Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-27210
Zunicom, Inc.
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(Exact name of registrant as specified in its charter)
TEXAS 75-2408297
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4315 West Lovers Lane, Dallas, Texas 75209
(Address of principal executive offices) (Zip Code)
(214) 352-8674
(Registrant's telephone number, including area code)
None
(Former name,former address and former fiscal year,if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
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(Title of Class)
Class A Preferred Stock, $1.00 Par Value
----------------------------------------
(Title of Class)
Units, consisting of one (1) share of Common Stock and one (1)
share of Class A Preferred Stock
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(Title of Class)
1
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 [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of "large accelerated filer, "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer
[ ] Accelerated filer [ ] Non-accelerated filer [ ](Do not check if a smaller
reporting company) Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
As of May 13, 2011, 9,733,527 shares of Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
2
Zunicom, Inc.
INDEX
3
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
ZUNICOM, INC.
ASSETS
| March 31, 2011 | December 31,2010 | ||
|---|---|---|---|
| (unaudited) | (audited) | ||
| CURRENT ASSETS | |||
| Cash and cash equivalents | $ 4,284,844 | $ 4,427,227 | |
| Accounts receivable – trade, net of $6,323
|
|||
| allowance for doubtful accounts of | |||
| and $6,323 | 33,925 | 37,064 | |
| Inventory | 45,965 | - | |
| Deferred costs | 27,345 | 69,034 | |
| Prepaid expenses and other current assets | 26,008 | 35,166 | |
| Total current assets | 4,418,087 | 4,568,491 | |
| PROPERTY AND EQUIPMENT | |||
| Furniture and fixtures | 10,000 | 10,000 | |
| Less accumulated depreciation | (1,833) | (1,333) | |
| Net property and equipment | 8,167 | 8,667 | |
| Intangible assets – net of accumulated amortization | 377,750 | 407,000 | |
| INVESTMENT IN UNCONSOLIDATED INVESTEE | 4,643,866 | 4,489,039 | |
| TOTAL ASSETS | $ 9,447,870 | $ 9,473,197 | |
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
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ZUNICOM, INC.
CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
| March 31, 2011 | December 31,2010 | |||
|---|---|---|---|---|
| (unaudited) | (audited) | |||
| CURRENT LIABILITIES | ||||
| Accounts payable | 347,435 | 406,185 | ||
| Accrued liabilities | 23,926 | 52,219 | ||
| Customer deposits | 56,293 | 52,586 | ||
| Total current liabilities | 427,654 | 510,990 | ||
| NON-CURRENT DEFERRED TAX LIABILITY | 2,488,818 | 2,424,863 | ||
| TOTAL LIABILITIES |
2,916,472 | 2,935,853 | ||
| STOCKHOLDERS' EQUITY | ||||
Preferred stock - $1.00 par value, 1,000,000 shares authorized; 60,208 and 60,208 Class A Preferred Shares issued and outstanding; liquidation preference of $316,092 as of March 31, 2011 |
60,208 | 60,208 | ||
Common stock - $0.01 par value; 50,000,000 shares authorized; 9,733,527 and 9,733,527 shares issued and outstanding |
97,335 | 97,335 | ||
| Additional paid-in capital | 9,166,198 | 9,153,520 | ||
| Accumulated deficit | (2,792,343) | (2,773,719) | ||
| Total stockholders' equity |
6,531,398 | 6,537,344 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 9,447,870 | $ 9,473,197 | ||
Preferred stock - $1.00 par value, 1,000,000 shares authorized; 60,208 and 60,208 Class A Preferred Shares issued and outstanding; liquidation preference of $316,092 as of March 31, 2011
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
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ZUNICOM, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2011 and 2010
| 2011 | 2010 | |||
| REVENUES | ||||
| Sales | $ 267,806 | $ - | ||
| Service revenue | 71,300 | - | ||
| Total revenue | 339,106 | - | ||
| COST OF REVENUES | ||||
| Cost of goods sold | 93,380 | - | ||
| Direct servicing costs | 48,477 | - | ||
| Total cost of sales | 141,857 | - | ||
| GROSS PROFIT | 197,249 | - | ||
| OPERATING EXPENSES | ||||
| Selling, general and administrative | 263,920 | 131,906 | ||
| Depreciation and amortization | 29,750 | - | ||
| Total operating expenses | 293,670 | 131,906 | ||
| LOSS FROM OPERATIONS | (96,421) | 131,906 | ||
| OTHER INCOME (EXPENSE) | ||||
| Interest income | 3,341 | 6,408 | ||
| Equity in earnings of investee | 154,826 | 197,069 | ||
| Total other income | 158,167 | 203,477 | ||
| INCOME BEFORE PROVISION FOR INCOME TAXES | ||||
| AND DISCONTINUED OPERATIONS | 61,746 | 71,572 | ||
| INCOME TAXES (EXPENSE) BENEFIT | (67,540) | (51,841) | ||
| (LOSS) INCOME FROM CONTINUING OPERATIONS | (5,794) | 19,730 | ||
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES | (6,960) | (61,984) | ||
| NET LOSS | (12,754) | (42,254) | ||
| Preferred Stock Dividend | (5,870) | (5,870) | ||
| Net loss attributable to common stockholders | $ (18,624) | $ (48,124) | ||
| Basic and diluted net loss per share | ||||
| attributable to common stockholders: | ||||
| (Loss) income from continuing operations | $ (0.00) | $ 0.00 | ||
| Loss from discontinued operations | $ (0.00) | $ (0.01) | ||
| Net loss per share | $ (0.00) | $ (0.01) | ||
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ZUNICOM, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
For the Three Months Ended March 31, 2011 and 2010
| Number of weighted average shares of common stock | ||||
| outstanding | ||||
| Basic and diluted | 9,733,527 | 9,733,527 | ||
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
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ZUNICOM, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31, 2011 and 2010
| 2011 | 2010 | ||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||
| Net profit (loss) | $ (12,754) | $ (42,254) | |
| Adjustments to reconcile net loss to net cash | |||
| used in operating activities: | |||
| Depreciation and amortization | 29,750 | 4,340 | |
| Write off of property and equipment | -- | 2,918 | |
| Equity in earnings of investee | (154,827) | (197,069) | |
| Stock-based compensation | 12,678 | 12,678 | |
| Provision for income taxes | 63,955 | 19,910 | |
| Changes in operating assets and liabilities: | |||
| Accounts receivable - trade | 3,139 | 7,723 | |
| Inventories | (45,965) | -- | |
| Prepaid expenses and other current assets | 9,158 | 18,047 | |
| Accounts payable | (58,750) | 41,293 | |
| Accrued liabilities | (28,293) | (29,561) | |
| Customer deposits | 3,707 | -- | |
| Deferred costs | 41,689 | -- | |
| Net cash used by operating activities | (136,513) | (161,975) | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||
| Dividends paid on preferred stock | (5,870) | (5,870) | |
| Net cash (used in) financing activities | (5,870) | (5,870) | |
| NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS | (142,383) | 167,845 | |
| Cash and cash equivalents at beginning of period | 4,427,227 | 5,680,943 | |
| Cash and cash equivalents at end of period | $ 4,284,844 | $ 5,513,098 |
The accompanying footnotes are an integral part of these unaudited
consolidated financial statements.
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ZUNICOM, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Zunicom, Inc., ("Zunicom" or the "Company") was formed on January 10, 1992 as a Texas corporation. Zunicom's consolidated wholly-owned subsidiary, AlphaNet Hospitality Systems Inc. ("AlphaNet"), has been a provider of guest communication services to the hospitality market. AlphaNet discontinued this business as of August 31, 2010. Accordingly, the results of this discontinued operation are presented in our Unaudited Consolidated Statements of Operation above. In April of 2010, AlphaNet purchased the assets and business of Action Computer Systems and is now a reseller of point-of-sale software and hardware to restaurants in southern Connecticut, Westchester County, New York, and New York City (Note K). Zunicom also holds a 41 percent ownership interest in Universal Power Group, Inc. (UPG), a distributor and supplier to a diverse and growing range of industries of portable power and related synergistic products, provider of third-party logistics services and a custom battery pack assembler.
NOTE B - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by United States generallyaccepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair presentation have been included for the three month period ended March 31, 2011. The results for the three month period ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. The unaudited consolidated financial statements included in this filing should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's annual report on form 10-K for the year ended December 31, 2010.
NOTE C - STOCK-BASED COMPENSATION
Stock-based compensation expense recognized in the statements of operations for the three months ended March 31, 2011 and 2010, of $12,678 and $12,678, respectively, represents the amortization of the restricted stock grant to the Company's chairman in 2007.
As of March 31, 2011, $12,114 of the restricted stock grant to the Company's chairman remains unamortized.
Valuation Assumptions
The fair values of option awards are estimated at the grant date using a Black-Scholes option pricing model. There were no options granted in the three months ended March 31, 2011 or 2010.
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NOTE C - STOCK-BASED COMPENSATION (CONTINUED)
Activity and Summary
Stock option activity under the 1999 and 2000 stock option plans was as follows:
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|
|||
|---|---|---|---|
| Weighted Average | |||
| Number of Shares | Exercise Price | ||
| Options outstanding at December 31, 2010 | 125,000 | $ 0.71 | |
| Granted | -- | $ -- | |
| Exercised | -- | $ -- | |
| Canceled, lapsed or forfeited | -- | $ -- | |
| Options outstanding at March 31, 2011 | 125,000 | $ 0.71 |
The following table summarizes stock options outstanding under the 1999 and 2000
stock option plans at March 31, 2011:
| Options Outstanding | Options Exercisable | |||||
| Weighted | ||||||
| Average | ||||||
| Remaining | Weighted | Weighted | ||||
| Number of | Contractual | Average | Number of | Average | ||
| Range of | Options | Life | Exercise | Options | Exercise | |
| Exercise Prices | Outstanding | (in years) | Price | Exercisable | Price | |
| $ 1.75 | 25,000 | 5.9 | $ 1.75 | 25,000 | $ 1.75 | |
| $ 0.45 | 100,000 | 2.0 | $ 0.45 | 100,000 | $ 0.45 | |
| $ 0.45 - $ 1.75 | 125,000 | 2.8 | $ 0.71 | 125,000 | $ 0.71 | |
At March 31, 2011, the aggregate intrinsic value of options outstanding was $20,000 and the aggregate intrinsic value of options exercisable was $20,000. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for those awards that have an exercise price currently below the quoted price. At March 31, 2011, all outstanding options were fully vested.
NOTE D - NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) decreased (increased) by the preferred stock dividends of $5,870 and $5,870 for the three months ended March 31, 2011 and 2010,respectively, by the weighted average number of common shares outstanding for the period.
Diluted net income (loss) per share is computed by dividing net income decreased by the preferred stock dividends by the weighted average number of common shares and common stock equivalents outstanding for the period. The Company's common stock equivalents include all common stock issuable upon conversion of preferred stock and the exercise of outstanding stock options.
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NOTE D - NET INCOME (LOSS) PER SHARE (CONTINUED)
The dilutive effect of 100,000 in-the-money options and the dilutive effect of the conversion of 60,208 shares of preferred stock into 120,416 shares of common stock have not been included in the computation of dilutive net income per share for the three months ended March 31, 2011 or for the three month period ended March 31, 2010, as the effect would be anti-dilutive.
NOTE E - UNCONSOLIDATED INVESTEE
The Company's investment in UPG is accounted for under the equity method of accounting for the three month period ended March 31, 2011 and 2010. Following is a summary of financial information of UPG for the three months ended March 31, 2011 and 2010:
| Three Months Ended March 31, | ||
| 2011 | 2010 | |
| ($ in thousands) | ||
| Net revenues | $ 21,587 | $ 26,035 |
| Cost of revenues | 17,278 | 21,602 |
| Gross profit | 4,309 | 4,433 |
| Operating expenses | 3,536 | 3,473 |
| Income from operations | 773 | 960 |
| Interest expense | (141) | (161) |
| Income from operations before income tax provision |
632 | 798 |
| Income tax provision | (229) | (293) |
| Net income | $ 403 | $ 506 |
Following is a summary of the balance sheets for UPG as of March 31, 2011
and December 31, 2010.
| March 31, 2011 | December 31, 2010 | |
| ($ in thousands) | ||
| Current assets | 42,754 | 46,126 |
| Noncurrent assets | 1,345 | 1,485 |
| Current liabilities | 21,406 | 25,177 |
| Noncurrent liabilities | 79 | 267 |
| Shareholders' equity | 22,614 | 22,167 |
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NOTE F - FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:
| o | Level 1: consists of financial instruments whose value is based on quoted market prices for identical financial instruments in an active market |
| o | Level 2: consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly; Level 2 inputs include (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) pricing models whose inputs are observable for substantially the full term of the financial instrument and (iv) pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument |
| o | Level 3: consists of financial instruments whose values are determined using pricing models that utilize significant inputs that are primarily unobservable, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation |
The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial instruments and their classification within the fair value hierarchy. Financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. There have been no changes in the classification of any financial instruments within the fair value hierarchy.
NOTE H - SHAREHOLDERS' EQUITY
During the three months ended March 31, 2011 and 2010, the Company paid a cash dividend of $5,870 and $5,870, respectively, to the holders of its class A Preferred Stock.
NOTE I - LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims that arise in the ordinary course of business. As of March 31, 2011, the Company is not subject to any ongoing legal proceedings.
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NOTE J - PURCHASE OF BUSINESS
On March 30, 2010, AlphaNet entered into a binding agreement to acquire the business and the assets of Advanced Computer Software, Inc., a New York corporation, doing business as Action Computer Systems for a purchase price of $495,000. Action Computer Systems is a reseller of point-of-sale software to restaurants in the New York metropolitan area and southern Connecticut. The software, Restaurant Manager, was developed by Action Systems Inc., Silver Spring, Maryland. On April 23, 2010, AlphaNet closed on the acquisition and now provides point-of-sale software, hardware systems and maintenance and support to restaurants in the New York metropolitan area and southern Connecticut.
The Company accounted for this purchase under the acquisition method of accounting. The following represents the purchase price allocation at the date of the acquisition:
| Customer Lists | $335,000 |
| Covenant not to compete | 150,000 |
| Fixed Assets | 10,000 |
| Purchase price | $495,000 |
Supplemental pro-forma information regarding the results of the combined entity for the comparative periods presented in these consolidated financial statements has not been presented, as the financial information of the business prior to acquisition is not available, and it is impracticable for management to reasonably estimate the effect for such disclosure.
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NOTE K – DISCONTINUED OPERATIONS
In August 2010, the Company discontinued its guest communications services business. The Company chose to abandon the assets associated with this business and accordingly has written these assets off in the consolidated statements of operations for the year ended December 31, 2010.
The asset related to discontinued operations in the three months ended March 31, 2011 is a deposit of $5,000. For the same period in 2010, assets related to discontinued operations included cash of $6,493, inventory of $6,226, deposits of $5,653 and prepaid expenses of $4,972. The liability related to discontinued operations in 2011 and 2010 is accounts payable of $289,102.
NOTE L - ECONOMIC DEPENDENCE
With the purchase of the business of Action Computer Systems in April 2010, the Company is now a reseller for Action Systems Inc. (ASI) in Silver Spring, Maryland, the developer of Restaurant Manager, a point-of-sale computer software system designed for restaurants. Should ASI fail to develop and issue improvements for the Restaurant Manager software to keep pace with technological developments and the operational needs of restaurants, Restaurant Manager's competitive position could be diminished and the Company's business would be harmed.
Should ASI cease operation of its business, the Company would be forced to identify other point-of-sale software that it could offer to the restaurant industry. The Company has an effective sales and marketing, and service and support infrastructure in place and an installed system base in excess of 450 customers which could make it an attractive reseller for one of the many point-of-sale software systems offered to restaurants. However, there is no guarantee that the Company would be able to identify such a replacement system or, if identified, complete an arrangement satisfactory to the Company or to the system developer.
NOTE M - INVENTORY
Beginning with the period ended March 31, 2011, management is performing a monthly inventory of components and parts to be sold and installed in POS systems. Accordingly, the balance sheet as of March 31, 2011, includes inventory valued at cost.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with Zunicom's Unaudited Consolidated Interim Financial Statements and notes thereto included elsewhere in this Form 10-Q. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain forward looking statements that involve risks and uncertainties, such as statements of Zunicom's plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. These statements include, without limitation, statements concerning the potential operations and results of the Company described below. Zunicom's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, without limitation, those factors discussed herein and in Zunicom's Annual Report on Form 10-K for the year ended December 31, 2010.
RESULTS OF OPERATIONS
Currently, the operations of Zunicom are conducted through its wholly-owned subsidiary, AlphaNet. AlphaNet has been a provider of guest communication services to the hospitality market. AlphaNet discontinued this business as of August 31, 2010. Accordingly, the results of this discontinued operation are presented in our Unaudited Consolidated Statements of Operation above. In April 2010, AlphaNet purchased the assets and business of Action Computer Systems and is now a reseller of point of sale software and hardware to restaurants in southern Connecticut, Westchester County, New York, and New York City.
Three months ended March 31, 2011
REVENUE
For the three month period ended March 31, 2011, Zunicom, through its wholly owned subsidiary Alphanet which, until August 31, 2010,consisted of two product lines, had consolidated revenues from continuing operations of $339,106 compared to $0 for the same period in 2010. This revenue is from Action Computer Systems which was acquired in April 2010.
COST OF REVENUE
For the three month period ended March 31, 2011, Action Computer Systems had cost of revenue from continuing operations of $141,857, compared to $0 for the same period in 2010.
OPERATING EXPENSES
For the three month period ended March 31, 2011, Zunicom's consolidated operating expenses from continuing operations, consisting of selling, general and administrative expenses and depreciation and amortization of property and equipment increased to $293,670 compared to $131,906 for the same period in 2010, an increase of $161,764 or 122.6%. The increase is due to Action Computer Systems operating expenses, depreciation, and amortization for the three month period ended March 31, 2011, of $195,937, offset by a decrease in Zunicom's expenses of $34,173.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Zunicom's selling, general and administrative expenses for the three month period ended March 31, 2011 were $97,733 compared to $131,906 for the same period in 2010, a decrease of $34,173 or 25.9%. The decrease is primarily attributable to decreased legal and consulting fees related to the wind down of the Office (TM) product and the acquisition of Action Computer Systems.
For the three month period ended March 31, 2011, the Company recorded $29,750 in depreciation and amortization expense from continuing operations compared to $0.0 in 2010. The increase is due to depreciation and amortization of the assets acquired in the acquisition of Action Computer Systems.
OTHER INCOME / EXPENSE
Zunicom's consolidated interest income for the three month period ended March 31, 2011 was $3,341 compared to interest income of $6,408 for the same period in 2010, a decrease of $3,067, or 47.9%. The decrease is due to lower cash balances and lower interest rates.
Equity in earnings of investee of $154,826 represents Zunicom's share of UPG's net income for the three month period ended March 31, 2011 recorded in accordance with the equity method of accounting for an unconsolidated investee.
Zunicom recorded a loss from discontinued operations of $6,960 for the three months ended March 31, 2011 compared to $61,984 for the same period in 2010. The Office (TM) product line was discontinued as of August 31, 2010.
LIQUIDITY
Zunicom, on a consolidated basis, had cash and cash equivalents of $4,284,844 at March 31, 2011.
Net cash used in operating activities was $136,513 for the three month period ended March 31, 2011 as compared to $161,975 for the same period in 2010. The cash used in operating activities is attributable to the net loss of $12,754 plus depreciation of $29,750, stock based compensation of $12,678, provision for income taxes of $63,955 less equity in earnings of investee of $154,827, and a decrease in working capital of $75,317.
For the three months ended March 31, 2011 there was no cash flow used in investing activities.
Net cash used in financing activities for the three month period ended March 31, 2011 was $5,870 representing payment of a cash dividend on the Company's preferred stock.
Zunicom management believes that cash on hand will be sufficient to meet its operational needs over the next year.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange
All of our customers and suppliers are in the United States and we are not subject to any foreign currency risk.
Interest Rates
We currently have no direct borrowings and therefore are not exposed to market rate risk for changes in interest rates.
ITEM 4. CONTROLS AND PROCEDURES
The Company's management, including the Company's principal executive officer and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13(a) - 15(e) and 15(d) - 15(e) under the Securities Exchange Act of 1934) as of the three months ended March 31, 2011. Based upon that evaluation, the Company's principal executive officer and principal financial officer have concluded that the disclosure controls and procedures were effective as of March 31, 2011 to insure that the information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, was recorded, processed, summarized or reported within the time periods specified in the rules and regulations of the SEC, and included controls and procedures designed to ensure that information required to be disclosed by us in such reports was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
There were no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
a. The following exhibits are filed as part of this report or incorporated herein as indicated.
3.1 Articles of Incorporation, as amended (incorporated by reference to
the Company's Registration Statement on Form SB-2, Commission File
No. 33-98662, filed on October 30, 1995 and amended on January 5,
1996 and January 23, 1996).
3.2 Certificate of Designation (incorporated by reference to the
Company's Registration Statement on Form SB-2, Commission File No.
33-98662, filed on October 30, 1995 and amended on January 5, 1996
and January 23, 1996).
3.2A Amended Certificate of Designation (incorporated by reference to
the Company's Registration Statement on Form SB-2, Commission File
No.33-98662, filed on October 30, 1995 and amended on January 5,
1996 and January 23, 1996).
3.3 Bylaws (incorporated by reference to the Company's Registration
Statement on Form SB-2, Commission File No. 33-98662, filed on
October 30, 1995 and amended on January 5, 1996 and January 23,
1996).
10.1 Second Amended and Restated Creditors Subordination Agreement
(incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the Quarter ended June 30, 2008, Commission File No.
0-27210, filed August 14, 2008)
10.2 Purchase and Sale agreement between AlphaNet Hospitality Systems,
Inc. Advanced Computer Software, Inc. dated March 30, 2010
(incorporated by reference to the Company's Annual Report on Form
10-K for the Fiscal year ended December 31, 2009, Commission File
No. 000-27210, filed April 7, 2010)
14.1 Code of Ethics and Business Conduct as adopted March 30, 2004
(incorporated by reference to the Company's Annual Report on Form
10-K for the Fiscal Year ended December 31, 2003, Commission File
No. 0-27210, filed March 31, 2004)
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002*
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002*
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
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32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002*
-----------------------
* Filed herewith.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Zunicom, Inc. | |
| (Registrant) | |
| Date: May 16, 2011 | /s/ John C. Rudy |
| John C. Rudy | |
| Chief Financial Officer | |
| (principal financial officer) |
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