SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE EXCHANGE ACT OF 1934
From the transition period from to
------------- -------------
Commission File Number 000-31631
---------
PERMA-TUNE ELECTRONICS, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Texas 75-2510791
----- ----------
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
199 TRADE ZONE DRIVE, RONKONKOMA, NEW YORK 11779
----------------------------------------------
(Address of principal executive offices)
(631) 981-2023
--------------
(Issuer's telephone number)
111 South Birmingham Street, Wylie, Texas 75098
----------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
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 XX No:
As of June 30, 2003, 2,322,700 shares of Common Stock of the issuer were
outstanding.
PERMA-TUNE ELECTRONICS, INC.
CONDENSED BALANCE SHEET
JUNE 30, DECEMBER 31,
2003 2002
ASSETS (UNAUDITED) (NOTE)
- -------------- ----------- --------------
Current assets:
Cash and cash equivalents $ 6,608 $ -
Accounts receivable, net 14,921 12,098
Inventory 34,314 34,447
Other current assets 369 529
-------------- ----------
Total current assets 56,212 47,074
Property and equipment, net 1,834 3,334
-------------- ----------
Total assets $ 58,046 $ 50,408
============== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
- -------------------------------------------------
Current liabilities:
Line of credit $ 22,824 $ 22,800
Accounts payable 45,775 44,413
Accrued expenses 5,662 5,767
Notes payable to stockholders 60,000 60,000
-------------- ----------
Total current liabilities 134,261 132,980
-------------- ----------
Commitments and contingencies
Stockholders' equity (deficit):
Common stock; no par value; 50,000,000 shares
authorized; 2,322,700 shares issued and
outstanding 264,966 264,966
Accumulated deficit (341,181) (347,538)
-------------- ----------
Total stockholders' equity (deficit) (76,215) (82,572)
-------------- ----------
Total liabilities and stockholders' equity $ 58,046 $ 50,408
============== ==========
Note: The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
PERMA-TUNE ELECTRONICS, INC.
UNAUDITED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Sales, net $ 89,554 $ 64,538 $ 158,090 $ 127,101
Cost of goods sold 33,879 28,499 57,909 50,822
----------- ----------- ----------- -----------
Gross profit 55,675 36,039 100,181 76,279
----------- ----------- ----------- -----------
Operating expenses:
General and administrative expenses 42,903 29,212 77,341 65,949
Legal and professional 6,849 31,074 11,424 36,262
Depreciation 750 841 1,500 1,682
----------- ----------- ----------- -----------
Operating expenses, net 50,502 61,127 90,265 103,893
----------- ----------- ----------- -----------
Income (loss) from operations 5,173 (25,088) 9,916 (27,614)
Interest expense (2,408) (1,465) (3,559) (4,080)
----------- ----------- ----------- -----------
Net income (loss) $ 2,765 $ (26,553) $ 6,357 $ (31,694)
=========== =========== =========== ===========
Net income (loss) per share-basic and
diluted $ 0.00 $ (0.01) $ 0.00 $ (0.01)
=========== =========== =========== ===========
Weighted average shares outstanding 2,322,700 2,312,700 2,322,700 2,312,700
=========== =========== =========== ===========
The accompanying notes are an integral part of
these unaudited condensed financial statements.
PERMA-TUNE ELECTRONICS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2003
COMMON STOCK ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
--------- -------- ---------- ---------
Balance at December 31, 2002 2,322,700 $264,966 $(347,538) $(82,572)
Net income - - 6,357 6,357
--------- -------- ---------- ---------
Balance at June 30, 2003 (unaudited) 2,322,700 $264,966 $(341,181) $(76,215)
========= ======== ========== =========
The accompanying notes are an integral part
of these unaudited condensed financial statements.
PERMA-TUNE ELECTRONICS, INC.
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
-------------------
2003 2002
-------- ---------
Cash flows from operating activities:
Net income (loss) $ 6,357 $(31,694)
Adjustment to reconcile net income (loss) to net cash
used in operating activities:
Depreciation expense 1,500 1,682
Changes in operating assets and liabilities:
Accounts receivable (2,823) 2,446
Inventory 133 (2,556)
Other assets 160 -
Accounts payable and accrued expenses 1,257 27,109
-------- ---------
Net cash provided by (used in) operating activities 6,584 (3,013)
-------- ---------
Cash flows from financing activities:
Proceeds from stockholder advances - 20,000
Line of credit, net 24 2,000
-------- ---------
Net cash provided by financing activities 24 22,000
-------- ---------
Net increase (decrease) in cash and cash equivalents 6,608 18,987
Cash and cash equivalents, beginning of period - 811
-------- ---------
Cash and cash equivalents, end of period $ 6,608 $ 19,798
======== =========
Supplemental cash flow information:
Cash paid for interest $ 3,559 $ 3,615
======== =========
Cash paid for income taxes $ - $ -
======== =========
The accompanying notes are an integral part of
these unaudited condensed financial statements.
PERMA-TUNE ELECTRONICS, INC.
SELECTED NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. GENERAL
-------
The unaudited condensed financial statements included herein have been prepared
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 accounting
principles generally accepted in the United States of America have been
condensed or omitted, pursuant to such rules and regulations. These unaudited
condensed financial statements should be read in conjunction with the audited
financial statements and notes thereto of Perma-Tune Electronics, Inc. (the
"Company") included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2002.
In the opinion of management, the unaudited condensed financial information
included herein reflect all adjustments, consisting only of normal, recurring
adjustments, which are necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the interim periods
presented. The results of operations for the interim periods presented herein
are not necessarily indicative of the results to be expected for a full year or
any other interim period.
2. ESTIMATES
---------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets or liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
This report contains forward looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934. These forward looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Factors that may affect future results" in this Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
report. The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's financial statements and notes
thereto included elsewhere in this report and the audited financial statements
included in the Company's Form 10-KSB for the year ended December 31, 2002.
OVERVIEW
Since its inception, the Company has focused on the production, research and
development of Porsche and Ferrari high performance ignition systems. The
Company's principal source of revenue has been from the Porsche repair parts
product line. In 1997 the Company began development of new product lines to
supply many repair and performance parts for a variety of cars and trucks.
The Company has introduced new products, has updated its extensive website and
has reduced its operating losses. The Company has reduced legal and accounting
costs, but still carries debt for services related to these items accrued in the
last 40 months. Significant progress has been made to reduce these obligations.
Management believes it is continuing to see the benefits of taking advantage of
the infrastructure improvements it has made (implementation of fully integrated
manufacturing/data base accounting software, the dedication of an officer to
finance/SEC compliance and marketing planning, and outsourcing of certain
manufacturing functions).
Since the Company has not yet raised money from its outstanding warrants, it has
focused on expanding its existing product lines to provide operating capital.
The Company has concentrated its efforts on streamlining and increasing the
production of its existing product lines in order to eliminate backorders for
Porsche products, and on introducing a new line of spark plug wire sets for
Porsche cars, and on introducing a new product line for late model Porsche cars.
NEW PRODUCTS
Plasma Ignition testing continues successfully on the Porsche 908 race car. The
car won the first race of the season by a wide margin of 26 seconds. The car
received much attention after the race which provided many opportunities to
conduct market research on the new product. In general, the comments on the
Plasma system were very favorable, with the most common praise being that
concerning its performance and compact size.
The Company intended to test the new Lamborghini Jalpa and Countach product line
using its newly acquired, in-car gravitational force dynamometer ("G meter")in
the second quarter of 2003.
The G-Tech brand Competition model G meter will be used to test the performance
of the Plasma Ignition against the Coilless Perma-Tune, conventional Perma-Tune
and the stock factory ignition. The testing will be performed by volunteer
Lamborghini drivers.
The Company could not perform the Lamborghini Jalpa and Countach product line
test during the 2nd quarter as planned. The software for the G-Tech in-car
dynamometer was not made available by the G-Tech company as promised. This
software is required to record the test results to a computer for analysis of
the test results. G-Tech has stated that the software will be available in
August of 2003. The testing will proceed as planned when the software is
available.
The Company continues to find new uses for the Plasma Ignition technology.
Florida Turbine, a jet engine research and development laboratory, has purchased
a Plasma Ignition for use in an experimental engine. Florida Turbine has
declined to tell the Company for whom the research is being performed, but has
indicated that the engine is of a pulsed detonation design intended to replace
existing military and civilian jet engines. The Company does not know when the
testing will be completed.
An energy firm based in the United Kingdom, Clarke Energy, has purchased a
Plasma Ignition for testing in its stationary electrical generating engines.
These engines run on a variety of alternate fuels, natural gas and petroleum
based fuels. Preliminary testing using the Plasma Ignition will be performed on
an exhaust afterburner that is designed to reduce oxides of nitrogen emissions
from the engine. When the afterburner testing is successfully concluded, testing
will begin using the Plasma Ignition to replace the existing spark ignition
systems used on the engine itself. These engines are twenty cylinder engines and
Clarke Energy intends to upgrade approximately 600 of these engines located
throughout the UK. Using twenty-one units per engine, this represents a
potential sale of 12,600 units, or approximately $2.5 million in potential
revenue. The Company expects the afterburner testing to be completed during the
third quarter of 2003.
Clarke Energy has indicated that the testing of the Plasma Drive in their
exhaust afterburner has been delayed. The delay was caused by the serious
illness of the chief design engineer that was to carry out the test. The
engineer has since recovered and the testing is expected to begin in the 3rd
quarter of 2003 with test results expected in the 4th quarter of 2003.
MARKETING STRATEGY
Until it is financially able to put a public relations firm on retainer, the
Company will continue its current marketing strategy of conducting sales
training missions to its wholesale distributors, continuing to improve and
expand its website, and making low-cost postcard mailings to alert distributors
to new product offerings. The Company now provides its warehouse distributors
with compact disks containing information on all of its product offerings in a
format that distributors can use to promote the Company's products in their
advertising and catalogs. The Company has continued to increase export sales as
a result of efforts by its new distributors. The Company's Internet site has
been instrumental in those sales and the Company is cultivating more contacts in
Europe. The Company has been told that publication of the FVD Worldwide
catalogue has been delayed. It is now expected to be released in the fourth
quarter of 2003. The Company continues to ship Plasma Ignition components to
race car engine builders. Independent dynamometer testing is being carried out
on the new components. Comparisons between the Perma-Tune product and the
Company's competitors will be performed.
The development of the Plasma Drive for the 2000, 01 and 02 model year Honda is
complete. Testing of the new Honda product line is expected to begin as soon as
the Company is financially able to pursue dyno testing and CARB certification.
Development of the Toyota and domestic product lines are rescheduled for the
third and fourth quarters of 2003 respectively.
MANUFACTURING OVERVIEW
Management has prepared for rapid growth. The Company's manufacturing technique
is flexible because of its modular design and it can respond easily to customer
demand. Modules can be mass-produced and then assembled to meet changing
purchase orders. Production can be increased and new products introduced
readily. Currently the Company is operating at a small percentage of its
manufacturing capacity.
COMPARISON OF OPERATING RESULTS
Quarter Ended June 30, 2003 Compared to the Quarter Ended June 30, 2002
- -------------------------------------------------------------------------
In the second quarter of 2003, the Company experienced a 39% sales growth as
gross sales increased from $64,538 in the second quarter of 2002 to $89,554 in
the second quarter of 2003.
Gross profit in the second quarter of 2003 was $55,675 compared to $36,039 in
the second quarter of 2002. As a percentage of sales, gross profit increased in
the second quarter of 2003 to 62% from 56% in the second quarter of 2002. The
Company has begun sub-contracting some labor-intensive operations to increase
its gross profit margin and to allow for rapid growth. The Company believes it
can further improve its profit margin, as it has lined up additional
sub-contractors to use in this expense-reducing effort, and will begin
outsourcing additional segments of production once capital funding allows it to
take advantage of the economies of scale these opportunities offer the Company.
The higher the quantity of parts we can subcontract to outside vendors, the
better price per piece the Company will be able to negotiate with each vendor,
lowering its cost of goods sold and raising its profit margin. Circuitry which
is currently hand-made in-house, can be outsourced for robotic manufacture with
an expected increase in accuracy and reliability, but the Company will need to
have the ability to make a large quantity purchase commitment and cover up-front
set-up costs to implement these plans. In all cases, the Company will retain
control over production of the Perma-Tune product line and its trade secrets by
manufacturing the key components itself.
General and Administrative (G & A) expenses were $42,903 and $29,212 in the
second quarters of 2003 and 2002, respectively. As a percentage of sales, G & A
expenses increased to 48% from 45%. The figures for both 2003 and 2002 are
unusually high by percentage. The major components of this atypical result are
extra salaries and wages (with related payroll taxes) for Company personnel to
carry out research and development work, and the internal costs associated with
being a fully reporting company. These expenses have been reigned in by changing
to a more cost-effective accounting firm, as well as having in-house personnel
author and edit SEC filings for review by the Company's attorney.
Interest expenses increased from $1,465 in the second quarter of 2002 to $2,408
in the second quarter of 2003. This increase reflects the accumulation of
interest associated with agreements with the Company's previous accountants to
allow the Company to pay its outstanding balances as revenue became available
from the collection of normal accounts receivable. Third-party debt levels have
increased in the second quarter of 2003. The Company made the decision to change
accounting firms in May, 2003 in order to reduce future expenditures on
financial reviews and audits. This change in audit firms was reported via a Form
8-K in May, 2003.
The Company showed a small net profit in the second quarter of 2003, but
incurred a net loss for the second quarter of 2002. The Company has a $341,181
net operating loss carry-forward, so there was no income tax liability for
either quarter. This net operating loss carry-forward will be offset against
future income through years ended December 31, 2011 through 2022. The majority
of this net operating loss carry-forward, $286,250, has occurred in the last
five years. This was the direct result of increased R&D expenses for developing
new products as well as the costs associated with the public offering that took
place.
As of June 30, 2003, the Company's accumulated losses were $341,181.
LIQUIDITY AND CAPITAL RESOURCES
For the quarter ended June 30, 2003, the Company generated net income of $5,173
from its operations. In prior years, the Company has typically had net losses.
Consequently, the Company has been dependent on private placements of its
equity securities and debt financing to fund its cash requirements, as well
as revenues provided by the normal operations of Perma-Tune.
On March 12, 2003, the Company renewed its $25,000 line of credit with The
American National Bank of Texas in Wylie. The note is collateralized by the
Company's accounts receivable, inventory and equipment, with an initial interest
rate of 7.75%. Interest is variable, based on the Prime Rate plus 3%. Accrued
interest is payable monthly, and the maturity date is September 12, 2003. For
the period ended June 30, 2003, the principal balance owed on this line of
credit was $22,824, with an interest rate of 7.75%.
On December 8, 1997, the Company issued an offering circular for 125,000 units
priced at $2.00 per unit. Each unit entitled the investor to one share of common
stock and three stock purchase warrants. Each warrant entitled the holder to
purchase one share of stock for $2.00. The warrants expire on December 31, 2003.
At December 31, 2002, there were 348,000 warrants outstanding.
Proceeds from the exercise of warrants are planned to fund production tooling
and start up costs of the Honda and Toyota products lines. The Company plans to
manufacture the required tooling estimated at $35,000 in materials and 560 man
hours. There may be other costs associated with attaining the California Air
Resources Board certification for the Honda, Toyota and late model Porsche
Product lines.
As of June 30, 2003 the Company's cash reserves totaled $6,608 and total
current assets were $56,212. The Company is continuing production and sales
efforts as well as further research and development and has just recently begun
to break even in terms of both cash flow and profitability. For the remainder of
2003 and into 2004, the Company has no long-term commitments but expects to
incur additional costs for research and development. It also expects to expand
its sales and marketing effort. These efforts could significantly increase
demand for the Company's products beyond the Company's current production
capacity. While the Company believes it can increase its production capacity to
meet sales demand, significant additional capital could be required to meet
expansion requirements.
Inventory at June 30, 2003 was $34,314. Inventory at December 31, 2002 was
$34,447.
The Company presently has an outstanding loan payable on demand to Terry Taylor,
a stockholder. Principal balance as of June 30, 2003 is $40,000. The loan bears
an interest rate of 10%. Interest is payable quarterly. The loan is secured by
inventory.
The Company also presently has an outstanding loan payable on demand to Lonnie
Lenarduzzi and Linda Decker, stockholders and directors. Principal balance as of
June 30, 2003 is $20,000. The loan bears an interest rate of 10%, and is
unsecured. The note is due June 28, 2004, with the option to renew the term for
an additional year.
The Company's working capital ratio was 0.42 in the second quarter of 2003,
compared with 0.52 in the second quarter of 2002. The Company will retire
accounts payable from income generated by normal operations. It has agreements
with its former accounting firm to pay them as funding becomes available.
The Company's inventory turnover ratios were 2.8 and 3.4 for the second quarter
2002 and 2003, respectively, improving slightly.
The Company's accounts receivable turnover ratios were 20 days and 17 days for
the second quarters of 2002 and 2003, respectively. This improvement is
attributable to the increase in customers paying by advance wire transfer or COD
terms. The Company continues to manage its accounts receivable very effectively,
collecting monies due within the terms offered to its customers.
The Company is taking steps to raise equity capital. There can be no assurance
that any new capital would be available to the Company or that adequate funds
for the Company's operations, whether from the Company's revenues, financial
markets, or other arrangements will be available when needed or on terms
satisfactory to the Company. The Company has no commitments from officers,
directors or affiliates to provide funding. The failure of the Company to obtain
adequate additional financing may require the Company to delay, curtail or scale
back some or all of its research and development programs, sales and marketing
efforts, and manufacturing operations. Any additional financing may involve
dilution to the Company's then-existing shareholders.
Without additional capital funding, the Company believes it can operate at its
current level of liquidity for twelve to twenty-four months. However, it
hopes to obtain short-term funding until operations are ramped up, creating the
profitability that will improve its liquidity position. The Company recently
completed a reverse merger transaction as discussed below in Subsequent Event.
SUBSEQUENT EVENT
On July 21, 2003, the Registrant acquired 100% of the issued and
outstanding shares of Trans Max Technologies, Inc., a Florida corporation,
("Trans Max") in exchange for 15,177,300 shares of the Registrant's common
stock. As a result of the acquisition of Trans Max, the control of the
Registrant shifted to the former shareholders of Trans Max. The following
individuals will exercise control of the Registrant.
Name No. of shares Percentage
---- --------------- ----------
Colonel Robert Fyn 5,312,055 30.4%
Murray H. Stark 5,312,055 30.4%
Peter Merganthaler 2,276,595 13.0%
Garth S. Bailey 2,276,595 13.0%
Following the Share Exchange there are 17,500,000 shares of the
Registrant's common stock outstanding. The Registrant entered into this
transaction due to financing commitments made by Trans Max and its
shareholders.
The business of Perma-Tune Electronics, Inc. will remain the business of the
Registrant.
As a result of the acquisition of Trans Max, the Registrant will be changing its
name from Perma-Tune Electronics, Inc. to Trans Max Technologies, Inc. In
addition, Lonnie Lenarduzzi resigned as the Registrant's President, Chief
Executive Officer and Director, Linda Decker resigned as Secretary, Chief
Financial Officer, and Director and the following persons resigned as directors:
Larrie Lenarduzzi, Wayne Robertson, and Harold "Red" Smith. Peter Mergenthaler
was appointed a director and the Chief Executive Officer.
In addition to entering into the share exchange agreement with Trans Max, the
Registrant entered into a two year employment agreement with Paul Cervino to
serve as the Registrant's Chief Financial Officer. Pursuant to the employment
agreement, Mr. Cervino will receive a base salary of $125,000 which may be
increased during the term of the agreement as well as a car allowance of $750.
In addition, Mr. Cervino earns 10,417 shares of the Registrant's common stock
for each month of service until such time as he receives an aggregate of 250,000
shares of common stock. If the Registrant fails to renew the contract other than
for cause, Mr. Cervino would be entitled to three months of compensation at the
rate in effect at the time of non-renewal.
Trans Max, the Registrant's wholly-owned subsidiary, entered into employment
agreements with Lonnie Lenarduzzi, Linda Decker and Randy Knapp.
Pursuant to the employment agreement with Lonnie Lenarduzzi, Mr. Lenarduzzi will
receive a base salary of $90,000 per year for a period of thirty months to
provide engineering and advisory services. In addition, Mr. Lenarduzzi receives
a car allowance of $600 per month and 10,417 shares of the Registrant's common
stock for each month of service until such time as Mr. Lenarduzzi receives an
aggregate of 250,000 shares of common stock. Mr. Lenarduzzi received $25,000 for
moving expenses and entered into a bonus agreement, whereby he and his wife,
Linda Decker, will receive 25% of the appraised value of the Perma-Tune business
after two years which shall be payable in cash, stock or a combination thereof
with the mutual consent of the Registrant. If Trans Max fails to renew the
contract other than for cause, Mr. Lenarduzzi would be entitled to three months
of compensation at the rate in effect at the time of non-renewal.
Pursuant to the terms of the employment agreement with Linda Decker, Ms. Decker
will provide business and financial services for a period of thirty months and
receive a base salary of $60,000 per year. In addition, Ms. Decker receives
10,417 shares of the Registrant's common stock for each month of service until
such time as Ms. Decker receives an aggregate of 250,000 shares of common stock.
Ms. Decker entered into a bonus agreement as outlined above. If Trans Max fails
to renew the contract other than for cause, Ms. Decker would be entitled to
three months of compensation at the rate in effect at the time of non-renewal.
Pursuant to the terms of the employment agreement with Randy Knapp, Mr. Knapp
shall serve as the Operations Manager and shall receive a base salary of $78,000
per year for a period of thirty months. Mr. Knapp received moving expenses in
connection with the employment agreement and receives 3,125 shares of the
Registrant's common stock until such time as an aggregate of 75,000 shares are
received. If Trans Max fails to renew the contract other than for cause, Mr.
Knapp would be entitled to three months of compensation at the rate in effect
at the time of non-renewal.
The change in control was reported via a Form 8-K in August, 2003.
ITEM 3. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Our chief executive
officer and our chief financial officer, after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the
"Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, our disclosure controls
and procedures were adequate and designed to ensure that material information
relating to us and our consolidated subsidiaries would be made known to them by
others within those entities.
(b) Changes in internal controls. There were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect our disclosure controls and procedures subsequent to the Evaluation Date.
OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.1 Employment agreement between Lonnie Lenarduzzi and Trans Max
Technologies, Inc.
10.2 Employment agreement between Linda Decker and Trans Max Technologies,
Inc.
10.3 Employment agreement between Randy Knapp and Trans Max Technologies,
Inc.
10.4 Employment agreement between Paul M. Cervino and Perma-Tune
Electronics, Inc.
10.5 Bonus agreement between Lonnie Lenarduzzi, Linda Decker and Trans Max
Technologies, Inc.
99.1 Certification Pursuant to 18.U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18.U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K
On May 8, 2003, the Registrant filed a report on Form 8-K relating to changes in
the Registrant's Certifying Accountant.
On August 14, 2003, the Registrant filed a report on Form 8-K relating to a
change in control.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PERMA-TUNE ELECTRONICS, INC.
Date: August 19, 2003
By: /s/ Linda Decker_
------------------
Linda Decker
Former Chief Financial Officer
CERTIFICATIONS
I, Lonnie Lenarduzzi, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Perma-Tune
Electronics, Inc.;
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. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us 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 our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our 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. The registrant's other certifying officer and 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 our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: August 19, 2003
By: /s/ Lonnie Lenarduzzi
-----------------
Lonnie Lenarduzzi
Former Chief Executive Officer
CERTIFICATIONS
I, Linda Decker, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Perma-Tune
Electronics, Inc.;
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. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us 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 our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our 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. The registrant's other certifying officer and 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 our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: August 19, 2003
By: /s/ Linda Decker
------------
Linda Decker
Former Chief Financial Officer