SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2005
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: 001-15777
Unitrend, Inc.
(Exact name of registrant as specified in its charter)
Nevada 34-1904923
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
4665 West Bancroft St.
Toledo, Ohio 43615
(Address of principal executive offices, including zip code)
(419) 536-2090
(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 [ ]
Number of shares of registrant's common stock outstanding
as of September 30, 2005: 70,390,770
UNITREND, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2005
Table of Contents
PART I FINANCIAL INFORMATION Page
Item 1. Condensed Financial Statements
Condensed Balance Sheets at September 30, 2005 and December 31,
2004............................................................ 3
Condensed Statements of Operations for the three and nine months
ended September 30, 2005, 2004 and for the period from September
27, 1994 (date of inception) to September 30, 2005.............. 4
Condensed Statements of Cash Flows for the nine months ended
September 30, 2005, 2004 and for the period from September 27,
1994 (date of inception) to September 30, 2005.................. 5
Statements of Stockholders' Equity for the nine months ended
September 30,2005 and for the years ended December 31, 2004,2003,
and 2002........................................................ 6
Notes to Condensed Financial Statements......................... 7-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 9-11
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................... 11
Item 2. Changes In Securities And Use Of Proceeds....................... 11
Item 3. Defaults Upon Senior Securities................................. 11
Item 4. Submission Of Matters To A Vote Of Security Holders............. 12
Item 5. Other Information............................................... 12
Item 6. Exhibit......................................................... 12
Signatures...................................................... 12
This quarterly report on Form 10-QSB is for the three and nine months ended
September 30, 2005. This quarterly report modifies and supersedes documents
filed prior to this quarterly report. The Securities and Exchange Commission
(SEC) allows Unitrend to "incorporate by reference" information that is filed
with them, which means that Unitrend can disclose important information to you
by referring you directly to those documents. Information incorporated by
reference is considered to be part of this quarterly report. In addition,
information that will be filed with the SEC in the future will automatically
update and supersede information contained in this quarterly report. In this
quarterly report, "Unitrend," "we," "us" and "our" refer to Unitrend, Inc.
You should carefully review the information contained in this quarterly report
and in other reports or documents that Unitrend files from time to time with the
SEC. In this quarterly report, Unitrend states Unitrend's beliefs of future
events and of Unitrend's future financial performance. In some cases, you can
identify those so-called "forward-looking statements" by words such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and other
comparable words. You should be aware that those statements are only Unitrend's
predictions. Actual events or results may differ materially. In evaluating
those statements, you should specifically consider various factors, including
the risks outlined in this document. Those factors may cause Unitrend's actual
results to differ materially from any of Unitrend's forward-looking statements.
Part I. Financial Information
Item I. Condensed Financial Statements
UNITREND, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
(unaudited) (unaudited)
September 30, 2005 2004
---------------- ----------------
CURRENT ASSETS
Cash $ 1,104 $ 427
Accounts receivable 519 384
Inventory - Finished goods 13,233 3,763
---------------- ----------------
Total current assets 14,856 4,574
PROPERTY AND EQUIPMENT, at cost
Land 67,485 67,485
Building and improvements 351,168 351,168
Furniture and fixtures 65,496 65,496
Computer equipment 151,055 151,055
Computer software 46,719 46,719
Automobiles 15,937 15,937
Tooling and dies under construction 940,007 940,007
---------------- ----------------
1,637,867 1,637,867
Less accumulated depreciation (324,426) (312,035)
---------------- ----------------
Net property and equipment 1,313,441 1,325,831
---------------- ----------------
OTHER ASSETS
Patent licensing costs,
net of accumulated amortization 19,126 20,713
---------------- ----------------
TOTAL ASSETS $ 1,347,423 $ 1,351,118
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES
Accounts payable $ 510,568 $ 707,201
Current portion of note payable - 171,047
Accrued expenses 1,016,035 1,209,271
---------------- ----------------
Total current liabilities 1,526,604 2,087,519
---------------- ----------------
NOTES PAYABLE - RELATED PARTIES 673,519 99,846
---------------- ----------------
STOCKHOLDERS' EQUITY
Common stock, no par value 3,805,098 3,805,098
Additional paid-in capital 9,332,592 8,975,592
Deficit accumulated in the development stage (13,990,391) (13,616,938)
---------------- ----------------
Total stockholders' equity (852,700) (836,248)
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,347,423 $ 1,351,118
================ ================
UNITREND, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
(unaudited) (unaudited) (unaudited) (unaudited) September 27, 1994
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended (Date of Inception)
Sept 30, 2005 Sept 30, 2004 Sept 30, 2005 Sept 30, 2004 to Sept 30, 2005
---------------- ---------------- ---------------- ---------------- ----------------
Sales $ 68 $ 5,036 $ 135 $ 5,786 $ 6,675
Cost of Sales (210) (4,439) (776) (6,643) (10,825)
---------------- ---------------- ---------------- ---------------- ----------------
Gross Income/Loss (142) 597 (641) (857) (4,150)
Research and development
expenses - - (1,936) - (568,451)
Selling, general and
administrative expenses (141,254) (96,188) (363,261) (342,995) (12,516,249)
---------------- ---------------- ---------------- ---------------- ----------------
Operating loss (141,397) (95,591) (365,838) (343,852) (13,088,850)
Other income - - - - (546,875)
Interest income - - - - 1,546
Interest expense - (3,774) (7,615) (10,973) (332,244)
---------------- ---------------- ---------------- ---------------- ----------------
Net loss before cumulative
effect of change in
accounting principle (141,397) (99,365) (373,453) (354,825) (13,966,424)
Cumulative effect of
change in accounting
principle - - - - (23,968)
---------------- ---------------- ---------------- ---------------- ----------------
Net loss $ (141,397) $ (99,365) $ (373,453) $ (354,825) $ (13,990,391)
================ ================ ================ ================ ================
Basic and diluted loss
per share:
Before cumulative effect
of change in accounting
principle $ (0.00) $ (0.00) $ (0.01) $ (0.01) $ (0.20)
Cumulative effect of change
in accounting principle - - - - -
---------------- ---------------- ---------------- ---------------- ----------------
Net loss $ (0.00) $ (0.00) $ (0.01) $ (0.01) $ (0.20)
================ ================ ================ ================ ================
Weighted average shares
outstanding used to compute
basic and diluted loss per
share 70,390,770 70,390,770 70,390,770 70,390,770 68,445,836
================ ================ ================ ================ ================
UNITREND, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
(unaudited) (unaudited) September 27, 1994
Nine Months Ended Nine Months Ended (Date Of Inception)
Sept 30, 2005 Sept 30, 2004 to Sept 30, 2005
---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (373,453) $ (354,825) $ (13,990,391)
---------------- ---------------- ----------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Change in accounting principle - - 23,968
Options issued for services - - 5,326,989
Depreciation & amortization 13,977 15,131 368,244
Loss on disposal of property
and equipment - - 608,643
Bad debt - - 42,157
Accrued interest income - - (3,091)
Common stock issued for services - - 10,000
Increase (decrease) in operating assets:
Accounts receivable (135) (520) (519)
Inventory (9,470) 4,694 (13,233)
Prepaid expenses - - -
Increase (decrease) in operating liabilities:
Accounts payable (196,633) 118,751 510,568
Accrued expenses (193,236) (139,867) 1,231,725
---------------- ---------------- ----------------
Total adjustments (385,497) (1,811) 8,105,451
---------------- ---------------- ----------------
Net cash used in operating activities (758,950) (356,636) (5,884,940)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for patent licensing costs - - (31,723)
Purchase of property and equipment - (28,600) (2,277,022)
Proceeds from sale of property and
equipment - - 10,941
Loans to related parties - - (18,191)
Loans to other entities - - (23,916)
Repayment from employee - - 3,041
Payment of organizational cost - - (30,168)
---------------- ---------------- ----------------
Net cash provided by (used in )
investing activities - (28,600) (2,367,038)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loan costs - - (5,448)
Loans from stockholder 930,674 388,439 4,496,616
Proceeds from note payable - - 290,000
Payment on note payable (171,047) (14,284) (290,000)
Proceeds from sale of common stock
and exercise of stock options - 9,500 2,629,063
Payments for stock recissions - - (134,170)
Sale of stock subject to recission
for cash - - 1,267,020
---------------- ---------------- ----------------
Net cash provided by financing
activities 759,627 383,655 8,253,081
---------------- ---------------- ----------------
Net increase (decrease) in cash 677 (1,581) 1,103
Cash - beginning of period 427 3,178 -
---------------- ---------------- ----------------
Cash - end of period $ 1,104 $ 1,597 $ 1,104
================ ================ ================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period
Interest $ 6,113 $ 6,069 $ 179,795
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
The President/Majority Stockholder forgave debt of $357,00 during the
period ended September 30, 2005.
UNITREND, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Nine Months Ended September 30, 2005
And For the Years Ended December 31, 2004, 2003 and 2002
(unaudited)
Deficit
Accumulated
Common Stock Additional During the
---------------- Paid-in Development
Shares Amount Capital Stage Total
---------- ---------- ---------- ------------- ----------
BALANCE -
DECEMBER 31, 2001 69,895,580 3,557,503 8,023,695 (11,099,384) 481,814
Majority stockholder
exercised options
at $0.50 per share
on January 22, 2002 476,190 238,095 - - 238,095
Net loss - 2002 - - - (1,050,937) (1,050,937)
---------- ---------- ---------- ------------- -----------
BALANCE -
DECEMBER 31, 2002 70,371,770 3,795,598 8,023,695 (12,150,321) (331,028)
Majority stockholder
forgives loans and
accrued salary on
December 31, 2003 577,988 577,988
Net loss - 2003 - - - (280,938) (280,938)
---------- ---------- ---------- ------------- -----------
BALANCE -
DECEMBER 31, 2003 70,371,770 3,795,598 8,601,683 (12,431,259) (33,978)
Exercise of stock
options at $0.50
per share on
January 14, 2004 19,000 9,500 - - 9,500
Majority stockholder
forgives loans on
March 31, 2004 - - 136,832 - 136,832
Majority stockholder
forgives loans on
June 30, 2004 - - 237,077 - 237,077
Net loss - 2004 - - - (1,185,976) (1,185,679)
---------- ---------- ---------- ------------- -----------
BALANCE -
DECEMBER 31, 2004 70,390,770 $3,805,098 $8,975,592 $(13,616,938) $ (836,248)
---------- ---------- ---------- ------------- -----------
Majority stockholder
forgives loans on
June 30, 2005 - - 357,000 - 357,000
Net loss for the
period ended
September 30, 2005 - - - (373,453) (373,453)
---------- ---------- ---------- ------------- -----------
BALANCE -
SEPTEMBER 30, 2005 70,390,770 $3,805,098 $9,332,592 $(13,990,391) $ (852,700)
========== ========== ========== ============= ===========
UNITREND, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2005
NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
BASIS OF PRESENTATION
The condensed financial statements included herein have been prepared by
Unitrend, Inc., without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. However, Unitrend, Inc. believes that the disclosures
are adequate to make the information presented not misleading.
The unaudited condensed financial statements included herein reflect all
adjustments (which include only normal, recurring adjustments) that are, in the
opinion of Unitrend's management, necessary to state fairly the results for the
three and nine month periods ended September 30, 2005. The results for the
three and nine month periods ended September 30, 2005 are not necessarily
indicative of the results expected for the full fiscal year.
NATURE AND SCOPE OF BUSINESS
Unitrend, Inc. (Unitrend) a Nevada corporation as of January, 1999, formerly an
Ohio corporation, is a development stage company formed with the purpose of
expanding the useful life of computer technology through our patented computer
enclosures, power supplies and related products that will ultimately be sold to
a national market. Unitrend, Inc. was incorporated on April 11, 1996 as Versa
Case, Inc. On May 15, 1996, Versa Case, Inc. changed its name to Unitrend, Inc.
The Company's operations to date have consisted primarily of incidental sales of
computer components while Company personnel have concentrated on the development
of its products and procuring the necessary patents on its technology. To date,
Unitrend has been issued nine United States patents with thirteen patent
applications pending. We also have nine registered trademarks and service marks.
As of September 30, 2005, expenses incurred have been primarily for
administrative support, tooling and product development of the enclosures and
power supplies that will ultimately be sold and tooling, product development and
inventory of the wire management systems that are currently being sold, which
has resulted in an accumulated deficit in the development stage of approximately
$13,990,000.
On April 16, 1998, Unitrend formed Osborne Manufacturing, Inc. (OMI) to produce
the Company's products. In 2002, OMI was dissolved because Unitrend's
management determined that it could save time and money by entering into a
contract with New Product Innovations, Inc. (NPI) to provide turnkey
manufacturing of its product line. NPI is a joint venture between General
Electric (GE) and Fitch, Inc. NPI along with Fitch will complete product
development, obtain agency approvals, engage in product positioning and
manufacturing development.
Unitrend merged with Server Systems Technology, Inc. (SSTI) effective December
15, 1998. SSTI was the predecessor to the Company and was formed September 27,
1994. SSTI owns several patents that are key to Unitrend's products, but
otherwise SSTI had ceased development stage operations when Unitrend was formed
in April, 1996. SSTI is a related party to Unitrend since the two entities have
common stockholders.
In early 2003, research and development began on the Cablety wire management
system. Designs were finalized and a tool was built to produce the Cablety.
Production of the Cablety began late in the fourth quarter of 2003 and the
Cablety was made available for sale over Unitrend's new e-commerce site. As of
the date of this filing, sales have been modest, but we anticipate sales to
increase as we move forward and concentrate on marketing our products through
direct and indirect channels. In late 2005, we hope to finalize any design
changes to the VersaCase product line and Breeze power supply.
On March 1, 2004, Unitrend entered into a contract with Titan Technologies, an
established national sales and marketing group, to market and sell our current
products and any future products developed by Unitrend. The first product that
has been sold by the Company is the Cablety, with initial sales focus on large
domestic distributors and original equipment manufacturers (OEMs). We will
modify distribution plans as demanded by the markets we serve in order to
maximize efficiency throughout all channels of distribution. In June 2004, R &
R Plastics completed two high volume production tools for the Cablety with new
industrial/military "Safety Wire" capabilities molded into it. Each tool is a
four-cavity mold and together are capable of producing 35,000 kits per week.
Molding, assembly and distribution of the Cablety components are being performed
by a local outside vendor.
In April 2004, Unitrend along with a representative from Titan Technologies
participated in RetailVision Spring 2004. RetailVision Spring 2004 is a trade
show that allows the manufacturer to sit face to face with potential retailers
and distributors in the computer industry. Unitrend presented to representatives
that comprise approximately 90% of the computer industry's manufacturers and/or
distributors. Positive results of this show include agreements signed with
Micro Center, Inc., TigerDirect.com and Zones, Inc. Micro Center, Inc. offers a
huge selection of competitively priced, high-quality products, and a wealth of
information to help customers make informed buying decisions. Micro Center has
twenty nationwide retail stores along with an online retail site. Currently, the
Cablety may be purchased at www.microcenter.com. TigerDirect.com carries the
world's largest selection of computer components, making them the reseller of
choice for the "build-it-yourselfer." Zones, Inc. and their affiliates are
single-source, multi-vendor direct marketing resellers of name-brand information
technology products to the small to medium sized business market, enterprise and
public sector accounts and sells product through outbound and inbound call
center account executives, specialty print and e-catalogs, and the Internet.
The Cablety is available for purchase at www.zones.com. In August 2004, Unitrend
exhibited at the Zones Accessories Training Fair where representatives from
Unitrend showed the benefits of using our product line. This show was attended
by only Zones sales and marketing representatives in order for them to learn
about all the products that Zones carries. In September 2004, Unitrend attended
the Gartner System Builders Summit. This show is the leading event for the
white box market. Vendors and resellers meet at this show to explore new
technologies and build strategic relationships. Unitrend established
relationships with interested vendors for when our product line is in full
production.
In early April 2005, Unitrend exhibited at the FOSE trade show. FOSE is the
most comprehensive technology event serving the government marketplace. The
U.S. government is the largest buyer of technology in the world, which made this
show the most efficient way for Unitrend to reach government customers. At this
show we introduced the Breeze power supply and the "new" flame orange Cablety
with the industrial/military safety wire capabilities. We also exhibited the
VersaCase and Cablety kits. Many government agencies reviewed our products and
gave us positive feedback. Many leads were made to place beta units within the
government for testing.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires Unitrend's management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from these estimates.
RELATED PARTY PAYABLE
There are unsecured notes payable to the President/majority stockholder, which
are payable in ten equal installments after Unitrend is profitable for one year.
As of September 30, 2005 and December 31, 2004, the outstanding balances of the
notes payable to the President/majority stockholder were $673,519 and $99,846,
respectively. On June 30, 2005, June 30, 2004 and March 31, 2004 Unitrend's
President/majority stockholder forgave loans to Unitrend of $357,000, $237,077
and $136,832, respectively. The President/majority stockholder also forgave
debt of $432,240, accrued interest of $22,280 and accrued salary of $199,352
during the year ended December 31, 2003. The forgiveness was accounted for as
contributed capital.
NEW ACCOUNTING PRONOUNCEMENT
None
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS - THIRD QUARTER OF 2005 COMPARED TO THIRD QUARTER OF 2004
Unitrend had no significant revenues in the quarter ended September 30, 2005 or
in the quarter ended September 30, 2004. In the fourth quarter 2003, Unitrend
began to produce and sell the Cablety wire management system. Revenues were
modest during the third quarter of 2005 because Unitrend had changed its primary
focus from promoting sales of the Cablety to the research and development of the
Breeze power supply, Viking Modular computer case and incorporating the Cablety
into this system. Unitrend anticipates not being classified as a development
stage enterprise sometime during 2006.
Unitrend had an operating loss of $141,397 during the quarter ended September
30, 2005 as compared to an operating loss of $95,591 during the quarter ended
September 30, 2004, an increase of 48%. This increase is directly related to an
increase in repair and maintenance costs.
Selling, general and administrative expenses increased to $141,254 during the
quarter ended September 30, 2005 as compared to $96,188 for the quarter ended
September 30, 2004, an increase of 47%. This change was due primarily to
increases in repair and maintenance expense and professional fees of
approximately $66,500 and $3,400 incurred during the quarter ended September 30,
2005 as compared to the quarter ended September 30, 2004. Unitrend had some
building repairs that needed to be made during the third quarter 2005 as
compared to the third quarter 2004. Unitrend did not incur any other
significant increases during the quarter ended September 30, 2005 as compared to
the quarter ended September 30, 2004. Unitrend experienced decreases in trade
show expense and payroll expense that were approximately $11,500 and $7,200,
respectively as Unitrend continued its efforts to cut costs to decrease
Unitrend's need for cash.
During the quarters ended September 30, 2005 and September 30, 2004 there were
no stock options granted under our 1999 Stock Option Plan.
RESULTS OF OPERATIONS FIRST NINE MONTHS OF 2005 COMPARED TO FIRST NINE MONTHS OF
2004
Unitrend had no significant revenues during the nine months ended September 30,
2005 or during the nine months ended September 30, 2004. In the fourth quarter
2003, Unitrend began to produce and sell the Cablety wire management system.
Revenues were modest during the first nine months of 2005 because Unitrend had
changed its primary focus from promoting sales of the Cablety to the research
and development of the Breeze power supply, Viking Modular computer case and
incorporating the Cablety into this system. Unitrend anticipates not being
classified as a development stage enterprise sometime during 2006.
Unitrend had an operating loss of $365,838 during the nine months ended
September 30, 2005 as compared to an operating loss of $343,852 during the nine
months ended September 30, 2004, an increase of 6%. As discussed below, this
operating loss increased due to increases in selling, general and administrative
expenses during the nine months ended September 30, 2005.
Unitrend had $1,936 in research and development expenses during the nine months
ended September 30, 2005 and zero for the nine months ended September 30, 2004.
Unitrend believes that research and development expenses will increase as
Unitrend goes forward. New Product Innovations, Inc. (NPI) will complete product
development, obtain agency approvals, engage in product positioning and
manufacturing development for the Breeze power supply and Viking modular
computer case. Unitrend anticipates this spending to continue to increase as
Unitrend continues to develop new and innovative products for the computer
industry. There was nothing spent on tooling during the first nine months of
2005 as compared to $28,600 spent on tooling during the first nine months of
2004. Our management anticipates tooling costs to increase as Unitrend moves
forward.
Selling, general and administrative expenses increased to $363,261 during the
nine months ended September 30, 2005 as compared to $342,995 during the nine
months ended September 30, 2004, an increase of 6%. This change was due
primarily to increases in repair and maintenance expense, marketing expense,
storage expense and internet expense of approximately $74,000, $10,000, $2,400
and $2,300 during the nine months ended September 30, 2005 as compared to the
same time period in 2004. Unitrend had some building repairs that needed to be
made during the nine months ended September 30, 2005 as compared to the same
time period in 2004. Marketing expense increased as Unitrend continued to
create a public awareness of Unitrend and its products. Parkview Metals
increased the storage fee for storing the tools to be used in the metal
components of the VersaCase during this same time period. There were decreases
in payroll expense and trade show expense during the nine months ended September
30, 2005 as compared to the nine months ended September 30, 2004. Payroll
expense decreased because of an employee's voluntary reduction in their salary
in an effort to cut costs. The Company experienced the decrease in trade show
expense because of the difference in fees associated with the 2005 FOSE trade
show as compared to the 2004 RetailVision trade show in the same time period
last year.
There were no stock options granted to non-employees during the nine months
ended September 30, 2005 or during the nine months ended September 30, 2004
under our 1999 Stock Option Plan.
Accounts payable decreased to $510,568 for the nine months ended September 30,
2005 compared to $707,201 at years end December 31, 2004. Unitrend's interest
expense for the nine months ended September 30, 2005 was $7,615 as compared to
$10,973 from the same time period last year. This expense decreased due to Mr.
Jelinger forgiving loans made to Unitrend and agreeing to not incur interest on
current or future loans that he may make to Unitrend.
LIQUIDITY AND CAPITAL RESOURCES
Unitrend has financed operations since inception primarily through public and
private sales of equity securities, as well as through loans from Unitrend's
President/majority stockholder, Conrad A.H. Jelinger. As of September 30, 2005,
Unitrend's cash totaled $1,104 and accounts receivable totaled $519. Loans from
Mr. Jelinger during the nine months ended September 30, 2005 totaled $930,674.
Mr. Jelinger forgave $357,000 of these loans on June 30, 2005. This was
accounted for as contributed capital.
For the nine months ended September 30, 2005, primary uses of cash for
Unitrend's operations and working capital requirements totaled $758,950.
Unitrend's future capital requirements will depend upon numerous factors,
including the amount of revenues generated from operations, the cost of sales
and marketing activities and the progress of research and development
activities, none of which can be predicted with certainty. In December, 2000,
Unitrend filed an SB-2 registration statement with the Securities and Exchange
Commission to register 4,000,000 shares of common stock, at $10.00 per share in
a "Best Efforts" offering. The SB-2 registration statement was declared
effective on December 28, 2000. The purpose of the offering was to raise
sufficient funds to enable Unitrend to commence manufacturing of the VersaCase
product. Ultimately, Unitrend did not receive sufficient subscriptions to
enable to commence manufacturing operations and the offering terminated with all
funds returned to subscribers. Currently, Unitrend plans to raise sufficient
funds through the advancement of monies by Unitrend's founder and/or through a
private placement. While funds advanced and raised from the founder may enable
Unitrend to continue product development and commence out-source manufacturing,
Unitrend's management cannot be certain that the founder will continue to fund
Unitrend's capital needs. Consequently, Unitrend may seek additional funding
during the next 24 months through a post effective amendment to the SB-2
registration statement. There can be no assurance that any additional financing
will be available on acceptable terms, if required. Moreover, if additional
financing is not available, Unitrend could be required to reduce or suspend
operations, seek an acquisition partner or sell securities on terms that may be
highly dilutive or otherwise disadvantageous to existing investors, or investors
purchasing stock offered in the anticipated secondary offering. In the event
that neither of the capital-raising mechanisms described above result in timely
usable proceeds to Unitrend, there may be a serious shortfall of working
capital. Unitrend has experienced in the past, and may continue to experience,
operational difficulties and delays in product development due to working
capital constraints. Any such difficulties or delays could have a material
adverse effect on the business, financial condition and results of operations.
OUTLOOK
The outlook section contains a number of forward-looking statements, all of
which are based on current expectations. Actual results may differ materially.
Unitrend's growth strategy is built around five imperatives: maintaining
technological leadership; increasing market share; acquiring other business
entities; leveraging strategic relationships; and the recruiting and retaining
of key personnel.
MAINTAINING TECHNOLOGICAL LEADERSHIP. The cutting edge of Unitrend's effort to
achieve technological leadership is to establish a standard for open
architecture and modularity in the computer enclosure industry. Other
components, accessories, and products are in various stages of development and
will be supported by an aggressive research and development budget.
INCREASING MARKET SHARE. Our entry into the market is estimated at a modest
level to allow for growth at a reasonable pace. However, Unitrend makes no
representations or guarantees that our management will be able to manage the
growth of the business. The Cablety was introduced to the market in the fourth
quarter of 2003 and Unitrend experienced modest sales. We anticipate sales to
grow as we add the Breeze power supply and Viking chassis to our product line.
Once these products are introduced, we expect that there will be significant
interest across a number of market segments. The VersaCase product line is
unparalleled in its versatile application as a PC or server enclosure. The ease
of access and scalability will provide numerous benefits to routine and
mission-critical users that will propel and increase market share.
ACQUIRING OTHER BUSINESS ENTITIES. In order to expand Unitrend's technological
and market capabilities, we may consider the pursuit of other companies. Such
acquisitions may include core and non-core entities. A core entity may be a
research and development group, and a non-core firm could be one that might
enhance our production process.
LEVERAGING STRATEGIC RELATIONSHIPS. Unitrend intends to leverage relationships
with companies that complement our mission. For instance, the uniqueness of
Cablety, Breeze and VersaCase technology will create opportunities for us to
establish strong relationships with key distributors. These distributors will
be able to offer their clients a product that is very competitive and
distinctive. We have been approached by distributors to consider a channel
relationship or exclusive position with them. While Unitrend must maintain a
broader market focus, we may selectively enter into agreements that would
enhance market credibility and penetration.
RECRUITING AND RETAINING OF KEY PERSONNEL. An entrepreneurial spirit that was
based in creativity, risk and reward drove the birth of Unitrend. We intend to
maintain this quality by offering competitive salary and incentive compensation.
Unitrend's overriding human resources philosophy is to build a corporate culture
that supports the success of each employee, as well as the Company.
Part II. Other Information
Item 1. Legal Proceedings
In 2004, Unitrend filed a claim for damages in the Wayne County Circuit Court,
State of Michigan, against a third party. Unitrend seeks $1,000,000 plus
exemplary damages, including actual costs and attorney's fees. If Unitrend is
able to recover damages, it will be used to purchase additional assets.
Item 2. Changes In Securities And Use Of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission Of Matters To A Vote Of Security Holders
Not Applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
99. Additional Exhibits
Exhibit 99.1 Certification Under Section 906 of Sarbanes-Oxley Act
of 2002
(b) Reports on form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Unitrend,
Inc. has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNITREND, INC.
Dated: November 14, 2005 By: /S/ CONRAD A.H. JELINGER
_________________________
Conrad A.H. Jelinger
Chief Executive Officer,
Interim Chief Financial Officer
and President