SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2006
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, 2006: 70,390,770
UNITREND, INC. AND SUBSIDIARY
FORM 10-QSB
QUARTER ENDED September 30, 2006
Table of Contents
PART I FINANCIAL INFORMATION Page
Item 1. Condensed Financial Statements
Condensed Balance Sheets at September 30, 2006 And December 31, 2005.4
Condensed Statements of Operations for the three and nine months
ended September 30, 2006, 2005 and for the period from September
27, 1994 (date of inception) to September 30, 2006 ............... 5
Condensed Statements of Cash Flows for the nine months ended
September 30, 2006, 2005 and for the period from September 27,
1994 (date of inception) to September 30, 2006 ................... 6
Statements of Stockholders' Equity for the nine months ended
September 30, 2006 and for the years ended December 31, 2005, 2004
and 2003.......................................................... 7
Notes to Condensed Financial Statements......................... 8-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 10-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................... 12
Item 2. Changes In Securities And Use Of Proceeds....................... 12
Item 3. Defaults Upon Senior Securities................................. 12
Item 4. Submission Of Matters To A Vote Of Security Holders............. 12
Item 5. Other Information............................................... 12
Item 6. Exhibit......................................................... 12
Signatures...................................................... 13
This quarterly report on Form 10-QSB is for the three and nine months ended
September 30, 2006. This quarterly report modifies and supersedes documents
filed prior to this quarterly report. The Securities and Exchange Commission
(SEC)allows us to "incorporate by reference" information that we file with them,
which means that we 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 we file 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 we file from time to time with the SEC.
In this quarterly report, we state our beliefs of future events and of our
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 our predictions. Actual events or
results may differ materially. In evaluating those statements, you should
specifically consider various factors, including the risks outlined below.
Those factors may cause our actual results to differ materially from any of our
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, 2006 December 31,2005
------------------ ----------------
CURRENT ASSETS
Cash $ 394 $ 291
Accounts Receivable 434 569
Inventory - Finished goods 13,168 13,168
---------------- ----------------
Total current assets 13,746 14,028
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 (340,782) (328,540)
---------------- ----------------
Net property and equipment 1,297,086 1,309,327
---------------- ----------------
OTHER ASSETS
Patent licensing costs,
net of accumulated amortization 17,011 18,598
---------------- ----------------
TOTAL ASSETS $ 1,328,093 $ 1,341,953
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES
Accounts payable $ 570,246 $ 510,176
Current portion of note payable - -
Accrued expenses 1,076,324 1,006,477
---------------- ----------------
Total current liabilities 1,646,570 1,516,653
---------------- ----------------
NOTES PAYABLE - RELATED PARTIES 969,884 850,068
---------------- ----------------
STOCKHOLDERS' EQUITY
Common stock, no par value 3,805,098 3,805,098
Additional paid-in capital 9,332,592 9,332,592
Deficit accumulated in the development stage (14,426,052) (14,162,458)
---------------- ----------------
Total stockholders' equity (1,288,361) (1,024,769)
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 1,328,093 $ 1,341,953
================ ================
UNITREND, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS (UNAUDITED)
(unaudited)
(unaudited) (unaudited) (unaudited) (unaudited) September 27,1994
Three Months Three Months Nine Months Nine Months (Date of Inception)
Ended Ended Ended Ended Ended to
September, 30 September, 30 September, 30 September, 30 September, 30
2006 2005 2006 2005 2006
------------- ------------- ------------- ------------- -----------------
Sales $ - $ 68 $ - $ 135 $ 6,725
Cost of Sales (147) (210) (441) (776) (11,523)
------------- ------------- ------------- ------------- -----------------
Gross Loss (147) (142) (441) (641) (4,798)
Research and development expenses - - (48,765) (1,936) (658,993)
Selling, general and administrative expenses (61,646) (141,254) (214,389) (363,261) (12,860,721)
------------- ------------- ------------- ------------- -----------------
Operating loss (61,793) (141,397) (263,595) (365,838) (13,524,512)
Other income - - - - (546,875)
Interest income - - - - 1,546
Interest expense - - - (7,615) (332,244)
------------- ------------- ------------- ------------- -----------------
Net loss before cumulative effect of change
in accounting principle (61,793) (141,397) (263,595) (373,453) (14,402,085)
Cumulative effect of change in accounting - - - - (23,968)
principle ------------- ------------- ------------- ------------- -----------------
Net loss $ (61,793) $ (141,397) $ (263,595) $ (373,453) $ (14,426,052)
============= ============= ============= ============= =================
Basic and diluted loss per share:
Before cumulative effect of change in
accounting principle $ (0.00) $ (0.00) $ (0.00) $ (0.01) $ (0.21)
Cumulative effect of change in
accounting principle - - - - -
------------- ------------- ------------- ------------- -----------------
Net loss $ (0.00) $ (0.00) $ (0.00) $ (0.01) $ (0.21)
============= ============= ============= ============= =================
Weighted average shares outstanding
used to compute basic and diluted loss 70,390,770 70,390,770 70,390,770 70,390,770 68,631,092
per share
============= ============= ============= ============= =================
UNITREND, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
(unaudited) (unaudited) September 27, 1994
Nine Months Ended Nine Months Ended (Date Of Inception)
September 30, 2006 September 30, 2005 September 30, 2006
---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (263,595) $ (373,453) $ (14,426,052)
---------------- ---------------- ----------------
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 13,828 13,977 386,714
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 in operating assets:
Accounts receivable 136 (135) (434)
Inventory - (9,470) (13,168)
Prepaid Expenses - - -
Increase (decrease) in operating liabilities:
Accounts payable 60,070 (196,633) 570,246
Accrued expenses 69,847 (193,236) 1,292,014
---------------- ---------------- ----------------
Total adjustments 143,881 (385,497) 8,244,038
---------------- ---------------- ----------------
Net cash used in operating activities (119,714) (758,950) (6,182,014)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for patent licensing costs - - (31,723)
Purchase of property and equipment - - (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 - - (2,367,038)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loan costs - - (5,448)
Loans from stockholder 119,816 930,674 4,792,980
Proceeds from note payable - - 290,000
Payment on note payable - (171,047) (290,000)
Proceeds from sale of common stock
and exercise of stock options - - 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 119,816 759,627 8,549,445
---------------- ---------------- ----------------
Net increase (decrease) in cash 103 677 394
Cash - beginning of period 291 427 -
---------------- ---------------- ----------------
Cash - end of period $ 394 $ 1,104 $ 394
================ ================ ================
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period
Interest $ - $ 6,113 $ 179,795
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
The President/Majority Stockholder forgave debt of $136,832 during the
period ended March 31, 2004.
UNITREND, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Nine Months Ended September 30, 2006
And For the Year Ended December 31, 2005, 2004, 2003, 2002
(unaudited)
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage Total
------------- ------------- ------------- ------------- -------------
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
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 and
accrued salary on
March 31, 2004 - - 136,832 - 136,832
Majority stockholder
forgives loans and
accrued salary on
June 30, 2004 - - 237,077 - 237,077
Net loss - 2004 - - - (1,185,679) (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 - 2005 - - - (545,520) (545,520)
------------- ------------- ------------- ------------- -------------
BALANCE -
DECEMBER 31, 2005 70,390,770 $ 3,805,098 $ 9,332,592 $ (14,162,458) $ (1,024,769)
Net loss for the
period ended
September 30, 2006 - - - (263,595) (263,595)
------------- ------------- ------------- ------------- -------------
BALANCE -
SEPTEMBER 30, 2006 70,390,770 $ 3,805,098 $ 9,332,592 $ (14,426,052) $ (1,288,361)
============= ============= ============= ============= =============
UNITREND, INC.
FORM 10-Q SB
QUARTER ENDED SEPTEMBER 30, 2006
NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
BASIS OF PRESENTATION
The condensed financial statements included herein have been prepared by the
Company, 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, the Company 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 management, necessary to state fairly the results for the three and
nine month period ended September 30, 2006. The results for the three and nine
month period ended September 30, 2006 are not necessarily indicative of the
results expected for the full fiscal year.
NATURE AND SCOPE OF BUSINESS
Unitrend, Inc. (the Company) 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. The Company was incorporated on April 11, 1996 as Versa Case,
Inc. On May 15, 1996, the Company changed its name to Unitrend, Inc. The
Company's operations to date have consisted primarily of incidental sales of
computer components while the Company personnel have concentrated on the
research and development of its products and procuring the necessary patents on
its technology. To date, the Company has been issued nine United States patents
with fifteen patent applications pending. The VersaCase patent alone was valued
at $9,478,000 by Robinwood Consulting, an independent firm experienced in the
valuation of intellectual property. Generally accepted accounting principles do
not allow us to record this valuation on the balance sheets, we can only account
for the direct costs involved in obtaining a patent. We also have nine
registered trademarks and service marks. As of September 30 2006, expenses
incurred have been primarily for administrative support, obtaining patents,
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 $14,426,000.
On April 16, 1998, the Company formed Osborne Manufacturing, Inc. (OMI) to
produce the Company's products. In 2002, OMI was dissolved because 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 began as 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.
The Company merged with Server Systems Technology, Inc. (SSTI) effective
December 15, 1998. SSTI was the predecessor to the Company and was formed
September 27, 1994. It owns several patents that are key to the Company's
products, but otherwise has ceased its development stage operations when the
Company was formed in April, 1996. SSTI is a related party to the Company 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 our 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 2006, we hope to finalize any design changes to the
VersaCase, Stable power supply 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 the Cablety,
VersaCase, and Stable power supply product lines 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 our distribution plans
as demanded by the markets we serve in order to maximize efficiency throughout
all channels of distribution. In March 2004, R & R Plastics began building a
high volume production tool for the Cablety with new industrial/military "Safety
Wire" capabilities molded into it. This tool was completed in June 2004. 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 will be
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.
In March, 2006 Unitrend took delivery of the new Stable "Breeze" power supply
proto-types built by NPI. The breeze power supply is a new generation of PC
power supply that has been designed as a potential replacement power supply
system for an estimated 1,250,000,000 PC's used in the world today. Its design
also makes it a good candidate for new PC installations by Value Added Resellers
(VARs) and Original Equipment Manufactures(OEM) around the world where high
quality and stable power is demanded. Tooling for the Breeze power supply is
expected to be completed in 2007 with potential sales expected to follow late in
the second quarter 2007.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles require 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
In the past, there were unsecured notes payable to the President/majority
stockholder, including interest at prime on the first business day of the year,
payable in ten equal installments after the Company is profitable for one year.
As of June 30, 2006 note payable to the President/majority stockholder was
$969,884. As of December 31, 2005 and December 31, 2004, the outstanding balance
of the note payable to the President/majority stockholder was $850,068 and
$99,846, respectively. During 2004, our President/majority stockholder forgave
loans to the Company of $373,909. He also forgave debt of $432,240, accrued
interest of $22,280 and accrued salary of $199,352 during the year ended
December 31, 2003. On March 31, 2000, our President/majority stockholder
forgave loans to the Company of $2,171,854 and accrued interest of $69,942. The
forgiveness was accounted for as contributed capital.
NEW ACCOUNTING PRONOUNCEMENTS
None
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
THIRD QUARTER OF 2006 COMPARED TO THIRD QUARTER OF 2005
We had no revenues in the third quarter ended September 30, 2006 as compared to
very modest sales in the third quarter ended September 30, 2005. Revenues were
nonexistent during the third quarter of 2006 because Unitrend had changed its
primary focus from promoting sales of Cablety to the research and development
of the Breeze power supply, Viking modular computer case and incorporating the
Cablety into this system. We anticipate not being classified as a development
stage enterprise sometime during 2007.
We had an operating loss of $61,793 during the quarter ended September 30,2006
As compared to an operating loss of $141,397 during the quarter ended
September 30, 2005 an decrease of approximately 56%
Selling, general and administrative expenses decreased to $61,646 during the
quarter ended September 30, 2006 as compared to $141,254 during the quarter
ended September 30, 2005, a decrease of approximately 56%. The decrease in
selling, general and administrative expenses was due primarily to some increases
and decreases in expenses. Unitrend only experienced an increase in consulting
fees of approximately $10,819 during the quarter ended September 30, 2006 as
compared to the same time period in 2005. The Company had significant decreases
in repair and maintenance expense and payroll expense of approximately $66,600
and $13,500 during the three months ended September 30, 2006 as compared to the
three months ended September 30, 2005.
There were no stock options granted to non-employees during the three months
ended September 30, 2006 or during the three months ended September 30, 2005.
RESULTS OF OPERATIONS
FIRST NINE MONTHS OF 2006 COMPARED TO FIRST NINE MONTHS OF 2006
Unitrend had nonexistent revenues during the nine months ended September 30,
2006 and had no significant revenues during the nine months ended September 30,
2005. Revenues were zero during the first nine months of 2006 because Unitrend
had changed its primary focus from promoting sales of 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 2007.
Unitrend had an operating loss of $263,595 during the nine months ended
September 30, 2006 as compared to an operating loss of $365,838 during the nine
months ended September 30, 2005, a decrease of approximately 28%. As discussed
below, this change is due to decreases in selling, general and administrative
expenses.
Unitrend had $48,765 in research and development expenses during the nine months
ended September 30, 2006 as compared to $1,936 for the nine months ended
September 30,2005. Unitrend believes that research and development expenses will
increase as Unitrend goes forward. 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 2006 or during the
first nine months of 2005. Our management anticipates tooling costs to increase
as Unitrend move forward.
Selling, general and administrative expenses decreased to $214,389 during the
nine months ended September 30, 2006 as compared to $363,261 during the nine
months ended September 30, 2005, a decrease of approximately 41%. This change
was due primarily to decreases in, payroll expense, repairs and maintenance, and
trade show expense of approximately $27,000, $74,000 and $7,500, respectively,
during the nine months ended September 30,2006 as compared to the same time
period in 2005. The only significant increase in expenses were consulting fees
of $44,000 in the nine months ended September 30, 2006 as compared to the same
time period in 2005.
There were no stock options granted to non-employees during the nine months
ended September 30, 2006 or during the nine months ended September 30, 2005.
Accounts payable increased to $570,246 for the nine months ended September 30,
2006 compared to $510,176 at years end December 31, 2005. The primary reason
for the increase was an increase in consulting fees of approximately $44,000
during the nine months ended September 30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through public
and private sales of equity securities that provided aggregate net proceeds of
$2,629,063, and net loans from its founder received from inception of
$4,792,980. As of September 30, 2006, the Company's cash totaled $394 and
accounts receivable totaled $434. Loans from Mr. Jelinger during the nine
months ended September 30, 2006 totaled $119,816. He forgave $373,909 of loans
in 2004. The President/majority stockholder forgave debt of $432,240, accrued
interest of $22,280 and accrued salary of $199,352 during the year ended
December 31, 2003. On March 31, 2000, our President/majority stockholder forgave
loans to the Company of $2,171,854 and accrued interest of $69,942. This was
accounted for as contributed capital.
Primary uses of cash for the nine months ended September 30, 2006 included
$119,714 for the Company's operations and working capital requirements. For the
nine months ended September 30, 2006, primary uses of cash for the Company's
investing requirements totaled zero due to no purchases of property or
equipment.
Our future capital requirements will depend upon numerous factors, including the
amount of revenues generated from operations, the cost of our sales and
marketing activities and the progress of our research and development
activities, none of which can be predicted with certainty. In December, 2000,
the company 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 filing was declared effective on
December 28, 2000. The purpose of the offering was to raise sufficient funds to
enable the Company to commence manufacturing of its VersaCase product.
Ultimately, the Company did not receive sufficient subscriptions to enable to
commence manufacturing operations and the offering terminated with all funds
returned to subscribers. Currently, the Company plans to raise sufficient funds
through the advancement of monies by its founder and/or through private
placements. While funds advanced and raised from the founder may enable the
Company to continue product development and commence out-source manufacturing,
we cannot be certain that the founder will continue to fund our capital needs.
Consequently, we may seek additional funding through an SB-2 registration
statement or through private placements. There can be no assurance that any
additional financing will be available on acceptable terms, if required.
Moreover, if additional financing is not available, we could be required to
reduce or suspend our 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 the Company, we may have a serious
shortfall of working capital. We have 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 our 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.
Our 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 our 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. They 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 us to grow at a reasonable pace. However, we make no
representations or guarantees that we will be able to manage the growth of our
business. The Cablety was introduced to the market in the fourth quarter of
2003 and we experienced modest sales. We anticipate sales to grow as we move
forward into 2007. Once VersaCase and the Stable power supply product lines 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 our 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. We intend to leverage our relationship
with companies that complement our mission. For instance, the uniqueness of
Cablety, Stable, 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 we 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 this company. We intend
to maintain this quality by offering competitive salary and incentive
compensation. Our 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
None
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 27, 2006 By: /S/ CONRAD A.H. JELINGER:
_________________________
Conrad A.H. Jelinger
Chief Executive Officer,
Interim Chief Financial Officer
and President
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Unitrend, Inc. (The
Company) on Form 10-QSB for the period ending September 30, 2006,
As filed with the Securities and Exchange Commission on the date
hereof (the Report), I, Conrad A.H. Jelinger, Chief Executive
Officer and Interim Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of
the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/s/ Conrad A.H. Jelinger
-----------------------------
Conrad A.H. Jelinger
November 27, 2006
Chief Executive Officer, Interim
Chief Financial Officer
and President