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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2002
Commission file number 2-93668-FW
UNIVIEW TECHNOLOGIES CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-1975147
(State of incorporation) (I.R.S. Employer Identification No.)
17300 North Dallas Parkway, Suite 2050, 75248
Dallas, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 233-0900
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.80 per share
(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]
On September 20, 2002 the aggregate market value of the voting stock
held by non-affiliates of the Registrant (3,263,318 shares) was
approximately $520,000, based upon the closing sale price of the Common
Stock as reported by the OTC Bulletin Board[R] ($0.16). Shares of Common
Stock held by each executive officer and director and by each person who
owns 5% or more of the outstanding Common Stock, based on corporate records
and Schedule 13G filings, have been excluded since such persons may be
deemed affiliates. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.
As of September 20, 2002 there were 3,749,785 shares of Registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: exhibits shown on the Exhibit Index.
GENERAL INDEX
Page Number
ITEM l. BUSINESS............................................ 3
ITEM 2. PROPERTIES.......................................... 6
ITEM 3. LEGAL PROCEEDINGS................................... 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 6
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS................................. 7
ITEM 6. SELECTED FINANCIAL DATA.............................. 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 10
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK......................................... 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements.......... 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................. 24
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.. 24
ITEM 11. EXECUTIVE COMPENSATION.............................. 26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.......................................... 29
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...... 30
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K......................................... 31
SIGNATURES.................................................... 31
CERTIFICATIONS................................................ 32
EXHIBIT INDEX................................................. 64
UNIVIEW TECHNOLOGIES CORPORATION
PART I
ITEM l. BUSINESS
(a) General Development of Business
uniView Technologies Corporation and its subsidiaries (the "Company")
offer enhanced digital media solutions to customers worldwide. Our digital
media devices enable the delivery of the highest quality video, audio and
gaming features through the Internet to a television set. We offer contact
center customer service solutions through CIMphony[TM], a suite of computer
telephony integration (CTI) software products and services. CIMphony
facilitates communication between a customer service representative and
their customer by allowing contact centers to customize and incorporate
voice, data and Internet communications into their customer interactions.
We market our products and services to hospitality, utility, banking
and telecommunication companies. Due to the open architecture of our
products, they can be readily customized to a specific customer's
requirements. This feature is not limited by geographical boundaries and
our products can be configured for international customers, as well as
domestic. We believe that our easily adaptable products position us at the
forefront of the emerging interactive broadband and CTI industries.
We were incorporated in Texas on July 13, 1984. We filed an S-18
registration statement in November 1984 and completed the registered
offering in January 1985. In 1996 we introduced our first uniView[R]
digital media device (set top box), which enables the display of Internet
content on a television. In 1998 we acquired Network America, which is a
full-service infrastructure provider of design and cabling services for
high-speed voice/data networks in multiple environments. In 1999 we added
CTI capabilities to our product offerings with full-scale customized call
center solutions. In 2002 we acquired a majority-owned subsidiary, uniView
Asia Limited, based in Hong Kong, which we plan to use as our base of Asian
operations and for other business opportunities in Asia.
More information about us can be found at our Web site,
www.uniView.com. Information shown or otherwise linked on the Web site is
not incorporated in any prior or future filings of the Company under the
1933 Act or the 1934 Act, unless we specifically incorporate such
information by reference, and such information shall not otherwise be deemed
filed under such Acts.
(b) Financial Information About Industry Segments
Please refer to Note N of the Notes to Consolidated Financial
Statements in this Form 10-K for information concerning Industry Segments.
(c) Narrative Description of Business
Major Markets, Products and Services
Our uniView digital media technology is available for licensing by
customers wishing to manufacture and market a digital media device that
provides easy and affordable access to the Internet through the television
medium. Our digital media units offer video on demand, high-speed Internet
access, broadcast entertainment programming and virtually limitless
information and content streams. Through our advanced reference designs,
our digital media devices allow users to save and store 6 to 8 hours of
programming, rewind, and pause television shows that are in mid broadcast;
provide electronic programming guides that let users select channels based
on television show, actor, or theme and can also be used to collect
demographic information; incorporate view/play of published media; and
incorporate VOD (Video on Demand) Stream.
Our CTI technologies offer a full range of standard or highly
customized products for customer contact centers. Our flagship CTI product,
CIMphony[TM], is an open architecture tool kit, meaning that it can be
readily customized to a specific customer's requirements. It can be
designed to support a single site or a geographically distributed network of
sites ranging in size from less than 10 to more than 4,000 agents hosting
inbound and outbound calls. CIMphony manages voice and data transactions
from multiple sources while allowing for intelligent routing and queuing.
Patents, Trademarks and Licenses
We own or hold rights to all patents, trademarks and licenses that we
consider to be necessary in the conduct of our business including, among
others, the registered "uniView" trademark, which is due for renewal in July
2003 and the registered "Electric Globe" logo, which is due for renewal in
September 2008. The registered "Curtis Mathes" name and logo was sold in
September 2001.
Manufacturing
We do not own manufacturing facilities, but rather contract all
manufacturing to third parties, primarily located in Asia. Although large
volume manufacturing is generally the responsibility of our customers, we do
contract manufacturing on a direct basis for smaller quantities and for
initial deployments. Our digital media technology is also available for
licensing to others, who make their own arrangements for manufacturing.
Environmental
We believe that we are in compliance with all applicable environmental
laws and do not anticipate that such compliance will have a material effect
on our future capital expenditures, earnings or competitive position.
Major Customers
In fiscal year 2002, one customer accounted for approximately 44.6% of
consolidated revenues and at June 30, 2002, one customer accounted for 58.1%
and another customer accounted for 25.2% of trade accounts receivable. In
fiscal year 2001, one customer accounted for approximately 24.9% of
consolidated revenues and at June 30, 2001, one customer accounted for 49.8%
of trade accounts receivable. In fiscal year 2000, one customer accounted
for approximately 11.2% of consolidated revenues and at June 30, 2000, one
customer accounted for 36.4% and another customer accounted for 19.3% of
trade accounts receivable.
Competition
We operate in an intensely competitive industry. A number of companies
have developed digital media devices and technologies similar to ours,
including, among others low-cost Internet access technologies, (ii) "set
top" boxes, as well as (iii) video game devices that provide Internet
access. In addition, manufacturers of television sets have announced plans
to introduce Internet access and Web browsing capabilities into their
products or through set top boxes, using technologies supplied by others.
Personal computer manufacturers have announced products that offer full-
fledged television viewing, combined with Internet access. CTI competitors
include companies that market products with functionalities similar to ours.
Competition occurs principally in the areas of functionality, design,
product features and price.
Research and Development
We view our ability to offer new, improved, and innovative interactive
broadband, digital media and CTI technologies as an important component in
our plan for future growth. We intend to take advantage of licensing
opportunities, as well as pursue internal and external development of new
technology as may be necessary to meet customer demand and to achieve and
maintain a competitive position in the marketplace.
Employees
As of June 30, 2002, we employed 25 persons. We believe that our
employee relations are good.
Warranty
CMC's warranty obligations for consumer electronics products sold in
the past have all expired. We have no material outstanding warranty
obligations at the present time.
ITEM 2. PROPERTIES
Location Purpose/Use Owned/Leased Square Footage
-------- ----------- ------------ --------------
Dallas, TX Corporate Headquarters/
uniView Softgen office/
Products Group office Leased 16,617
Dallas, TX Storage facility Leased 5,120
Tulsa, OK Network America, Inc. office Leased 7,500
At June 30, 2002 we operated from the foregoing locations. Our
locations are deemed to be suitable for all of our operations and are
reasonably well utilized, except for our Dallas office, which is currently
being under-utilized due to recent reductions in staff and operations.
ITEM 3. LEGAL PROCEEDINGS
We are routinely a party to ordinary litigation incidental to our
business, as well as to other litigation of a nonmaterial nature, the
outcome of which we do not expect, individually or in the aggregate, to have
a material adverse effect on our financial condition or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
We held our 2001 Annual Shareholders' Meeting on May 2, 2002. Of our
3,399,785 common shares issued and outstanding as of March 28, 2002, the
Record Date, 2,351,526 were represented in person or by proxy at the
meeting, which constituted a quorum for the transaction of all business to
come before the meeting.
The following proposals were approved by the required number of shares
represented at the meeting:
1. Election of Directors:
Patrick A. Custer (For 2,274,204; Withheld 77,322.)
Edward M. Warren (For 2,274,204; Withheld 77,322.)
Bernard S. Appel (For 2,274,223; Withheld 77,303.)
Billy J. Robinson (For 2,274,223; Withheld 77,303.)
George C. Platt (For 2,274,223; Withheld 77,303.)
2. Ratification of the appointment of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending June 30, 2002.
For: 2,323,783 Against: 25,153 Abstaining: 2,590
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
Until September 13, 2002 our common stock, $.80 par value (the "Common
Stock") traded on the NASDAQ SmallCap Market[SM]. It now trades on the OTC
Bulletin Board under the symbol "UVEW." High and low trade price
information for our Common Stock is presented below for each quarter in the
last two fiscal years.
Quarter Ending Date High Trade Low Trade
------------------- ---------- ---------
Fiscal 2002
-----------
June 30, 2002 $ 0.87 $ 0.35
March 31, 2002 $ 1.31 $ 0.57
December 31, 2001 $ 0.90 $ 0.35
September 30, 2001 * $ 4.08 $ 0.65
Fiscal 2001 *
-----------
June 30, 2001 $ 7.92 $ 2.88
March 31, 2001 $11.04 $ 4.00
December 31, 2000 $19.52 $ 3.52
September 30, 2000 $30.00 $12.00
* Stock prices adjusted retroactively to reflect the effects of a one-
for-eight reverse stock split on September 7, 2001.
Holders
As of September 20, 2002 there were approximately 11,500 record
shareholders and individual participants in security position listings.
Dividends
We have never paid cash dividends on common shares and do not
anticipate doing so in the foreseeable future. The payment of any future
cash dividends will be at the discretion of our Board of Directors and will
depend upon, among other things, future earnings, capital requirements, our
general financial condition and general business conditions. In addition,
our Series 2002-G Convertible Preferred Stock contains preferential
covenants that materially limit the discretion of our Board of Directors
with respect to payment of dividends or making any other distribution to our
common shareholders so long as Series 2002-G is outstanding or unconverted.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table summarizes our equity compensation plans as of June
30, 2002:
Number of Securities
Number of Securities Remaining Available For
To Be Issued Upon Weighted-average Future Issuance Under
Exercise of Outstanding Exercise Price of Equity Compensation Plans
Options, Warrants Outstanding Options, (Excluding Securities
Plan Category and Rights Warrants and Rights Reflected in Column (a))
--------------------------------------------------------------------------------------------
(a) (b) (c)
Equity Compensation
Plans Approved by
Security Holders 2,200,158 $ 3.67 2,826,720
Equity Compensation
Plans Not Approved by
Security Holders 313 $ 70.00 - 0 -
--------- ------- ---------
Total 2,200,471 $ 3.68 - 0 -
========= ======= =========
Options issued and available for future issuance under stockholder-
approved plans consist primarily of those authorized pursuant to our 1999
Equity Incentive Plan.
Recent Sales of Unregistered Securities
Issuances of equity securities during the fourth fiscal quarter that
were not registered under the Securities Act of 1933 consisted of the
following:
On May 10, 2002 we issued to accredited investors for cash a $200,000
convertible debenture and, in connection therewith, warrants to purchase
150,000 shares of our Common Stock. The debenture is convertible at any
time into 133,333 shares of our Common Stock at a fixed conversion price of
$1.50 per share and has a maturity date of May 31, 2003. The warrants are
exercisable at any time through April 30, 2005 at a fixed exercise price of
$1.50 per share; however, the warrants are subject to a contingency that
upon satisfaction of the anti-dilution provisions of our outstanding Series
2002-G Convertible Preferred Stock, the exercise price will be adjusted to
par value.
On June 26, 2002 we issued 350,000 shares of our Common Stock (valued
at $.37 per share, or $129,500) to accredited investors in exchange for
60% of the outstanding capital stock of uniView Asia Limited. uniView
Asia's primary asset consisted of an intellectual property license. The
intellectual property provides a solution for the distribution of financial
and other information through the FM radio broadcasting network for display
on a standard television set.
On June 27, 2002 we issued our Series 2002-K Convertible Preferred
Stock to an accredited investor in connection with a $500,000 investment in
the Company. The preferred stock has no provision for dividends and is
convertible at any time into 625,000 shares of our Common Stock at a fixed
conversion price of $0.80 per share. We may, at our sole option at any
time, redeem any or all outstanding shares of the preferred stock at a
redemption price of 120% of its face value.
The foregoing issuances were made pursuant to the exemption from
registration provided by Rule 506 of Regulation D and/or Section 4(2) of the
Securities Act of 1933, in that (a) the investor or its purchaser
representative is reasonably believed to have such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of the investment, (b) the investor or its purchaser
representative were provided with required information and an opportunity to
obtain additional information a reasonable period of time prior to the
transaction, (c) the investor or its purchaser representative were advised
of the limitations on resale of the Common Stock, (d) the investor
represented its intention to acquire the securities for investment only and
not with view to or for sale in connection with any distribution thereof,
and (e) appropriate legends were affixed to the instruments issued in the
transactions.
ITEM 6. SELECTED FINANCIAL DATA
All financial data for the years referenced below were derived from our
Consolidated Financial Statements for those years and the comparability of
the information is affected by acquisitions, dispositions, and other
transactions which are described in the footnotes which accompany those
Consolidated Financial Statements, and which should be read in conjunction
with this five-year financial summary. Other factors which may affect the
comparability of the information for the more recent fiscal years are
discussed further in Item 7 below.
Year Ended June 30,
-------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Consolidated Statement
of Operations Data
------------------
Revenues $5,369,311 $9,332,232 $ 9,145,705 $11,486,058 $ 2,487,213
Net loss before
extraordinary item (2,327,191) (6,622,458) (10,863,875) (6,297,353) (17,418,141)
Extraordinary item -
early extinguishment
of debt (406,243) -- -- -- --
Loss from continuing
operations after
extraordinary item (2,733,434) (6,622,458) (10,863,875) (6,297,353) (17,418,141)
Loss per Common
Share (1)
Loss before
extraordinary item (0.18) (0.08) (3.82) (7.02) (26.96)
Extraordinary item (0.12) -- -- -- --
Loss after
extraordinary item (0.30) (0.08) (3.82) (7.02) (26.96)
Year Ended June 30,
-------------------------------------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Consolidated Balance
Sheet Data
--------------------
Total assets 4,842,203 8,837,360 12,523,204 14,080,768 17,728,662
Long term debt 14,938 1,388,126 595,324 3,823,210 3,835,315
Redeemable preferred
stock 1,456,000 1,170,000 8,409,600 10,350,000 --
Stockholders' equity
(deficit) 2,018,192 3,933,806 860,699 (2,013,022) 7,300,231
Number of employees 25 67 104 79 109
(1) Basic and diluted loss per share which was computed based upon the
weighted average number of common shares outstanding during each fiscal
year.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion provides information to assist in the
understanding of our financial condition and results of operations and
should be read in conjunction with the Consolidated Financial Statements and
related notes appearing elsewhere herein.
Forward Looking Statements
This report may contain "Forward Looking Statements," which are our
expectations, plans, and projections which may or may not materialize, and
which are subject to various risks and uncertainties, including statements
concerning expected expenses and the adequacy of our sources of cash to
finance our current and future operations. When used in this report, the
words "plans," "believes," "expects," "anticipates," "estimates" and similar
expressions are intended to identify forward-looking statements. Factors
which could cause actual results to materially differ from our expectations
include the following: general economic conditions and growth in the high
tech industry; competitive factors and pricing pressures; changes in product
mix; the timely development and acceptance of new products; and the risks
described from time to time in our SEC filings. These forward-looking
statements speak only as of the date of this report. We expressly disclaim
any obligation or undertaking to release publicly any updates or change in
our expectations or any change in events, conditions or circumstances on
which any such statement may be based, except as may be otherwise required
by the securities laws.
Results of Operations
Please refer to Note N of the Notes to Consolidated Financial
Statements in this Form 10-K for additional information on our operating
segments.
FISCAL YEAR ENDED JUNE 30, 2002 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2001
Revenues
Total revenues for fiscal year 2002 decreased to $5.37 million, as
compared to $9.33 million in 2001. Revenues for fiscal year 2002 are
primarily comprised of revenues from the sale of CTI products and support
services provided by uniView Softgen, as well as revenues from
infrastructure design and cabling services provided by Network America.
uniView Softgen. Revenues for uniView Softgen for fiscal year 2002
were approximately $2.68 million, compared to approximately $2.88 million
for 2001. Much of the revenue for 2002 is attributable to the sale in
January 2002 of a source code license of our CIMphony product to HSBC
Holdings plc ("HSBC") for $1.3 million in cash. HSBC generated
approximately $2.5 million of our revenues during the fiscal year ended June
30, 2001 and at the time of the sale represented our largest CTI customer.
The transaction has resulted in limited revenues from this customer after
the sale, as HSBC assumed the responsibility for its own CTI software
operations. Sales from CTI products and support services since the date of
the HSBC sale through June 30, 2002 have totaled $172,500. In connection
with the sale transaction, HSBC also offered positions to some of our staff
who had been assigned to manage and maintain the HSBC contract and our CTI
staff was reduced accordingly. We expect to generate future revenues from
uniView Softgen primarily through additional sales of source code licenses
to other customers.
Network America. Revenues for Network America for fiscal year 2002
were approximately $2.5 million, compared to approximately $5.0 million for
2001. Network America has historically offered computers and computer
networks, primarily to school districts in Oklahoma and Arkansas. During
fiscal year 2001, we shifted our emphasis to providing infrastructure design
and cabling services for high-speed voice/data networks in multiple
environments. The decrease in revenues for 2002 is attributable to the
transition period brought about by the change from primarily offering
hardware to primarily offering higher margin services. We expect to
generate future revenues from Network America primarily from cabling and
other services.
Curtis Mathes. Due to the sale of the Curtis Mathes trademark in
September 2001, we recognized only $50,000 in royalty revenue from the
trademark during fiscal 2002, compared to $1.13 million during the previous
year. We do not expect to recognize any additional royalty revenues from
the trademark.
Gross Margin
Gross margin for fiscal year 2002 was $3.11 million, as compared to
$4.35 million for 2001. As a percentage of total revenue, gross margin
increased to 58% in fiscal year 2002, compared to 46.6% in the previous
year. The increase as a percentage of revenue can be attributed to focusing
resources on opportunities at uniView Softgen and Network America that yield
better margins, as well as to the sale of the source code license to HSBC.
Inventory Write-Down and Software Development Costs
No inventories were written down in 2002 or 2001.
We did not capitalize any additional software development costs in
fiscal year 2002. In fiscal year 2001, we capitalized software development
costs of $329,000, which are attributable to continued improvements and
enhancements to the various models of our digital media device. Efforts to
improve our product offerings by expanding capability and functionality are
driven by customer and market demands in conjunction with ever-improving
technologies. These efforts are expected to be ongoing as we strive to
provide leading edge technologies in a very dynamic market environment.
Operating Expenses
Total operating expenses for fiscal year 2002 decreased 41% to
approximately $6.60 million, compared to approximately $11.14 million for
the same period last year. Significant components of operating expenses for
the fiscal years ended June 30, 2002 and 2001 consisted of the following:
Year ended June 30,
-------------------------------
2002 2001
----------- -----------
Compensation $ 3,099,108 $ 4,972,693
Facilities 578,423 729,766
Depreciation 494,112 583,229
Amortization of software development
costs, trademark, and goodwill 1,098,937 1,332,948
Online service expense 66,516 853,053
Legal expense 141,489 0
Stock option expense 0 58,496
Other 1,123,310 2,611,785
----------- -----------
Total $ 6,601,895 $ 11,141,970
=========== ===========
"Other" expenses include public company cost, telephone, travel,
office, insurance, and other general and administrative expenses. The
decrease in online service expenses for 2002 compared to 2001 primarily
consists of TVData online television listings utilized in connection with
our digital media products, which services were terminated in July 2001.
The remaining decrease in operating expenses for fiscal year 2002 is
primarily attributable to reduced compensation and other expenses due to a
reduction in the number of employees and overall cost controls.
Interest Expense
Corporate interest expense for fiscal year 2002 was $90,000 as
compared to $113,000 in 2001. The decrease in interest expense is primarily
attributable to a decrease in our debt level from approximately $1.4 million
at June 30, 2001 to approximately $0.24 million at June 30, 2002. Products
and services interest expense for fiscal year 2002 was $12,000 as compared
to $64,000 in 2001. This decrease is due in part to phasing out our line of
credit arrangement with FINOVA in fiscal 2001. The weighted average interest
rate for our borrowings was 13.2% and 13.8% for the years ended June 30,
2002 and 2001, respectively.
FISCAL YEAR ENDED JUNE 30, 2001 COMPARED TO FISCAL YEAR ENDED JUNE 30, 2000
Revenues
Total sales for fiscal year 2001 increased slightly to $9.33 million,
as compared to $9.15 million in 2000. Revenues for both fiscal years 2001
and 2000 were primarily comprised of network system design and integration
services and revenues from the sale of CTI products and support services.
Other revenues in fiscal 2001 consisted of royalties received under a
license agreement for use of the Curtis Mathes trademark.
uniView Softgen. Revenues for uniView Softgen increased from
approximately $1.64 million in 2000 to approximately $2.88 million for 2001,
which is primarily attributable to an increase in services provided to our
CTI customers during this period.
Network America. Revenues for Network America decreased from
approximately $6.6 million for 2000 to approximately $5.0 million for 2001,
which is primarily attributable to a shift in emphasis from providing
hardware to providing higher margin cabling services.
Curtis Mathes. During fiscal year 2001, we signed a trademark license
agreement with Kmart Corporation and Curtis Mathes products began to appear
in Kmart stores across the nation. We recognized $1.13 million in royalty
revenue from the trademark during fiscal year 2001, compared to no royalty
revenue during the previous year.
Gross Margin
Gross margin increased 62.3 % to $4.35 million in fiscal year 2001, as
compared to $2.68 million in 2000. As a percentage of total revenue, gross
margin increased to 46.6% in fiscal year 2001, compared to 29.3% in 2000.
The increase as a percentage of revenue during this period is primarily a
result of higher gross margins associated with uniView Softgen's CTI
software products and support services.
Inventory Write-Down and Software Development Costs
No inventories were written down in 2001. During fiscal year 2000,
inventories of early versions of our digital media device were written off
totaling approximately $91,000. These units were developed for specific
applications and were less versatile and innovative than the market now
demands. Even though the units were written off, we continued to market the
boxes to niche markets and applications. The write-down was the result of
technological improvements to the device as well as a concurrent change in
our marketing strategy. Our digital media devices were initially offered on
a retail basis in the consumer electronics market. However, because of slow
consumer acceptance of this product category, we realized that digital media
device sales alone would not produce the kind of return on investment that
we hope to achieve for our shareholders. We redirected our focus and
determined not to sell uniView digital media devices on a consumer retail
basis, but rather to bundle the product, together with our connectivity and
other computer-related services, and market the resulting package in a
commercially based market.
Software development costs of $329,000 and $201,000, attributable to
continued improvements and enhancements to the various models of our digital
media device, were capitalized in fiscal years 2001 and 2000, respectively.
Operating Expenses
Total operating expenses for fiscal year 2001 decreased 16% to
approximately $11.14 million, compared to approximately $13.31 million for
2000. Significant components of operating expenses for the fiscal years
ended June 30, 2001 and 2000 consisted of the following:
Year ended June 30,
-------------------------------
2002 2001
----------- -----------
Compensation $ 4,972,693 $ 4,984,023
Facilities 729,766 761,848
Depreciation 583,229 1,313,240
Amortization of software development
costs, trademark, and goodwill 1,332,948 1,133,896
Online service expense 853,053 878,754
Legal expense 0 299,130
Stock option expense 58,496 661,413
Other 2,611,785 3,280,726
----------- -----------
Total $ 11,141,970 $ 13,313,030
=========== ===========
"Online service expense" primarily consists of TVData online television
listings utilized in connection with our digital media products. "Other"
expenses in 2001 include public company cost, telephone, travel, office,
insurance, and other general and administrative expenses. "Other" expenses
in 2000 additionally include one-time moving expenses relating to the
relocation of our corporate offices in fiscal year 2000. The decrease is
primarily attributable to non-cash items, such as a reduction in
depreciation and amortization totaling $531,000 due primarily to writing off
$1.3 million of obsolete equipment during 2000, and a reduction in stock
options expense of $603,000 due to issuing fewer options during 2001 with an
exercise price below market.
Interest Expense
Corporate interest expense for fiscal year 2001 was $113,000 as
compared to $193,000 in 2000. Products and services interest expense for
fiscal year 2001 was $64,000 as compared to $90,000 in 2000. This decrease
is due in part to phasing out our line of credit arrangement with FINOVA in
fiscal 2001. The weighted average interest rate for our borrowings was
13.8% and 10.7% for the years ended June 30, 2001 and 2000, respectively.
Liquidity and Capital Resources
Cash and cash equivalents at June 30, 2002 were $724,000 compared to
$581,000 at June 30, 2001. Although cash used in operations decreased
substantially over the past year, we did not achieve a positive cash flow
from operations. Our plan to reach profitability includes (a) further
reduction of general and administrative expenses, (b) maintenance of our
higher gross margin percentages by continuing to emphasize services over
product sales, and (c) increased sales of both products and services in the
Asian market through our subsidiary, uniView Asia Limited. We also expect
to continue generating revenues from our cabling operations at Network
America, licensing our digital media technology, selling digital media
devices, and providing CTI services, as well as selling other source code
licenses of our CTI technology. Under this plan, we believe that we will be
able to generate sufficient funds to provide us with adequate liquidity and
capital for the next twelve months. If we are unable to do so from
operations, additional financing or equity placements may be necessary. We
have in the past relied on available borrowing arrangements and sales of our
common and preferred stock to supplement operations. However, outside
financial resources may not continue to be available to us or may not be
available on favorable terms.
Cash Flows From Operations
Cash used in operations for the fiscal year ended June 30, 2002 was
$2.15 million compared to $3.46 million in 2001. The major components of
cash used in operations during 2002 were comprised of a $2.73 million loss
from operations, including depreciation and amortization of $1.6 million
(primarily capitalized software amortization) and a one-time gain of $1.1
million on the sale of the Curtis Mathes trademark, as well as a reduction
in our investment in working capital. In addition, an extraordinary loss of
$406,000 for early extinguishment of debt resulted from the assumption by
the purchaser of the trademark of a $2 million note payable. (See Note G of
the Notes to Consolidated Financial Statements in this Form 10-K for
additional information on Long-Term Debt.)
Cash used in operations for the fiscal year ended June 30, 2001 was
$3.46 million compared to $6.70 million in 2000. Major components of cash
used in operations in fiscal year 2001 were a net loss from operations of
$6.62 million and a reduction in deferred revenues of $719,000, consisting
of fees received in advance for call center maintenance and other services,
which uniView Softgen earned and recognized during fiscal year 2001, offset
by the following: depreciation and amortization decreased to $1.92 million
for fiscal year 2001 from $3.45 million the previous year, primarily due to
$1.3 million in capitalized costs of the set top box being fully amortized
and $0.86 million in equipment being fully depreciated in fiscal year 2000;
accounts receivable decreased by $529,000, primarily due to a slow down in
sales during the fourth quarter of fiscal year 2001 compared to the fourth
quarter of the previous year; prepaid expenses decreased by $730,000 in
fiscal year 2001 from the previous year, primarily due to a reduction in
prepaid expenses for television listings that expired during fiscal year
2001; and accounts payable and accrued liabilities increased by $313,000,
primarily due to a $450,000 deposit on the trademark sale received in fiscal
year 2001.
Cash used in operations for the fiscal year ended June 30, 2000 was
$6.70 million. A major component of cash used in operations in fiscal year
2000 was a net loss from operations of $10.86 million. This amount was
offset by depreciation on equipment of $1.3 million and amortization of
software development costs of $2.1 million, as well as stock compensation
expense of $661,000 incurred as a result of issuing stock options to
employees below the market price in fiscal year 2000.
Cash Flows From Investing Activities
During fiscal year 2002, we sold the Curtis Mathes[R] trademark to an
investment group for $4.5 million, which included $635,000 in cash ($450,000
of which was received in fiscal 2001) and $1,865,000 in a note receivable.
The sale allowed us to obtain a release of our secured debt of $2 million
with Sagemark as the buyer assumed the outstanding debt, providing
additional operating capital. The value of the sale was based on an
estimated four years of projected royalty stream from the Curtis Mathes
brand. Payments received on the note receivable in fiscal 2002 totaled
$1.02 million, and the current outstanding principal balance of the note
receivable is $850,000, which is due in March 2003. We additionally
purchased approximately $12,000 of property and equipment during 2002 and
purchased a long-term certificate of deposit for $25,000.
During fiscal year 2001, we purchased property and equipment for
$177,000, approximately $100,000 of which related to computers and computer
software. Additional development costs of $329,000 were capitalized as
expenditures relating to improvements in our digital media device and we
received approximately $68,000 in cash from the sale of fully depreciated
equipment.
During fiscal year 2000, we purchased property and equipment for
$495,000, $300,000 of which related to the Zirca acquisition. Additional
development costs of $201,000 were capitalized as expenditures relating to
improvements in our digital media device. As part of the uniView Softgen
acquisition, we received approximately $92,000 in cash.
Cash Flows From Financing Activities
Cash flow from financing activities generated approximately $1.11
million during fiscal year 2002; major components include $500,000 from the
issuance of preferred stock and $700,000 from proceeds of long term debt.
Cash flow from financing activities generated $3.06 million during
fiscal year 2001; major components include $2.00 million from the sale
of Common Stock and $1.52 million from proceeds of long term debt.
Additionally, net repayment of the bank line of credit totaled approximately
$321,000 for the year.
Cash flow from financing activities generated $4.32 million during
fiscal year 2000; major components include $4.2 million from the sale
of Common Stock, and $1.0 million from the exercise of stock warrants.
Additionally, net repayment of the bank line of credit totaled slightly more
than $389,000 for the year.
Other Matters
Reverse Stock Split
In September 2001, our stockholders approved and we implemented a one
for eight reverse split of our outstanding shares of Common Stock to bring
us into compliance with the continued listing requirements for the Nasdaq
SmallCap Market, which require a minimum $1 bid price on common stock. Par
value was changed from $.10 to $.80 per share. After completion of the
reverse stock split, we had approximately 3,398,977 common shares
outstanding. All share data give effect to the reverse split applied
retroactively as if it occurred at the beginning of the earliest period
presented.
Acquisition of uniView Asia Limited
On June 26, 2002 we completed the acquisition, through a share
exchange, of a controlling interest (60%) in uniView Asia Limited, a Hong
Kong company, for 350,000 shares of newly issued Common Stock. uniView
Asia's primary asset consists of an intellectual property license. The
intellectual property provides a solution for the distribution of financial
and other information through the FM radio broadcasting network for display
on a standard television set.
Subsequent Events
In September 2002 our securities were delisted from the NASDAQ SmallCap
Market[SM] and are now traded on the OTC Bulletin Board. (For further
discussion, refer to the risk factor on page 20 below, "Delisting from the
Nasdaq SmallCap Market could make it more difficult for investors to trade
our securities.")
Critical Accounting Policies
The preparation of the consolidated financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates. The
following critical accounting policies are utilized by management in the
preparation of the consolidated financial statements.
Redeemable Preferred Stock. During fiscal year ended June 30, 2002, we
redeemed all of our Series 1999-D1 preferred stock by issuing 240 shares of
Series 2002-G preferred stock (stated value $25,000 per share) in exchange.
All accrued dividends on Series 1999-D1 were forgiven. The new series of
preferred stock has no provision for dividends and is convertible into
4,000,000 shares of Common Stock at $1.50 per share. All outstanding and
unconverted shares of the new preferred stock as of June 30, 2004 shall be,
at the holders' option, either converted into Common Stock or redeemed at a
price which fluctuates based on the market price of our Common Stock.
The accounting method we have adopted for securities such as Series
2002-G preferred stock was derived from Emerging Issues Task Force (EITF)
Topic No. D-98. It recognizes changes in redemption value immediately as
they occur and adjusts the carrying value of the security to equal the
redemption value at the end of each reporting period. Since the redemption
value of these securities is tied to the market price of the Common Stock,
this accounting method causes our loss attributable to common stockholders
and stockholders' equity to fluctuate each quarter with the market - as
stock price increases, stockholders' equity decreases and loss per share
increases, and vice versa. Earnings per share from cash transactions are
not affected.
Product and Software Development Costs. We capitalize product and
software development costs beginning at the time technological feasibility
of the product or software is established, until the product or software is
ready for use in products. Research and development costs of products and
software are expensed as incurred. The capitalized costs related to
products or software which we expect to become an integral part of our
revenue-producing products are amortized in relation to expected revenues
from the product, or straight-line over a maximum of four years, whichever
is greater. We regularly review the carrying value of product or software
development costs, and we recognize a loss when the expected net realizable
value of a product falls below the unamortized cost.
Impairment of Long-lived Assets. The Company evaluates long-lived
assets and intangibles held and used for impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be
recoverable. Impairment is recognized when the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amounts
of such assets.
Revenue Recognition. We recognize revenue as follows: (a) service
revenue - when the services are provided; (b) equipment and product sales -
at the time of delivery and customer acceptance; (c) installation of
software and hardware systems - the completed contract method; and (d)
royalties - when earned as the customer sells royalty related products.
Amounts for which revenue cannot be recognized such as uncompleted contracts
or unearned maintenance services are included in deferred revenue and are
recognized as contracts are completed or ratably over the period covered by
the maintenance agreement.
Risk Factors: Factors That May Affect Future Results
We do not provide forecasts of future financial performance. While we
continue to pursue new business that complements our overall business plan,
the following issues and uncertainties, among others, should be considered
in evaluating our growth potential.
RISKS RELATED TO COMPANY OPERATIONS
There may be limited or no demand for our technologies and services and
losses may continue.
We have reported a net loss in each of our last five fiscal years from
a combination of various operating segments. In 1996 we introduced our
first uniView[R] digital media device, which enables the display of Internet
content on a television. In 1998 and 1999 we acquired other computer-
related companies, consolidated operations and moved to a different business
model focused on licensing our technologies and providing computer-related
consulting services. In 2000 we acquired proprietary CTI technologies,
which provide solutions for customer contact centers, and began integrating
our technologies, culminating in our announcement of CIMWeb[TM], a powerful
web-enabled product blending the technologies of customer contact centers
with digital media products. In 2002, we acquired controlling interest in
uniView Asia Limited, a Hong Kong company, which we plan to use as our base
of Asian operations and for other business opportunities in Asia. As you
can see, our corporate character and direction has changed in the recent
past and we have a limited operating history in our present form under our
current business model. We believe that our easily adaptable products
position us at the forefront of the emerging interactive broadband and CTI
industries, however, there may be limited or no demand for our technologies
and services and losses may continue.
Insufficient financial resources could severely limit our ability to
continue operations.
In recent years, we have not achieved a positive cash flow from
operations. We continue to rely on sales of common and preferred stock and
available credit arrangements to supplement our ongoing financial needs.
Until we become self-supporting, we will have to utilize additional equity
or debt financing. We continually evaluate opportunities with various
investors to raise additional capital. We have in the past raised all of
the financing necessary to fund ongoing operations. Such resources may not
be available to us in the future or they may not be available upon favorable
terms. A lack of sufficient financial resources to fund operations until
our business plan begins to produce the expected returns could severely
limit our ability to continue operations.
RISKS RELATED TO THE COMPANY'S COMMON STOCK
A depressed stock price could impair our ability to raise capital and
severely limit our ability to continue operations.
The prevailing market price for our Common Stock has been depressed for
an extended period of time. A continued depressed stock price could further
impair our ability to raise additional capital through the sale of equity
securities, severely limiting our ability to continue operations.
Delisting from the Nasdaq SmallCap Market could make it more difficult for
investors to trade our securities.
Our Common Stock is currently traded on the OTC Bulletin Board, being
delisted from the NASDAQ SmallCap Market on September 13, 2002. Compared to
the NASDAQ SmallCap Market, an investor may find it more difficult to sell
our securities. Also, if the trading price of our stock remains below $5.00
per share, trading could potentially be subject to certain other rules of
the Exchange Act. Such rules require additional disclosure by broker-
dealers in connection with any trades involving a stock defined as a "penny
stock." "Penny stock" is defined as any non-Nasdaq equity security that has
a market price of less than $5.00 per share, subject to certain exceptions.
Such rules require the delivery of a disclosure schedule explaining the
penny stock market and the risks associated with that market before entering
into any penny stock transaction. The rules also impose various sales
practice requirements on broker-dealers who sell penny stocks to persons
other than established customers and accredited investors. For these types
of transactions, the broker-dealer must make a special suitability
determination for the purchaser and must receive the purchaser's written
consent to the transaction prior to the sale. The additional burdens
imposed upon broker-dealers by such requirements could discourage broker-
dealers from effecting transactions in the securities. This could severely
limit the market liquidity of the securities and the ability to sell the
securities in the secondary market.
Increased dilution could reduce the value of a shareholder's investment.
As of June 30, 2002 we had issued (1) 3,749,785 shares of Common Stock;
(2) warrants and vested employee stock options that could be exercised into
1,743,584 shares of Common Stock; and (3) convertible securities that could
be converted into approximately 4,758,750 shares of Common Stock. If the
holders of all outstanding warrants, options, and convertible securities
exchanged their holdings for Common Stock on that date, there would be
approximately 10,252,119 shares of Common Stock outstanding. Such an event
would dilute an existing shareholder's ownership interest in the Company.
For example, an existing 10% shareholder before such event would become a
3.7% shareholder after such event. All other existing shareholders would
experience similar dilution. Such an event would increase our net tangible
book value by the amount of the proceeds we received for issuing Common
Stock in exchange for the warrants and options (approximately $13.3 million
or $1.30 per share increase). "Pro forma net tangible book value"
represents the amount of total tangible assets, less total liabilities,
divided by the number of shares of Common Stock outstanding after such
event.
RISKS RELATED TO OUR TECHNOLOGIES AND SERVICES
Obsolete technology could result in fewer sales and less cash flow to fund
ongoing operations.
We operate in a marketplace that changes rapidly. Changes in industry
standards, frequent innovations and changes in customer preferences could
render our technologies and services unmarketable if we are slow to
anticipate or adjust to these changes. We may have to develop new
technologies or modify our existing technologies and services to keep pace
with these changes. Pursuit of these technological advances may require
substantial expenditures, and we may not succeed in adapting our
technologies as rapidly or as successfully as our competitors. Our
competitors may have better financing and could gain advantage by
implementing new technologies and services more quickly and at lower cost.
Failure to adapt our technologies or to develop and introduce new
technologies and enhancements in a timely fashion could result in fewer
sales and less cash flow to fund ongoing operations.
Delayed development of the Internet and Broadband industries could restrict
our growth accordingly.
We expect to derive a significant portion of our future income from our
Internet-related technologies. Our future success will depend to a great
extent upon the continued development and expansion of the Broadband
industry and the Internet. If these industries do not realize the expected
rate of growth our own growth could be restricted accordingly.
RISKS RELATED TO THE INDUSTRY
Inability to compete could result in fewer sales and less cash flow to fund
ongoing operations.
The industry in which we and our licensees operate is intensely and
increasingly competitive. A number of companies have announced development
of, or have introduced digital media devices and technologies similar to
ours. Such competitors include, among others: (i) suppliers of low-cost
Internet access technologies, such as "network computer" devices promoted by
Oracle and others, (ii) "set top" boxes developed by WebTV Networks,
Scientific Atlanta and others, as well as (iii) video game devices that
provide Internet access such as the Sega Saturn, the Sony Playstation and
the Nintendo 64. In addition, manufacturers of television sets have
announced plans to introduce Internet access and Web browsing capabilities
into their products or through set top boxes, using technologies supplied by
others. Personal computer manufacturers, such as Gateway 2000, have
announced products that offer full-fledged television viewing, combined with
Internet access. CTI competitors include companies that market products
with functionalities similar to ours, such as Alcatel, Nortel, Lucent and
others. Competition occurs principally in the areas of style, quality,
functionality, service, design, product features and price.
Our competitors may develop products and services that are superior to
ours. They may be priced competitively with ours. They may achieve greater
market acceptance than ours. Many of our competitors may have greater
financial, technical, marketing and/or personnel resources than we do. This
competitive environment could (1) limit the number of customers that are
willing to utilize our technologies and services, (2) require price
reductions and increased spending on technology development, marketing and
content procurement, and (3) limit our ability to develop new technologies
and services. Any of the foregoing events could result in fewer sales and
less cash flow to fund ongoing operations.
In addition, some of our competitors may be acquired by, receive
investments from or enter into other commercial relationships with larger,
well-established and well-funded companies. We may not have the resources
required to continue to respond effectively to these competitive pressures.
Unfavorable domestic and international governmental regulations could
increase costs and result in less cash to fund ongoing operations.
The Federal Communications Commission ("FCC") provides mandatory
guidelines for the electronic emissions of licensed products containing our
technologies. Several federal and state government agencies, legislative
bodies and courts, including the FCC, the Federal Trade Commission and the
Internal Revenue Service further impact our technologies and services. A
number of legislative and regulatory proposals from various international
bodies and foreign and domestic governments in the areas of
telecommunication regulation, access charges, encryption standards, content
regulation, consumer protection, intellectual property, privacy, electronic
commerce, and taxation, among others, are currently under consideration. We
cannot predict whether such proposals will be adopted or whether they would
be favorable or unfavorable to the industry.
There are certain other significant risks inherent in doing business on
an international level, for example: (1) unexpected changes in regulatory
requirements, (2) uncertain political risks, (3) export restrictions, (4)
export controls relating to our encryption technology, (5) tariffs and other
trade barriers, (6) fluctuations in currency exchange rates, and (7)
potentially adverse tax consequences. Any one or all of the foregoing could
increase costs and result in less cash being available to fund ongoing
operations.
Limited protection of our intellectual property and infringement of third
party patents could increase costs and result in less cash being available
to fund ongoing operations.
We regard our digital media and CTI technologies as proprietary. We
rely primarily on a combination of trademark, copyright and trade secret
laws, nondisclosure agreements, and other methods to protect these
proprietary rights. We expect to enter into transactions in countries where
intellectual property laws may not be well developed or are poorly enforced.
Policing unauthorized use of our technologies is also difficult and can be
expected to be a recurring problem. As is common in the industry, from time
to time we receive notices from third parties claiming infringement of
intellectual property rights. We investigate these claims and respond, as
we deem appropriate. As the number of technologies in the industry
increases and the functionality of these technologies overlap, infringement
claims against us may also increase. A successful claim could limit our
ability to use our technology or cause us to incur additional expense to
modify our products. Any claim or litigation, with or without merit, could
increase costs and result in less cash being available to fund ongoing
operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates which may
adversely affect our financial position, results of operations and cash
flows. In seeking to minimize the risks from interest rate fluctuations, we
manage exposures through our regular operating and financing activities. We
do not use financial instruments for trading or other speculative purposes
and we are not a party to any leveraged financial instruments. We are
exposed to interest rate risk primarily through our borrowing activities,
which are described in the "Long-Term Debt" Notes to the Consolidated
Financial Statements, which are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements and related Financial Statement
Schedules are included immediately following the signature page of this Form
10-K.
Selected Quarterly Financial Data (unaudited)
The following tables set forth certain unaudited financial data for the
quarters indicated:
Fiscal 2002 Quarter Ended Fiscal 2001 Quarter Ended
-------------------------------------------------- ------------------------------------------------------
Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31, March 31, June 30,
2001 2001 2002 2002 2000 2000 2001 2001
--------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Net Sales $1,639,662 $ 827,858 $2,393,752 $ 508,039 $ 2,580,737 $ 3,108,472 $ 1,884,654 $ 1,758,369
Gross Margin $1,003,082 $ 473,723 $1,713,433 $ (76,602) $ 1,028,529 $ 1,278,972 $ 1,102,452 $ 942,125
% of net sales 61.2% 57.2% 71.6% (15.1)% 39.9% 41.1% 58.5% 53.6%
Operating income $ (868,653) $(1,372,669) $ 81,350 $(1,328,287) $(1,656,118) $(1,610,942) $(1,641,718) $(1,881,114)
(loss)
% of net sales (53.0)% (165.8)% 3.4% (261.5)% (64.2)% (51.8)% (87.1)% (107.0)%
Net income (loss) $ (245,387) $(1,348,541) $ 112,581 $(1,252,087) $(1,675,216) $(1,631,370) $(1,665,682) $(1,660,190)
% of net sales (15.0)% (162.9)% 4.7% (246.5)% (64.9)% (52.5)% (87.9)% (94.4)%
Net income (loss) $ 269,913 $(1,429,491) $ 11,855 $ 128,646 $(6,176,291) $ 8,520,905 $(2,388,007) $ (241,265)
attributable to
common shareholders
% of net sales 16.5% (172.7)% 0.5% 25.3% (239.3)% 274.1% (126.7)% (13.7)%
Net income (loss)
attributable to
common shareholders
per share - basic $0.08 $(0.42) $0.00 $0.04 $(1.84) $2.51 $(0.70) $(0.13)
- diluted $0.08 $(0.42) $0.00 $0.04 $(1.84) $2.50 $(0.70) $(0.13)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During our two most recent fiscal years, no independent accountant
engaged as the principal accountant to audit our financial statements has
resigned or was dismissed.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRAN
Board of Directors
The following sets forth, with respect to each member of our Board of
Directors as of June 30, 2002, his name, age, period served as director,
present position, if any, with the Company and other business experience.
All directors serve one-year terms between annual meetings of shareholders.
Patrick A. Custer, 53, is the Chairman of the Board and Chief Executive
Officer. Mr. Custer served as a director from 1984 to 1985, and from 1987
until the present. He served as President and Chief Executive Officer from
1984 to 1985 and from September 1992 until the present. From 1986 until
1990, Mr. Custer was an international business consultant for Park Central
Funding (Guernsey), Ltd. From 1978 until 1982, Mr. Custer was a general
securities principal and worked for a major brokerage firm as a corporate
finance specialist and was owner of his own brokerage firm. He was
responsible for structuring and funding IPO's, real estate, energy
companies, and numerous high-tech start-up companies. Mr. Custer's
technical experience includes engineering and management positions with
Texas Instruments and Honeywell. Mr. Custer is a graduate of Texas Tech
University in Finance and Management, with additional studies in Electrical
Engineering and master studies in Finance.
Edward M. Warren, 61, has been a director since September 1992. Since
1987, he has been the Registered Principal and Branch Manager for a major
securities firm in Albany, New York. He is also a Financial Consultant,
having presented numerous financial seminars over the years throughout
eastern New York and western New England. He is also a co-founder of the
Coronado Group, through which he has in the past provided professional
services to the financial community, such as the analysis of economic and
market conditions, review of financial products, exchange of marketing
ideas, and continuing evaluation and recommendation of asset allocation
models. Mr. Warren received his undergraduate degree from Williams College
and holds a Master of Arts degree from Harvard University.
Billy J. Robinson, 54, has been a director since March 1994. He has
also served as Vice President and General Counsel since October 1993, and as
Secretary since June 1994. Mr. Robinson has over twenty years legal
experience, representing banks and other financial institutions, with a
concentration in commercial transactions. Mr. Robinson is admitted to
practice before the United States Supreme Court, the United States District
Court for the Northern District of Texas and the District of New Mexico, and
is licensed to practice before all state courts in Texas and New Mexico.
Mr. Robinson is a certified Mediator in the State of Texas and is the author
of the 1994-95 Real Estate Law Correspondence Course for the Texas Tech
University Paralegal Certification Program.
Bernard S. Appel, 70, has been a director since February 1995. He
enjoyed a career of 34 years with Radio Shack, holding virtually every key
merchandising and marketing position, culminating with his promotion to
president in 1984. In 1992 he was promoted to Chairman of Radio Shack and
Senior Vice President of Tandy Corporation. Since 1993, Mr. Appel has
operated the private consulting firm of Appel Associates, providing
companies with merchandising, marketing and distribution strategies,
creative line development and domestic and international procurement.
George C. Platt, 62, has been a director since July 2000. He is
currently President and Chief Executive Officer of ViewCast.com., Inc., a
Dallas-based provider of video communications solutions, and has served in
that capacity since September 1999. From 1991 through 1999, Mr. Platt was
the President and Chief Executive Officer of Intecom, Inc., a provider of
multimedia telecommunications products and services. Prior to that, Mr.
Platt was the President and Chief Executive Officer of Shared Resource
Exchange, Inc. (SRX), an entrepreneurial startup company. Before joining
SRX, Mr. Platt served for six years as Vice President of the Business
Communications Group at ROLM Corporation. Mr. Platt holds a Bachelor of
Science Degree from Northwestern University and a Masters in Business
Administration from the University of Chicago. Mr. Platt currently serves
on the Board of Directors for InterVoice, Inc., a provider of call
automation systems, and ViewCast.com, Inc.
Executive Officers
The following table lists the names and positions held by all executive
officers as of June 30, 2002. There are no family relationships between any
director or executive officer and any other director or executive officer.
Executive officers serve at the discretion of the Board of Directors. The
biographies of these executive officers appear above.
Name Position
---- --------
Patrick A. Custer Chairman of the Board, President, Chief
Executive Officer and Principal Financial
Officer
Billy J. Robinson Vice President, General Counsel,
Secretary and Director
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the 1934 Act ("Section 16(a)"), requires our
directors, executive officers and persons who beneficially own more than 10%
of a registered class of our equity securities ("10% Owners") to file
reports of beneficial ownership of our securities and changes in such
beneficial ownership with the Securities and Exchange Commission
("Commission"). Directors, executive officers and 10% Owners are also
required by rules promulgated by the Commission to furnish us with copies of
all forms they file pursuant to Section 16(a).
Based solely upon a review of the copies of the forms filed pursuant to
Section 16(a) furnished to us, or written representations that no year-end
Form 5 filings were required for transactions occurring during fiscal year
ended June 30, 2002, we believe that during the fiscal year ended June 30,
2002, all Section 16(a) filing requirements applicable to our directors,
executive officers and 10% Owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid over the last
three completed fiscal years to our Chief Executive Officer and any other
executive officer who received compensation exceeding $100,000 during the
fiscal year ended June 30, 2002.
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
--------------------------------- --------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Other
Name and Year Other Restricted Securities LTIP Compen-
Principal Ended Annual Stock Underlying Payouts sation
Position June 30 Salary($) Bonus($) Compensation($) Awards($) Options(#) ($) ($)
- ---------- ------- -------- ------- -------------- ---------- -------------- ------- ------
Patrick A. Custer 2002 210,000 -0- (1) -0- 378,000 -0- -0-
Chairman of the 2001 210,000 -0- (1) -0- 141,250 -0- -0-
Board and CEO 2000 200,340 -0- (1) -0- 106,250 -0- -0-
Billy J. Robinson 2002 150,000 -0- (1) -0- 240,000 -0- -0-
Vice President 2001 150,000 -0- (1) -0- 37,500 -0- -0-
and General Counsel 2000 145,131 -0- (1) -0- 50,000 -0- -0-
Leslie Leland 2002 145,000 -0- (1) -0- -0- -0- -0-
President 2001 115,000 -0- (1) -0- -0- -0- -0-
2000 -- -- -- -- -- -- --
Cameron Hurst 2002 110,500 -0- (1) -0- -0- -0- -0-
Vice President, CTO 2001 146,250 -0- (1) -0- -0- -0- -0-
2000 -- -- -- -- -- -- --
(1) Other annual compensation to this executive officer, including payment
of a car allowance and other personal benefits, did not exceed the
lesser of $50,000 or 10% of such executive officer's total annual
salary and bonus for such fiscal year.
Option Grants Table
The following table shows individual grants of stock options made
during fiscal year ended June 30, 2002 to each of the named executive
officers.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (3)
- -------------------------------------------------------------------------------- ---------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total Exercise Market
Underlying Options or Base Price on
Options Granted to Price the Date Expiration
Name Granted(#) Employees ($/Sh) of Grant Date 5% ($) 10% ($)
- ---- ------------- ---------- -------- -------- ---------- ------- ---------
Patrick A. Custer 189,000 (1) 25% $ 0.80 $ 0.59 11/29/06 - 0 - 28,390
189,000 (2) 17% $ 0.80 $ 0.65 05/09/07 5,590 46,650
Billy J. Robinson 120,000 (1) 16% $ 0.80 $ 0.59 11/29/06 - 0 - 18,025
120,000 (2) 11% $ 0.80 $ 0.65 05/09/07 3,550 29,620
(1) These options are subject to the terms of our 1999 Equity Incentive
Plan; they have a five-year life and vest and become exercisable in
increments of 1/3 per year beginning on November 30, 2002.
(2) These options are subject to the terms of our 1999 Equity Incentive
Plan; they have a five-year life and vest and become exercisable in
increments of 1/3 per year beginning on May 10, 2002.
(3) Potential realizable values are net of exercise price, but before
deduction of taxes associated with exercise. The indicated 5% and 10%
values represent assumed rates of appreciation only and are provided
to comply with Commission regulations. They do not necessarily reflect
our views as to the likely trend in the stock price. Actual gains, if
any, on stock option exercises and the sale of Common Stock holdings
will be dependent upon, among other things, the future performance
of the Common Stock, overall stock market conditions and the option
holder's continued employment through the vesting period. The amounts
reflected in this table may not be achieved.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table shows aggregate exercises of options (or tandem
stock appreciation rights) and freestanding stock appreciation rights during
the fiscal year ended June 30, 2002 by each of the named executive officers.
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)(1)
Shares
Acquired Value Exercisable (E)/ Exercisable (E)/
Name on Exercise(#) Realized($) Unexercisable (U) Unexercisable (U)
- ------ -------------- ----------- ----------------- -----------------
Patrick A. Custer -0- -0- 312,375 (E) -0- (E)
315,000 (U) -0- (U)
Billy J. Robinson -0- -0- 129,375 (E) -0- (E)
200,000 (U) -0- (U)
Leslie Leland -0- -0- 29,375 (E) -0- (E)
Cameron Hurst -0- -0- 29,375 (E) -0- (E)
(1) At June 30, 2002 none of the options were considered "in-the-money," as
the fair market value of the underlying securities on that date ($0.37)
did not exceed the exercise price of the options.
Compensation of Directors
None of the inside directors are paid compensation as such, except for
services performed in another capacity, such as an executive officer. The
outside directors are paid $500 per meeting, plus their expenses for
attending Board of Director meetings. During fiscal 2002, we additionally
granted each of the three outside directors stock options to purchase a
total of 100,000 shares of Common Stock. The options have a five year life
and vested immediately. The exercise price of the options is $0.80 per
share and the market price of the Common Stock on the dates of grant,
November 30, 2001 and May 10, 2002, was $0.59 and $0.65 per share,
respectively.
Employment Contracts and Termination and Change-in-Control Arrangements
At June 30, 2002, we had no employment agreement with any named
executive officer.
Compensation Committee Interlocks and Insider Participation
Mr. Custer and Mr. Robinson participated in advising our Board of
Directors concerning certain aspects of executive officer compensation
during the last completed fiscal year. Mr. Custer is Chairman of the Board,
President and Chief Executive Officer; and Mr. Robinson is Vice President,
General Counsel, Secretary and Director.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 20,
2002 with respect to the beneficial ownership of Common Stock by (i) persons
known to us to be the beneficial owners of more than 5% of the outstanding
shares of Common Stock, (ii) all directors of the Company, (iii) each of the
executive officers named in the Summary Compensation Table (appearing in
Item 11) and (iv) all directors and executive officers of the Company and
significant subsidiaries as a group.
The number of shares of Common Stock beneficially owned by each
individual set forth below is determined under the rules of the Commission
and the information is not necessarily indicative of beneficial ownership
for any other purpose. Under such rules, beneficial ownership includes any
shares as to which an individual has sole or shared voting power or
investment power and any shares which an individual presently, or within 60
days of September 28, 2002 (the date on which this Form 10-K is due at the
Commission), has the right to acquire through the exercise of any stock
option or other right. Unless otherwise indicated, each individual has sole
voting and investment power (or shares such powers with his spouse) with
respect to the shares of Common Stock set forth in the following table. The
information is based upon corporate records, information furnished by each
shareholder, or information contained in filings made with the Commission.
Number of Shares
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
5% Beneficial Owners
Patrick A. Custer 350,383 (1) 8.63%
17300 N. Dallas Pkwy., Suite 2050
Dallas, Texas 75248
Peak Decision International Limited 350,000 (2) 9.33%
Unit 1603, 16F
Dina House,
11 Duddell Street, Central
Hong Kong
Gemini Growth Fund, L.P. 481,565 (3) 10.00%
3602 McKinney Ave, Suite 220
Dallas, Texas 75204
Directors
Patrick A. Custer 350,383 (1) 8.63%
Billy J. Robinson 131,612 (4) 3.39%
Edward M. Warren 122,221 (5) 3.16%
Bernard S. Appel 120,314 (6) 3.11%
George C. Platt 106,750 (7) 2.77%
Executive Officers
Patrick A. Custer 350,383 (1) 8.63%
Billy J. Robinson 131,612 (4) 3.39%
All Directors and Executive
Officers as a Group 831,280 (8) 21.06%
(1) Includes 2,188 shares owned outright by Mr. Custer; 312,375 shares
issuable to Mr. Custer upon exercise of vested nonstatutory Employee
Stock Options; 32,729 shares held of record by Custer Company, Inc.,
a family trust, over which Mr. Custer exercises voting control; 2,969
shares owned by his wife; 118 shares held by his wife for the benefit
of his minor daughter; and 2 shares each held by Mr. Custer for the
benefit of his two sons.
(2) Common shares owned.
(3) Includes 26,625 shares owned outright by Founders Equity Group, Inc.,
an affiliate of Beneficial Owner, 65,940 shares owned outright by
Founders Partners IV, LLC, an affiliate of Beneficial Owner, 256,250
shares issuable upon exercise of warrants, and 133,333 shares issuable
upon conversion of a convertible debenture.
(4) Includes 2,237 shares owned outright, and 129,375 shares issuable to
Mr. Robinson upon exercise of vested nonstatutory Employee Stock
Options.
(5) Includes 2,532 shares owned outright, and 119,689 shares issuable to
Mr. Warren upon exercise of vested nonstatutory stock options.
(6) Includes 625 shares owned outright, and 119,689 shares issuable to
Mr. Appel upon exercise of vested nonstatutory stock options.
(7) Includes 500 shares owned outright, and 106,250 shares issuable to
Mr. Platt upon exercise of vested nonstatutory stock options.
(8) Includes shares beneficially owned by all directors and Executive
Officers shown above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
Reference is made to the financial statements filed as part of
this report.
(2) Financial Statement Schedules
Reference is made to the financial statement schedules filed as
part of this report. All other schedules are omitted because they
are not applicable or not required, or because the required
information is included in the financial statements or notes
thereto.
(3) Exhibits
Reference is made to the Exhibit Index at the end of this Form
10-K for a list of all exhibits filed with and incorporated by
reference in this report.
(b) Reports on Form 8-K
During the three months ended June 30, 2002 the Company filed no
Reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNIVIEW TECHNOLOGIES CORPORATION
By: /s/ PATRICK A. CUSTER
---------------------
Patrick A. Custer
Chief Executive Officer
and Principal Financial Officer
September 30, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
Principal Executive Officer and
Principal Financial and Accounting Officer
/s/ PATRICK A. CUSTER Chairman of the Board, September 30, 2002
Patrick A. Custer Chief Executive Officer
and Director
Additional Directors
/s/ BILLY J. ROBINSON Vice President, General September 30, 2002
Billy J. Robinson Counsel, Secretary and
Director
/s/ EDWARD M. WARREN Director September 30, 2002
Edward M. Warren
/s/ BERNARD S. APPEL Director September 30, 2002
Bernard S. Appel
/s/ GEORGE C. PLATT Director September 30, 2002
George C. Platt
CERTIFICATIONS
I, Patrick A. Custer, certify that:
1. I have reviewed this annual report on Form 10-K of uniView
Technologies Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report; and
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this annual
report.
September 30, 2002
By: /s/ PATRICK A. CUSTER
---------------------
Patrick A. Custer
Principal Executive Officer
and Principal Financial Officer
Report of Independent Certified Public Accountants
Board of Directors
uniView Technologies Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of uniView
Technologies Corporation and Subsidiaries as of June 30, 2002 and 2001, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended June
30, 2002. These financial statements are the responsibility of management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards 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. An audit also includes assessing the
accounting principles used and significant estimates made by management as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of uniView
Technologies Corporation and Subsidiaries as of June 30, 2002 and 2001, and
the consolidated results of their operations and their consolidated cash
flows for each of the three years in the period ended June 30, 2002 in
conformity with accounting principles generally accepted in the United
States of America.
We have also audited Schedule II for each of the three years in the period
ended June 30, 2002. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statements, the Company incurred net losses of $2,733,434, $6,622,458, and
$10,863,875 for the years ended June 30, 2002, 2001 and 2000, respectively.
These factors, among others, as discussed in Note B to the financial
statements raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are
described in Note B. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
GRANT THORNTON LLP
Dallas, Texas
September 3, 2002
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30,
ASSETS 2002 2001
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 724,051 $ 580,601
Trade accounts receivable, net of allowance
for doubtful accounts of $13,637 in 2002
and 2001 356,178 561,257
Note receivable from the sale of trademark 850,000 -
Inventories 49,929 223,449
Prepaid expenses 285,271 153,532
Other current assets 3,506 166,551
----------- -----------
Total current assets 2,268,935 1,685,390
CERTIFICATE OF DEPOSIT 25,000 -
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $1,618,974 in 2002 and
$3,466,403 in 2001 150,033 655,558
OTHER ASSETS
Purchased software, net of accumulated
amortization of $1,783,263 in 2002 and
$1,099,546 in 2001 711,702 1,395,419
Product and software development costs, net of
accumulated amortization of $522,476 in 2002
and $247,898 in 2001 422,190 696,768
Trademark, net of accumulated amortization of
$1,796,594 in 2001 - 3,088,161
Intellectual property license 129,500 -
Goodwill, net of accumulated amortization of
$414,824 in 2002 and $313,372 in 2001 1,005,509 1,106,961
Other 129,334 209,103
----------- -----------
Total other assets 2,398,235 6,496,412
----------- -----------
Total assets $ 4,842,203 $ 8,837,360
=========== ===========
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS - CONTINUED
June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 2002 2001
----------- -----------
CURRENT LIABILITIES
Current maturities of long-term debt,
net of debt discount of $52,500 in 2002 $ 169,992 $ 22,576
Current maturities of obligations under
capital leases 30,002 71,741
Trade accounts payable 707,207 447,093
Accrued expenses 395,003 1,108,984
Deposits - 450,000
Deferred revenue 50,869 245,034
----------- -----------
Total current liabilities 1,353,073 2,345,428
LONG TERM DEBT, less current maturities, net
of debt discount of $176,350 in 2001 13,445 1,356,630
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 1,493 31,496
----------- -----------
Total liabilities 1,368,011 3,733,554
REDEEMABLE PREFERRED STOCK
Series 1999-D1, 0 and 720 shares issued and
outstanding at June 30, 2002 and June 30,
2001, respectively (liquidation preference
of $18,000,000, plus undeclared dividends
in arrears of $1,846,849 at June 30, 2001) - 1,170,000
Series 2002-G, 240 and -0- shares issued and
outstanding at June 30, 2002 and June 30,
2001, respectively (liquidation preference
of $6,000,000) 1,456,000 -
STOCKHOLDERS' EQUITY
Preferred stock, cumulative, $1.00 par value;
1,000,000 shares authorized:
Series A, 30,000 shares issued and outstanding
at June 30, 2002 and 2001 30,000 30,000
Series H, 2 shares issued and outstanding
at June 30, 2002 and 2001 (liquidation
preference of $50,000) 2 2
Series 2002-K, 20 and -0- shares issued and
outstanding at June 30, 2002 and June 30,
2001, respectively (liquidation preference
of $500,000) 20 -
Common stock, $.80 par value; 80,000,000 shares
authorized; 3,749,785 and 3,398,977 shares
issued and outstanding at June 30, 2002 and
2001, respectively 2,999,828 2,719,181
Additional paid in capital 57,190,291 56,365,019
Accumulated deficit (58,201,949) (55,180,396)
----------- -----------
Total stockholders' equity 2,018,192 3,933,806
----------- -----------
Total liabilities and stockholders' equity $ 4,842,203 $ 8,837,360
=========== ===========
The accompanying notes are an integral part of these statements.
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended June 30,
2002 2001 2000
---------- ---------- ----------
Revenues
Product sales $ 1,919,695 $ 5,434,527 $ 7,710,606
Consulting and support services 3,399,463 2,765,958 1,435,099
Royalties 50,153 1,131,747 -
---------- ---------- ----------
Total revenues 5,369,311 9,332,232 9,145,705
Cost of products and services
Cost of product sales 939,082 3,231,702 5,553,372
Cost of consulting and support services 1,316,593 1,748,452 910,958
---------- ---------- ----------
Total cost of products and services 2,255,675 4,980,154 6,464,330
---------- ---------- ----------
Gross margin 3,113,636 4,352,078 2,681,375
Operating expenses
Selling 52,850 686,377 708,167
General and administrative 4,955,996 8,539,416 9,157,725
Depreciation and amortization 1,593,049 1,916,177 3,447,138
---------- ---------- ----------
6,601,895 11,141,970 13,313,030
---------- ---------- ----------
Operating loss (3,488,259) (6,789,892) (10,631,655)
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
Year ended June 30,
2002 2001 2000
---------- ---------- ----------
Other (income) expense
Interest income $ (95,445) $ (30,247) $ (35,689)
Interest expense 101,389 177,237 283,096
Other income, net (63,966) (246,151) (15,187)
Gain on sale of assets - (68,273) -
Gain on sale of trademark (1,103,046) - -
---------- ---------- ----------
Total other (income) expense (1,161,068) (167,434) 232,220
---------- ---------- ----------
Loss before extraordinary item (2,327,191) (6,622,458) (10,863,875)
---------- ---------- ----------
Extraordinary item - early
extinguishment of debt (406,243) - -
---------- ---------- ----------
NET LOSS (2,733,434) (6,622,458) (10,863,875)
Decrease in redemption value of
redeemable preferred stock (2,168,657) (7,239,600) (1,940,400)
Dividend requirements on preferred stock 454,300 901,800 901,800
---------- ---------- ----------
Net loss attributable to common
stockholders $(1,019,077) $ (284,658) $(9,825,275)
========== ========== ==========
Per share amounts allocable to common
stockholders - Basic and diluted
Loss before extraordinary item $(0.18) $(0.08) $(3.82)
Extraordinary item (0.12) - -
----- ----- -----
Net loss $(0.30) $(0.08) $(3.82)
===== ===== =====
Weighted average common shares
outstanding - Basic and diluted 3,404,172 3,387,645 2,571,611
The accompanying notes are an integral part of these statements.
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended June 30, 2002, 2001 and 2000
Common Stock Preferred Stock Additional
---------------------- -------------------- paid-in Accumulated
Shares Amount Shares Amount capital deficit Total
---------- ---------- -------- ---------- ----------- ------------ -----------
Balances - July 1, 1999 1,876,645 $1,501,315 140,143 $ 140,143 $43,162,615 $(46,817,095) $ (2,013,022)
Redemption of Series A preferred stock - - (100,000) (100,000) - (18,099) (118,099)
Conversion of Series A preferred
including accrued dividends for
common stock 971 777 (10,000) (10,000) 10,873 (1,650) -
Conversion of Series 1999-E preferred
including accrued dividends for
common stock 100,337 80,270 (96) (96) (72,086) (8,088) -
Conversion of Series 1999-C preferred
including accrued dividends for
common stock 111,492 89,193 (44) (44) (65,643) (23,506) -
Conversion of Series H preferred
including accrued dividends for
common stock 208 167 (1) (1) (166) - -
Sale of common stock 209,128 167,302 - - 4,287,963 - 4,455,265
Exercise of warrants 214,781 171,825 - - 866,550 - 1,038,375
Common stock issued for services 43,906 35,125 - - 147,375 - 182,500
Conversion of debt to common stock 489,785 391,828 - - 2,396,895 - 2,788,723
Legal settlement paid in stock 31,250 25,000 - - 475,000 - 500,000
Preferred stock dividends - - - - - (1,875) (1,875)
Acquisitions of businesses 228,562 182,850 - - 2,108,043 - 2,290,893
Stock compensation for employees
and directors - - - - 661,414 - 661,414
Allocation for decrease in redemption
value of redeemable preferred stock - - - - - 1,940,400 1,940,400
Net loss - - - - - (10,863,875) (10,863,875)
---------- ---------- -------- ---------- ----------- ------------ -----------
Balances - June 30, 2000 3,307,065 2,645,652 30,002 30,002 53,978,833 (55,793,788) 860,699
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED
For the years ended June 30, 2002, 2001 and 2000
Common Stock Preferred Stock Additional
---------------------- -------------------- paid-in Accumulated
Shares Amount Shares Amount capital deficit Total
---------- ---------- -------- ---------- ----------- ------------ -----------
Sale of common stock 91,912 $ 73,529 - $ - $ 1,926,471 $ - $ 2,000,000
Stock compensation for employees
and directors - - - - 58,496 - 58,496
Issuance of warrants for services - - - - 212,619 - 212,619
Issuance of warrants in connection
with long-term debt - - - - 188,600 - 188,600
Preferred stock dividends - - - - - (3,750) (3,750)
Allocation for decrease in redemption
value of redeemable preferred stock - - - - - 7,239,600 7,239,600
Net loss - - - - - (6,622,458) (6,622,458)
---------- ---------- -------- ---------- ----------- ------------ -----------
Balances - June 30, 2001 3,398,977 2,719,181 30,002 30,0025 6,365,019 (55,180,396) 3,933,806
Adjustment to common stock for reverse
stock split 808 647 - - (647) - -
Issuance of common stock for investment
in subsidiary 350,000 280,000 - - (150,500) - 129,500
Issuance of Series 2002-K preferred stock - - 20 20 499,980 - 500,000
Issuance of warrants for services - - - - 72,000 - 72,000
Issuance of warrants in connection
with long-term debt - - - - 156,875 - 156,875
Repriced warrants in connection
with long-term debt - - - - 179,064 - 179,064
Issuance of warrants in connection
with the sale of trademark - - - - 68,500 - 68,500
Preferred stock dividends - - - - - (2,119) (2,119)
Preferred stock dividends forgiven
in exchange of Series D-1 for
Series G preferred stock - - - - - (2,454,657) (2,454,657)
Allocation for decrease in redemption
value of redeemable preferred stock - - - - - 2,168,657 2,168,657
Net loss - - - - - (2,733,434) (2,733,434)
---------- ---------- -------- ---------- ----------- ------------ -----------
Balances - June 30, 2002 3,749,785 $ 2,999,828 30,022 $ 30,022 $ 57,190,291 $ (58,201,949) $ 2,018,192
========== ========== ======== ========== =========== ============ ===========
The accompanying notes are an integral part of this statement.
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended June 30,
2002 2001 2000
---------- ---------- -----------
Cash flows from operating activities
Net loss $(2,733,434) $(6,622,458) $(10,863,875)
Adjustments to reconcile net loss to
cash used in operating activities:
Gain on sale of assets - (68,273) -
Depreciation and amortization 1,593,049 1,916,177 3,447,138
Bad debt expense - 35,816 114,078
Gain on sale of trademark (1,103,046) - -
Stock compensation expense - 58,496 661,414
Issuance of warrants for services 72,000 212,619 -
Amortization of debt discount 53,545 12,250 -
Loss on early extinguishment
of debt 406,243 - -
Changes in assets and liabilities,
net of effects from acquisitions
and dispositions:
Trade accounts receivable 205,079 529,388 9,779
Inventories 173,520 38,152 174,982
Prepaid expenses (131,738) 729,736 (325,399)
Other current assets 163,045 205,535 (372,086)
Other assets 81,286 (99,974) 40,831
Accounts payable and accrued
liabilities (734,867) 312,527 2,544
Deferred revenue (194,165) (718,996) 406,957
---------- ---------- -----------
Cash and cash equivalents used
in operating activities (2,149,483) (3,459,005) (6,703,637)
Cash flows from investing activities
Cash from acquisition - - 91,681
Purchase of property and equipment (11,606) (177,234) (495,378)
Additions to product and software
development costs - (329,307) (201,173)
Collections on note receivable 1,015,000 - -
Proceeds from sale of trademark 185,000 - -
Investment in certificate of deposit (25,000) - -
Proceeds from sale of assets - 68,273 -
Disposal of property and equipment 23,019 - -
---------- ---------- -----------
Cash and cash equivalents provided
by (used in) investing activities 1,186,413 (438,268) (604,870)
uniView Technologies Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Year ended June 30,
2002 2001 2000
---------- ---------- -----------
Cash flows from financing activities
Proceeds from long term debt $ 700,000 $ 1,517,025 $ -
Proceeds from line of credit - 1,746,003 5,780,382
Principal payments on line of credit - (2,067,445) (6,169,798)
Principal payments on long-term debt (19,621) (24,824) (299,686)
Principal payments on capital lease
obligations (71,740) (111,302) (90,306)
Dividends paid (2,119) (3,750) (1,875)
Redemption of preferred stock for cash - - (118,099)
Proceeds from issuance of preferred
stock 500,000 - -
Proceeds from issuance of common stock - 2,000,000 5,217,392
---------- ---------- -----------
Cash and cash equivalents provided
by financing activities 1,106,520 3,055,707 4,318,010
Net increase (decrease) in cash and
cash equivalents 143,450 (841,566) (2,990,497)
Cash and cash equivalents,
beginning of year 580,601 1,422,167 4,412,664
---------- ---------- -----------
Cash and cash equivalents,
ending of year $ 724,051 $ 580,601 $ 1,422,167
========== ========== ===========
Supplemental information
Cash paid for interest $ 80,965 $ 142,343 $ 98,909
See Note M for supplemental schedule of non-cash investing and financing
activities.
The accompanying notes are an integral part of these statements.
uniView Technologies Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002, 2001 and 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
uniView Technologies Corporation and Subsidiaries (the Company), offer
enhanced digital media solutions to customers worldwide. Its products
deliver the highest quality video, audio and gaming features through
broadband networks. In addition, the Company provides customers with
enterprise customer service solutions through CIMphony_, a suite of
computer telephony integration (CTI) software products and services. The
Company markets its products and services to hospitality, utility, banking
and telecommunication companies in the United States and internationally.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and 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 accompanying
notes. Actual results could differ from those estimates.
Cash Equivalents
All highly liquid debt investments with an original maturity of three
months or less are considered to be cash equivalents.
Inventories
Inventories are stated at the lower of average cost or market.
Inventories consist primarily of computer parts and peripherals to be used
in network systems and products.
Property and Equipment
Property and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives. Maintenance and
repairs are expensed as incurred. Equipment leased under capital lease
obligations is depreciated over the life of the lease using the straight-
line method.
Accounting for Impairment of Long-Lived Assets
The Company evaluates long-lived assets and intangible assets, including
goodwill, held and used for impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable.
Impairment is recognized when the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of such
assets.
Product and Software Development Costs
The Company capitalizes product and software development costs incurred
from the time technological feasibility of the product or software is
established until the product or software is ready for use in products.
Research and development costs related to product and software development
are expensed as incurred. The capitalized costs related to the product or
software which will become an integral part of the Company's revenue-
producing products are amortized in relation to expected revenues from the
product or straight-line, over a maximum of four years, whichever is
greater. The carrying value of product or software development costs is
regularly reviewed by the Company, and a loss is recognized when the net
realizable value by product falls below the unamortized cost.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash and cash equivalents,
notes receivable, redeemable preferred stock and debt. The fair value of
cash and notes receivable approximate the recorded amounts because of the
liquidity and short term nature of these items. The fair value of debt
approximates the recorded amounts. The fair value of redeemable preferred
stock is reflected by the recorded amount as it represents fair value
based on the market price of the Company's common stock.
Stock-Based Compensation
The Company accounts for stock-based compensation to employees using the
intrinsic value method. Accordingly, compensation cost for stock options
is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must
pay to acquire the stock.
Redeemable Preferred Stock
The Company's Series 1999-D1 and 2002-G preferred stock is redeemable at
the option of the holder, and is therefore classified outside of
stockholders' equity in the accompanying balance sheets. The redemption
value of these securities varies based on the market price of the Company's
common stock. The Company has adopted an accounting method provided in
EITF Topic D-98 for these types of securities, which recognizes changes in
redemption value immediately as they occur and adjusts the carrying value
of the security to equal the redemption value at the end of each reporting
period. The result of this accounting method is an increase in loss
attributable to common shareholders and a decrease in stockholders' equity
as the Company's common stock price increases, with the opposite effect
when the Company's common stock price decreases. Earnings per share from
cash transactions are not affected by this accounting method.
Revenue Recognition
The Company recognizes service revenue as the services are provided.
Equipment and product sales are recognized at the time of delivery and
customer acceptance. Revenue from the installation of software and
hardware systems is recognized on the completed contract method. Royalty
revenue is recognized when earned as the customer sells royalty related
products. Amounts for which revenue cannot be recognized such as
uncompleted contracts or unearned maintenance services are included in
deferred revenue and are recognized as contracts are completed or ratably
over the period covered by the maintenance agreement.
On January 16, 2002, the Company completed the sale of a source code
license to one of its largest customers of its uniView Softgen product.
The sale resulted in the Company receiving $1.3 million in cash (this
revenue is included in consulting and support service revenue in the
accompanying statements of operations). The buyer also hired six of the
Company's employees. The Company is actively marketing similar source
code licenses to other customers. Subsequent to the sale to HSBC and
through August 30, 2002, the Company has generated approximately $262,000
of revenue related to this product.
Advertising Costs
Advertising costs are charged to operations as incurred. Advertising
costs for the years ended June 30, 2002, 2001, and 2000 were $23,469,
$555,187, and $304,069, respectively.
Reverse Stock Split
In September 2001, the Company's stockholders approved a one for eight
reverse stock split. All share and per share data give effect to the
reverse split applied retroactively as if it occurred at the beginning of
the earliest period presented. The number of outstanding shares has been
further adjusted to reflect the effects of rounding fractional shares to
the next whole share after the reverse split.
Loss Per Share
Basic loss per common share is based on the weighted average number of
common shares outstanding. Diluted loss per share is computed based on
the weighted average number of shares outstanding, plus the number of
additional common shares that would have been outstanding if dilutive
potential common shares had been issued. In all years presented, all
potential common shares were anti-dilutive.
All share and per share data give retroactive effect to the one for eight
reverse stock split approved by the stockholders in September 2001 as if
the reverse split occurred on July 1, 1999.
Reclassifications
Certain reclassifications of the 2001 and 2000 financial statements and
related notes have been made to conform with the 2002 presentation.
New Pronouncements
In June 2001, the Financial Accounting Standards Board approved for
issuance Statement of Financial Accounting Standards No. 141 ("SFAS 141"),
"Business Combinations". This standard eliminates the pooling method of
accounting for business combinations initiated after June 30, 2001. In
addition, SFAS 141 addresses the accounting for intangible assets and
goodwill acquired in a business combination. This portion of SFAS 141 is
effective for business combinations completed after June 30, 2001. The
Company does not expect SFAS 141 to have a material effect on the
Company's financial position or results of operations.
In June 2001, the Financial Accounting Standards Board approved for
issuance Statement of Financial Accounting Standards No. 142 ("SFAS 142"),
"Goodwill and Intangible Assets", which revises the accounting for
purchased goodwill and intangible assets. Under SFAS 142, goodwill and
intangible assets with indefinite lives will no longer be amortized, but
will be tested for impairment annually and also in the event of an
impairment indicator. SFAS 142 is effective for fiscal years beginning
after December 15, 2001, with early adoption permitted for companies with
fiscal years beginning after March 15, 2000 if their first quarter
financial statements have not previously been issued. The Company expects
that adoption of SFAS 142 will reduce annual operating expenses by
approximately $101,000. The Company will adopt SFAS 142 effective July 1,
2002.
In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for
the Impairment or Disposal of Long-Lived Assets". SFAS 144 addresses
financial accounting and reporting for the impairment or disposal of long-
lived assets. This statement supersedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("SFAS 121") and related literature and establishes a single
accounting model, based on the framework established in SFAS 121, for
long-lived assets to be disposed of by sale. The Company is required to
adopt SFAS 144 for fiscal years beginning after December 15, 2001. The
Company does not believe that the adoption of this standard will have a
material effect on its financial condition or results of operations.
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 145 ("SFAS 145"),
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections". SFAS 145 identifies
amendments that should have been made to previously existing
pronouncements and formally amends the appropriate pronouncements. SFAS
145 amends Accounting Principles Board Opinion No. 30 ("APB 30"),
"Reporting the Results of Operations-Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions" to reflect the rescission of FASB
Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt"
("SFAS 4"). The FASB noted that SFAS 4 dictated the classification of
gains and losses from extinguishments of debt and, thus, did not permit a
conceptual consideration under the provisions of APB 30 of whether an
extinguishment of debt is extraordinary in nature. The FASB concurred
that debt extinguishments are often routine, recurring transactions and
concluded that classifying the associated gains and losses as
extraordinary items in all cases is inconsistent with the criteria in APB
30. The Company is required to adopt SFAS 145 during the first fiscal
quarter of 2003. The Company does not believe that the adoption of this
standard will have a material effect on its financial condition or results
of operations.
NOTE B - GOING CONCERN MATTERS
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. The Company
incurred net losses of $2,733,434, $6,622,458, and $10,863,875, during the
years ended June 30, 2002, 2001, and 2000, respectively.
For the last several years, the Company has been developing its business
plan with a focus in offering the technical expertise of its experienced
and knowledgeable staff to customers wishing to increase business
productivity by maximizing the benefits of their information technology.
The Company's product offerings include providing consulting services to
niche markets, technology products through its digital media products and
its computer telephony integration products. In October 1999, the Company
acquired the assets and assumed certain liabilities of Softgen
International, Inc. to enter the computer telephony integration (CTI)
business, which provided revenue of $2.7 million and $2.9 million in
2002 and 2001, respectively. However, the Company's operating losses
continued. Additionally, the Company sold its Curtis Mathes trademark and
all associated rights to the trademark in September 2001 for total
proceeds of $4.5 million of which $635,000 was received in cash,
$1,865,000 will be received at various dates through March 2003 and $2.0
million of the proceeds was long-term debt assumed by the buyer of the
trademark. In addition, in January 2002, the Company sold a source code
license of its CIMphony product to HSBC Holdings Plc ("HSBC"), its largest
customer for that product, for $1.3 million in cash. In addition to
providing cash for operations, this transaction resulted in a reduction of
overall employee expenses, while continuing to allow opportunities for
sales of CIMphony source code licenses to other customers. However, this
transaction is expected to result in limited revenues in the future from
this customer, as it assumes the responsibility for its own CTI software
operations. The Company is continuing to evaluate all of its options for
increasing revenues and reducing expenses.
For the last three years, the Company used significant amounts of cash
from operations and despite the negative cash flows from operations, the
Company was able to secure financing to support itself. While the
proceeds from the trademark sale and improvements to its operations reduced
negative cash flows from operations, it may be necessary for the Company to
obtain additional funds for operations in order to continue as a going
concern until operations demonstrate the ability to generate sufficient
cash flows to meet the needs of the Company.
The financial statements do not include any adjustments to reflect the
possible effects on the recoverability and classification of assets or
liabilities which may result from the inability of the Company to continue
as a going concern.
NOTE C - BUSINESS COMBINATIONS AND DIVESTITURES
Effective September 22, 1999 the Company acquired assets of Zirca
Corporation ("Zirca") for $300,000 cash and 45,000 restricted common
shares of the Company valued at $675,000. The acquisition of Zirca was
accounted for as a purchase and the Company allocated the excess purchase
price over tangible assets acquired of approximately $360,000 to purchased
software. In October 2001, the Company disposed of the remaining assets
related to this acquisition as the assets were no longer being utilized.
Effective October 29, 1999 the Company acquired the assets and assumed
certain liabilities of Softgen International, Inc. ("Softgen").
Consideration for the acquisition consisted of 146,875 restricted shares
of the Company's common stock and warrants to acquire another 117,500
shares at $24.00 per share, plus other consideration for a total value of
$2.7 million, and certain former shareholders of Softgen received 39%
ownership of the new corporation, uniView Softgen Corporation. As a
result of the acquisition of Softgen, which was accounted for as a
purchase, the Company allocated the excess purchase price over tangible
assets acquired of approximately $2.2 million to purchased software based
on an appraisal. During the fiscal quarter ended March 31, 2000, certain
adjustments were made to the purchase price and corresponding allocation
of purchase price as the result of a more detailed analysis of the assets
and liabilities assumed in the acquisition.
Effective June 26, 2002, the Company acquired 60% of the outstanding
capital stock of uniView Asia Limited (formerly China Action Management
Limited) for 350,000 shares of its $.80 par value common stock. The
acquisition of uniView Asia Limited was accounted for as a purchase. The
Company has allocated the purchase price of approximately $129,500 to
intellectual property license.
All acquisitions have been accounted for as purchases and the operations
of the purchased companies have been included in the Company's statement
of operations since their date of acquisition.
NOTE D - DISPOSITION OF ASSETS AND SIGNIFICANT SALES TRANSACTIONS
In September 2001, the Company sold the Curtis Mathes trademark for $4.5
million, consisting of cash and notes receivable. $450,000 in cash was
received in June 2001. At June 30, 2002, a total of $1,650,000 of the
purchase price had been received in cash, leaving a principal balance of
$850,000 on a note receivable due in March 2003. In connection with the
sale, the Company was released from approximately $2.0 million of long-
term debt, which was assumed by the buyer of the trademark. As a result
of the release of this long-term debt, the Company recorded an
extraordinary loss on debt extinguishment of $406,243. The Company had
issued warrants to the lender in connection with the loan and was
amortizing these costs over the life of the loan. The carrying amount of
the debt was $1,593,757 at the time of payment due to the value of the
warrants and upon early extinguishment of the debt, all of the costs were
accelerated. The Company recorded a gain of $1,103,046 on the sale of the
trademark.
In December 2001, the Company wrote off the remaining assets of $143,539
relating to the prior acquisitions of Advanced Systems Group ("ASG"),
uniView Xpressway Group ("Xpressway") and Zirca, as these assets were no
longer being utilized.
In January 2002, the Company sold a source code license of its CIMphony
product to HSBC, its largest customer for that product, for $1.3 million
in cash. In February 2002, as part of the agreement, the Company allowed
HSBC to hire six of its employees who were principally involved in
servicing this customer, while retaining adequate support staff for its
other CTI customers. In addition to providing cash for operations, this
transaction resulted in a reduction of overall employee expenses, while
continuing to allow opportunities for sales of CIMphony source code
licenses to other customers. However, the transaction is also expected to
result in limited revenues in the future from this customer, as it assumes
the responsibility for its own CTI software operations. This customer
generated approximately $2.4 million (including the sale of the source
code license) and $2.5 million in revenues during the years ended June 30,
2002 and 2001, respectively.
NOTE E - PROPERTY AND EQUIPMENT
Property and equipment at June 30 consist of the following:
Useful life
(in years) 2002 2001
---------- ---------- ----------
Equipment 3-5 $ 1,306,933 $ 3,348,634
Furniture and fixtures 5 177,698 223,182
Computer software 3 102,603 215,637
Vehicles 3 116,503 131,591
Leasehold improvements lease term 65,270 202,917
1,769,007 4,121,961
---------- ----------
Less accumulated depreciation
and amortization (1,618,974) (3,466,403)
---------- ----------
$ 150,033 $ 655,558
========== ==========
Equipment under capital leases included above at June 30, 2002 and 2001
was $102,921 and $114,910, respectively, and the related accumulated
amortization amounted to $78,935 and $49,936, respectively. Amortization
of assets held under capital leases is included with depreciation expense.
Depreciation expense for years ending June 30, 2002, 2001, and 2000
totaled $494,112, $583,229, and $1,313,241, respectively.
NOTE F - OTHER ASSETS
Other assets at June 30 consist of the following:
2002 2001
---------- ----------
Purchased software $ 2,494,965 $ 2,494,965
Product and software development costs 944,666 944,666
Trademark - 4,884,755
Intellectual property license 129,500 -
Goodwill 1,420,333 1,420,333
Other 129,334 209,103
---------- ----------
5,118,798 9,953,822
Less accumulated amortization (2,720,563) (3,457,410)
---------- ----------
$ 2,398,235 $ 6,496,412
========== ==========
Purchased software is amortized in relation to expected revenue from the
product or straight-line over a maximum of four years, whichever is
greater. Amortization expense for the years ended June 30, 2002, 2001,
and 2000 was $683,718, $808,392, and $291,154, respectively. Revenue from
these products was $2,677,445 (including the $1.3 million sale of the
source code license), $2,972,504 and $2,450,886 for the years ended June
30, 2002, 2001 and 2000, respectively.
Product and software development costs are being amortized over their
estimated useful life of three years. Amortization expense for the years
ended June 2002, 2001, and 2000 was $273,060, $178,867, and $1,345,803,
respectively. Revenue from these products was $93,623, $22,423 and
$257,954 for the years ended June 30, 2002, 2001 and 2000, respectively.
The Company purchased the Curtis Mathes Corporation in 1993 and sold its
only remaining asset, the Curtis Mathes trademark, in September 2001 for a
gain of $1,103,046. The trademark was being amortized on a straight-line
basis over 20 years. Amortization expense for the years ended June 30,
2002, 2001, and 2000 was $43,706, $244,237 and $244,237, respectively.
Goodwill totaling $1,420,333 from 1998 acquisitions of Video Management,
Inc. (VMI) and Computer Network Solution (CNS) is being amortized over its
estimated useful life of fourteen years. Amortization expense for each of
the years ended June 30, 2002, 2001 and 2000 was $101,453.
NOTE G - LONG-TERM DEBT
Long-term debt at June 30 consists of the following:
2002 2001
---------- ----------
Secured note payable to a finance company
collateralized by a security agreement
in the Curtis Mathes Trademark with
interest at 14%. Interest payments
due monthly, principal is due
December 7, 2005. $ - $ 1,500,000
Convertible note payable to a finance
company collateralized by substantially
all assets with interest at 14%.
Interest payments due monthly,
principal is due May 31, 2003. 200,000 -
Other 35,937 55,556
---------- ----------
235,937 1,555,556
Less debt discount (52,500) (176,350)
---------- ----------
183,437 1,379,206
Less current portion (169,992) (22,576)
---------- ----------
$ 13,445 $ 1,356,630
========== ==========
The weighted average interest rate of borrowings outstanding at June 30,
2002 and 2001 is 13.19% and 13.8%, respectively.
Future annual aggregate maturities of long-term debt are as follows:
Year ending
June 30,
-----------
2003 $ 169,992
2004 13,445
----------
$ 183,437
==========
NOTE H - COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases equipment and facilities under various non-cancelable
operating and capital leases which expire at various dates through fiscal
2005. The following are scheduled future minimum lease payments and
sublease rental income at June 30, 2002:
Operating Leases
-----------------------------
Minimum Sublease
Year ending Capital lease rental
June 30, leases payments income Totals
-------- ------- ------- ------- -------
2003 $ 31,098 $305,304 $ 39,238 $266,066
2004 3,924 184,373 39,238 145,135
2005 - 78,374 16,349 62,025
------- ------- ------- -------
Total minimum lease payments 35,022 $568,051 $ 94,825 $473,226
Less amount representing ======= ======= =======
interest (3,527)
-------
Present value of net minimum
lease payments including
current maturities of $30,002 $ 31,495
=======
Rental expense under operating leases for the years ended June 30, 2002,
2001, and 2000 was $437,124, $616,327, and $530,701, respectively.
Litigation
In October 2000, the Trustee in a bankruptcy filing subsequently filed an
adversary proceeding against the Company alleging a preferential transfer
under the bankruptcy code. Subsequent to June 30, 2001, the Company
agreed to settle the legal action for a payment of $50,000. The
settlement was approved by the court and was paid during fiscal 2002.
On July 26, 1999, the Company and a vendor agreed to settle a legal
action. In return for a prepayment of $750,000 and 31,250 shares of its
common stock whose market value at closing date was $16.00 per share, the
Company received two years of television listing services from the vendor.
The agreement required an additional annual fee of $70,000 and a nominal
fee per customer. As of June 30, 2002, all fees associated with the
agreement have been fully paid.
The Company is routinely a party to ordinary litigation incidental to its
business, as well as to other litigation of a nonmaterial nature, the
outcome of which management does not expect, individually or in the
aggregate, to have a material adverse effect on the financial condition or
results of operations of the Company in excess of the amount accrued for
such purposes at June 30, 2002.
NOTE I - CONCENTRATIONS OF CREDIT RISK
During 2002, 2001 and 2000, one customer represented 45%, 25% and 11% of
sales, respectively. At June 30, 2002, two customers accounted for 84% of
trade accounts receivable. At June 30, 2001, one customer accounted for
50% of trade accounts receivable and at June 30, 2000, two customers
represented 56% of trade accounts receivable.
Management provides an allowance for doubtful accounts which reflects
its estimate of the uncollectible receivables. In the event of non-
performance, the maximum exposure to the Company is the recorded amount of
the receivable at the balance sheet date. The Company's receivables are
generally not secured.
NOTE J - STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK
Preferred Stock
The Company has 1,000,000 shares authorized of $1.00 par value cumulative
preferred stock. The Company's articles of incorporation allow the board
of directors to determine the number of shares and determine the relative
rights and preferences of any series of preferred stock to be issued.
In December 1992, the Company issued 140,000 shares of Series A redeemable
preferred stock (stated value $1 per share). In fiscal 2000, 100,000
shares were redeemed for cash, and 10,000 shares were converted to common
stock, with the remaining 30,000 outstanding at June 30, 2002. Shares
accumulate dividends at 6%, or $1,800 per year. Cumulative dividends in
arrears at June 30, 2002 and 2001 totaled $10,350 and $8,550,
respectively.
In fiscal 1996, the Company issued 55 shares of Series H convertible
redeemable preferred stock (stated value $25,000 per share). 52 shares
were converted into common stock in fiscal 1997, and one share was
converted in fiscal 2000, with the remaining two shares outstanding at
June 30, 2002. Shares accumulate dividends at 5%, or $2,500 per year and
are paid in May and November of each year. Shares are convertible based
on 80% of the five day average closing bid price of the Company's common
stock, with minimum and maximum conversion limits of $12 and $32 per
share, respectively. No dividends in arrears exist on Class H shares at
June 30, 2002 or 2001.
In June 1999, the Company issued 720 shares of Series D-1 convertible
redeemable preferred stock (stated value $25,000 per share). The shares
accumulated dividends at 5%, or $900,000 per year and were convertible into
common stock at $32 per share. In fiscal 2002, the Company exchanged
these shares for 240 shares of Series 2002-G preferred stock (stated
valued $25,000 per share). The new series of preferred stock has no
provision for dividends and is convertible into 4,000,000 shares of common
stock at $1.50 per share. All outstanding and unconverted shares of the
new preferred stock as of June 30, 2004 shall be, at the holders' option,
either converted into common stock or redeemed by the Company based on
the market price of the Company's common stock. Cumulative dividends in
arrears at June 30, 2001 totaled $1,850,000. In conjunction with the
exchange of shares, all accumulated dividends associated with the D-1
preferred stock were released by mutual agreement.
Additionally, all outstanding Series E and Series C preferred stock was
converted during fiscal 2000.
In June 2002, the Company issued 20 shares of Series K convertible
redeemable preferred stock (stated value $25,000 per share). The shares
have no provision for dividends and are convertible into common shares at
$.80 per share. At any time, at the Company's sole discretion, the
Company may redeem all or part of the outstanding preferred shares at a
price per share of 120% of their face value.
Dividends of $2,119, $3,750, and $1,875 on preferred stock were paid
during the years ended June 30, 2002, 2001, and 2000, respectively. Non-
cash dividends of $33,244 were paid during the year ended June 30, 2000
through the issuance of common stock. Cumulative dividends in arrears as
of June 30, 2002 and 2001 amounted to $10,350 and $1,858,550,
respectively.
Common Stock
Effective September 7, 2001, the Board of Directors amended the par value
of the common stock from $0.10 to $0.80 per share in conjunction with a
one for eight reverse stock split. The authorized number of shares
was maintained at 80,000,000. All references throughout the financial
statements to numbers of shares and per share amounts have been restated.
Stock Options
The Company has periodically granted stock options for employment and
outside services received during the years reported. These options are
treated as fixed, compensatory awards.
The Company grants non-compensatory stock options to key employees and
directors at market value at the date of grant. The options granted to
directors generally vest immediately, and the options granted to employees
generally vest over a 3-year period. During 2002 and 2001, options covering
22,688 and 185,882 shares, respectively, vest over 3 years and during
1998, options covering 11,250 shares vest over 1.5 years.
During 2001 and 2000, options issued to employees and directors with
exercise prices less than market value resulted in compensation expense
under the intrinsic value method of $58,496 and $661,414, respectively.
Had compensation cost been determined on the basis of fair value pursuant
to FASB Statement No. 123, net loss and net loss per share for 2002, 2001
and 2000 would have been increased as follows:
2002 2001 2000
---------- ---------- -----------
Net loss
As reported $(2,733,434) $(6,622,458) $(10,863,875)
Pro forma (2,983,547) (9,755,688) (13,961,374)
Loss per share
As reported (0.80) (2.22) (4.56)
Pro forma (0.88) (2.88) (5.76)
The fair value of these options was estimated at the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions:
2002 2001 2000
---------- ----------- ----------
Expected volatility 150% 150% 158%
Risk-free interest rate 3.50% - 4.30% 4.33% - 5.75% 5.9%
Expected lives 3 years 1 to 3 years 1.5 to 3.75 years
Dividend yield - - -
Additional information with respect to all options outstanding at June 30,
2002, and changes for the three years then ended was as follows:
Above Equal to Below
market price market price market price
------------------ --------------- --------------
Weighted Weighted Weighted
average average average
exercise exercise exercise Total
Options price Options price Options price Options
------- ------ ------ ----- ------- ----- -------
Outstanding at
July 1, 1999 5,888 $ 71.28 12,500 $14.64 10,938 $29.84 29,326
Granted 201,653 18.88 - - 102,500 14.08 304,153
Exercised - - - - - - -
Forfeited (250) 180.00 - - - - (250)
------- ------ ------ ----- ------- ----- -------
Outstanding at
June 30, 2000 207,291 20.24 12,500 14.64 113,438 15.60 333,229
Granted 275,679 14.80 6,250 14.48 9,026 16.48 290,955
Forfeited (28,040) 17.68 - - (6,563) 16.48 (34,603)
------- ------ ------ ----- ------- ----- -------
Outstanding at
June 30, 2001 454,930 15.76 18,750 14.56 115,901 15.68 589,581
Granted 2,162,857 0.83 - - - - 2,162,857
Forfeited (540,820) 2.46 - - (11,147) 28.65 (551,967)
------- ------ ------ ----- ------- ----- -------
Outstanding at
June 30, 2002 2,076,967 $ 3.63 18,750 $14.56 104,754 $14.40 2,200,471
========= ====== ====== ===== ======= ===== =========
Number Weighted
of shares average
underlying exercise
options price
---------- -----
Options exercisable at June 30, 2000 292,605 $16.88
========= =====
Options exercisable at June 30, 2001 558,519 $15.60
========= =====
Options exercisable at June 30, 2002 1,061,555 $ 7.91
========= =====
For 2002, options granted above market value had a weighted average fair
value per share of $0.83. For 2001, options granted above, equal to, and
below market value had a weighted average fair value per share of $11.20,
$11.92 and $16.08, respectively. For 2000, options granted above and
below market value had a weighted average fair value per share of $12.64
and $18.40, respectively.
Information about stock options outstanding at June 30, 2002 is summarized
as follows:
Options outstanding Exercisable
-------------------------------- ----------------------
Weighted
average Weighted Weighted
remaining average average
Range of contractual exercise Number exercise
exercise prices Number life price exercisable price
---------------- --------- ----- ------- ----------- --------
$0.80 1,650,592 4.65 $ 0.80 516,742 $ 0.80
$12.00 to $16.48 530,816 3.50 14.25 525,750 14.23
$21.52 to $28.00 18,750 2.60 25.84 18,750 25.84
$70.00 313 0.42 70.00 313 70.00
Common stock warrants issued and outstanding at June 30, 2002 are
summarized as follows:
Weighted Weighted
average average
Range of exercise price Number remaining life exercise price
---------------------- ------- -------------- --------------
$1.50 to $3.00 307,500 6.99 $ 1.54
$6.72 to $16.00 121,250 8.27 10.81
$24.00 to $28.00 136,594 0.63 24.37
$32.00 to $48.00 162,500 1.89 33.85
All outstanding warrants are exercisable at June 30, 2002, with the
exception of 150,000 warrants which become exercisable at various dates
through February 2005.
During the year ended June 30, 2002, warrants to purchase 150,000 shares
of the Company's common stock were granted in connection with consulting
services provided. The warrants have an exercise price of $1.50, expire
in February 2007, and were valued at $72,000 and recorded as a prepaid
expense, net of amortization of $6,000 at June 30, 2002. Additionally,
warrants to purchase 150,000 shares of the Company's common stock were
granted in connection with the issuance of long-term debt. These warrants
have an exercise price of $1.50 and expire in April 2005. The value
of the warrants, $60,000, is included as a discount on the debt net
of accumulated amortization of $7,500. Warrants to purchase 50,000 shares
of the Company's common stock were granted for a finder's fee in connection
with the sale of the Curtis Mathes trademark. These warrants have an
exercise price of $32.00 per share, with a provision to reprice at par
value upon the satisfaction of the anti-dilution provisions of certain
preferred stock. The value of the warrants, $68,500, was recorded as a
reduction in the gain on the sale of trademark in the accompanying
statement of operations.
During the year ended June 30, 2001, warrants to acquire 168,750 shares of
the Company's common stock (valued at $188,600) were granted in connection
with the issuance of long-term debt. The value of the warrants was
included as a discount on the debt net of accumulated amortization of
$12,500 at June 30, 2001. In 2002, additional warrants to acquire 31,250
shares (valued at $96,875) related to this debt were issued, and the
warrants issued in 2001 were repriced to $.80 per share (valued at
$179,064). The warrants have an exercise price of $0.80 and expire
between December 2003 and July 2006. In connection with the sale of the
Curtis Mathes trademark in September 2001, this debt was assumed by the
buyer of the trademark and these costs were accelerated and recorded as an
extraordinary loss on extinguishment of debt. Additionally, warrants to
purchase 12,500 and 2,500 shares of the Company's common stock were granted
to a customer in connection with a sale of set-top boxes and to a
consultant for services performed, respectively. The warrants have an
exercise price of $28.00, expire in October 2005, and were valued at
$180,000 and charged to selling expense during the fourth quarter 2001.
In connection with the acquisition of Softgen, the Company issued warrants
allowing the holders the ability to purchase 117,500 shares of the
Company's common stock at a price of $24.00 per share, exercisable from
the date of acquisition, October 29, 1999, for a period of three years.
During the year ended June 30, 2000, the Company issued warrants to
acquire 45,344 shares of the Company's common stock to various entities in
connection with their assistance in the raising of capital during the
year. The warrants have exercise prices ranging from $16.00 to $48.00 and
expire between June 2003 and March 2005.
During the year ended June 30, 2000, warrants to purchase 214,781 shares
of the Company's common stock were exercised for proceeds of $1,038,375.
The warrants were issued in previous years in connection with the raising
of capital for the Company and the exercise prices ranged from $3.20 to
$20.00 per share.
NOTE K - INCOME TAXES
A reconciliation of income tax benefit computed by applying the U.S.
Federal tax rates to the net loss and recorded income tax expense
(benefit) is as follows:
2002 2001 2000
---------- ---------- ----------
Tax benefit at statutory rate $ (929,368) $(2,251,636) $(3,693,718)
Non-deductible expenses 3,134 93,572 143,198
Change in estimate for prior years - - 183,466
Sale of trademark (610,842) - -
Adjustment of net operating
loss carryforwards - 2,164,423 -
Change in valuation allowance 1,502,582 (6,359) 3,439,968
Other 34,494 - (72,914)
---------- ---------- ----------
$ - $ - $ -
========== ========== ==========
The components of the Company's deferred income taxes at June 30, 2002 and
2001 are as follows:
2002 2001
---------- ----------
Deferred tax assets
Inventories $ 13,600 $ 19,112
Accounts receivable 4,637 4,637
Fixed assets 38,695 -
Accrued liabilities 16,900 33,900
Deferred revenue 12,250 83,312
Net operating loss carryforwards 19,703,764 18,374,843
---------- ----------
19,789,846 18,515,804
---------- ----------
Deferred tax liabilities
Fixed assets - (62,012)
Software and product development costs (86,402) (236,901)
Deferred costs - (16,029)
---------- ----------
(86,402) (314,942)
Net deferred tax asset 19,703,444 18,200,862
Valuation allowance (19,703,444) (18,200,862)
---------- ----------
$ - $ -
========== ==========
At June 30, 2002, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $57,941,000 which may be used
to offset future taxable income, subject to certain limitations and
provisions of the Internal Revenue Code, and will expire in various
amounts in the years 2008 through 2022 if not utilized.
NOTE L - PENSION AND OTHER BENEFIT PROGRAMS
Prior to a subsidiary's bankruptcy filing in 1992, the subsidiary had a
defined benefit plan, which covered substantially all full-time employees.
The following table sets forth the funded status of the Company's defined
pension plan at June 30:
2002 2001 2000
-------- -------- --------
Actuarial present value of
benefit obligations
--------------------------
Accumulated benefit obligation $ 637,444 $ 700,879 $ 781,466
Projected benefit obligation 637,444 700,879 781,466
Plan assets at fair value 666,675 609,637 657,772
-------- -------- --------
Excess projected benefit obligation (29,231) 91,242 123,694
-------- -------- --------
Net pension (asset) liability $ (29,231) $ 91,242 $ 123,694
======== ======== ========
Net pension cost includes
the following components
-------------------------
Interest on unfunded liability $ 6,387 $ 8,660 $ 9,432
Actuarial (gain) loss (84,881) (5,187) 10,437
-------- -------- --------
Net pension cost (benefits) $ (78,494) $ 3,473 $ 19,869
======== ======== ========
The weighted average assumed discount rate used in determining the
actuarial present value of the projected benefit obligation for 2002,
2001, and 2000 was 7%. The net pension asset is included in other
noncurrent assets in the consolidated balance sheet.
NOTE M - NON-CASH INVESTING AND FINANCING ACTIVITIES
2002 2001 2000
---------- ---------- ----------
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of common stock for
purchase of assets $ 129,500 $ - $ 2,290,893
========== ========= ==========
Conversion of debt to common stock $ - $ - $ 2,788,723
========== ========= ==========
Issuance of common stock warrants
for expenses and services $ 72,000 $ 212,619 $ 682,500
========== ========= ==========
Stock compensation - $ 58,496 $ 661,414
========== ========= ==========
Issuance of common stock
for dividends $ - $ - $ 33,244
========== ========= ==========
Issuance of warrants in connection
with sale of trademark $ 68,500 $ - $ -
========== ========= ==========
Note receivable from sale
of trademark $ 1,865,000 $ - $ -
========== ========= ==========
Debt relieved upon sale of trademark $ 2,000,000 $ - $ -
========== ========= ==========
Issuance of warrants in connection
with long-term debt $ 335,938 $ 188,600 $ -
========== ========= ==========
NOTE N - BUSINESS SEGMENT INFORMATION
The Company is primarily engaged in high technology product sales and
consulting and support services. The following tables set forth certain
information with respect to the years ended June 30:
The Company has three segments for 2002 and 2001 and two segments for
2000: Technology product sales, technology consulting and support
services, and royalty from trademark licensing (new in 2001). The
segments are differentiated by the products and services provided as
follows:
Product sales
-------------
This segment consists of set-top boxes, network equipment, computer
cabling, computer telephony integration (CTI) and personal computer
equipment and peripherals.
Consulting and support services
-------------------------------
This segment consists of services for the implementation of e-business
solutions, software support maintenance, and network development and
support.
Royalties
---------
This segment consists of royalty income from licensing the Curtis Mathes
Trademark which was sold September 2001.
The Company's underlying accounting records are maintained on a legal
entity basis. Segment disclosures are on a performance basis consistent
with internal management reporting. The Company evaluates performance
based on earnings from continuing operations before income taxes and other
income and expense. The Corporate column includes corporate overhead
related items. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies (Note
A).
2002 2001 2000
---------- ----------- -----------
Net revenues
Product sales $ 1,919,695 $ 5,434,527 $ 7,710,606
Consulting and support services 3,399,463 2,765,958 1,435,099
Royalties 50,153 1,131,747 -
---------- ----------- -----------
$ 5,369,311 $ 9,332,232 $ 9,145,705
Operating loss
Product sales $(1,504,892) $ (2,924,871) $ (2,638,049)
Consulting and support services (1,497,418) (1,937,387) (1,154,461)
Corporate (485,949) (1,927,634) (6,839,145)
---------- ----------- -----------
Total operating loss (3,488,259) (6,789,892) (10,631,655)
Less interest expense (101,389) (177,237) (283,095)
Other income (expenses) 159,411 344,671 50,875
Gain on sale of trademark 1,103,046 - -
---------- ----------- -----------
Loss before extraordinary item (2,327,191) (6,622,458) (10,863,875)
Extraordinary item (406,243) - -
---------- ----------- -----------
Net loss $(2,733,434) $ (6,622,458) $(10,863,875)
========== =========== ===========
Identifiable assets
Computer products and service $ 213,030 $ 3,783,772 $ 8,023,184
Corporate 4,629,173 5,053,588 4,500,020
---------- ----------- -----------
$ 4,842,203 $ 8,837,360 $ 12,523,204
========== =========== ===========
Depreciation, amortization
and write-down
Computer products and service $ 421,136 $ 306,213 $ 2,230,321
Corporate 1,171,913 1,609,965 1,216,817
---------- ----------- -----------
$ 1,593,049 $ 1,916,178 $ 3,447,138
========== =========== ===========
Capital expenditures
Computer products and service $ 11,606 $ 148,948 $ 487,378
Corporate - 28,286 8,000
---------- ----------- -----------
$ 11,606 $ 177,234 $ 495,378
========== =========== ===========
International revenues for the years ended June 30, 2002, 2001 and 2000
totaled $2,396,981, $2,589,784, and $1,255,234, respectively.
uniView Technologies Corporation and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the years ended June 30, 2002, 2001 and 2000
Balance at Charged to Charged Balance
beginning costs and to other at end
Description of year expenses accounts Deductions of year
----------- --------- --------- -------- ---------- ---------
Year ended June 30, 2000
Allowance for
doubtful accounts $ 76,510 $ - $ - $ (70,636) $ 5,874
Year ended June 30, 2001
Allowance for
doubtful accounts 5,874 18,780 - (11,017) 13,637
Year ended June 30, 2002
Allowance for
doubtful accounts 13,637 - - - 13,637
UNIVIEW TECHNOLOGIES CORPORATION
and Subsidiaries
EXHIBIT INDEX
Exhibit Sequential
Number Description of Exhibits Page Number
----------------------------------------------------------------------------
3(i) Articles of Incorporation of the Company, as amended (filed
as Exhibit "3(i)" to the March 26, 2002 amendment to the
Company's Quarterly Report on Form 10-Q/A for the fiscal
quarter ended December 31, 2001 and incorporated herein by
reference.) N/A
3(ii) Bylaws of the Company, as amended (filed as Exhibit "3(ii)"
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1999 and incorporated herein by
reference.) N/A
4.1 Form of common stock Certificate of the Company (filed as
Exhibit "4.2" to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 and incorporated
herein by reference.) N/A
4.2 uniView Technologies Corporation 1999 Equity Incentive Plan
(filed as Exhibit "4.4" to the Company's Registration
Statement on Form S-8 filed with the Commission on July 12,
2000 and incorporated herein by reference.) N/A
4.3 Series A Preferred Stock terms and conditions (filed as
Exhibit "4.3" to the Company's annual report on Form 10-K
for the fiscal year ended June 30, 1994 and incorporated
herein by reference.) N/A
4.4 Series H Preferred Stock terms and conditions (filed as
Exhibit "4.4" to the Company's Registration Statement on
Form S-3 originally filed with the Commission on June 20,
1996 and incorporated herein by reference.) N/A
4.5 Series 1999-D1 Preferred Stock terms and conditions (filed
as Exhibit "4.6" to the Company's Registration Statement on
Form S-3 filed with the Commission on June 28, 1999 and
incorporated herein by reference.) N/A
4.6 Form of warrant issued in connection with Series 1998-A1
Preferred Stock (filed as Exhibit "4.7" to the Company's
Registration Statement on Form S-3 filed with the Commission
on July 20, 1998 and incorporated herein by reference.)
N/A
4.7 Series 2002-G Preferred Stock terms and conditions (filed as
Exhibit "4.1" to the Company's Current Report on Form 8-K
dated as of March 5, 2002 and incorporated herein by
reference.) N/A
4.8 Form of warrant issued in connection with private placement
to Bonanza Partners, Ltd. (filed as Exhibit "4.11" to the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 1999 and incorporated herein by
reference.) N/A
4.9 Form of warrant issued in connection with acquisition of
certain assets of Softgen International, Inc. (filed as
Exhibit "4.12" to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended December 31, 1999 and
incorporated herein by reference.) N/A
4.10 Form of warrant issued in connection with private placement
to LBI Group, Inc. (filed as Exhibit "4.5" to the Company's
Registration Statement on Form S-3 filed with the Commission
on May 19, 2000 and incorporated herein by reference.) N/A
4.11 Form of warrant issued in connection with private placement
to Founders Partners VI, LLC (filed as Exhibit "4.5" to the
Company's Registration Statement on Form S-3 filed with the
Commission on October 10, 2000 and incorporated herein by
reference.) N/A
4.12 Form of warrant issued to Sagemark Capital, L.P. in
connection with a loan to the Company (filed as Exhibit
"4.11" to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended December 31, 2000 and incorporated
herein by reference.) N/A
4.13 Form of warrant issued to Highland Holdings for a finder's
fee in connection with the Sagemark loan to the Company
(filed as Exhibit "4.12" to the Company's Quarterly Report
on Form 10-Q/A for the fiscal quarter ended September 30,
2001 and incorporated herein by reference.) N/A
4.14 Form of warrant issued to Massive Capital, LLC for a
finder's fee in connection with the sale of the Curtis
Mathes trademark (filed as Exhibit "4.13" to the Company's
Quarterly Report on Form 10-Q/A for the fiscal quarter ended
September 30, 2001 and incorporated herein by reference.) N/A
4.15 Securities Purchase Agreement dated March 5, 2002 between
registrant and Brown Simpson Partners I, Ltd. relating to
the redemption of registrant's Series 1999-D1 Convertible
Preferred Stock with Series 2002-G Convertible Preferred
Stock (filed as Exhibit "99.2" to the Company's Current
Report on Form 8-K dated as of March 5, 2002 and
incorporated herein by reference.) N/A
4.16 Registration Rights Agreement dated March 5, 2002 between
registrant and Brown Simpson Partners I, Ltd. relating to
the registration of the shares of common stock underlying
registrant's Series 2002-G Convertible Preferred Stock
(filed as Exhibit "99.3" to the Company's Current Report on
Form 8-K dated as of March 5, 2002 and incorporated herein
by reference.) N/A
4.17 Settlement and Mutual Release Agreement dated March 5, 2002
between registrant and Brown Simpson Partners I, Ltd.
relating to the redemption of registrant's Series 1999-D1
Convertible Preferred Stock with Series 2002-G Convertible
Preferred Stock (filed as Exhibit "99.4" to the Company's
Current Report on Form 8-K dated as of March 5, 2002 and
incorporated herein by reference.) N/A
4.18 * Form of warrant issued to Setfield Limited for services
rendered. 68
4.19 * Form of warrant issued to Gemini Growth Fund, L.P. in
connection with a loan to the Company. 73
4.20 * Series 2002-K Preferred Stock terms and conditions. 84
10.1.1 Lease Agreement between the Company and CMD Realty
Investment Fund II, L.P., dated October 18, 1999 pertaining
to the property utilized as the corporate headquarters
(filed as Exhibit "10.2" to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2000 and
incorporated herein by reference.) N/A
10.1.2 First Addendum to Lease Agreement between the Company and
CMD Realty Investment Fund II, L.P., dated November 10, 1999
pertaining to the property utilized as the corporate
headquarters (filed as Exhibit "10.2.1" to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 2000 and incorporated herein by reference.) N/A
10.1.3 Second Addendum to Lease Agreement between the Company and
CMD Realty Investment Fund II, L.P., dated January 10, 2000
pertaining to the property utilized as the corporate
headquarters (filed as Exhibit "10.2.2" to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 2000 and incorporated herein by reference.) N/A
10.2 ** Employment Contract with Mr. Hurst, dated as of February 14,
2001 (filed as Exhibit "10.4" to the March 26, 2002
amendment to the Company's Annual Report on Form 10-K/A for
the fiscal year ended June 30, 2001 and incorporated herein
by reference.) N/A
10.3 ** Employment Contract with Ms. Leland, dated as of February
14, 2001 (filed as Exhibit "10.5" to the March 26, 2002
amendment to the Company's Annual Report on Form 10-K/A for
the fiscal year ended June 30, 2001 and incorporated herein
by reference.) N/A
10.4 Trademark License Agreement between the Company and Avmark,
Inc. relating to the Curtis Mathes trademark, dated July 1,
2000 (filed as Exhibit "10.8" to the March 26, 2002
amendment to the Company's Annual Report on Form 10-K/A for
the fiscal year ended June 30, 2001 and incorporated herein
by reference.) N/A
10.5 Agreement for Purchase and Assignment of Trademarks between
the Company and CM Royalties, LLC, dated September 6, 2001
(filed as Exhibit "2" to the Company's Current Report on
Form 8-K dated September 6, 2001 and incorporated herein by
reference.) N/A
10.6 Global Purchase Agreement with HSBC Holdings plc relating to
installation of computer telephony integration software by
uniView Softgen Corporation in HSBC call centers, dated
October 26, 1999 (filed as Exhibit "10.9" to the March 26,
2002 amendment to the Company's Annual Report on Form 10-K/A
for the fiscal year ended June 30, 2001 and incorporated
herein by reference.) N/A
10.7 Amendment to Global Purchase Agreement with HSBC Holdings
plc relating to source code license, dated December 20, 2001
(filed as Exhibit "10.1" to the March 26, 2002 amendment to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 2001 and incorporated herein by
reference.) N/A
10.8 * International Distributor Agreement between subsidiary
uniView Softgen Corporation and Korea Computer, Inc., dated
October 1, 2001. 88
10.9 * Business Alliance Agreement between subsidiary uniView
Technologies Products Group, Inc. and Metrophone
Telecommunications, Inc., dated January 15, 2002. 102
10.10 * Supply Agreement between subsidiary uniView Asia Limited
(formerly China Action Management Limited) and Information
Technology Company Limited, dated as of July 17, 2002. 110
21 * Subsidiaries of the Company. 116
23 * Consent of Independent Certified Public Accountants. 117
_______________
* Filed herewith.
** Management contract or compensation plan or arrangement required
to be filed as a exhibit pursuant to Item 14(c).