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 March 31, 2001
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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 89014
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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 46,919,507 shares of Common stock issued and outstanding,
par value $.001 per share as of March 31, 2001. The Registrant has 793,500
shares of Preferred Stock issued and outstanding as of March 31, 2001.
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........................................ 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 20
Item 2. Changes in Securities and Use of Proceeds............ 20
Item 3. Defaults upon Senior Securities...................... 20
Item 4. Submission of Matters to a Vote
of Security Holders................................. 20
Item 5. Other Information.................................... 20
Item 6. Exhibits and Reports on Form 8-K..................... 20
Signatures..................................................... 21
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
The unaudited financial statements of registrant for the three months ended
March 31, 2001, 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 three months ended March 31, 2001. 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, 2000 and March 31, 2001
ASSETS
March 31 December 31
2001 2000
CURRENT ASSETS
Cash 11,062.00 48,071.00
Accounts Receivable 90,871.00 60,396.00
Marketable Securities 72,000.00 72,000.00
Inventory 141,301.00 170,095.00
Accrued Income 11,200.00 11,200.00
Prepaid Expenses 172,962.00 2,891.00
---------- ---------
Total Current Assets 499,396.00 364,653.00
PROPERTY AND EQUIPMENT
Property and Equipment
(net of depreciation) 2,921,370.00 2,774,036.00
------------ ------------
Total Property and Equipment 2,921,370.00 2,774,036.00
OTHER ASSETS
Patent Rights Acquired
(net of amortization) 1,181,750.00 1,196,708.00
Long Term Investment 284,116.00 284,116.00
Website Assets 41,627.00 42,154.00
Customer Lists 45,686.00 46,500.00
Patterns/Designs 58,381.00 57,588.00
Trade Show Booths 8,816.00 6,450.00
Packaging Design/Artwork 28,443.00 7,534.00
Product Design/Tooling 9,000.00 0.00
Security Collateral 40,000.00 0.00
Deposits 3,855.00 3,455.00
------------ ------------
Total Other Assets 1,701,674.00 1,644,505.00
------------ ------------
TOTAL ASSETS 5,122,440.00 4,783,194.00
============ ============
See accompanying notes to financial statements
5
Nutek, Inc.
CONSOLIDATED
BALANCE SHEET
AS AT
December 31, 2000 and March 31, 2001
LIABILITIES & EQUITY
March 31 December 31
2001 2000
CURRENT LIABILITIES
Accounts Payable 63,582.00 51,639.00
Short Term Notes Payable 810,055.00 702,435.00
Discount on Notes Payable 0.00 0.00
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Total Current Liabilities 873,637.00 754,074.00
OTHER LIABILITIES
Long Term Notes Payable 32,000.00 32,000.00
Unamortized Interest Payable 0.00 0.00
Accrued Bond Interest 0.00 0.00
Bonds Payable 0.00 0.00
Clipper Asset Purchase 639,948.00 639,948.00
Deposits Received 0.00 0.00
Patent Rights Acquired Liability 670,000.00 670,000.00
------------ ------------
Total Other Liabilities 1,341,948.00 1,341,948.00
------------ ------------
TOTAL LIABILITIES 2,215,585.00 2,096,022.00
EQUITY
Common Stock 46,919.00 45,186.00
Common Stock, $0.001 par value,
authorized 200,000,000; shares issued
and outstanding at March 31, 2001
46,919,507 common shares; issued and
outstanding at December 31, 2000,
45,186,132 common shares
Additional Paid in Capital 7,531,790.00 7,237,329.00
Preferred Stock, $.001 par
value, authorized
20,000,000 shares 794.00 794.00
issued and outstanding at
March 31, 2001 and December 31
2000, 793,500 preferred shares
Royalty Investors 20,000.00 30,000.00
Treasury Stock (49,263.00) (49,263.00)
Retained (Deficit) (4,643,385.00) (4,576,874.00)
Common Stock Subscribed 0.00 0.00
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Total Stockholders' Equity 2,906,855.00 2,687,172.00
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TOTAL LIABILITIES AND OWNERS EQUITY 5,122,440.00 4,783,194.00
============ ============
See accompanying notes to financial statements
6
Nutek, Inc.
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR 3 MONTHS ENDED
March 31, 2000 and March 31, 2001
STATEMENT OF OPERATIONS
Unaudited Audited
--------- --------
Three months ended Jan 1
March 31 2000,
to Dec.
2001 2000 31, 2000
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REVENUES 315,856.00 198,048.00 1,250,627.00
COSTS AND EXPENSES
Cost of Goods Sold 61,384.00 33,280.00 88,787.00
Selling, General and
Administrative 258,152.00 75,976.00 706,693.00
Depreciation Expense 40,699.00 29,614.00 141,901.00
Interest Expense 4,500.00 158.00 15,817.00
Amortization of Intangibles 17,632.00 18,821.00 72,262.00
----------- ---------- -----------
Total Costs and Expenses 382,367.00 157,849.00 1,025,460.00
----------- ---------- -----------
Net Ordinary Income or
(Loss) before income taxes (66,511.00) 40,199.00 225,167.00
Income Tax Expense 0.00 11,413.00 0.00
Benefit due to loss
Carry forward 0.00 (11,413.00) 0.00
Net Income or (Loss) (66,511.00) 40,199.00 225,167.00
========== ========= ==========
Basic weighted average
number of common
shares outstanding 45,283,007 36,758,236 41,757,088
Basic Net Loss Per Share (0.001) 0.001 0.01
See accompanying notes to financial statements
7
Nutek, Inc.
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR 3 MONTHS ENDED
March 31, 2000 and March 31, 2001
STATEMENT OF CASH FLOWS
January 1, 2001 January 1, 2000
to March 31, to March 31
2001 2000
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit(loss) from operations (66,511.00) 40,199.00
Adjustments to reconcile net
income to net cash provided
Items not requiring cash
Services Received for stock 0.00 0.00
Depreciation Expense 40,699.00 29,614.00
Amortized Interest Expense 4,500.00 158.00
Amortization of Intangibles 17,632.00 18,821.00
(Increase)/Decrease in
accounts receivable (30,475.00) (22,330.00)
(Increase)/Decrease in
inventory 28,794.00 (83,633.00)
(Increase)/Decrease in Deposits (400.00) 0.00
Increase/(Decrease) in Accounts
Payable 11,943.00 (3,004.00)
Net cash flow provided by operating
activities 6,182.00 (20,175.00)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase Kristi & Co 0.00 29,812.00
Purchase of Website 0.00 12,000.00
Purchase of Electrostatic Light 0.00 40,000.00
Purchase of Print Shop Assets 50,000.00 0.00
Purchase of Prepaid Services 170,000.00 0.00
Net cash used by investing
activities (220,000.00) (81,812.00)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 79,189.00 311,067.00
Increase/(Decrease) in Notes
payable 107,620.00 (214,100.00)
Increase/(Decrease) in Royalty
Investments (10,000.00) 0.00
Treasury Stock 0.00 0.00
Net cash provided by financing
activities 176,809.00 96,967.00
Balance at beginning of
period 48,071.00 81,404.00
Net increase (decrease) in cash (37,009.00) (5,020.00)
Balance as at end of
period 11,062.00 76,384.00
See accompanying notes to financial statements
8
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated in August of 1991 (Date of Inception) under the
laws of the State of Nevada, as Nutek, Inc. (The Company) and is engaged
primarily in the oil and gas industry.
SRC International, Inc. was incorporated 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 on leases in Texas. The Company
remained inactive until it was acquired in June of 1996 by Nutek. 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 were 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, 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 year end 2000.
Kristi & Co. was incorporated on September 13, 1999, is a Nevada corporation
doing business in California marketing woman's resort wear clothing designs and
design groups was purchased by the company 01/06/2000.
Nutek Oil, Inc. was incorporated December 3, 1998, purchased selected equipment
and assets on 02/23/2000 from Clipper Operating Company and is in the oil
producing business.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
The accompanying consolidated financial statements include the accounts of
Nutek Inc., and its different business segments, SRC International, Inc.,
Century Clocks Inc., Kristi & Co. and Nutek Oil, Inc. All significant
inter-company balances and transactions have been eliminated.
Accounting policies and procedures have not been determined except as follows:
1. The Company uses the accrual method of accounting.
2. Inventories are stated at the lower of cost or market, cost being
determined on the first in, first out (FIFO) basis.
3. Basic earnings per share is computed using the weighted average number of
shares of common stock outstanding. Diluted earnings per share were not
included as the inclusion of convertible notes, convertible preferred stock and
warrants would be anti-dilutive and all contingencies for conversion have not
occurred.
4. The Company has not yet adopted any policy regarding payment of dividends.
The Company has authorized 20,000,000 shares of Series B preferred stock with a
par value of $0.001 (one tenth of one cent). All of the shares which have been
issued were issued for cash at $1.00 a share. Series B 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.
9
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS
5. The Company experienced a profit from the last fiscal 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. The Company's marginal
tax rate is 15%. Its effective tax rate is zero. It has net operating losses
of $4,643,385.00. These losses begin to expire in 2004. The estimated tax
benefit of these losses is $691,259.00. The Company had a loss of $66,511.00
for the first quarter of 2001. The company's effective tax rate is 0%
6. 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 as at
the date of the financial statements and revenues and expenses for the period
reported. Actual results may differ from these estimates.
7. The cost of equipment is depreciated over the estimated useful life of the
equipment utilizing the straight line method of deprecation. Depreciation
recorded during 1999 was $110,626.00. Depreciation recorded during 2000 was
$141,901.00. Depreciation recorded during the first three months of 2001 was
$40,699.00.
8. The Company has adopted December 31 as its fiscal year end.
9. The Company expenses its research and development in the period it's
incurred.
10. All non cash exchanges of stock for services rendered or other purposes
were recorded at the market value of the stock exchanged.
11. The Company's Statement of Cash Flows is reported utilizing cash
(currency on hand and demand deposits) and cash equivalents (short-term, highly
liquid investments with a maturity of less than 90 days).
Schedule of non-cash financing activities
As at As at
March 31 2001 December 31 2000
Common stock issued for investments
in other companies $ 0.00 $ 50,000.00
Common stock issued for Website Assets 0.00 9,000.00
Common stock issued for patents 0.00 0.00
Common stock issued to Employees 5,500.00 0.00
Common stock issued cancel trade payables 0.00 77,250.00
Common stock issued for Packaging/Design 20,000.00 0.00
Common Stock issued for Clipper assets 0.00 639,948.00
Common stock issued in exchange for services 31,500.00 24,000.00
Common stock issued to cancel Notes Payable 12,500.00 325,305.00
------------- -------------
Total $ 69,500.00 $1,125,503.00
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 $639,948.00 a note for $639,948.00 was issued for the balance of
the purchase price.
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 at the current
market price of $0.20, and a note for $50,000.00 with annual interest of 7% was
issued for the balance of the purchase price, payable within 18 months.
12. The Company has adopted SOP 98-5. Start-up costs and reorganization
costs were expensed when SOP 98-5 was adopted.
13. Oil well leases are depleted over the units of production, or 12 years,
whichever is shorter.
10
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS
14. Identifiable intangibles including patents are amortized over five years.
The amount of amortization recorded in 1999 was $62,367.00. The amount of
amortization recorded in 2000 was $72,262.00. Amortization recorded for the
first three months of 2001 was $17,632.00.
15. 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.
16. The Company has adopted FASB 121. Management determined that as the
major intangible asset, the electric light switch, was purchased late in 1999
there had not been a significant reduction in the usefulness of the asset at
March 31, 2001.
17. 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.
18. The Company has adopted FASB 115. Its equity securities are classified
as available for sale and reported at fair value.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of manufacturing equipment, oil leases and
equipment, office equipment, furniture and fixtures and molds.
All assets are booked at historical purchase price and there is no variance
between book value and the purchase price.
Estimated Useful Life
---------------------
March 2001 December 2000
Manufacturing Equipment $ 351,111.00 $ 352,678.00 5-7 Years
Leasehold Improvements $ 1,687.00 $ 1,708.00 5-7 Years
Drilling Equipment - Vaculift $ 219,521.00 $ 222,300.00 6-7 Years
Factory Equipment $ 1,296.00 $ 1,312.00 6-8 Years
Office Equipment $ 109,563.00 $ 111,107.00 6-8 Years
Clipper Assets - Nutek Oil $1,526,721.00 $1,422,295.00 6-8 Years
Printing Plant Equipment $ 57,000.00 $ 0.00 6-8 Years
Furniture & Fixtures $ 49,259.00 $ 49,883.00 7-12 Years
Super Glide Molds $ 223,241.00 $ 226,067.00 10-15 Years
Handi Plate Molds $ 133,534.00 $ 135,224.00 10-15 Years
Clock Molds $ 225,865.00 $ 228,724.00 10-15 Years
Shower Saver Molds $ 13,108.00 $ 13,273.00 10-15 Years
Mold - Steel $ 9,464.00 $ 9,464.00 10-15 Years
------------- -------------
$2,921,370.00 $2,774,035.00
NOTE 4 - OTHER ASSETS
Other assets consists of patents, the purchase of Kristi and Co, Inc for
$100,000, design and artwork 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.
March 2001 December 2000
Electrostatic light switch $ 926,765.00 $ 938,496.00
Dowel Maker $ 9,184.00 $ 9,300.00
Handi Plate Patent $ 245,801.00 $ 248,912.00
Website Development $ 41,627.00 $ 42,154.00
Customer Lists $ 45,686.00 $ 46,500.00
Patterns/Designs $ 58,381.00 $ 57,588.00
Trade Show Booths $ 8,816.00 $ 6,450.00
Packaging Design/Artwork $ 28,443.00 $ 7,534.00
Product Design/Tooling $ 9,000.00 $ 0.00
Long Term Investment $ 284,116.00 $ 284,116.00
Security Deposit/Collateral $ 40,000.00 $ 0.00
Rent Deposit $ 3,855.00 $ 3,455.00
------------- -------------
$1,701,674.00 $1,644,505.00
11
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
Note payable to John L Rainaldi,
a stockholder, 15% per annum $32,000.00
payments based upon the terms
of the related loan agreements, secured by ----------
stock of the Company. $32,000.00
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.
Short Term Notes Payable $810,055.00
NOTE 6 - INCOME TAXES
Nutek, Inc. and its business segments available net operating loss carry
forwards to offset future federal taxable income of approximately
$4,643,385.00. The carry forwards start expiring in 2004. The Company has
deemed it less than likely that this benefit will be utilized. Therefore
Company recognized no income tax benefit from the losses generated during the
quarter ended March 31, 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 $ 4,643,385.00
Valuation allowance (4,643,385.00)
---------------
Net deferred tax asset -0-
12
Nutek, Inc.
NOTES TO FINANCIAL STATEMENT
NOTE 7 - CONTINGENCIES AND COMMITMENTS
1. Office Lease
As of March 31, 2001 the Company leased office and warehouse space in
California with aggregate monthly rent of approximately $2,856.00. Rent
recorded during 1999 and 2000 respectfully was $21,218.25 and $34,272.00.
2. Handi-Plate royalty
As part of acquiring the patents for this product, Nutek Inc. to provide the
inventor a 2.5% royalty interest on the gross sales of this product.
After numerous delays by the manufacturer of the tooling 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.
3. Clock royalty
As part of the acquisition of Century Clocks SA clock molds, a 7.5% royalty
interest was given. The royalty owners advanced $55,000.00 to Nutek, Inc.
Murray Conradie has the option of converting the loan which he made to Nutek
Inc. in the amount of $57,000.00 to a royalty interest and becoming a
participant in the 7.5% royalty interest.
NOTE 8 - 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 $150,000.00 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. As at December 31, 2000, the Company only owes the
$670,000.00 royalty portion as the $150,000.00 cash portion was paid. As of
March 31, 2001 the balance is $670,000.00.
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 $639,948.00 a note for $639,948.00 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 were
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.
Elite Fitness was acquired 04/07/1999 for 125,000 shares of the Company's stock
in exchange for the outstanding common stock of Elite Fitness. The business
combination has been accounted for under the pooling of interest method. 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.
Century Clocks, Inc. (a Nevada Corporation) was incorporated on January 15,
1999 by Nutek, Inc. On April 30, 1999, clock molds valued at $257,800.00 were
acquired. Shares in the amount of 1,315,000 with a fair market value of $.12
totaling $157,800.00 plus notes payable in the amount of $100,000 was given in
exchange for the clock molds.
13
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS (Continued)
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 $50,000.00 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 $30,000.00 and the designs and patterns at $70,000.00
Current sales and cash flows of Kristi and Co.'s line indicate that the
valuation was accurate.
NOTE 9 - RELATED PARTY TRANSACTIONS
As of Marhc 31, 2001, Murray Conradie, President of Nutek Inc., has loaned
the Company $196,008.00, which includes $57,000.00 as a result of his brokering
the purchase of clock molds from South Africa. 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 $126,000.00, 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
$26,250.00 for unpaid compensation during the first six months of 2000.
As of March 31, 2001, Kristi Conradie, vice president of Nutek Inc., has
loaned the Company $93,655.00 Kristi Conradie, vice president, received 250,000
shares of Nutek Inc's common restricted stock and a note payable in the amount
of $50,000.00 for the outstanding stock of Kristi and Co., Inc.
Kristi Conradie received 163,334 shares of the company's common stock valued at
$24,500.00 for unpaid compensation during the first six months of 2000.
Murray Conradie and Kristi Conradie have also loaned the company an additional
$90,930.00 through their personal lines of credit which is included in the
short term notes payable.
The total amount owed by the company to Murray and Kristi Conradie as of
March 31, 2001 is $380,593.00
NOTE 10 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
of liabilities that might result should the Company be unable to continue as a
going concern. The Company's consolidated financial statements have been
prepared on the assumption the Company will continue as a going concern.
The Company previously reported as a Development Stage Company, however the
Company has generated significant revenues from its planned principal
operations for the year ending December 31, 2000 and is no longer considered a
Development Stage Company. Management believes that current operations will
continue to provide sufficient profits to meet operating costs and expansion.
NOTE 11 - YEAR 2000 ISSUE
The Company experienced no disruption in business to customers or vendors or
had a material adverse effect on the company's business, financial condition or
results of operations related to the year 2000.
NOTE 12. - 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 which were not
received. This case goes to trial in September of 2000. This case was
successfully resolved by Nutek 11/2000 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.
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 as
Advance Plastics has agreed to return the Handi-plate mold to the company.
14
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - SUBSEQUENT EVENTS
On May 1, 2001 the company moved operations to 1110 Mary Crest Road, Henderson,
Nevada.
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 as
Advance Plastics has agreed to return the Handi-plate mold to the company.
In February 2001, the company increased the preferred shares to 20,000,000
authorized and the common shares to 200,000,000 authorized.
NOTE 14 - SEGMENT INFORMATION
The Company has adopted FASB 131. The adoption of FASB 131 did not affect
results of the companies 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 and
Century Clocks.
15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
All statements, trend analysis and other information contained in this Report
relative to markets for the Company's products and trends in revenues, gross
margin and anticipated expense levels, as well as other statements including
words such as "believe," "anticipate," "expect," "estimate," "plan" and
"intend" and other similar expressions, constitute forward-looking statements.
Those forward-looking statements are subject to business and economic risks,
and the Company's actual results of operations may differ from those contained
in the forward-looking statements. The following discussion of the financial
condition and results of Operations of the Company should also be read in
conjunction with the Financial Statements and Notes related thereto-included
elsewhere in this Report.
The Company was incorporated under the laws of the State of Nevada, on August
23, 1991, under the name Swiss Technique, Inc. The original Articles of the
Company authorized the issuance of fifty million (50,000,000) shares of common
stock with a par value of $0.001. On or about August 23, 1991, pursuant to
Section 78.486, Nevada Revised Statutes as amended, the Company filed with the
Nevada Secretary of State Articles of Merger, whereby the Company merged with
Sun Investments, Inc., a Utah corporation. On or about April 10, 1992, the
Issuer, with majority shareholder vote filed Articles of Amendment to the
Articles of Incorporation with the Secretary of State of Nevada, authorizing
five million (5,000,000) shares of Preferred Stock each have a par value of
$0.001, with such rights, preferences and designations and to be issued in
such series as determined by the Board of Directors of the Corporation. The
Company in accordance with Section 78.250 of the Nevada Revised Statues and
as a result of the majority consent of shareholders executed on or about
March 3, 1995 changed the name of the Company from Swiss Technique, Inc.,
to NuTek, Inc. The Company filed a Certificate of Amendment of Articles of
Incorporation with the Secretary of State of Nevada to change its name. On
or about September 20, 1997, the Company filed with the Nevada Secretary of
State a Plan of Reorganization and Agreement between itself and International
Licensing Group, Inc., a Delaware Corporation.
The Company is engaged in multiple business activities, which include but
are not limited to:
a) Elite Fitness Systems Inc. which markets video "fitness program" tapes
through infomercials;
(Update: Management 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.)
b) Century Clocks Inc., which produces plastic wall clocks;
c) Vac-U-Lift Production Company Inc., which owns the rights to oil leases in
Texas;
(Update: Management 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 were written off.)
d) Kristi & Co. Inc., designs and markets woman's resort wear clothing.
e) Nutek Oil Inc., was incorporated in the State of Texas and acquired
some of the assets of Clipper Operating Company and is involved in oil
production.
f) Internet marketing;
g) Other consumer/industrial products which include: a plastic buffet
plate, producing "light switch" covers plates; and, plastic coverings for
metal rails,.
The Company's website can be found at: www.nutk.com.
16
The Company had a loss $66,511 for the Quarter ended March 31, 2001,
based on revenues of $315,856 As of March 31, 2001, the Company had an
accumulated retained deficit of $4,643,385. The Company expects that its
operating expenses will increase significantly during the next several months,
especially in the areas of sales and marketing, and brand promotion. Thus, the
Company will need to generate increased revenues to attain profitability. To
the extent that increases in its operating expenses precede or are not
subsequently followed by commensurate increases in revenues, or that the
Company is unable to adjust operating expense levels accordingly, the Company's
business, results of operations and financial condition would be materially and
adversely affected. There can be no assurances that the Company can sustain
profitability or that the Company's operating losses will not increase in the
future.
Going Concern - The Company's financial statements are prepared using the
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount of liabilities that might result should the Company be
unable to continue as a going concern.
The Company's consolidated financial statements have been prepared on the
assumption the Company will continue as a going concern. The Company
previously reported as a Development Stage Company, how ever the company has
for the fiscal year 2000 generated significant revenues from its planned
principal operations and is no longer considered a Development Stage Company.
Management believes that current operations will soon return to sufficient
profits 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.
Loss Per Share - The Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" that established
standards for the computation, presentation and disclosure of earnings per
share ("EPS"), replacing the presentation of Primary EPS with a presentation
of Basic EPS. It also requires dual presentation of Basic EPS and Diluted EPS
on the face of the income statement for entities with complex capital
structures. The Company did not present Diluted EPS since it has a simple
capital structure.
The Company has not pursued or explored any opportunities for an acquisition
or merger. This does not preclude that the Company may not explore any
opportunities in the future.
Results of Operations
For the First Quarter, ended March 31, 2001, the Company has generated
$315,856 in revenues and generated a loss of $66,511 for the same
period. This compares to revenues of $198,048 and a profit of $40,199 for the
same period last year. Through January 1, 2001 to March 31, 2001, the
Company has increased its working capital position by $15,180 from a
negative $389,421 at December 31, 2000 to a negative $374,241.
During the First Quarter, the Company finalized development and testing of its
Electrostatic Light Switch product which will be launched internationally in
the second quarter. The Company is still in the process of developing its
Website. The majority of the Company's expenses for the quarter included
selling, general administrative costs, product development and advertising and
promotion. There were non-recurring costs for legal fees and settlements of
$61,231 during this first quarter. Management has also been increased with the
employment of Mr. Donald Hejmanowski as Vice-President Finance from January 1,
2001 which has resulted in an increase in salaries.
Plan of Operation
1) During First Quarter ended March 31, 2001 the Company incurred a
net loss of $66,511 from operations against revenues of $315,856 as
compared to a net profit from operations of $40,199 against revenues
of $198,048 for the same Quarter last year. The Company has increased its
selling, general and administration costs from $75,976 for the same
period last year to $258,152 for the First Quarter this year. Depreciation
costs for the First Quarter this year were $40,699, as compared to $29,614
for the same period last year.
As of March 31, 2001, the Company has forty six million nine hundred and
nineteen thousand five hundred and seven (46,919,507) shares of its $0.001 par
value common voting stock issued and outstanding which are held by
approximately four hundred thirty-seven (437) shareholders of record.
The Company also has seven hundred ninety-three thousand five hundred
(793,500) shares of its $0.001 par value Preferred Stock issued and
outstanding, as of March 31, 2001. All 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.
17
Liquidity and Capital Resources
In December, 1999, a stock offering was made in reliance upon an exemption
from registration provisions 4(2) of the Securities Act of 1933, as amended,
pursuant to Regulation D, Rule 504 of the Act. The Company raised one
hundred thousand ($100,000) dollars through this Offering purchased by one
individual. The Company received the proceeds from this Offering in January,
2000. ("See Financial Statements, Statement of Changes in Shareholders'
Equity, Subscription Receivable.")
Between April, 1999 through October, 1999, the Company sold 2,040,000
Shares of unregistered common stock in exchange for Clock Molds, Patent
# 5833350, and certain "rights" to videos. These issuances were deemed
exempt from registration under the Securities Act in reliance on either (a)
Section 4(2) of the Securities Act, as transaction not involving a public
offering, or (b) Rule 701 promulgated under the Securities Act. No commissions
were paid to any placement agent or underwriter for any of these issuances.
The Company signed a Letter of Intent with Clipper Operating Co., Inc.
in November, 1999. The terms of the Agreement include cash and Company
stock for oil mineral rights including some fixed assets of Clipper Operating
Co. This deal was finalized on February 22, 2000. (See "Letter of Intent,"
Exhibit 10.9, filed in the Company's Registration Statement 10SB12G)
The Company currently anticipates that it has enough available funds to
meet its anticipated needs for working capital, capital expenditures and
business expansion for the next 12 months. The Company expects that it will
continue to experience a small operating cash flow for the foreseeable future
as a result of significant new product development, advertising and
infrastructure.
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. There
can be no assurance that additional financing will be available on terms
favorable to the Company, or at all. If adequate funds are not available
or are not available on acceptable terms, the Company may not be able to
continue in business, or to a lesser extent not be able to take advantage
of acquisition opportunities, develop or enhance services or products or
respond to competitive pressures.
The Company currently has ten (10) employees of which three (3) are
Officers of the Company. As the Company begins to develop its other
product lines it will need to add employees.
The Company has no material commitments for capital expenditures nor does
it foresee the need for such expenditures over the next year.
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 Form10-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 was recently in litigation with several separate lawsuits. They
were:
A former employee at Vac-u-lift, herein referred to as the Plaintiff,
slipped and fell on wet grass outside the offices, in Jourdanton, TX, and
subsequently alleged that she twisted her knee. She filed a complaint against
the company for various health conditions, and $500,000. Their attorney filed
two separate suits, of which the company was unable to properly Respond to the
first suit, and subsequently the Plaintiff received Summary judgment against
NuTek. Since Plaintiff did not follow specific legal procedures against NuTek,
which is considered a foreign corporation where the suit was filed in Texas,
the Company has initiated a restricted appeal to have the ruling reversed.
The second suit was answered, in July, 1999, and since it is tied to the
first suit, nothing has happened since. The Company plans to concurrently
file a counter suit for $150,000 in damages. The company successfully
overturned this judgment.
The other case pending in the court system involves an individual who
represented himself to the company to be an attorney. It was later
discovered that this individual misrepresented himself and was not an
attorney. This individual offered to find purchasers of the Company's common
stock, in order to enhance the capitalization for the Company, so that it
could pursue other projects. The Company issued the transfer company, which
is controlled by this individual 1,000,000 shares of common stock to sell
for the Company in order to enable this individual to raise money for the
company. No sales took place, nor was any of these shares sold for NUTK. The
individual in question, has refused to return these common shares to the
Company. The company has initiated a lawsuit to recover the stock, and under
court Jurisdiction, this block of stock was interpleaded with the Court. The
Company is scheduled to go to trial in September 2000. This case has also
successfully been resolved by Nutek 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.
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 as
Advance Plastics has agreed to return the Handi-plate mold to the company.
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
During the quarter ended March 31, 2001, the following matters were submitted
to the Company's security holders. The increase of the preferred stock from
5,000,000 authorized to 20,000,000 and the increase of the common stock from
50,000,000 authorized to 200,000,000 authorized.
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
None.
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 and CFO
Date: May 14, 2001
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/ Donald Hejmanowski
- -----------------------------------
Donald Hejmanowski, Corporate Secretary
Date: May 14, 2001
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
10.14 Purchase Agreement - Printing Equipment
27.1 Financial Data Schedule
21