U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 2002
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[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the
Transition Period from ________ to ___________
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Commission File Number: 0-29087
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NUTEK, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0374623
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1110 Mary Crest Road, Henderson, NV 89074
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(Address of principal executive offices) (zip code)
702-567-2613 (Telephone) 702-567-2617 (Fax)
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Issuer's Telephone Number
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months
(or 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 [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
1
The Registrant has 85,759,775 shares of Common stock issued and outstanding,
par value $.001 per share as of June 30, 2002. The Registrant has
596,408 shares of Preferred Stock Series A issued and outstanding and
508,500 shares of Preferred Stock Series B issued and outstanding as of
June 30, 2002.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 4
Balance Sheet (unaudited)............................ 5-6
Statements of Operations (unaudited)................. 7
Statements of Cash Flows (unaudited)................. 8
Notes to Financial Statements........................ 9-15
Item 2. Management's Discussion and Analysis of Plan
of Operation........................................ 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 27
Item 2. Changes in Securities and Use of Proceeds............ 27
Item 3. Defaults upon Senior Securities...................... 27
Item 4. Submission of Matters to a Vote
of Security Holders................................. 27
Item 5. Other Information..................................... 27
Item 6. Exhibits and Reports on Form 8-K...................... 29
Signatures...................................................... 31
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
The unaudited financial statements of registrant for the three
months ended June 30, 2002, follow. As prescribed by item 310 of
Regulation S-B, the independent auditor has reviewed these
unaudited interim financial statements of the registrant for the
six months ended June 30, 2002. The financial statements reflect
all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented.
4
Nutek, Inc.
CONSOLIDATED
BALANCE SHEET
AS AT
December 31, 2001 and June 30, 2002
ASSETS
June 30 December 31
2002 2001
CURRENT ASSETS
Cash 12,849.00 60,610.00
Accounts Receivable 1,380,939.00 681,042.00
Note Receivable 750,000.00 0.00
Other Current Assets 342,913.00 413,815.00
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Total Current Assets 2,486,701.00 1,155,467.00
PROPERTY AND EQUIPMENT
Property and Equipment
(net of depreciation) 2,922,197.00 2,994,776.00
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Total Property and Equipment 2,922,197.00 2,994,776.00
OTHER ASSETS
Patent Rights Acquired
(net of amortization) 540,012.00 561,262.00
Goodwill 1,692,782.00 1,462,782.00
Other Assets 337,655.00 433,166.00
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Total Other Assets 2,570,449.00 2,457,210.00
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TOTAL ASSETS 7,979,347.00 6,607,453.00
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See accompanying notes to financial statements
5
Nutek, Inc.
CONSOLIDATED
BALANCE SHEET
AS OF
December 31, 2001 and June 30, 2002
LIABILITIES & EQUITY
June 30 December 31
2002 2001
CURRENT LIABILITIES
Accounts Payable 167,556.00 233,270.00
Accrued Expenses 205,772.00 105,867.00
Other Current Liabilities 308,262.00 140,605.00
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Total Current Liabilities 681,590.00 479,742.00
OTHER LIABILITIES
Long Term Notes Payable 919,809.00 636,767.00
Bonds Payable 170,411.00 170,411.00
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Total Other Liabilities 1,090,220.00 807,178.00
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TOTAL LIABILITIES 1,771,810.00 1,286,920.00
EQUITY
Common Stock 85,760.00 71,392.00
Common Stock, $0.001 par value,
authorized 200,000,000; 85,759,775
common shares issued and outstanding
at June 30, 2002; 71,392,535 common
shares issued and outstanding at
December 31, 2001
Additional Paid in Capital 11,183,511.00 10,505,593.00
Preferred Stock 1,105.00 1,390.00
Preferred Stock, $.001 par value,
20,000,000 shares authorized; 508,500
Series B shares issued and outstanding
as of June 30, 2002 and 793,500
shares as of December 31, 2001; 596,408
Series A shares issued and outstanding
as of June 30, 2002 and 596,408 shares
as of December 31, 2001.
Subscription Receivable (140,000.00) (0.00)
Treasury Stock (55,388.00) (52,388.00)
Retained (Deficit) (4,867,451.00) (5,205,454.00)
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Total Stockholders' Equity 6,207,537.00 5,320,533.00
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TOTAL LIABILITIES AND OWNERS EQUITY 7,979,347.00 6,607,453.00
============ ============
See accompanying notes to financial statements
6
Nutek, Inc.
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR 6 MONTHS ENDED
June 30, 2001 and June 30, 2002
STATEMENT OF OPERATIONS
Nutek, Inc.
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR 3 AND 6 MONTHS ENDED
June 30, 2001 and June 30, 2002
Unaudited Audited
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Three months ended Six months ended Jan 1
June 30 June 30 2001,
to Dec.31
2002 2001 2002 2001 2001
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Revenues 1,605,037 296,700 3,066,179 612,556 2,915,548
COSTS AND EXPENSES
Cost of Goods Sold 568,748 164,541 1,337,945 225,925 1,089,836
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GROSS PROFIT 1,036,289 132,159 1,728,234 386,631 1,825,712
Selling, General and
Administrative 736,193 92,979 1,229,821 351,131 1,811,638
Depreciation Expense 48,559 31,298 105,452 71,997 178,726
Amortization Expense 21,101 20,615 22,862 38,247 38,651
Interest Expense 16,478 10,500 28,767 15,000 87,878
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Total Costs and Expenses 822,331 155,392 1,386,902 476,375 2,116,893
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Net Ordinary Income or
(Loss) before taxes 213,958 (23,233) 341,332 (89,744) (291,181)
Other Income/Expense 14,953 (2,388) 35,355 (2,388) 20,378
Income Tax Expense 0 0 0 0 0
Net Income or (Loss) 228,911 (25,621) 376,687 (92,132) (270,803)
======== ======= ======== ======= =======
Basic weighted average
number of common
shares outstanding 79,223,967 49,440,000 75,541,211 49,440,000 59,140,808
Diluted weighted average
number of common
shares outstanding 139,373,267 50,233,500 135,690,511 50,233,500 119,290,108
Basic Net Income (Loss)
Per Share 0.003 (0.001) 0.005 (0.002) (0.005)
Diluted Net Income (Loss)
Per Share 0.002 (0.001) 0.003 (0.002) (0.002)
See accompanying notes to financial statements
7
Nutek, Inc.
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR 6 MONTHS ENDED
June 30, 2001 and June 30, 2002
STATEMENT OF CASH FLOWS
Jan 1, 2002 Jan 1, 2001
to June 30, to June 30,
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit(loss) from operations 376,687.00 (92,132.00)
Adjustments to reconcile net income
to net cash provided
Non-cash transactions
Services Received for stock 0.00 384,500.00
Depreciation Expense 105,452.00 71,997.00
Amortization Expense 22,862.00 38,247.00
(Increase)/Decrease in notes receivable (2,383.00) 0.00
(Increase)/Decrease in accounts receivable(733,553.00) (9,589.00)
(Increase)/Decrease in inventory (101,900.00) 32,194.00
(Gain) / Loss on Disposition of Equipment 715.00 0.00
(Increase)/Decrease in Deposits (390.00) 0.00
Increase/(Decrease) in Accounts Payable (108,780.00) 50,125.00
(Increase) in prepaid expenses, current 500.00 (138.00)
(Increase) in prepaid expenses, L/T 0.00 (170,000.00)
Increase/(decrease) in accrued expenses 100,254.00 0.00
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Net cash provided by operating activities(340,536.00) 305,204.00
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) / Sale of Equipment (35,138.00) 50,000.00
(Increase)/Decrease in Other Assets (7,010.00) (48,231.00)
Net increase/decrease in other assets (7,500.00) 234,835.00
Net cash used by investing activities (49,648.00) 136,604.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock (32,127.00) 122,693.00
Write off Assets 0.00 (265,954.00)
Prior Period Adjustment 0.00 (26,038.00)
Increase/(Decrease) in Short Term
Loans Receivable (37,500.00) 0.00
Increase/(Decrease) in Short Term
Loans Payable 167,658.00 0.00
Increase/(Decrease) in Long Term
Loans Payable 247,392.00 (26,004.00)
Increase/(Decrease) in Treasury Stock (3,000.00) 0.00
Increase/(Decrease) in Royalty Investments 0.00 (10,000.00)
Net cash provided by financing activities 342,423.00 (205,303.00)
Balance at beginning of period 60,610.00 48,071.00
Net increase (decrease) in cash (47,761.00) 236,505.00
Balance as at end of period 12,849.00 284,576.00
See accompanying notes to financial statements
8
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
As of June 30, 2002
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
Nutek, Inc. was incorporated in August of 1991 under the laws of
the State of Nevada, as Nutek, Inc. (the Company) and is engaged
in multiple industries.
SRC International, Inc. was incorporated on June 20, 1997 in
Illinois. SRC International Inc. manufactures "Super Glide",
a rail covering made of an extremely durable, super-slick, space
age polymer, designed to reduce friction between rails and hangers
in the dry cleaning and garment industries.
Vac-U-Lift Production Company was incorporated in the State of Texas
in March of 1995 and is in the oil extracting industry for leases
in Texas. The Company remained inactive until Nutek acquired it in
June of 1996. Nutek determined at the end of Fiscal 2000 to shut
down this operation through bankruptcy. This company had no
significant assets but had accounts payable of approximately $19,000,
which was discharged as a result of the bankruptcy.
Century Clocks, Inc. is a Nevada corporation formed by Nutek, Inc.
and doing business in California. Century Clocks has a joint venture
agreement with the Department of Veterans Industries. The company
produces clocks assembled and packaged by U.S. Veterans.
Elite Fitness Systems, Inc. is a Nevada corporation doing business
in California. Elite Fitness Systems, Inc. markets a proven fitness
system that has kept the world's finest fighting force in supreme
physical condition.
Nutek determined at the end of Fiscal 2000 to return Elite Fitness
Systems Inc. to Mr. Helvenston in exchange for the 125,000 shares
of Nutek Restricted Stock that were originally issued for the
purchase of this corporation. Accordingly, Elite Fitness Systems,
Inc.s results of operations, assets, liabilities and other financial
activities are not included in Nutek's Consolidated Statements for
the year ended 2001.
Kristi & Co., a Nevada Corporation doing business in California,
was incorporated on September 13, 1999. The Company markets woman's
resort-wear. The Company purchased the clothing designs and design
groups on January 6, 2000.
Nutek Oil, Inc. was incorporated on December 3, 1998. The Company
is in the oil producing business and purchased selected equipment
and assets on February 23, 2000 from Clipper Operating Company.
During 2001, Nutek Oil was spun off as a separate company.
Datascensions, Inc. and related assets was purchased on September
27, 2001 for $2,200,000 using company shares at fair market value.
Datascensions, Inc. is a premier data solutions company representing
a unique expertise in the collecting, storage, processing and
interpretation of data.
On May 13, 2002, Nutek, Inc. acquired Sin Fronteras, Inc., a Costa
Rica company for $980,000 in exchange for 13,517,241 shares of
Nutek common stock. This acquisitions intent is to complement
Datascensions, Inc.s business line. Sin Fronteras, Inc. is a
data solutions and market research company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Companys policy is to prepare the financial statements on
the accrual basis of accounting. The fiscal year end is December 31.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments
with maturities of three months or less when purchased.
Investments and Marketable Securities
The Company has adopted FASB 115. Its equity securities are
classified as available for sale and reported at fair value.
Investments are recorded at the lower of cost or market. Any
reductions in market value below cost are shown as unrealized
losses in the consolidated statement of operations.
Summary of Non-Cash Transactions
There were non-cash transactions that are discussed in Note 3.
Consolidation Policy
The accompanying consolidated financial statements include the
accounts of Nutek Inc., and its different business segments, SRC
International, Inc., Datascension, Inc., Century Clocks, Kristi
& Co., and Nutek Oil, Inc. All significant inter-company
balances and transactions have been eliminated.
Inventory Valuation
Inventories are stated at the lower of cost or market, cost being
determined on the first in, first out (FIFO) basis.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires that management
make estimates and assumptions which affect the reported amounts
of assets and liabilities at the date of the financial statements
and revenues and expenses for the period reported. Actual results
may differ from these estimates.
SOP 98-5
The Company has adopted SOP 98-5, which treats the remaining
portion of organizational costs as an expense. Start-up costs
and reorganization costs were expensed when SOP 98-5 was adopted.
Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends. The Company has authorized 20,000,000 shares of
preferred stock with a par value of $0.001. 508,500 shares have
been issued as Series B shares for cash at $1.00 a share and
596,408 shares have been issued as Series A shares.
Preferred shares have the same voting rights as the common shares
but have priority in the event of company liquidation. All of
the Series B shares outstanding were to be redeemed at $1.00 a
share plus all accrued dividends prior to December 31, 1993.
This has been extended by mutual agreement. Series B shares have
annual dividends of $.15 per share that are payable quarterly.
They are convertible to common shares on a one for one basis at
the holders' option.
Fixed Assets
Fixed assets are stated at cost. Expenditures that materially
increase the life of the assets are capitalized. Ordinary
maintenance and repairs are charged to expense as incurred.
When assets are sold or otherwise disposed of, the cost and the
related accumulated depreciation and amortization are removed
from the accounts and any resulting gain or loss is recognized
at that time. Depreciation is computed primarily on the
straight-line method for financial statement purposes over the
following estimated useful lives:
Computer Equipment 5 Years
Drilling Equipment 20 Years
Factory Equipment 7 Years
Furniture & Fixtures 7 Years
Office Equipment 5 Years
Equipment and Machinery 20 Years
Molds and Tooling 20 Years
Depreciation expense was $178,726 and $105,452 for the year ended
December 31, 2001 and the six months ended June 30, 2002,
respectively.
Goodwill and Intangible Assets
Under guidance of SFAS 142, Net assets of companies acquired in
purchase transactions are recorded at fair value at the date of
acquisition, as such, the historical cost basis of individual assets
and liabilities are adjusted to reflect their fair value. Identified
intangibles are amortized on an accelerated or straight-line basis over
the period benefited. Goodwill is not amortized, but is reviewed for
potential impairment on an annual basis at the reporting unit level.
The impairment test is performed in two phases. The first step of the
goodwill impairment test, used to identify potential impairment, compares
the fair value of the reporting unit with its carrying amount, including
goodwill. Of the fair value of the reporting unit exceeds its carrying
amount, goodwill of the reporting unit is considered not impaired;
however, if the carrying amount of the reporting unit exceeds its fair
value, an additional procedure must be performed. That additional
procedure compares the implied fair value of the reporting units
goodwill (as defined in SFAS 142) with the carrying amount of that
goodwill. An impairment loss is recorded to the extent that the
carrying amount of goodwill exceeds its implied fair value.
Other intangible assets are evaluated for impairment if events and
circumstances indicate a possible impairment. Such evaluation of other
intangible assets is based on undiscounted cash flow projections.
Identifiable intangibles, with the exception of patents, are
amortized over five years. All patents are amortized over 17
years. The amount of amortization recorded for the year ended 2001
and the six months ended June 30, 2002 was $38,651 and $22,862,
respectively.
The Company has adopted SFAS 142. Under its guidance, Management has
determined that as the major intangible asset, the value of the
electric light switch, purchased late in 1999, has not significantly
decreased and there has been no reduction in the usefulness of the
asset as of June 30, 2002. Additionally, the asset is being
amortized and will be tested for impairment at least annually, in
accordance with SFAS 142.
As of May 13, 2002, the Company expanded its operations by acquiring
a data processing center in Costa Rica that is currently fully
operational in exchange for 13,517,241 shares of its common stock.
As a result of this transaction, the Company recognized $230,000 of
goodwill in its books. This asset will not be amortized and will be
tested for impairment at least annually, in accordance with SFAS 142.
Earnings Per Share Calculations
Basic earnings per common share (EPS) is computed by dividing
income available to common stockholders by the weighed-average number
of common shares outstanding for the period. The weighed-average
number of common shares outstanding for computing basic EPS was
75,541,211 and 49,440,000 for the period ended June 30, 2002 and 2001,
respectively. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock. The weighed-average number
of common shares outstanding for computing diluted EPS was 135,690,511
and 50,233,500 for the period ended June 30, 2002 and 2001,
respectively.
Income Taxes
The Company experienced losses during the previous fiscal tax year
reported. The Company will review its need for a provision for
federal income tax after each operating quarter. The Company has
adopted FASB 109, as discussed in Note 7.
Advertising
Advertising costs are expensed when incurred. Advertising expense
for the three months ended June 30, 2002 and December 31, 2001 was
$3,239 and $35,230, respectively.
Depletion
Oil well leases are depleted over the units of production, or 12
years, whichever is shorter.
Research and Development
The Company expenses its research and development in the periods
incurred.
NOTE 3 SUMMARY OF NON-CASH TRANSACTIONS
Assets and leases of the Clipper Operating Company were acquired on
February 23, 2000 with 2,064,348 shares of Nutek stock at the current
market price of $0.31 representing $639,948. A note for $639,948 was
issued for the balance of the purchase price. The note balance as of
June 30, 2002 is $390,060.
Kristi and Co. was acquired on January 6, 2000 for 250,000 shares of
the Company's stock in exchange for the outstanding common stock of
Kristi and Co. at the current market price of $0.20, and a note for
$50,000 with annual interest of 7% was issued for the balance of the
purchase price, payable within 18 months. The note balance as of
June 30, 2002 is $10,000.
Datascensions was acquired on September 27, 2001 for 27,500,000 shares,
valued at $2,200,000. The value was determined by the average closing
price of the stock over the five previous days the stock traded. Of
this amount 20,911,111 has been converted to 209,111 shares of the
Series A preferred stock. As part of this acquisition, the Company
received $650,000 of accounts receivable and $472,500 of property
and equipment.
Sin Fronteras, Inc., a Costa Rica company, was acquired on May 13,
2002 for 13,517,241 shares of Nuteks common stock in exchange for
the outstanding common stock of Sin Fronteras, Inc. at the fair market
value of the average closing bid price of Nuteks stock for the five
trading days prior to May 13, 2002 at the price of $0.0725. This
acquisition entitled Nutek, Inc. to assume $750,000 of note receivables
due to Sin Fronteras, Inc. No other assets or liabilities were
assumed.
NOTE 4 RECLASSIFICATIONS
Certain reclassifications have been made to the June 30, 2001 amounts
to conform with the June 30, 2002 financial statements presentation.
These reclassifications had no effect on net earnings. Other
reclassifications have been made to reverse stock for asset transactions
made in 2001 in the amount of $108,850.
NOTE 5 STOCKHOLDERS EQUITY
The Articles of Incorporation were amended by deleting the existing
ARTICLE IV and replacing it in its entirety with the following amendments:
"ARTICLE 4: Authorized Shares: The aggregate number of shares
which the corporation shall have authority to issue shall consist of two
hundred million (200,000,000) shares of Common Stock having a $.001 par
value, and twenty million (20,000,000) shares of Preferred
Stock having a $.001 par value. The Common and/or Preferred Stock of
the Company may be issued from time to time without prior approval by
the stockholders. The Common and/or Preferred Stock may be issued for
such consideration as may be fixed from time to time by the Board of
Directors. The Board of Directors may issue such shares of Common and/or
Preferred Stock in one or more series, with such voting powers, designations,
preferences and rights or qualifications, limitations or restrictions
thereof as shall be stated in the resolution or resolutions."
This amendment to the Articles of incorporation has been duly adopted,
filed and accepted by the Nevada Secretary of State in accordance with
General Corporation Law of the State of Nevada.
On December 27, 2001, an agreement was reached with three affiliates
to exchange notes and common stock, including accrued and unpaid interest,
for Series A Preferred Stock at $5.42 per share. The exchange for 596,408
Series A Preferred Stock was completed in December 2001.
The Series A Preferred Stock are convertible at any time into a
number of shares of Common Stock determined by the greater of $5.42
per share of Series A Preferred Stock, plus any accrued and unpaid
dividends thereon or one hundred (100) shares of common stock for
one (1) share of Series A Preferred Stock plus any accrued and unpaid
dividends thereon. Dividends on the Series A Preferred Stock are
cumulative and payable quarterly at an annual dividend rate of 5%.
The Company, at its option, may redeem the Series A Preferred Stock,
in whole or in part, at any time and from time to time, at a redemption
price of $5.42 per share plus any accrued and unpaid dividends thereon.
Upon liquidation, holders of the Series A Preferred Stock will be
entitled to repayment of the greater of $5.42 per share of Series A
Preferred Stock, plus any accrued and unpaid dividends thereon or one
hundred (100) shares of common stock for one (1) share of Series A
Preferred Stock plus any accrued and unpaid dividends thereon, prior
to any distributions to holders of common Stock. The Series A Preferred
Stock does not have any voting rights except as required
by law or as set forth in the exhibits in the resolution by the
Board of Directors.
On December 27, 2001, the Company issued 596,408 shares of Series
A Preferred Stock of the Company's Class B Preferred Stock to three
affiliates. The conversion consideration was determined by the
historical value of the common shares converted into the Series A
Preferred Stock and the value of the notes converted into the Series
A Preferred Stock of the Company based on the value of the common
stock at the time of conversion. The Class B Series A Preferred Shares
are convertible into a number of shares of Common Stock, determined by
the greater of one hundred (100) common shares per one (1) share of
Series A Preferred Stock plus all accrued and unpaid dividends thereon,
or the Series A Preferred Stock having a value of $5.42 per share plus
all accrued and unpaid dividends thereon subject to adjustment as
provided in the exhibits in the resolution by the Board of Directors.
On January 9, 2001, the Company increased its authorized shares to
200,000,000 shares of common stock, par value $.001 and 20,000,000
shares of preferred stock, par value $.001.
On September 27, 2001, the Company issued 27,500,000 shares in
exchange for 100% of the stock of Datascensions. Based on the
average closing stock price over the five previous days, the
purchase price was $2,200,000. Of this amount, 20,911,111 has
been converted to 209,111 shares of the Series A preferred stock.
During 2001, the Company issued 2,063,550 shares, valued at $86,501
to employees.
During 2001, the Company issued 2,487,220 shares to various consultants
There were 3,000,000 shares canceled for stock that was given to
an employee and subsequently canceled upon that employee leaving
the Company. An additional 200,000 shares were canceled during
2001, which were originally given as the collateral when the Company
bought the print shop and a further 125,000 shares were canceled
which had been previously issued to Mr. Helvenston for the purchase
of Elite Fitness.
August 1999, the Company issued 1,000,000 shares of stock, valued
at $180,000 in exchange for 5,000 shares, representing one-third
ownership of Electrostatic Solutions, Inc.. On April 1, 2002,
the Company recalled the 1,000,000 shares of its common stock
for the purchase of one-third ownership interest in Electrostatic
Solutions, Inc., due to patents litigation. This transaction
resulted in a reduction of additional paid-in capital by $180,000.
The Company reduced the Series B Preferred stock by 285,000 shares
from 793,500 to 508,500 shares as 285,000 Series B Preferred had
been converted to common stock.
The Company issued 650,000 shares of restricted stock, at par value to
"an individual" in final settlement of the slip and fall lawsuit in
Texas. This was a confidential out of court settlement. An additional
200,000 shares of restricted stock were issued for the settlement of
this lawsuit for a third party involved in the lawsuit. The "employee
responsible paid the Company" $10,000.00 for the 200,000 shares of
restricted stock that were issued for this third party.
NOTE 6 - OTHER ASSETS
Other assets consist of patents, the purchase of Kristi and Co, Inc
for $100,000, design and artwork, goodwill and website development for
software and coding. These assets were valued at the existing market
value of Nutek stock at the time of purchase, when stock was used to
purchase the asset.
NOTE 7 - LONG-TERM DEBT
Long-term debt consists of the following:
The Company obtained a loan on February 20, 2000 to assist in the purchase
of Nutek Oil, Inc. The loan accrued interest at 7.5% per year through
September 30, 2001 and is accruing interest at 10% per year from October 1,
2001 on. The balance on this loan at December 31, 2001 is $464,268 and
$382,601 as of June 30, 2002.
The Company obtained a loan from Gertrude Madich in the amount of $40,000,
bearing an interest rate of 10% per year on November 13, 2001. There have
been interest payments made in the amount of $1,000 on this note as of
June 30, 2002. This note is due December 31, 2006.
The Company obtained a loan from Theressa Lindert in the amount of $20,000,
bearing an interest rate of 10% per year on November 16, 2001. There have
been interest payments made in the amount $697 on this note as of June 30,
2002. This note is due December 31, 2006.
The Company obtained a loan from Gertrude Madich in the amount of $10,000,
bearing an interest rate of 10% per year on December 11, 2001. There have
been interest payments made in the amount of $680 on this note as of June
30, 2002. This note is due December 31, 2006.
The Company obtained a loan from Venture Resource Consulting in the
amount of $87,400, bearing an interest rate of 12% per year on February
14, 2002. There have been interest payments made in the amount of $1,852
on this note as of June 30, 2002. This note is due August 13, 2002.
The Company obtained a credit line from Black Mountain Bank in January
2002. The credit line carries an interest rate of 7% per year. There
have been interest payments made in the amount of $5,193 on this line
as of June 30, 2002. The balance on this line as of June 30, 2002 is
$373,800.
The Company has a note payable to GE Capital for an equipment acquisition,
for $36,5000, bearing an annual interest rate of 17.6%, due December 1,
2005, with monthly payments of $1,064, including interest. The carrying
balance on this note as of June 30, 2002 is $30,908.
All other notes payable are non-interest bearing. Interest on notes
payable, which are non-interest bearing, have been imputed at the rate
of 9% per annum.
NOTE 8 - INCOME TAXES
Nutek, Inc. and its business segments available net operating loss
carry forwards to offset future federal taxable income of approximately
$5,205,453. The carry forwards start expiring in 2004. The Company has
deemed it less than likely that this benefit will be utilized. Therefore,
the Company recognized no income tax benefit from the losses generated
during the years ended December 31, 2000 and 2001. The Company has
adopted the Statement of Financial Accounting Standards No. 109 -
"Accounting for Income Taxes."
Deferred tax asset
Net operating loss carry forwards $ 5,205,453
Valuation allowance (5,205,453)
Net deferred tax asset -
NOTE 9 - CONTINGENCIES AND COMMITMENTS
Handi-Plate Royalty
As part of acquiring the patents for this product, Nutek Inc. agreed to
provide the inventor a 2.5% royalty interest on the gross sales of this
product.
After numerous delays by the tooling manufacturer to provide Nutek
the final finished product in order to fulfill orders received, Nutek
lost over $5 million in sales of this product. In December 2000, the
Company prepared a lawsuit, which it has served on Advance plastics,
et al, of San Diego, California claiming more than $5 million in damages.
These revenues had made up a significant part of Nutek's growth strategy
for 2000 and were a significant setback to meeting the sales objectives
for the year.
The company has determined it is in the best interests of the shareholders
to not pursue further legal action against Advanced Plastics of San Diego
since Advanced Plastics has agreed to return the Handi-Plate mold to the
company.
Clock royalty
As part of the acquisition of Century Clocks SA clock molds, a 7.5%
royalty interest was given. The royalty owners advanced $55,000 to
Nutek, Inc. Murray Conradie had the option of converting the loan which
he made to Nutek Inc. in the amount of $57,000 to a royalty interest
and becoming a participant in the 7.5% royalty interest. During 2001,
the note was canceled and converted to the preferred stock.
Subscriptions Receivable
The Company has received common stock subscriptions in the amount of
$100,000. The Company reported this as part of shareholder's equity.
The Company received the payment for the subscriptions in the first
quarter 2000.
Litigation
A lawsuit was initiated by the Company to recover 1,000,000 shares of its
common stock, which was issued to an individual for services. The services
were never received. Nutek successfully resolved this case in November
2000 before going to trial.
After numerous delays by the manufacturer of the tooling to provide Nutek
the final finished product for the Handi-Plate product in order to fulfill
orders received, Nutek lost over $5 million in sales of this product. In
December 2000, the Company prepared a lawsuit, which it has served on
Advance plastics, et al, of San Diego, California claiming more than $5
million in damages. These revenues had made up a significant part of
Nutek's growth strategy for 2000 and were a significant setback to meeting
the sales objectives for the year.
After numerous delays by the inventor of the Electrostatic Light Switch
patent number 5833350 to provide Nutek the information, continuation
patents and schematics, which Nutek purchased, Nutek acquired world-wide
rights to a significantly enhanced patent and returned the rights to
Electro Static Solutions LLC for patent number 5833350. Electro Static
Solutions and its members are now involved in litigation with Nutek for
the return of $150,000.00 in cash and $180,000.00 in Nutek stock paid to
Electro Static Solutions. Electro Static Solutions is claiming the balance
of the purchase price. The Company is very confident that the company will
prevail in this litigation.
NOTE 10 - ACQUISITIONS
All assets are booked at historical purchase price and there is no variance
between book value and the purchase price.
Patent rights for an electro static light switch were acquired August 27,
1999 for the fair market price of $1,000,000 from a non-related party.
Payment was made by issuing 600,000 shares of Restricted Common Stock
valued at $.30 per share. Another $150,000 was to be paid in cash with
the balance of $670,000 to be paid by increasing the royalty payment
from seven to ten percent until the balance is paid off. After numerous
delays by the inventor of the Electrostatic Light Switch patent number
5833350 to provide Nutek the information, continuation patents and
schematics which Nutek purchased, Nutek acquired world-wide rights to a
significantly enhanced patent and returned the rights to Electro Static
Solutions LLC for patent number 5833350.
Nutek Oil, Inc., some of the assets and leases of the Clipper Operating
Company were acquired on 02/23/2000 with 2,064,348 shares of Nutek stock
at the current market price of $0.31 representing $639,948 a note for
$639,948 was issued for the balance of the purchase price. The purchase
price of $1,279,896 was made up of (mineral acreage for $454,959;
equipment at market value $788,217; and gas pipeline at market value
$36,720), Vac-U-Lift Production Company, Inc. In June of 1996, the
company exchanged 100,000 shares of its common stock and a certain
amount of cash to acquire all of the outstanding common shares of
Vac-U-Lift Production Company, Inc., a Texas corporation. The business
combination was been accounted for under the purchase method of accounting.
There was no goodwill or intangible assets recorded for this acquisition.
Nutek determined at the end of Fiscal 2000 to shut down this operation
through bankruptcy. This company had no significant assets but had
accounts payable of approximately $19,000.00, which was discharged as
a result of the bankruptcy.
SRC International, Inc. was acquired for 1,000,000 shares of the Company's
common stock for all the outstanding stock of SRC International, Inc. in a
transaction consummated on 04/01/1998. SRC International Inc. manufactures
"Super Glide" a rail covering made of an extremely durable, super-slick,
space age polymer designed to reduce friction between rails and hangers
in the dry cleaning and garment industries. The business combination has
been accounted for under the pooling of interest method.
Century Clocks, Inc. (a Nevada Corporation) was incorporated on January 15,
1999 by Nutek, Inc. On April 30, 1999, clock molds valued at $257,800 were
acquired. Shares in the amount of 1,315,000 with a fair market value of
$.12 totaling $157,800 plus notes payable in the amount of $100,000 was
given in exchange for the clock molds.
Kristi and Co. was acquired 01/06/2000 for 250,000 shares of the Company's
stock in exchange for the outstanding common stock of Kristi and Co and
a note payable in the amount of $50,000 payable within 18 months at an
interest rate of 7% per annum. Kristi and Co. has the rights to certain
woman's resort wear clothing designs and design groups. Kristi and Co.
plans to market these items and to continue creating new designs. Kristi
and Co. was incorporated September 13, 1999. Kristi and Co. reported the
rights and assets purchased from Kristi Hough at their historical cost of
zero in a manner similar to a pooling of interest due to the common control
of management, per APB Opinion 16. When Nutek, Inc. purchased Kristi and
Co., the acquisition was booked at the estimated fair market value of those
rights and assets which Kristi and Co. owned under the purchase method of
accounting for business combinations per APB 16 as there was not a common
control issue for this transaction. Accordingly, these designs and client
lists were restated at their estimated fair market values per the best
judgment of management. Management based its evaluation on the fact that
these customer lists, designs and patterns had previously generated revenues
of approximately $1,500,000 for a company in a similar line of business
over a period of approximately 18 months. Nutek, Inc. estimated the
customer list at $30,000 and the designs and patterns at $70,000. Current
sales and cash flows of Kristi and Co.'s line indicate that the valuation
was accurate. The Company anticipates selling these items since Kristi
and Co. is no longer in business.
Datascensions, Inc. was acquired on July 2, 2001 for $2,200,000 of Nutek,
Inc.s restricted common stock in exchange for the outstanding common stock
of Datascensions, Inc. There were 27,500,000 shares issued. Of this amount,
20,911,111 has been converted to 209,111 shares of the Series A preferred
stock. Datascensions, Inc. is a premiere data solutions company
representing unique expertise in collection, storage, processing and
interpretation of data.
Sin Fronteras, Inc., a Costa Rica company, was acquired on May 13, 2002
for 13,517,241 shares of Nutek's common stock in exchange for the
outstanding common stock of Sin Fronteras, Inc. at the fair market value
of the average trading price of Nuteks stock for the five trading days
prior to May 13, 2002 at the price of $0.0725. This acquisition entitled
Nutek, Inc. to assume $750,000 of notes receivable due to Sin Fronteras,
Inc. No other assets or liabilities were assumed.
NOTE 11 - RELATED PARTY TRANSACTIONS
Mr. Conradie was formerly an officer and manager of Century Clocks SA.
He negotiated a purchase of clock molds from South Africa. This was a
three party transaction which involved Mr. Conradie purchasing the molds
in South Africa and then transferring the clock molds to Century Clocks,
Inc., a company wholly owned by Nutek, Inc. and formed to pursue this
business opportunity. The clock molds were recorded at Mr. Conradie's,
the transferor's, historical cost and book value. There were no
inventories involved in these transactions. Mr. Conradie also received
1,050,000 shares of the Company's common stock valued at $126,000, December
30, 1999 the day the stock was authorized and recorded in the Company's
minutes.
Murray Conradie received 175,000 shares of the company's common stock
valued at $26,250 for unpaid compensation during the first six months
of 2000.
Kristi Conradie, vice president, received 250,000 shares of Nutek Inc's
common restricted stock and a note payable in the amount of $50,000 for
the outstanding stock of Kristi and Co., Inc.
Kristi Conradie received 163,334 shares of the company's common stock
valued at $24,500 for unpaid compensation during the first six months
of 2000.
Murray Conradie and Kristi Conradie have loaned the company an
additional $107,333 through their personal lines of credit which
is included in the short-term notes payable.
NOTE 12 WARRANTS AND OPTIONS
The Company does not currently have any stock options issued. The
company has adopted FASB 123 and will account for stock issued for
services and stock options under the fair value method.
NOTE 13 SEGMENT INFORMATION
The Company has adopted FASB 131. The adoption of FASB 131 did not
affect results of the companys statement of operations or financial
position, but did affect the disclosure of segment information. The
Company operates within two segments, retail sales and exploration and
production of oil and gas. Retail sales includes Kristi and Co.,
SuperGlide, Electrostatic light switch, Tekplate, and Century Clocks.
NOTE 14 PRIOR PERIOD ADJUSTMENT
Prior management owned a company called Vac-U-Lift Production Company
Inc., which went bankrupt and was closed down. Management had formed
a partnership called the Vac-U-Lift partnership, which was formed to
drill a single oil well. This was previously reported on the books
as "Drilling equipment" for $260,604. This amount was removed, along
with a $97,173 adjustment for inventory of Kristi & Co., reported on
the prior financial statements.
For the period ended June 30, 2002 the Company recorded a prior period
adjustment of $38,685 due to an error in expensing inventory that should
have been capitalized.
NOTE 15 RECENT PRONOUNCEMENTS
During 2001, the Financial Accounting Standards Board released SFAS
142 which is to be applied starting with fiscal years beginning after
December 31, 2001. SFAS 142 addresses financial accounting and reporting
for acquired goodwill and other intangible assets. Currently, the Company
has no acquired goodwill or other intangible assets; therefore, this
standard has no effect on the financial statements when adopted.
In August 2001, the Financial Accounting Standards Board released
SFAS 143 which is to be applied starting with fiscal years beginning
after June 15, 2002. SFAS 143 addresses financial accounting and
reporting for asset retirement obligations. Currently, the Company
has no obligations associated with the retirement of tangible long-lived
assets; therefore, this standard has no effect on the financial
statements when adopted.
In October 2001, the Financial Accounting Standards Board released
SFAS 144 which is to be applied starting with fiscal years beginning
after December 15, 2001. SFAS 144 addresses financial accounting and
reporting for impairment or disposal of long-lived assets. Currently,
the Company has no long-lived assets; therefore, this standard has no
effect on the financial statements when adopted.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
The following is a discussion of certain factors affecting Registrant's
results of operations, liquidity and capital resources. You should read
the following discussion and analysis in conjunction with the Registrant's
consolidated financial statements and related notes that are included
herein under Item 1 above.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
The statements contained in the section captioned Management's Discussion
and Analysis of Financial Condition and Results of Operations which are
historical are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements represent the Registrants present expectations or beliefs
concerning future events. The Registrant cautions that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Registrant to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
Such factors include, among other things, the uncertainty as to the
Registrants future profitability; the uncertainty as to the demand for
Registrants services; increasing competition in the markets that Registrant
conducts business; the Registrant's ability to hire, train and retain
sufficient qualified personnel; the Registrant's ability to obtain financing on
acceptable terms to finance its growth strategy; and the Registrant's
ability to develop and implement operational and financial systems to
manage its growth.
1) Plan of Operation
The Company is engaged in multiple business activities, which currently
include:
(A) Datascension Inc., which conducts telephone market research and
provides data entry services for third parties;
(B) Nutek Oil Inc, which owns the rights to oil leases in Texas;
(C) Kristi & Co., Inc., which designs, manufactures and sells woman's
resort wear clothing;
(D) Century Clocks Inc., which produces plastic wall clocks;
(E) SRC International Inc., which produces plastic coverings for metal
rails;
(F) Other consumer/industrial products which include: a patented safety
product that replaces standard light switch cover plates that automaticall
provide illumination in the event of a power failure; and a patented plastic
buffet plate that allows the user to hold both a plate and cup in one hand.
The Companys websites can be found at: www.nutk.com; www.tekplate.com
and www.datascension.com
(i) Short-term Objectives:
- Continue the expansion of Datascension.
- Expand Datascensions international operations further.
- Continue market penetration and consumer awareness of the Tekplate product
- Make acquisitions of strategic competitors.
- Develop strategic Joint Venture relationships.
Nutek recently made the decision to eliminate certain operations to
focus more of its resources on its core growth operations. The decision was
based on a number of factors including the performance and cash flow
requirements of Kristi & Co., Inc. and Century Clocks Inc., the general
slow growth projections for the next few years, the high cost of customer
acquisition and retention and the ongoing costs associated with maintaining
these operations at a competitive level. Kristi & Co., Inc and Century Clocks
Inc., did expand their customer base of customers, however, to maintain and
continue growth would require significant additional capital requirements.
Nutek anticipates that these actions will reduce operating expenses and at
the same time have a significant impact on increasing revenue and profits.
(ii) Long-term Objectives:
- Expand the Tekplate penetration to both a national and international
level.
- Secure significant business opportunities for Datascension Inc.
- Complete in-field drilling of 20 additional oil wells.
There is a planned sale of significant equipment and assets to include,
Kristi & Co., Inc, Century Clocks Inc., and SRC International Inc. The
company anticipates a significant capital infusion into the company from
the sale of these assets, which will provide additional capital for the
purchase of Tekplate inventory and the expansion of Datascension into
the International markets. Excluding any potential acquisition, the
Company's work force is expected to increase at a rate equal to actual
increases of our business operations.
1) During the Second Quarter ended June 30, 2002 the Company had a net
profit of $228,911 from operations against revenues of $1,605,037 as
compared to a net loss from operations of $25,621 against revenues of
$296,700 for the same quarter last year. The Company has increased its
selling, general and administration costs from $92,979 for the same
period last year to $736,191 for the Second Quarter this year.
Depreciation costs for the Second Quarter this year were $48,559 as
compared to $31,298 for the same period last year.
As of June 30, 2002, the Company has eighty-five million seven hundred
fifty-nine thousand seven hundred seventy five (85,759,775) shares of
its $0.001 par value common voting stock issued and outstanding which
are held by approximately five hundred and sixteen (516) shareholders
of record. The Company also has five hundred and eight thousand five
hundred (508,500) shares of its $0.001 par value Preferred Stock Series
B issued and outstanding, as of June 30, 2002. All Series B Preferred
shares which have been issued were issued for cash at $1.00 a share.
Series B Preferred shares have the same voting rights as the common
shares but have priority in the event of Company liquidation. All of
the shares outstanding were to be redeemed at $1.00 a share plus all
accrued dividends prior to December 31, 1993. This has been extended
by mutual agreement. Series B shares have annual dividends of $.15 a
share payable quarterly. They are convertible to common shares on a
one for one basis at the holders' option. The Company also has five
hundred and ninety-six thousand four hundred
and eight (596,408) shares of its $0.001 par value Preferred Stock
Series A issued and outstanding, as of June 30, 2002.
2) Results of Operations
For the Second Quarter, ended June 30, 2002, the Company has generated
$1,605,037 in revenues and generated a profit of $228,911 for the same
period. This compares to revenues of $296,700 and a loss of $25,621 for
the same period last year. The Company has increased its working capital
position by $634,919 from a positive $1,170,191 at March 31, 2002 to a
positive $1,805,110 on June 30, 2002.
The majority of the Company's expenses for the quarter included selling,
general administrative costs.
3) Liquidity and Capital Resources
Management is of the opinion that sufficient working capital will be
available from internal operations and from outside sources during the
next twelve months thereby enabling Nutek to meet its obligations and
commitments as they become payable. Historically, Nutek has been
successful in its efforts to secure working capital from private
placements of common stock securities, bank debt, and loans from
private investors. Currently, Mr. Conradie and Mr. Kincer have both
provided significant personal collateral to the Companys bankers in
return for a substantial line of credit and the commitment to fund
purchase orders for the Tekplate product from major wholesalers.
As an on going concern, if the Company needs to raise additional funds
in order to fund expansion, develop new or enhanced services or products,
respond to competitive pressures or acquire complementary products,
businesses or technologies, any additional funds raised through the
issuance of equity or convertible debt securities, the percentage
ownership of the stockholders of the Company will be reduced, stockholders
may experience additional dilution and such securities may have rights,
preferences or privileges senior to those of the Company's Common Stock.
The Company does not currently have any contractual restrictions on its
ability to incur debt and, accordingly, the Company could incur significant
amounts of indebtedness to finance its operations. Any such indebtedness
could contain covenants which would restrict the Company's operations.
As of June 30, 2002, the Company had four hundred and forty-one (441)
employees of which eight (8) are Officers of the Company. As the Company
continues to grow and develop its product lines it will need to add
employees.
The Company's consolidated financial statements have been prepared on
the assumption the Company will continue as a going concern. Management
believes that current operations will continue to provide sufficient
revenues to meet operating costs and expansion.
Unclassified Balance Sheet - In accordance with the provisions of SFAS
No. 53, the Company has elected to present an unclassified balance sheet.
Basic earnings per share is computed using the weighted average number
of shares of common stock outstanding for the period end. The net income
(loss) for the period end is divided by the weighted average number of
shares outstanding for that period to arrive at earnings per share.
Diluted EPS is calculated to show, on a pro forma basis, per share
earnings for the period available to common shareholders assuming the
exercise or conversion of all securities that are exercisable or
convertible into common stock and which would either dilute or not
affect basic EPS.
18
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things
as future capital expenditures (including the amount and nature thereof),
finding suitable merger or acquisition candidates, expansion and growth of
the Company's business and operations, and other such matters are
forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors
it believes are appropriate in the circumstances. However, whether actual
results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company.
This Form 10-QSB contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar
terms. These statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current expectations of
the Company, its directors or its officers with respect to, among other
things: (i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; (iii) the Internet and Internet commerce; and, (iv) the Company's
financing plans. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. Factors that could adversely affect actual results and performance
include, among others, the Company's limited operating history, dependence
on continued growth in the use of the Internet, the Company's inexperience
with the Internet, potential fluctuations in quarterly operating results and
expenses, security risks of transmitting information over the Internet,
government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB
are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequence to or effects on the Company or its business or operations. The
Company assumes no obligations to update any such forward-looking statements.
19
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is from time to time involved in litigation incident to the
conduct of its business. Certain litigation with third parties and present
and former employees of the Company is routine and incidental, such
litigation can result in large monetary awards for compensatory or
punitive damages.
The Company is currently involved in the following litigation:
After numerous delays by the inventor of the Electrostatic Light Switch
patent number 5833350 to provide Nutek the information, continuation patents
and schematics which Nutek purchased, Nutek acquired world wide rights to a
significantly enhanced patent and returned the rights to Electro Static
Solutions LLC for patent number 5833350. Electro Static Solutions and its
members are now involved in litigation with Nutek for the return of $150,000.00
in cash and $180,000.00 in Nutek stock paid to Electro Static Solutions.
Electro Static Solutions is claiming the balance of the purchase price.
The Company and legal counsel are very confident that the company will prevail
in this litigation.
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
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
EX-99.1
CONSOLIDATED PRO FORMA
EXHIBIT 99.1
Nutek, Inc.
CONSOLIDATED PRO FORMA
FINANCIAL STATEMENTS
for the period ending
March 31, 2002
TABLE OF CONTENTS
-----------------
PAGE
BALANCE SHEET........................................................... 1-2
STATEMENT OF OPERATIONS ........................................... 3
NOTES TO FINANCIAL STATEMENTS.......................................... 4
NUTEK, INC.
1110 MARY CREST ROAD
HENDERSON, NV 89014
The following financial statements set forth summary pro forma financial data
of the Company. The Company has prepared pro forma balance sheets and
statements of operations for the periods ending March 31, 2002. The pro
forma financial statements are based on historical financial statements of
Nutek, Inc., and Datascension, Inc. adjusted to give effect to the combination
resulting from the purchase agreement of Datascension, Inc. in April of 2002.
The pro forma balance sheet has been prepared based on the assumption that
the transactions occurred on January 1, 2001. The pro forma statements of
operation are based on the assumption that the transaction occurred on
January 1, 2002.
Nutek, Inc.
CONSOLIDATED PRO FORMA
BALANCE SHEET
AS AT
March 31, 2002
BALANCE SHEET - ASSETS
Proforma Proforma Proforma Proforma
Nutek, Inc.Sin Fronteras Adjustments Combined
ASSETS
CURRENT ASSETS
Cash 54,450 0.00 0.00 54,450
Marketable Securities 72,000 0.00 0.00 72,000
Accounts Receivable
(Net of Reserves) 1,148,227 0.00 0.00 1,148,227
Notes Receivable 25,865 750,000 0.00 775,865
Accrued Income 11,200 0.00 0.00 11,200
Inventory 193,265 0.00 0.00 193,265
Prepaid Expenses 167,609 0.00 0.00 167,609
---------------------------------------------
Total Current Assets 1,672,616 750,000 0.00 2,422,616
PLANT AND EQUIPMENT
Plant and Equipment
(less Depreciation) 2,984,321 0.00 0.00 2,984,321
---------------------------------------------
Total Plant and
Equipment 2,984,321 0.00 0.00 2,984,321
OTHER ASSETS
Deposits 22,652 0.00 0.00 22,652
Patent Rights Acquired
(net of amortization) 560,266 0.00 0.00 560,266
Web Sites
(net of amortization) 12,154 0.00 0.00 12,154
Packaging Design
(net of amortization) 70,864 0.00 0.00 70,864
Other Assets
(net of amortization) 151,940 0.00 0.00 151,940
Investments 188,000 0.00 0.00 188,000
Goodwill 1,462,782 0.00 0.00 1,462,782
-----------------------------------------------------
Total Other Assets 2,468,658 0.00 0.00 2,468,658
TOTAL ASSETS 4,902,222 750,000 0.00 5,652,222
==============================================
See accompanying notes to financial statements
F-1
Nutek, Inc.
CONSOLIDATED PRO FORMA
BALANCE SHEET
AS AT
March 31, 2002
BALANCE SHEET - LIABILITIES & EQUITY
Proforma Proforma Proforma Proforma
Nutek, Inc.Sin Fronteras Adjustments Combined
LIABILITIES & EQUITY
Current Liabilities
Accounts Payable 171,027 0.00 0.00 171,027
Accrued Expenses 263,572 0.00 0.00 263,572
Short Term Notes Payable 67,826 0.00 0.00 67,826
---------------------------------------------------------------
Total
Current Liabilities 502,425 0.00 0.00 502,425
Long Term Liabilities 1,244,981 0.00 0.00 1,244,981
Total Liabilities 1,747,406 0.00 0.00 1,747,406
EQUITY
Capital Stock 72,243 750 0.00 72,993
Additional Paid
in Capital 10,414,906 749,250 0.00 11,164,156
Preferred Stock 1,105 0.00 0.00 1,105
Treasury Stock (52,388) 0.00 0.00 (52,388)
Retained Earnings
or (Deficit) (5,057,677) 0.00 0.00 (5,057,677)
- ---------------------------------------------------------------------
Total Stockholders'
Equity 5,378,189 750,000 0.00 6,128,189
TOTAL LIABILITIES &
OWNER'S EQUITY 7,125,595 750,000 0.00 7,875,595
==============================================
See accompanying notes to financial statements
F-2
Nutek, Inc.
CONSOLIDATED PRO FORMA
STATEMENT OF OPERATIONS
For Year Ended March 31, 2002
STATEMENT OF OPERATIONS
Proforma Proforma Proforma Proforma
Nutek, Inc.Sin Fronteras Adjustments Combined
REVENUE
Net Sales 1,461,142 0.00 0.00 1,461,142
COSTS AND EXPENSES
Cost of Sales 769,196 0.00 0.00 769,196
Selling, General and
Administrative 493,628 0.00 0.00 493,628
Depreciation Expense 56,893 0.00 0.00 56,893
Interest Expense 12,289 0.00 0.00 12,289
Amortization of
Intangible Assets 1,761 0.00 0.00 1,761
- --------------------------------------------------------------------
Total Cost & Expenses 1,333,767 0.00 0.00 1,333,767
- --------------------------------------------------------------------
Other Income (Expense) 20,402 0.00 0.00 20,402
Net Income or (Loss) before
Income Taxes 147,777 0.00 0.00 147,777
See accompanying notes to financial statements
-3-
Nutek, Inc.
NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
NOTE 1 - PRO FORMA FINANCIAL STATEMENTS
The following financial statements set forth summary pro forma financial data
of the Company. The Company has prepared pro forma balance sheets and
statements of operations for the periods ending March 31, 2002. The pro
forma financial statements are based on historical financial statements of
Nutek, Inc., and Sin Fronteras Inc. adjusted to give effect to the
combination resulting from the purchase agreement of April of 2002, under the
following assumptions. The pro forma balance sheet has been prepared based
on the assumption that the transactions occurred on January 1, 2002. The pro
forma statements of operation are based on the assumption that the
transaction occurred on January 1, 2002. There were no adjustments made
to arrive at the combined company.
20
SIGNATURES
Pursuant to the requirements of Section 12 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.
Nutek, Inc.
------------
(Registrant)
/s/ Murray N. Conradie
- -------------------
Murray N. Conradie,
President, Chairman
Date: July 31, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Nutek, Inc.
/s/ Jason F. Griffith, CPA
- -----------------------------------
Jason F. Griffith
CFO and Corporate Secretary
Date: July 31, 2002
EX-27.2
FINANCIAL DATA SCHEDULE
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET, THE STATEMENT OF OPERATIONS, AND THE STATEMENT OF CASH FLOWS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2002
<PERIOD-START> APR-01-2002
<PERIOD-END> JUN-30-2002
<CASH> 12,849
<RECEIVABLES> 1,380,939
<ALLOWANCES> 0
<INVENTORY> 226,221
<CURRENT-ASSETS> 2,486,701
<PP&E> 3,027,649
<DEPRECIATION> 105,452
<TOTAL-ASSETS> 7,979,347
<CURRENT-LIABILITIES> 681,590
<BONDS> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 1,105
<COMMON> 85,760
<OTHER-SE> 6,207,537
<TOTAL-LIABILITY-AND-EQUITY> 7,979,347
<SALES> 1,605,037
<TOTAL-REVENUES> 1,605,037
<CGS> 568,748
<TOTAL-COSTS> 1,391,079
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,478
<INCOME-PRETAX> 228,911
<INCOME-TAX> 0
<INCOME-CONTINUING> 228,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228,911
<EPS-PRIMARY> 0.003
<EPS-DILUTED> 0.002