $1,865
Year ended June 30, 2001:
Allowance for doubtful
accounts 8,232 15,456 (22,763) 925
Year ended June 30, 2000:
Allowance for doubtful
accounts 8,402 3,901 (4,071) 8,232
*(Write-off) recovery of bad debts
Page 19