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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 March 31, 2003
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 April 30, 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................... 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.................................................. 12
ITEM 4. CONTROLS AND PROCEDURES............................... 12
PART II.
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............. 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
March 31 June 30
2003 2002
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 25,134 $ 724,051
Trade accounts receivable, net - 356,178
Notes receivable - 850,000
Inventories - 49,929
Prepaid expenses 12,000 285,271
Other current assets - 3,506
----------- -----------
Total current assets 37,134 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 - 129,500
Goodwill, net of accumulated amortization - 1,005,509
Other 42,179 129,334
----------- -----------
Total other assets 42,179 2,398,235
----------- -----------
Total assets $ 79,313 $ 4,842,203
=========== ===========
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Balance Sheets
March 31 June 30
2003 2002
----------- -----------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current maturities of long-term debt $ - $ 169,992
Current maturities of obligations
under capital leases - 30,002
Trade accounts payable 16,847 707,207
Accrued expenses 25,800 395,003
Deferred revenue - 50,869
----------- -----------
Total current liabilities 42,647 1,353,073
LONG TERM DEBT, less current maturities - 13,445
OBLIGATIONS UNDER CAPITAL LEASES, less
current maturities - 1,493
----------- -----------
Total liabilities 42,647 1,368,011
REDEEMABLE PREFERRED STOCK
Series 2002-G, 196 and 240 shares issued
and outstanding, and liquidation
preferences of $4.9 million and $6
million at March 31, 2003 and June
30, 2002, respectively 78,400 1,456,000
STOCKHOLDERS' EQUITY (DEFICIT)
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; 4,486,120 and
3,749,785 shares issued and outstanding
at March 31, 2003, and June 30, 2002,
respectively 3,588,896 2,999,828
Additional paid in capital 57,190,291 57,190,291
Accumulated deficit (60,850,943) (58,201,949)
----------- -----------
Total stockholders' equity (deficit) (41,734) 2,018,192
----------- -----------
Total liabilities and stockholders'
equity (deficit) $ 79,313 $ 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 Nine months ended
March 31 March 31 March 31 March 31
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenues
Product sales $ - $ 368,783 $ 2,808 $ 1,951,218
Services - 1,980,969 241,026 2,815,900
Royalties - 44,000 - 94,153
---------- ---------- ---------- ----------
Total revenues - 2,393,752 243,834 4,861,271
Cost of products and services
Cost of product sales - 246,271 1,048 843,727
Cost of services - 434,048 - 827,306
---------- ---------- ---------- ----------
Total cost of products
and services - 680,319 1,048 1,671,033
---------- ---------- ---------- ----------
Gross margin - 1,713,433 242,786 3,190,238
Operating expenses
Sales expense 226 8,768 5,541 40,188
General and administrative
expense 67,760 1,189,408 894,896 3,994,334
Depreciation and amortization - 433,907 261,637 1,315,687
Asset impairment - - 1,238,943 -
Discount on acceleration of note
receivable collection - - 300,000 -
Extinguishment of debt - - - 406,243
Impairment of goodwill - - 1,005,509 -
---------- ---------- ---------- ----------
Total operating expenses 67,986 1,632,083 3,706,526 5,756,452
---------- ---------- ---------- ----------
Operating income (loss) (67,986) 81,350 (3,463,740) (2,566,214)
Other (income) expense
Gain on sale of trademark - - - (1,103,046)
Interest and other (income)
expense 8,222 (32,346) (38,604) (76,852)
Interest expense - 1,115 12,389 95,030
---------- ---------- ---------- ----------
Total other (income) expense 8,222 (31,231) (26,214) (1,084,868)
---------- ---------- ---------- ----------
Net income (loss) (76,208) 112,581 (3,437,526) (1,481,346)
Decrease in redemption value
of redeemable preferred stock 47,600 58,157 1,316,100 944,657
Dividend requirements on
preferred stock (625) (158,883) (1,875) (453,225)
---------- ---------- ---------- ----------
Net income (loss) attributable
to common stockholders $ (29,233) $ 11,855 $(2,123,301) $ (989,914)
========== ========== ========== ==========
Net income (loss) per share
attributable to common
stockholders -
basic and diluted $ (0.01) $ 0.00 $ (0.53) $ (0.29)
========== ========== ========== ==========
Weighted average common shares
outstanding - basic and diluted 4,451,920 3,399,785 4,015,937 3,399,584
The accompanying notes are an integral part of these statements.
UNIVIEW TECHNOLOGIES CORPORATION and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended March 31,
2003 2002
----------- -----------
Cash flows from operating activities
Net loss $ (3,437,526) $ (1,481,346)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 261,637 1,315,687
Asset impairment 1,238,943 -
Discount on acceleration of note
receivable collection 300,000 -
Impairment of goodwill 1,005,509 -
Other - 5,475
Gain on sale of Curtis Mathes trademark - (1,103,046)
Discount on debt - 46,045
Amortization of debt discount 16,563 -
Loss on extinguishment of debt - 406,243
Changes in operating assets and
liabilities, net of effects of
acquisitions and dispositions:
Trade accounts receivable 356,178 133,707
Inventories 49,929 54,809
Prepaid expense 273,271 (97,764)
Other current assets 3,506 171,976
Accounts payable and accrued liabilities (1,059,563) (960,898)
Deferred revenue (50,869) (80,645)
----------- -----------
Cash and cash equivalents used
in operating activities (1,042,422) (1,589,757)
Cash flows from investing activities
Proceeds from certificate of deposit 25,000 -
Collections on note receivable 550,000 865,000
Proceeds from sale of trademark - 185,000
Sale of property and equipment - 11,398
Purchase of property and equipment - (11,606)
----------- -----------
Cash and cash equivalents provided
by investing activities 575,000 1,049,792
Cash flows from financing activities
Proceeds from long term debt 100,000 500,000
Principal payments on long-term debt (300,000) (15,401)
Principal payments on capital
lease obligations (31,495) (55,404)
Dividends paid - (1,059)
----------- -----------
Cash and cash equivalents provided
by (used in) financing activities (231,495) 428,136
Net increase (decrease) in cash and
cash equivalents (698,917) (111,829)
Cash and cash equivalents, beginning of period 724,051 580,601
----------- -----------
Cash and cash equivalents, end of period $ 25,134 $ 468,772
=========== ===========
Supplemental information
Cash paid for interest $ 12,389 $ 74,606
Non-cash investing and financing activities:
Debt relieved upon sale of trademark $ - $ 2,000,000
Notes receivable from sale of trademark $ - $ 1,865,000
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
March 31, 2003
(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 AND SUBSEQUENT EVENT
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.
Subsequent Event. Subsequent to the period ended March 31, 2003,
the holder of the Company's Series 2002-G preferred stock sold all of
its interest in the preferred stock to a third party. On April 16, 2003,
the new holder of the preferred stock agreed to modify the terms of the
preferred stock, whereby any future redemption of the preferred stock shall
be at the sole option of the Company. This modification to the terms of the
preferred stock means that EITF Topic D-98 will no longer apply to these
securities and the preferred stock will be accounted for in future periods
as equity.
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 were collateralized by a security interest in the note
received in connection with the sale of 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 discount on acceleration of note receivable collection.
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. for a purchase price
of $10. In connection with the sale, the Company issued warrants to
purchase 150,000 shares of its common stock, exercisable through December
19, 2005 at a fixed exercise price of the greater of $.01 or par value per
share. The Company reported no gain or loss on the transaction as the
assets of these subsidiaries had been written off or realized, and the
liabilities on the books were satisfied prior to the sale.
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 nine-month periods ended March 31, 2003 or 2002. The effect of
preferred stock dividends and changes in value of redeemable preferred stock
on net income allocable to common stockholders was $.01 and $.02 per share
for the three months ended March 31, 2003 and 2002, $.34 and $.14 per share
for the nine months ended March 31, 2003 and 2002, respectively.
The weighted average of outstanding warrants that were not included in
the diluted calculation because their effect would be anti-dilutive total
592,844 and 442,011 for the three months and 555,992 and 441,212 for the
nine months ended March 31, 2003 and 2002, respectively. The weighted
average of outstanding options that were not included in the diluted
calculation because their effect would be anti-dilutive total 1,758,013
and 1,606,420 for the three months and 1,984,737 and 1,049,691 for the
nine months ended March 31, 2003 and 2002, 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 nine months ended
March 31:
Three Months Ended Nine Months Ended
March 31 March 31 March 31 March 31
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net revenues
Product sales $ - $ 368,783 $ 2,808 $ 1,951,218
Services - 1,980,969 241,026 2,815,900
Royalties - 44,000 - 94,153
---------- ---------- ---------- ----------
Total revenues $ - $ 2,393,752 $ 243,834 $ 4,861,271
========== ========== ========== ==========
Operating income (loss)
Product sales $ (226) $ 198,868 $ (3,781) $ (253,677)
Services 45,245 376,536 (1,110,910) 308,537
Corporate (113,005) (494,054) (2,349,049) (2,621,074)
---------- ---------- ---------- ----------
Total operating income (loss) (67,986) 81,350 (3,463,740) (2,566,214)
Less interest expense - (1,115) (12,389) (95,030)
Gain on sale of trademark - - - 1,103,046
Interest and other income
(expense) (8,222) 32,346 38,604 76,852
---------- ---------- ---------- ----------
Net income (loss) $ (76,208) $ 112,581 $(3,437,526) $(1,481,346)
========== ========== ========== ==========
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.
STOCK-BASED COMPENSATION
In December 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure" (SFAS 148) which
amends Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS 123). SFAS 148 provides alternative
methods of transition for voluntary change to the fair value based method
of accounting for stock-based employee compensation and requires disclosures
in annual and interim financial statements of the effects of stock-based
compensation as reflected below.
The Company continues to account for its stock options under the
recognition and measurement principles of Accounting Principles board
Opinion No. 25 "Accounting for Stock Issued to Employees," and related
Interpretations. No stock based employee compensation expense related to
the Company's stock options is reflected in the net income (loss), as all
options granted under the plan had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following
table illustrates the effect on net income (loss) and income (loss) per
share if the Company had applied the fair value recognition provisions of
SFAS 123 to stock-based compensation.
Three Months Ended Nine Months Ended
March 31 March 31 March 31 March 31
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net income (loss), as reported $ (76,208) $ 112,581 $(3,437,526) $(1,481,346)
Deduct: Total stock-based employee
compensation expense determined
using the fair value based
method for all awards, net
of related tax effects $ (102,920) $ (68,701) $ (308,760) $ (166,184)
---------- ---------- ---------- ----------
Pro forma net income (loss) $ (179,128) $ 43,880 $(3,746,286) $(1,647,530)
========== ========== ========== ==========
Income (loss) per share
Basic, as reported $ (0.02) $ 0.03 $ (0.86) $ (0.44)
Basic, pro forma $ (0.04) $ 0.01 $ (0.93) $ (0.48)
Diluted, as reported $ (0.02) $ 0.03 $ (0.86) $ (0.44)
Diluted, pro forma $ (0.04) $ 0.01 $ (0.93) $ (0.48)
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 discontinued operations in December 2002, 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.
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 March 31, 2003. 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.
Results of Operations
Revenues. We report no revenues for the third fiscal quarter ended
March 31, 2003, compared to $2.4 million for the same quarter last year.
For the nine months ended March 31, 2003, total revenues decreased to
approximately $244,000 compared to $4.9 million for the same period last
year. The decreases are due to the Company discontinuing all operations
during December 2002.
Gross Margin. Gross margin for the third fiscal quarter ended March
31, 2003 was zero compared to $1.7 million for the same quarter last year.
Gross margin for the nine months ended March 31, 2003 was $243,000, compared
to $3.2 million for the same period last year.
Operating Expenses. Total operating expenses for the three months
ended March 31, 2003 decreased to $68,000 compared to $1.63 million for the
same quarter last year. Total operating expenses for the nine months ended
March 31, 2003 decreased to $3.71 million compared to $5.35 million for the
same period last year. Significant components of operating expenses for
the three and nine months ended March 31, 2003 and 2002 consisted of the
following:
Three Months Ended Nine Months Ended
March 31 March 31 March 31 March 31
2003 2002 2003 2002
--------- ---------- ---------- ----------
Compensation $ 66,500 $ 913,000 $ 534,000 $ 2,627,000
Facilities 1,000 126,000 87,000 394,000
Depreciation - 69,000 84,000 444,000
Online service expense - 2,000 2,000 61,000
Amortization of product
and software development
costs, purchased software,
trademark, and goodwill - 226,000 178,000 872,000
Asset impairment - - 1,239,000 -
Extinguishment of debt - - - 406,000
Impairment of goodwill - - 1,006,000 -
Discount on acceleration of
note receivable collection - - 300,000 -
Legal expense and
professional fees - 69,000 141,000 220,000
Sales and marketing expenses - 9,000 5,000 40,000
Other 500 218,000 131,000 692,000
--------- ---------- ---------- ----------
Total $ 68,000 $ 1,632,000 $ 3,707,000 $ 5,756,000
"Other" expenses include public company cost, telephone, travel,
office, insurance, and other general and administrative expenses. The
decrease in operating expenses for the nine month period ended March 31,
2003 is attributable to the Company discontinuing all operations in December
2002.
Liquidity and Capital Resources
Cash Flows From Operations. Cash used in operations for the nine months
ended March 31, 2003 and 2002 was approximately $1.0 million and $1.6 million,
respectively. The major components of cash flows from operations for the nine
month period ended March 31, 2003 were comprised of a $3.4 million loss from
operations, which included impairment of goodwill and other assets, primarily
intangible assets, totaling $2.2 million.
Cash Flows From Investing Activities. During the nine months ended
March 31, 2003, we received net cash from investing activities of $575,000,
consisting of proceeds from redemption of 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 $1,050,000, consisting of proceeds from the sale
of the Curtis Mathes trademark, and we purchased approximately $12,000 of
property and equipment.
Cash Flows from Financing Activities. During the nine months ended
March 31, 2003 we used cash of approximately $231,000 in financing
activities, compared to generating net cash of $428,000 during the same
period last year. The primary components of the items for the nine months
ended March 31, 2003 were $100,000 from proceeds of long-term debt, and a
$300,000 principal payment on long-term debt.
Subsequent Event
Subsequent to the period ended March 31, 2003, the holder of the
Company's Series 2002-G preferred stock sold all of its interest in the
preferred stock to a third party. On April 16, 2003, the new holder of the
preferred stock agreed to modify the terms of the preferred stock, whereby
any future redemption of the preferred stock shall be at the sole option of
the Company. This modification to the terms of the preferred stock means
that EITF Topic D-98 will no longer apply to these securities and the
preferred stock will be accounted for in future periods as equity.
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 March 5, 2002 we issued to accredited investors Series 2002-G
Convertible Preferred Stock, having a face value of $6 million, in
consideration of the redemption of Series 1999-D1 Convertible Preferred
Stock, having a face value 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 on June 30, 2004. On January 7, 2003 the holder converted
$250,000 face amount of Series 2002-G Preferred Stock into 166,667 shares of
common stock, and on January 13, 2003 the holder converted another $250,000
face amount of Series 2002-G Preferred Stock into 166,667 shares of common
stock.
On January 27, 2003 we issued to an accredited investor, in connection
with legal services rendered to the Company, 3,000 shares of our common
stock and warrants to purchase 25,000 shares of our common stock. The
warrants are exercisable for five years after reduction of the par value of
our common stock to $.01 and are exercisable at a fixed exercise price per
share equivalent to the par value of our common stock on the date of
exercise.
On March 26, 2003 we issued to an accredited investor, in connection
with the sale of nine subsidiaries in December 2002, warrants to purchase
150,000 shares of our common stock. The warrants are exercisable through
December 19, 2005 at a fixed exercise price per share equivalent to the
greater of $.01 or the par value of our common stock on the date of
exercise.
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Reference is made to the Exhibit Index beginning on page 15 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: May 20, 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: May 20, 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
----------------------------------------------------------------------------
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 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
4.8 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
4.9 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
4.10 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
4.11 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
4.12 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
4.13 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
4.14 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
4.15 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
4.16 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
4.17 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
4.18* Form of warrant issued to Associates Funding Group, Inc. in
connection with sale of nine subsidiaries. 19
4.19* Form of warrant issued to Akin, Gump, Strauss, Hauer & Feld,
LLP. in connection with legal services rendered to the
Company. 24
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. 30
_______________
* Filed herewith.