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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 000-13225
UNIVIEW TECHNOLOGIES CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-1975147
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
17300 North Dallas Parkway, Suite 2050 75248
Dallas, Texas (Zip Code)
(Address of principal executive offices)
(972) 233-0900
(Registrant's telephone number, including area code)
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 ___
At January 31, 2003, there were 4,486,120 shares of Registrant's common
stock outstanding.
GENERAL INDEX
Page
Number
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PART I.
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS..................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................... 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.................................................. 11
ITEM 4. CONTROLS AND PROCEDURES............................... 12
PART II.
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............. 12
ITEM 5. OTHER INFORMATION..................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................... 14
SIGNATURES...................................................... 14
CERTIFICATIONS.................................................. 14
EXHIBIT INDEX................................................... 16
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Balance Sheets
December 31 June 30
2002 2002
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 216,772 $ 724,051
Trade accounts receivable, net - 356,178
Notes receivable - 850,000
Inventories - 49,929
Prepaid expenses 49,478 285,271
Other current assets - 3,506
----------- -----------
Total current assets 266,250 2,268,935
CERTIFICATE OF DEPOSIT - 25,000
PROPERTY AND EQUIPMENT, net of
accumulated depreciation - 150,033
OTHER ASSETS
Purchased software, net of
accumulated amortization - 711,702
Product and software development
costs, net of accumulated amortization - 422,190
Intellectual Property License 121,407 129,500
Goodwill, net of accumulated amortization - 1,005,509
Other 45,655 129,334
----------- -----------
Total other assets 167,062 2,398,235
----------- -----------
Total assets $ 433,312 $ 4,842,203
=========== ===========
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Balance Sheets
December 31 June 30
2002 2002
----------- -----------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ - $ 169,992
Current maturities of obligations
under capital leases 16,987 30,002
Trade accounts payable 110,555 707,207
Accrued expenses 83,842 395,003
Deferred revenue - 50,869
----------- -----------
Total current liabilities 211,384 1,353,073
LONG TERM DEBT, less current maturities - 13,445
OBLIGATIONS UNDER CAPITAL LEASES, less
current maturities 204 1,493
----------- -----------
Total liabilities 211,588 1,368,011
REDEEMABLE PREFERRED STOCK
Series 2002-G, 216 and 240 shares issued
and outstanding, and liquidation
preferences of $5.4 million and $6
million, at December 31 and June 30,
2002, respectively 126,000 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 (liquidation preference
of $30,000) 30,000 30,000
Series H, 2 shares issued and outstanding
(liquidation preference of $50,000) 2 2
Series 2002-K, 20 shares issued and
outstanding (liquidation preference
of $500,000) 20 20
Common stock, $.80 par value; 80,000,000 shares
authorized; 4,149,786 and 3,749,785 shares
issued and outstanding at December 31,
2002, and June 30, 2002, respectively 3,319,829 2,999,828
Additional paid in capital 56,870,290 57,190,291
Accumulated deficit (60,124,417) (58,201,949)
----------- -----------
Total stockholders' equity 95,724 2,018,192
----------- -----------
Total liabilities and
stockholders' equity $ 433,312 $ 4,842,203
=========== ===========
The accompanying notes are an integral part of these statements.
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Three months ended Six months ended
December 31 December 31 December 31 December 31
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenues
Product sales $ 1,058 $ 314,396 $ 2,808 $ 1,582,435
Services 52,640 513,461 241,026 834,931
Royalties - - - 50,153
---------- ---------- ---------- ----------
Total revenues 53,698 827,857 243,834 2,467,519
Cost of products and services
Cost of product sales 591 112,476 1,048 597,456
Cost of services - 241,658 - 393,258
---------- ---------- ---------- ----------
Total cost of products
and services 591 354,134 1,048 990,714
---------- ---------- ---------- ----------
Gross margin 53,107 473,723 242,786 1,476,805
Operating expenses
Sales expense 131 13,462 5,315 31,420
G & A expense 635,564 1,368,435 1,321,411 2,804,925
Depreciation and amortization 984,039 464,495 1,233,135 881,781
---------- ---------- ---------- ----------
Total operating expenses 1,619,734 1,846,392 2,559,861 3,718,126
---------- ---------- ---------- ----------
Operating loss (1,566,627) (1,372,669) (2,317,075) (2,241,321)
Other (income) expense
Gain on sale of trademark - - - (1,103,046)
Interest and other income (24,779) (27,914) (46,825) (44,505)
Interest expense 5,331 3,786 12,389 93,915
---------- ---------- ---------- ----------
Total other (income) expense (19,448) (24,128) (34,436) (1,053,636)
---------- ---------- ---------- ----------
Loss before extraordinary item (1,547,180) (1,348,541) (2,282,639) (1,187,685)
Extraordinary Item - early
extinguishment of debt - - - (406,243)
---------- ---------- ---------- ----------
Net loss (1,547,180) (1,348,541) (2,282,639) (1,593,928)
Decrease (increase) in redemption
value of redeemable preferred
stock 674,000 145,125 1,330,000 886,500
Dividend requirements
on preferred stock (625) (226,075) (1,250) (452,150)
---------- ---------- ---------- ----------
Net loss attributable to
common stockholders after
extraordinary item $ (873,805) $(1,429,491) $ (953,889) $(1,159,578)
========== ========== ========== ==========
Loss per common share
- basic and diluted
Loss before extraordinary item $ (0.23) $ (0.42) $ (0.25) $ (0.22)
Extraordinary item - - - (0.12)
---------- ---------- ---------- ----------
Net Loss $ (0.23) $ (0.42) $ (0.25) $ (0.34)
========== ========== ========== ==========
Weighted average common shares
outstanding - basic and diluted 3,841,814 3,398,977 3,802,684 3,398,977
The accompanying notes are an integral part of these statements.
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended December 31,
2002 2001
----------- -----------
Cash flows from operating activities
Net loss $ (2,282,639) $ (1,593,928)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 1,233,135 881,781
Write-off of fixed assets 1,148,072 143,549
Bad debt 300,000 -
Other - 5,475
Gain on sale of Curtis Mathes trademark - (1,103,046)
Discount on debt - 46,045
Amortization of debt discount 16,563 -
Early extinguishment of debt - 406,243
Changes in operating assets and
liabilities, net of effects of
acquisitions and dispositions:
Trade accounts receivable 356,178 66,159
Inventories 49,929 28,872
Prepaid expense 235,793 82,664
Other current assets 3,506 164,219
Accounts payable and accrued
liabilities (907,814) 125,780
Deferred revenue (50,869) (129,287)
----------- -----------
Cash and cash equivalents provided
by (used in) operating activities 101,854 (875,474)
Cash flows from investing activities
Proceeds from certificate of deposit 25,000 -
Collections on note receivable 550,000 -
Proceeds from sale of trademark - 865,000
Purchase of property and equipment - (11,606)
----------- -----------
Cash and cash equivalents provided
by investing activities 575,000 853,394
Cash flows from financing activities
Proceeds from long term debt 100,000 500,000
Principal payments on long-term debt (300,000) (9,795)
Non-cash debt items (969,829) -
Principal payments on capital lease
obligations (14,304) (40,681)
Dividends paid - (1,059)
----------- -----------
Cash and cash equivalents provided
by (used in) financing activities (1,184,133) 448,465
Net increase (decrease) in cash and cash
equivalents (507,279) 426,385
Cash and cash equivalents, beginning of period 724,051 580,601
----------- -----------
Cash and cash equivalents, end of period $ 216,772 $ 1,006,986
=========== ===========
Supplemental information
Cash paid for interest $ 12,389 $ 73,492
Non-cash investing and financing activities:
Debt relieved upon sale of trademark $ - $ 2,000,000
Notes receivable from sale of trademark $ - $ 1,185,000
Warrants issued in connection with debt $ - $ 275,938
Warrants issued in connection with sale
of trademark $ - $ 68,500
The accompanying notes are an integral part of these statements.
UNIVIEW TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)
BASIS OF PRESENTATION
The interim consolidated financial statements and summarized notes
included herein were prepared, without audit, in accordance with accounting
principles generally accepted in the United States of America (U.S. GAAP)
for interim financial information, pursuant to rules and regulations of the
Securities and Exchange Commission. Because certain information and notes
normally included in complete financial statements prepared in accordance
with U.S. GAAP were condensed or omitted pursuant to such rules and
regulations, it is suggested that these financial statements be read
in conjunction with the Consolidated Financial Statements and the Notes
thereto, included in the Company's Annual Report on Form 10-K for the
preceding fiscal year. These interim financial statements and notes hereto
reflect all adjustments which are, in the opinion of management, necessary
for a fair statement of results for the interim periods presented. Such
financial results, however, should not be construed as necessarily
indicative of future earnings.
REDEEMABLE PREFERRED STOCK
The Company's Series 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.
NOTES PAYABLE / NOTES RECEIVABLE
On May 10, 2002 the Company entered into a note payable with Gemini
Growth Fund, L.P. for $200,000, at an annual interest rate of 14%, maturing
on May 31, 2003. On November 12, 2002, the loan agreement was modified to
change the loan amount from $200,000 to $300,000 and the Company entered
into an additional note payable with Trident Growth Fund, L.P., formerly
known as Gemini Growth Fund, L.P., for $100,000 at an annual interest rate
of 14%, maturing on November 30, 2003. In connection with the $100,000
loan, the Company issued warrants to purchase 75,000 shares of its Common
Stock, exercisable for three years at a fixed exercise price of $1.50 per
share. The loans are collateralized by a security interest in the Curtis
Mathes trademark and other assets of the Company. Interest is payable
monthly in cash. In December 2002, the Company received a notice of default
and acceleration notice from Trident Growth Fund, accelerating the entire
principal balance due on the notes. To satisfy this obligation, the Company
negotiated a discount on the $850,000 note receivable it acquired in the
sale of the Curtis Mathes trademark in exchange for a lump sum payment of
$550,000 from the debtor, charging $300,000 to bad debt. Approximately
$300,000 of the proceeds received by the Company were applied to pay the
entire remaining principal balance, as well as accumulated interest and
other fees, due on the note payable to Trident Growth Fund.
SALE OF SUBSIDIARIES
In December 2002, the Company sold nine of its subsidiaries: Video
Management, Inc., including its wholly owned subsidiary Network America,
Inc., Corporate Network Solutions, L.C., Warranty Repair Corporation, FFL
Corporation, including its wholly owned subsidiary Systematic Electronics
Corp., uniView Technologies Advanced Systems Group, Inc., uniView Network
America Corp., and uniView Xpressway Corporation. In the transaction,
all of the issued and outstanding common stock of each of subsidiary was
transferred to W. I. Technology Holding Company Inc. The Company reports
a net loss of $969,829 from the transaction, consisting primarily of
writing off inter-company accounts relating to the subsidiaries. Amounts
attributable to the subsidiaries that were sold have been excluded from the
consolidation for the three and six month periods ended December 31, 2002.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share are based upon the weighted average
number of shares of common stock outstanding. Diluted earnings (loss) per
share are based upon the weighted average number of shares of common stock
outstanding and, when dilutive, common shares issuable for stock options,
warrants and convertible securities. There are no dilutive securities in the
three and six-month periods ended December 31, 2002 or 2001. The effect of
preferred stock dividends and changes in value of redeemable preferred stock
on net income allocable to common stockholders was $.18 per share for the
three months ended December 31, 2002, ($.02) per share for the three months
ended December 31, 2001, $.35 per share for the six months ended December
31, 2002 and $.13 per share for the six months ended December 31, 2001.
The weighted average of outstanding warrants that were not included in
the diluted calculation because their effect would be anti-dilutive total
516,839 and 440,344 for the three months and 537,966 and 436,268 for the six
months ended December 31, 2002 and 2001, respectively. The weighted average
of outstanding options that were not included in the diluted calculation
because their effect would be anti-dilutive total 2,017,229 and 954,530 for
the three months and 2,095,634 and 771,094 for the six months ended December
31, 2002 and 2001, respectively.
BUSINESS SEGMENT INFORMATION
During 2002 and 2001, the Company was primarily engaged in the
development of advanced digital entertainment devices, computer telephony
integration software, and cabling services. The following tables set forth
certain information with respect to the three and six months ended December
31:
Three months ended Six months ended
December 31 December 31 December 31 December 31
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net Revenues:
Product sales $ 1,058 $ 314,396 $ 2,808 $ 1,582,435
Services 52,640 513,461 241,026 834,931
Royalties - - - 50,153
---------- ---------- ---------- ----------
$ 53,698 $ 827,857 $ 243,834 $ 2,467,519
========== ========== ========== ==========
Operating loss:
Product sales $ (527,075) $ (415,004) $ (680,388) $ (452,545)
Services (394,224) (87,274) (468,946) (67,999)
Corporate (645,328) (870,391) (1,167,741) (1,720,777)
---------- ---------- ---------- ----------
Total operating loss (1,566,627) (1,372,669) (2,317,075) (2,241,321)
Less interest expense (5,331) (3,786) (12,389) (93,915)
Gain on sale of trademark - - - 1,103,046
Interest and other income 24,779 27,914 46,825 44,505
---------- ---------- ---------- ----------
Net loss before
extraordinary item (1,547,180) (1,348,541) (2,282,639) (1,187,685)
---------- ---------- ---------- ----------
Extraordinary item - early
extinguishment of debt - - - (406,243)
---------- ---------- ---------- ----------
Net loss after
extraordinary item $(1,547,180) $(1,348,541) $(2,282,639) $(1,593,928)
========== ========== ========== ==========
NEW ACCOUNTING STANDARDS
In July 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"),
"Accounting for Costs Associated with Exit or Disposal Activities." The
standard requires companies to recognize costs associated with exit or
disposal activities when they are incurred rather than at the date of
a commitment to an exit or disposal plan. SFAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31,
2002. The Company expects no material impact to its financial statements
upon adoption of SFAS 146.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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, such as 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 other risks described from
time to time in the 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 changes 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.
Overview
Until the Company ceased operations in December 2002 (see discussion
under Item 5, "Other Information" below) we offered enhanced digital media
solutions to customers worldwide. We also offered contact center customer
service solutions through CIMphony[TM], a suite of computer telephony
integration (CTI) software products and services.
As with most technologies, a lack of continuous development and
improvement quickly leads to obsolescence. Due to the uncertainty of
any likelihood of continuing operations and the resulting suspension of
ongoing development of our technologies, we have written down all of the
intellectual property values and goodwill associated with our technologies
in our financial statements.
The following discussion provides information to assist in the
understanding of the Company's financial condition and results of operations
for the fiscal quarter ended December 31, 2002. It should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
appearing in the Company's Annual Report on Form 10-K for fiscal year
ended June 30, 2002. All amounts reported are net of the effects of
the disposition of the subsidiaries discussed in Item 5 below.
Results of Operations
Revenues. Total revenues for the second fiscal quarter ended December
31, 2002 were approximately $54,000, compared to $828,000 for the same
quarter last year. For the six months ended December 31, 2002, total
revenues decreased to $244,000, compared to $2.5 million for the same period
last year. The decreases primarily are due to the disposition of Network
America during the period, resulting in the exclusion of all of its revenues
for the three and six-month periods ended December 31, 2002.
uniView Softgen. Revenues for uniView Softgen for the second fiscal quarter
ended December 31, 2002 were approximately $53,000, compared to $342,000
for the same quarter last year. For the six months ended December 31, 2002,
revenues decreased to $241,000, compared to $1.2 million for the same period
last year.
Network America. Revenues for Network America for the three and six-month
periods ended December 31, 2002 have been excluded, due to the disposition
of this subsidiary during the period. Revenues for Network America for the
three months ended December 31, 2001 were $430,000. For the six months
ended December 31, 2001, revenues for Network America were $1.2 million.
Curtis Mathes. Due to the sale of the Curtis Mathes trademark in September
2001, the Company recognized no royalty revenue for the three and six month
periods ended December 31, 2002, compared to $50,000 in royalty revenue and
no royalty revenue, for the same periods in 2001, respectively.
Gross Margin. Gross margin for the second fiscal quarter ended
December 31, 2002 was approximately $53,000, compared to $474,000 for the
same quarter last year. Gross margin for the six months ended December 31,
2002 was $243,000, compared to $1.5 million for the same period last year.
Operating Expenses. Total operating expenses for the three months
ended December 31, 2002 decreased to $1.6 million, compared to $1.8 million
for the same quarter last year. Total operating expenses for the six months
ended December 31, 2002 decreased to $2.56 million, compared to $3.7 million
for the same period last year. Significant components of operating
expenses for the three and six months ended December 31, 2002 and 2001
consisted of the following:
Three months ended Six months ended
December 31 December 31 December 31 December 31
2002 2001 2002 2001
---------- ---------- ---------- ----------
Compensation $ 139,000 $ 811,000 $ 441,000 $ 1,714,000
Facilities 17,000 141,000 86,000 268,000
Depreciation 43,000 117,000 84,000 236,000
Online service expense 1,000 3,000 2,000 59,000
Amortization of product
and software development
costs, purchased software,
trademark, and goodwill 941,000 348,000 1,149,000 645,000
Legal expense and
professional fees 18,000 96,000 143,000 151,000
Sales and marketing
expenses - 14,000 5,000 31,000
Other 461,000 316,000 650,000 614,000
---------- ---------- ---------- ----------
Total $ 1,620,000 $ 1,846,000 $ 2,560,000 $ 3,718,000
========== ========== ========== ==========
Other expenses include public company cost, telephone, travel, office,
insurance, and other general and administrative expenses. The decrease in
operating expenses of approximately $1.16 million for the six month period
ended December 31, 2002, compared to the same period in 2001, is primarily
attributable to reduced compensation and other expenses due to a reduction
in the number of employees and overall cost controls.
Loss on Sale of Subsidiaries. As of December 20, 2002, we
completed the spin off of nine of our subsidiaries. In connection with
the transaction, we report a net loss of $969,829 from the transaction,
consisting primarily of writing off inter-company accounts relating to the
subsidiaries. (For further discussion, see Item 5, "Other Information,"
below.)
Liquidity and Capital Resources
Cash Flows From Operations. Cash provided by (used in) operations for
the six months ended December 31, 2002 and 2001 was approximately $102,000
and ($875,000), respectively. The major components of cash flows from
operations for the current period were comprised of a $2.3 million loss from
operations, which included depreciation of $84,000 and amortization of $1.15
million, primarily capitalized software amortization.
Cash Flows From Investing Activities. During the six months ended
December 31, 2002, we received net cash from investing activities of
$575,000, consisting of proceeds from cashing in a certificate of deposit
and collections on the note received in the sale of the Curtis Mathes
trademark. During the same period last year, we received net cash from
investing activities of approximately $853,000; we received $865,000 in
proceeds from the sale of the Curtis Mathes trademark and purchased
approximately $12,000 of property and equipment.
Cash Flows from Financing Activities. During the six months ended
December 31, 2002 we used cash of approximately $1,184,000 in financing
activities, compared to receiving cash of $450,000 during the same period
last year. The primary components of the items for the six months ended
December 31, 2002 were $100,000 from proceeds of long-term debt, a $300,000
principal payment on long-term debt, and approximately $970,000 in non-cash
debt items, consisting of the net difference between the inter-company
accounts and the deficits attributable to the subsidiaries sold during the
second fiscal quarter ended December 31, 2002.
ITEM 3. 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 of our Annual Report on Form 10-K for
fiscal year ended June 30, 2002, which are incorporated herein by reference.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer has reviewed and evaluated the
effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within 90 days
before the filing date of this quarterly report. Based on that evaluation,
the Chief Executive Officer has concluded that our current disclosure
controls and procedures are effective and timely, providing him with
material information relating to us required to be disclosed in the reports
we file or submit under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. We are not aware of any
significant deficiencies or material weaknesses, therefore no corrective
actions were taken.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Issuances of equity securities during the reporting period that were
not registered under the Securities Act of 1933 consisted of the following:
On November 12, 2002 we issued to accredited investors for cash a
$100,000 convertible debenture and, in connection therewith, warrants to
purchase 75,000 shares of our Common Stock. The debenture is convertible at
any time into 66,667 shares of our Common Stock at a fixed conversion price
of $1.50 per share and has a maturity date of November 30, 2003. The
warrants are exercisable at any time through November 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 of the common stock. (We paid this debenture
in full and it was retired in December 2002.)
On March 5, 2002 we issued to accredited investors Series 2002-G
Convertible Preferred Stock, having a face amount of $6 million, in
consideration of the redemption of Series 1999-D1 Convertible Preferred
Stock, having a face amount of $18 million, and the forgiveness of $2.7
million of dividends that would have matured in June 2002. Series 2002-G
Preferred Stock is convertible at any time into 4 million shares of our
Common Stock at a fixed conversion price of $1.50 per share and is
redeemable at the option of the holder on June 30, 2004. On September 12,
2002 the holder converted $100,000 face amount of Series 2002-G Preferred
Stock into 66,667 shares of Common Stock; on December 19, 2002 the holder
converted $250,000 face amount of Series 2002-G Preferred Stock into 166,667
shares of Common Stock; and on December 31, 2002 the holder converted
another $250,000 face amount of Series 2002-G Preferred Stock into 166,667
shares of Common Stock.
All of the foregoing issuances were made pursuant to the exemption from
registration provided by Rule 506 of Regulation D, Rule 144(k) or Section
4(2) of the Securities Act of 1933, in that (a) the investors or their
purchaser representatives are reasonably believed to have such knowledge
and experience in financial and business matters that they are capable of
evaluating the merits and risks of the investment, (b) the investors or
their purchaser representatives were provided with required information
and an opportunity to obtain additional information a reasonable period
of time prior to the transaction, (c) the investors or their purchaser
representatives were advised of the limitations on resale of the common
stock underlying the warrants, (d) the investors represented their intention
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof, (e) appropriate legends
were affixed to the instruments issued in the transaction, and (f) the
investors satisfied the holding period and were not affiliates within the
previous three months, as required by Rule 144(k).
ITEM 5. OTHER INFORMATION
In December 2002, due to our financial position, as well as the general
business outlook for the upcoming year, the Company ceased all operations.
At that time, the Company received resignations from its outside directors
and general counsel and laid off all employees and officers. Some former
employees continued to act in a consulting role to facilitate an orderly
process of winding down remaining operations, as well as the CEO who
remained as the sole director. We have implemented a plan and we continue
to evaluate other possibilities to maximize the value of the remaining
assets for the benefit of creditors and shareholders.
As of December 20, 2002, we completed the spin off of nine of our
subsidiaries, including the following: Video Management, Inc., including
its wholly owned subsidiary Network America, Inc., Corporate Network
Solutions, L.C., Warranty Repair Corporation, FFL Corporation, including its
wholly owned subsidiary Systematic Electronics Corp., uniView Technologies
Advanced Systems Group, Inc., uniView Network America Corp., and uniView
Xpressway Corporation.
In the transaction, all of the issued and outstanding common stock of
each subsidiary was transferred to W. I. Technology Holding Company Inc. We
report a net loss of $969,829 from the transaction, consisting primarily of
writing off inter-company accounts relating to the subsidiaries. The terms
of the agreement were established through arms length negotiations between
the parties, considering the financial statements of the subsidiaries.
There exists no material relationship between W. I. Technology Holding
Company Inc. and the Company or any of its affiliates, any director or
officer of the Company, or any associate of any such director or officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Reference is made to the Exhibit Index beginning on page 16 of
this Form 10-Q for a list of all exhibits filed with and
incorporated by reference in this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the reporting period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
uniView Technologies Corporation
(Registrant)
By: /s/ PATRICK A. CUSTER
-------------------------------
Patrick A. Custer
Chief Executive Officer
and Principal Financial Officer
Date: February 12, 2003
CERTIFICATIONS
I, Patrick A. Custer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of uniView
Technologies Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly 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
quarterly report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and I have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: February 12, 2003
By: /s/ PATRICK A. CUSTER
-------------------------------
Patrick A. Custer
Chief Executive Officer
and Principal Financial Officer
UNIVIEW TECHNOLOGIES CORPORATION
and Subsidiaries
EXHIBIT INDEX
Exhibit Sequential
Number Description of Exhibits Page Number
----------------------------------------------------------------------------
2* Stock Purchase Agreement dated as of December 20, 2002 between
the Company and W. I. Technology Holding Company Inc. 19
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 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
4.6 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
4.7 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
4.8 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
4.9 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
4.10 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
4.11 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
4.12 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
4.13 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
4.14 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
4.15 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
4.16 Form of warrant issued to Setfield Limited for services rendered
(filed as Exhibit "4.18" to the Company's annual report on Form
10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference.) N/A
4.17 Form of warrant issued to Gemini Growth Fund, L.P. in connection
with a loan to the Company (filed as Exhibit "4.19" to the
Company's annual report on Form 10-K for the fiscal year ended
June 30, 2002 and incorporated herein by reference.) N/A
4.18 Series 2002-K Preferred Stock terms and conditions (filed as
Exhibit "4.20" to the Company's annual report on Form 10-K for
the fiscal year ended June 30, 2002 and incorporated herein by
reference.) N/A
99.1* Certification of Chief Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. 25
_______________
* Filed herewith.