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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
AMENDMENT NUMBER 2
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
Hightec, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware 52-0894692
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4190 Bonita Rd., Suite 105, Bonita, CA 91902
(Address of Principal Executive Offices) (ZIP Code)
(619) 297-2717
(Issuer's Telephone Number, Including Area Code)
Securities to be Registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
---------------------------- ----------------------------
---------------------------- ----------------------------
Securities to be Registered under Section 12(g) of the Act:
Common Stock
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
10SB-1
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ITEM 1 DESCRIPTION OF BUSINESS
GENERAL
1. By an action of Shareholders effective on the 31st
day of March, 1995, the Company's name was changed to
Hightec, Inc.
2. The Company was originally organized on October 22,
1968 to act as a registered investment company. This
plan was abandoned in 1970.
3. On May 1, 1995, the Company acquired its wholly-owned
subsidiary, Navmatic Corporation, a Nevada
corporation in a tax-free exchange of stock. The
Company, which previously had 799,205 shares
outstanding, exchanged 7,192,845 shares of its common
stock for all of the outstanding stock of Navmatic
Corporation (2000 shares of common stock).
4. Business Description: The Company manufactures and
sells the NAVIGATOR 360 (the "Navigator") Computer
Numerical Control ("CNC") system to be retrofitted to
hydraulically indexed machine tools. The unpatented
Navigator technology is wholly owned subject to a 5%
royalty to Exten Industries, Inc. and a 5% royalty to
E.T.C., Inc. The cost of a typical system is between
$40,000 and $60,000.
The Navigator system is the only system in production
capable of accurately controlling three-dimensional
contours on hydraulic machines. Cost considerations
make it especially applicable to the very large
hydraulic mills manufactured from the turn of the
century through the 1950's. Customers have reported
recapture of the entire cost of a Navigator-equipped
machine in as little as three months.
The NAVIGATOR 360 technology was developed in 1985 by
Electronic Technology Corporation (E.T.C.) to fill
the need within the machine tool industry for
simultaneous multiple-axis computer control of very
large hydraulically-driven machines. This successful
development followed a decade of attempts by others
to reduce the high cost and improve the output
quality of manual operation of these machines. The
first prototype was put in operation in 1985 and the
first optimized system was sold in 1987.
Since acquiring the Navigator technology in May of
1992, the
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Company's wholly-owned subsidiary, Navmatic
Corporation, has reorganized manufacturing,
installation and services procedures to minimize cost
and maximize response to the customer's needs.
Navmatic currently handles sales and customer support
in-house while sub-contracting system design,
fabrication and installation. To stimulate sales, the
company has embarked on a program to lower the retail
system sales price by lowering the cost of the
hydraulic control components supplied with the
Navigator 360 package. A new servo valve and manifold
configuration, which will reduce the total system
cost by 15 - 20%, are currently under development.
No single supplier is critical to the Company's
operation.
The Company primarily markets, designs, quotes, sells
and services Navigator 360 systems. The needs of a
potential customer are analyzed, a system is
designed, costs are compiled and quotes are generated
in-house. If the sale is made, purchase orders are
placed for off-the-shelf and custom-fabricated
components, and a contract is awarded to a
sub-contractor for assembly and check-out of the
system which the Company oversees. On approval by the
Company, the assembler, packages and ships the
system. This contractor also supplies complete
as-built drawings for each system while the Company
generates and updates installation and service
manuals. If installation is to be provided by the
Company, a contract is awarded to an installer. The
recent upswing in commercial aircraft and automotive
sales, which has stimulated the machine tool
industry, is expected to also result in an increase
in Navigator sales. Exploration of overseas markets
have recently begun.
Installations of the Navigator 360 system have been
successful on a wide variety of machines employed to
produce products from military and commercial
aircraft structural components to automotive
production, sheet metal dies to industrial air
conditioning compressors. Of the twenty systems
listed below, five were installed between 1992 and
1995. Installations of record include:
Acro Tech PF Industries
Kirkland, WA
Openside planer conv. 48x148, 1-spindle, 20HP
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Acro Tech PF Industries
Kirkland, WA
Planer profiler 53x168, 1-spindle, 20HP
Damar Machine Co.
Monroe, WA
Box planner, 14'
Damar Machine Co.
Monroe, WA
Cincinnati planer profiler 60x168, 20HP closed column
Demmer Tool and Die Corp.
Lansing, MI
Cincinnati Hydrotel 48x168, 1-spindle, 50HP
Frakes Aviation
Cleburne, TX
Cincinnati Hydrotel 30x120
Freemont Plastic Mold
Freemont, OH
Cincinnati Hydrotel 16x30, 1-spindle, 5HP
GEA Rainey
Catoosa, OK
P&W profiler, multi-spindle
GEA Rainey
Catoosa, OK
P&W Wilson bridge profiler, 6-spindle (3)
Kaamen Die Sinking
North Vernon, IN
Cincinnati Hydrotel 28x120, 1-spindle, 20HP
Le Gobel Co.
Brea, CA
Arrow airframe profiler 52x148, 1-spindle, 15HP
MART
Montreal, QB
Cincinnati Hydrotel 28x120, 3-spindle
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Marvin Engineering
Inglewood, CA
Cincinnati 30x120 Hydrotel, 3-spindle, 20HP
Marvin Engineering
Inglewood, CA
Frost profiler 36x168 ram type, 2-spindle, 20HP
Marvin Engineering
Inglewood, CA
P&W Wilson profiler, 36x144, 4-spindle, 40HP
Matrix Tool & Die
Bryan, OH
Rambaudi RAMCOP 1000 profiler, 40x16x20, 8 spindle
Mikol Missel Air
Gardena, CA
Gray planer profiler, 48x264, 1 spindle, 15HP
Paragon Precision Products
Valencia, CA
Cincinnati Hydrotel, 3-spindle
Park Engineering Co.
Buena Park, CA
Cincinnati 30x120 Hydrotel, 3-spindle, 20HP
Park Engineering Co.
Buena Park, CA
Cincinnati Hydrotel 3-spindle, 20HP
The 20 installations listed above represent 14
customers, 7 of which are on the west coast. Most of
these are primarily involved in the production of
parts for the aviation industry which is concentrated
in the West. Those in the Mid-West are primarily
producers of automotive dies and parts.
COMPETITION
The Company's NAVIGATOR 360 control system is the only system
known to be on the market with which a hydraulically-driven
machine can produce low-tolerance, three-dimensional computer
controlled contours. The alternative is to convert the
hydraulic machine to electric
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motor and ball screw drive. However, a typical conversion
costs two to three times the cost of a Navigator installation
and requires a machine down time of several months compared to
the two to three weeks required for a Navigator installation.
In addition, removal of the hydraulic drives severely reduces
the output capacity of many machines.
MANUFACTURING PRACTICES/SOURCE OF SUPPLY
Each Navigator system is custom-designed to meet the
customer's requirements. All necessary system components are
then purchased from manufacturers, either as off-the-shelf or
built-to-spec items. The system is then assembled and tested
by a subcontractor who also supplies as-built drawings.
Following acceptance of the test results by the Company, the
subcontractor packages and ships the system directly to the
customer.
The Company does no installation. Depending on the customer's
situation, the Company may arrange for a complete turnkey
installation by an experienced installer or supply the
customer with the engineering and technical input necessary
for the customer to successfully accomplish the installation
on its own. In any event, the sales price always includes
final checkout and adjustment of the system by the Company.
None of the individual parts are unique and are available from
numerous suppliers.
METHOD OF SALES AND DISTRIBUTION
Sales are handled directly by the Company. Leads are generated
through advertisements in National industry publications and
contacts with the retrofitting community.
No distribution network is involved, although some sales are
made to installers who then resell the system with
installation as a package to the end user.
RESEARCH AND DEVELOPMENT
The Company currently spends no funds for research and
development. To date, expenses for evaluation of a new
hydraulic valve design have been borne by the potential
vendor. The Company plans to incur no significant expense in
the development of a lower-cost valve. It is expected that a
vendor's stock valve can be modified to meet the Company's
requirements and that the cost of engineering and testing will
be borne by the vendor. The reduced cost will be the result of
using a
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valve which is a modified production unit rather than a custom
unit built totally to the Company's specifications as is now
the case.
The Company is not actively considering the acquisition of
other products at this time.
EMPLOYEES
The Company has no paid or commissioned sales staff. The cost
of marketing is solely in the cost of advertising. Mr.
Campbell's profit-based consulting fee is the only regular
compensation paid to officers.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
INTRODUCTION
Hightec, Inc. ceased operations in 1973 and, according, had no
revenues from operations until it's merger with Navmatic,
Corporation and has had limited working capital reserves. The
following discussion should be read while keeping in mind that
on May 1, 1995, Hightec, Inc. recommenced operations with the
reverse acquisition of Navmatic Corporation, a company which
produces and sells numerical control systems for use with
hydraulic machinery. Since the Company has accounted for the
acquisition as a recapitalization, the consolidated financial
statements include the activity of Navmatic, which is a wholly
owned subsidiary of Hightec, Inc., for all periods. Also, one
should keep in mind that there was a corresponding change in
control on May 1, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has principally relied upon the
cash flow generated from its operations for working capital. A
large portion of this capital has been provided by the
original investors and more currently from the shareholders of
the wholly owned subsidiary, Navmatic Corporation.
Net income of $3,088 was generated by the Company for the year
ended June 30, 1995, and $3,088 in cash was provided by
operations. The Company can continue to finance operating
activities at the present time in this manner. Down payments
from orders are sufficient to provide the necessary working
capital to deliver the product.
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RESULTS OF OPERATIONS
For the Year Ended June 30, 1995 as Compared to the Year Ended
June 30, 1994.
Revenues decreased by $64,717 (67.2%) from $96,279 for the
year ended June 30, 1994 (FY 1994) to $31,562 for the year
ended June 30, 1995 (FY 1995). This decrease was primarily due
to the fact that the Company had substantially larger
contracts during FY 1994 versus FY 1995.
As discussed above under "DESCRIPTION OF BUSINESS", revenues
may be expected to increase through ongoing operations and
increases as the machine tool industry continues to expand. In
addition, the Company expects increases in its service and
maintenance contracts. The Company is expecting to capitalize
on its newer low cost system of machining for smaller machine
shops.
Cost of goods sold decreased by $65,722 (71.2%) from $92,227
in FY 1994 to $26,505 in FY 1995 or, as a percentage of
revenues, decreased from 95.8% to 83.9%. This decrease, as a
percentage of revenues, was due to increased efficiency in
performance of the contracts and the Company's efforts in
purchasing parts in multiple units versus piecemeal purchasing
.
Operating expenses decreased from $3,184 in FY 1994 to $1,969
in FY 1995 or, as a percentage of revenues, from 3.3% to 6.2%.
The decrease, was due to substantial reduction in sales
revenue of the Company.
For the Six Months Ended December 31, 1995 as Compared to the
Six Months Ended December 31, 1994.
Revenues decreased by $20,206 (65.5%) from $30,850 for the six
months ended December 31, 1994 (MOS 1994) to $10,644 for the
six months ended December 31, 1995 (MOS 1995). This decrease
was primarily due to the general downturn in heavy
manufacturing and due to the fact that the Company had
substantially larger contracts during the six months ending
December 31, 1994 compared to the six months ending December
31, 1995.
As discussed above under "DESCRIPTION OF BUSINESS", the
Company revenues are expected to increase during the
subsequent quarters and year due to ongoing operations.
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Costs of goods sold decreased by $13,354 (59.0%) from $22,613
in MOS 1994 to $9,259 in MOS 1995 or, as a percentage of
revenues, increased from 73.3% to 86.9%. This dollar decrease
was due primarily to the reduced revenues, while on a
percentage of revenues basis costs increased because of a
decline in the ability to purchase parts in multiple units
versus piece-meal purchasing.
Operating costs decreased by $492 (23.2%) from $2,115 in MOS
1994 to $11,623 in MOS 1995 or, as a percentage of revenues,
increased from 6.8% to 15.2%. This dollar decrease was
primarily the result of fewer administrative costs due to the
volume of revenues, however as a percentage the increase is a
result of the nature of certain fixed administrative costs
being applied to reduced revenues. Management anticipates that
these costs, as a percentage of revenues, will decrease as its
operations expand under the current plan of expansion.
The Company's business is sensitive to the manufacturing cycle
in the United States, especially to the military and aircraft
segment. The Company is also affected by the general long-term
decrease in heavy manufacturing in the United States. However,
the Company believes that its increase in the sale of services
is an indication that work in the shops for which the
Navigator system is appropriate is on an up cycle.
The Company expects an increase in sales when work is
completed on a new valve which could be the basis for a
lower-cost system more attractive to the smaller machine
shops.
The Company continues to generate sufficient cash for the
current and foreseeable future needs from profits.
ITEM 3. DESCRIPTION OF PROPERTY
The Company owns no real property. It maintains an address
rent free from EFM Venture Group, Inc. at 4190 Bonita Road,
#105, Bonita, California 91902. This office is primarily for
the delivery of mail.
The Company's subsidiary, Navmatic Corporation rents office
space for its administrative operation for $50 per month, on a
month to month basis, from Mr. Malcolm Campbell at 3756
Pioneer Place, San Diego, California 92103.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of November 15, 1995, the following persons were known by
the Company to own, of record beneficially, 5% or more of the
Company's common stock:
<TABLE>
<CAPTION>
Name and Address Title Or Type of Amount Percentage
Class Ownership Owned Owned
-------------------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
EFM Venture Group(2) Common Record 3,596,423 45%
505 Camino Elevado
Bonita, CA 91902
Malcolm D.(1) and Common Record 3,996,422 50%
Marion A. Campbell
3756 Pioneer Place
San Diego, CA 92103
</TABLE>
--------------------
(1) Malcolm D. Campbell serves as President and Director. Mr.
and Mrs. Campbell may be deemed "parents" of the Company, as
defined by the Securities and Exchange commission. 2 EFM
Venture Group, Inc., a California Corporation, is owned
one-third each by Edward F. Myers III, Shari Myers Sapp and
Dr. and Mrs. Edward F. Myers. Dr. Myers
is a Director of Navmatic Corporation.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
A. The directors and Officers of the Company, all of those
whose terms will expire one year from there election, or
at such a time as their successors shall be elected and
qualified are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE TITLE
---------------- --- -----
<S> <C> <C> <C>
Malcolm D. Campbell 59
President/CFO/Director
3756 Pioneer Place
San Diego, CA 92103
Barry D. Russell 61 Director
1234 W. 7th Ave., #3
Vancouver, BC V6H1B6
Arlen O. Barksdale, Ph.D. 50 Director and Secretary
1136 Lime Place
Vista, CA 92083
</TABLE>
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B. Resumes of the Directors and Officers of the Company are:
MALCOLM D. CAMPBELL
PRESIDENT, DIRECTOR
Mr. Campbell was elected President and Director of
Hightec, Inc. on May 30, 1995 and currently serves in
those capacities. He is also an Officer and Director of
the Company's wholly-owned subsidiary, Navmatic
Corporation, having been President from September, 1982 to
May, 1992, Director from September, 1982 to present, and
Secretary and Vice President from May, 1992 to present.
He served as Director of Exten Industries from December,
1990 to May, 1994, as President and CEO from November 1992
to February 1994, as CFO from February, 1994 to May, 1994
and as Secretary from February, 1994 to October, 1994.
Exten Industries is a publicly-held holding corporation.
He also served as Director, Secretary and Vice President
of Technology of Exten's bio-tech subsidiary, Xenogenex,
from April, 1992 to October, 1994, from April, 1994 to
October, 1994 and December, 1992 to October, 1994,
respectively. Xenogenex's business is the development of a
synthetic bio-liver.
Mr. Campbell has held management positions in numerous
start-up and turn-around small businesses including:
Operations Manager of XXSYS, a publicly-traded composite
material application developer; President and Director of
PDI International, which markets U.S. technology overseas;
President, CEO and Director of Composites Technology,
Inc., an instrument manufacturer; CEO, Director and
Operations Manager of Syscor, Inc., a security systems
provider; and President and Director of Twentieth Century
Investments, Inc., a blind pool/blank check company.
From 1957 to 1981, Mr. Campbell was employed by the
Convair-Astronautics Division of General Dynamics
Corporation as a Research Scientist and Group Engineer,
where he managed research laboratories employing up to 20
persons with an annual budget in excess of $2,500,000. He
is recognized throughout the aerospace industry as an
expert on materials testing and the design of cryogenic
instrumentation. He was first to successfully measure the
thermal expansion coefficients of "zero expansion"
pseudo-isotropic graphite-epoxy laminates for optical
structure applications in space and operated the
industry's first indoor liquid hydrogen research facility.
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Mr. Campbell received a Bachelor of Science degree from
Bethany College, Bethany, West Virginia, in physics and
mathematics in 1957.
He is the author of approximately 300 technical articles,
books, and papers.
BARRY D. RUSSELL
DIRECTOR
Mr. Russell was elected Director of Hightec, Inc. on
September 5, 1995, and currently serves in that capacity.
From 1988 to 1991, he was President and Chief Executive
Officer of Bowne of Vancouver, Inc. and a Director of
Bowne of Canada, Inc. Both companies are wholly-owned
subsidiaries of Bowne and Co., the leading international
financial printing company. Bowne and Co. is listed on the
American Stock Exchange.
Mr. Russell was the owner and Manager of Pola Graphics
Ltd., a premier typesetting company from 1975 to 1988; the
controlling shareholder of Infocorp Financial and Security
Printing Corp. from 1984 to 1988, and the controlling
shareholder of Wesmin Graphics, Inc., a commercial
printing company from 1983 to 1988. All three companies
were acquired by Bowne of Canada, Inc., in 1988.
He acquired control of Vancouver's Business Report, a
monthly business magazine published in Vancouver. In 1978
he became a member of the Washington, D.C. based
Typographers International Association and served as a
member of the Executive Board of the Western Chapter from
1980 to 1985. In 1981, Mr. Russell was elected to the
Board of Directors and appointed Chairman of the Board of
First Entertainment Corporation, a public company newly
listed for trading on the Vancouver Stock Exchange. In
1991, Mr. Russell assumed the additional duties of
President and Chief Executive Officer.
ARLEN O. BARKSDALE, PH.D.
DIRECTOR
Dr. Barksdale was elected Director of Hightec, Inc. on
September 5, 1995, and currently serves in that capacity.
Since 1991, he has been President and Chief Executive
Officer of
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Pyramid Graphics and Printing which targets the
institutional and healthcare sector through supply and
distribution channels. From 1990 to 1991, he was Chief
Operations Officer of AbuKhalaf & Sons, Amman Jordan, a
Maquiledore manufacturer of high-volume OEM computer
assemblies in Mexico with a target export market of $15M.
Dr. Barksdale was Professor and Dean of National
University's School of Computer Science and Engineering
from 1988 to 1990, serving at campuses in San Diego, Los
Angeles, Orange County, Las Vegas and Costa Rica. In this
position, he developed advertising and marketing and
curriculum for Telecommunications, Computer and
Information Science, Manufacturing Engineering and
Software Engineering Programs. He also interfaced with
healthcare providers on telecommunication, networks,
analysis and treatment equipment as well as specialized
scheduling software.
From 1985 to 1988 he was President and Chief Executive
Officer of Petrocast, Dallas, Texas, a developer of
high-tech equipment, systems and processes for the
healthcare industry. He was President and Technical
Operations Manager of Skytec Systems, Dallas, Texas, a
manufacturer of TVRO microwave systems, from 1980 to 1985;
President and Chief Operating Officer, Sales and
Marketing, of Cory Enterprises, Ft. Worth, Texas, a
manufacturer of mechanical and electrical assemblies from
1977 to 1980; and Director of Operations of Texas
Instruments, Dallas, Houston, Lubbock and Sherman, Texas
and Bedford England operations where he supplied
marketing, advertising and technical support for high
volume manufacturing of calculator and computer products.
He was a Postdoctoral Fellow M.D., Anderson Cancer
Research Institute, Materials Science Dep't., Rice
University; AEC Research Fellow, Physics Dep't., Rice
University; Engineering Technician, Bell Helicopter;
Production Planner, Ling Temco Vought; and
Machinist/Draftsman, Chicago Pneumatic.
Dr. Barksdale received an A.A. in Biology and Math from
Weatherford College in 1967, a B.S. in Physics, Math and
Chemistry from the University of Texas in 1969, an M.A. in
Physics (Solid State) from Rice University in 1972; and a
Ph.D. in Physics (Solid State) from Rice University in
1973. He has received numerous honors from academic
institutions and national organizations.
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ITEM 6. EXECUTIVE COMPENSATION
A. Mr. Malcolm D. Campbell, President/Director, receives 20%
of gross profit from sales. His total remuneration in the
fiscal year ending June 30, 1995 was $1118. No other
Officer or Director of the Company receives any
remuneration from the Company.
B. There is no annuity, pension or retirement benefits
proposed to be paid to officers, directors or employees of
the Company in the event of retirement at normal
retirement date pursuant to any presently existing plan
provided or contributed to by the Company or any of its
subsidiaries, if any.
C. No remuneration other than that reported in paragraph (A)
of this item is proposed to be paid in the future directly
or indirectly by the Company to any Officer or Director
under any plan which is presently existing. No options
have been granted.
<TABLE>
<CAPTION>
================================================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-term Compensation
- --------------------------------------------------------------------------------------------------------------------------------
Name Year Salary Bonus Other Restricted Options/ LTIP All other
and ($) ($) annual Stock SARs payouts compen-
Principal compen- Award(s) (#) ($) sation
Position sation (#) ($)
($)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Malcolm 1995 0 0 1118. 0 0 0 0
Campbell
(CEO)
- --------------------------------------------------------------------------------------------------------------------------------
Malcolm 1994 0 0 2556. 0 0 0 0
Campbell
(CEO)
- --------------------------------------------------------------------------------------------------------------------------------
Malcolm 1993 0 0 0 0 0 0 0
Campbell
(CEO)
================================================================================================================================
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 31, 1995, the Company sold 400,000 shares of common
stock to its president, Malcolm D. Campbell, for $5,500. The
sale was made as a non-public offering in reliance on Section
4(2) of the Securities Act
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of 1933 as amended.
On May 1, 1995 the Company issued 7,192,845 shares of its
common stock to the two stockholders of Navmatic Corporation,
EFM Venture Group, Inc. (3,596,423) and Mr. and Mrs. Malcolm
Campbell (3,596,422), in exchange for all of the outstanding
shares of Navmatic Corporation (2000 common shares). The
exchange was made as a non public offering in reliance on
Section 4(2) of the Securities Act of 1933 as amended.
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. NUMBER OF EQUITIES, SECURITIES HOLDERS
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Common 23
All stockholders with the exception of two affiliates have
held their shares, fully paid, for 25 years.
There is, as of the date of filing, no public market in any
class of stock of the Company.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On March 31, 1995, the Company sold 400,000 shares of common
stock to its president, Malcolm D. Campbell, for $5500. The
sale was made as a non-public offering in reliance on Section
4(2) of the Securities Act of 1933 as amended.
On May 1, 1995 the Company issued 7,192,845 shares of its
common stock to the two shareholders of Navmatic Corporation,
EFM Venture Group, Inc (3,596,423 shares) and Mr. and mrs.
Malcolm Campbell (3,596,422 shares), in exchange for all of
the outstanding shares of Navmatic Corporation (2000 common
shares). The sale was made as a non public offering in
reliance on Section 4(2) of the Securities Act of 1933 as
amended.
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ITEM 11. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Certificate of Incorporation authorizes the
issuance of 50,000,000 Shares of Common Stock, par value
$0.001 per share, of which 7,992,050 shares were outstanding
as June 30, 1995. Holders of shares of Common Stock are
entitled to one vote for each share on all matters to be voted
on by the stockholders. Holders of Common Stock do not have
cumulative voting rights. Holders of shares of Common Stock
are entitled to share ratably in dividends, if any, as may be
declared, from time to time by the Board of Directors in its
discretion, from funds legally available therefor. In the
event of a liquidation, dissolution, or winding up of the
Company, the holders of shares of Common Stock are entitled to
share pro rata all assets remaining after payment in full of
all liabilities. Holders of Common Stock have no preemptive or
other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such
shares. All of the outstanding Common Stock is fully paid and
non-assessable.
PREFERRED STOCK
There is no preferred stock authorized.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company provides for
indemnification of Directors and Officers of the Company as
follows:
ARTICLE IX
"The personal liability of the directors of the corporation
is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of * 102 of
the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented."
ARTICLE X
"The corporation shall, to the fullest extent permitted by
the provisions of * 145 of the General Corporation Law of
the State of Delaware, as the same may be
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amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other
matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may
be entitled under any Bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action
in his official capacity while holding such office, and
shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such
a person."
ITEM 13. FINANCIAL STATEMENTS
a). Audited Financial Statements for the years ended June 30,
1995, 1994 and 1993.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
a) Audited Financial Statements for the fiscal years ended
June 30, 1995, 1994 and 1993.
The Company's 10QSB's for the quarters ended December
31, 1995 and March 31, 1996 are hereby incorporated by
reference.
b) The following exhibits are hereby included by reference
to the Company's Form 10-SB, Amendment 1 filed with the
Commission on February 28, 1996:
(2). Plan of Acquisition.
(3)(i). Articles of Incorporation.
(ii). By-Laws.
(23) Consent of Auditor
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HIGHTEC, INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Auditor's Report ............................................ F-2
Consolidated balance sheets as of June 30, 1995
1994, and 1993 ....................................................... F-3
Consolidated statements of operations for the years
ended June 30, 1995, 1994 and 1993 ................................... F-4
Consolidated statements of changes in stockholders
equity for the years ended June 30, 1995, 1994
and 1993 ............................................................. F-5
Consolidated statements of cash flows for the years
ended June 30, 1995, 1994, and 1993 .................................. F-6
Notes to consolidated financial statements .............................. F-7-10
</TABLE>
<PAGE> 19
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF HIGHTEC, INC.
We have audited the accompanying balance sheet of Hightec, Inc. as of June 30,
1995, 1994, and 1993 and the related statements of operations, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hightec, Inc. as of June 30,
1995, 1994, and 1993, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/ Harlan & Boettger
San Diego, California
July 31, 1995
F-2
<PAGE> 20
HIGHTEC, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
June 30,
-------------------------------------------------
1995 1994 1993
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,542 $ 454 $ 2,876
Note Receivable 700
----------- ----------- -----------
Total Current Assets $ 3,542 $ 454 $ 3,576
PROPERTY AND EQUIPMENT,
less $ 21,844, of accumulated depreciation -- -- --
----------- ----------- -----------
Total Assets $ 3,542 $ 454 $ 3,576
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ $ $ 4,104
----------- ----------- -----------
Stockholders' Equity
Common Stock-,$.001 par,
50,000,000 shares authorized,
7,992,050 shares issued and
outstanding at June 30, 1995 and
7,192,845 issued and outstanding at
June 30, 1994 and 1993 7,992 7,193 7,193
Paid in Capital 1,540,051 1,535,350 1,535,350
Less Stock Subscription Receivable (5,500) -- --
Retained Deficit (1,539,001) (1,542,089) (1,543,071)
----------- ----------- -----------
Total Stockholders' Equity (Deficit) 3,542 454 (528)
----------- ----------- -----------
Total Liabilities and Stockholders'
Equity $ 3,542 $ 454 $ 3,576
=========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of this statement.
F-3
<PAGE> 21
HIGHTEC, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
June 30,
--------------------------------------------
1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
REVENUES
Sales $ 31,562 $ 96,279 $ 36,892
COST OF GOODS SOLD 26,505 92,227 23,542
---------- ---------- -----------
GROSS PROFIT 5,057 4,052 13,350
OPERATING EXPENSES 1,169 3,084 17,923
---------- ---------- -----------
INCOME (LOSS) FROM OPERATIONS 3,888 968 (4,573)
OTHER INCOME (EXPENSES)
Miscellaneous Income -- 814 --
---------- ---------- -----------
INCOME (LOSS) BEFORE TAXES 3,888 1,782 (4,573)
Income Taxes 800 800 800
---------- ---------- -----------
NET INCOME (LOSS) $ 3,088 $ 982 $ (5,373)
========== ========== ===========
NET INCOME (LOSS) PER SHARE $ .0004 $ .0001 $ (.0007)
========== ========== ===========
AVERAGE COMMON SHARES OUTSTANDING 7,326,046 7,192,845 7,192,845
========== ========== ===========
</TABLE>
The notes to the financial statements are an integral part of this statement.
F-4
<PAGE> 22
HIGHTEC, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Common Stock
---------------------- Paid in Retained
Shares Amount Capital Deficit Total
--------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1992 7,592,050 $7,592 $ 1,535,350 $(1,537,698) $ 4,845
Net Loss -- -- -- (5,373) (5,373)
--------- ------ ----------- ----------- -------
Balance, June 30, 1993 7,592,050 7,592 1,535,350 (1,543,071) (528)
Net Income -- -- -- 982 982
--------- ------ ----------- ----------- -------
Balance, June 30, 1994 7,592,050 7,592 1,535,350 (1,542,089) 454
Issued Shares of
Common Stock 400,000 400 5,100 -- --
Issued Shares of
Common Stock for
net assets of Hightec 399,205 399 (399) -- --
Less stock subscription
receivable -- -- -- -- (5,500)
Net Income (Loss) for Year -- -- -- 3,088 3,088
--------- ------ ----------- ----------- -------
Balance, June 30, 1995 7,992,050 $7,992 $ 1,540,051 (1,539,001) $ 3,542
========= ====== =========== =========== =======
</TABLE>
The notes to the financial statements are an integral part of this statement.
F-5
<PAGE> 23
HIGHTEC, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended June 30,
-------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $3,088 $ 982 $(5,373)
Adjustments to Reconcile net Income (Loss)
to Net Cash used in operating Activities:
Bad Debt -- 700 --
Increase (Decrease) in Accounts Payable -- (4,104) 3,263
------ ------- -------
NET CASH PROVIDED (ABSORBED)
BY OPERATING ACTIVITIES 3,088 (2,422) (2,110)
NET INCREASE (DECREASE) IN CASH 3,088 (2,422) (2,110)
CASH, at Beginning of Period 454 2,876 4,986
------ ------- -------
CASH, at End of Period $3,542 $ 454 $ 2,876
====== ======= =======
</TABLE>
The notes to the financial statements are an integral part of this statement.
F-6
<PAGE> 24
HIGHTEC, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The financial statements include the accounts of Hightec, Inc.
and its wholly owned subsidiary Navmatic Corporation (together,
the "Company"). All intercompany transactions have been
eliminated in consolidation. Certain previously reported
amounts have been reclassified to conform to the 1995
presentation.
Company
Hightec Fund, Inc. was incorporated under the laws of the state
of Delaware in October, 1968. During March, 1995 the Board of
Directors changed the name from Hightec Fund, Inc. to Hightec,
Inc.
Hightec, Inc. was inactive until May 21, 1995 on which date it
acquired Navmatic Corporation ("Navmatic") in a reverse
acquisition. The historical financial statements of the Company
presented include the financial condition and results of
operations of Navmatic for all reported periods.
Acquisition
During May 1995, pursuant to an agreement between Hightec, Inc.
and Navmatic, Hightec, Inc. acquired Navmatic in a reverse
acquisition. Hightec, Inc. issued 7,192,845 shares of common
stock for all of the outstanding shares of Navmatic. Because
Hightec, Inc. was inactive prior to the acquisition, this
acquisition has been accounted for as a recapitalization of the
Company's stockholders' equity rather than as a business
combination.
Business Activity
The Company, through its wholly owned subsidiary is in the
business of manufacturing and selling the Navagator 360
Computer Numerical Control system to be retrofitted to
hydraulically indexed machine tools.
Revenue and Cost Recognition
The Company recognizes sales revenues in full at the time of
shipment.
F-7
<PAGE> 25
Cost of sales and general and administrative costs are charged
to expense as incurred.
Property and Equipment
Property and equipment are stated at cost. Major renewal and
improvements are capitalized, while maintenance and repairs are
expensed when incurred. Depreciation is computed over the
estimated useful lives of depreciable assets using the
straight-line method. The cost and accumulated depreciation for
fixed assets sold, retired, or otherwise disposed of are
relieved from the accounts and resulting gains or losses are
reflected in income. Depreciation is computed over the
following estimated useful lives:
Furniture 5-7 Years
Equipment 5-7 Years
Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consists of taxes
currently due plus deferred taxes related primarily to
differences between the basis of various assets for financial
and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of
those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for operating losses that
are available to offset future taxable income and tax credits
that are available to offset federal income taxes.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and Equipment consists of:
<TABLE>
<CAPTION>
June 30,
------------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Furniture $ 8,681 $ 8,681 $ 8,681
Equipment 13,163 13,163 13,163
------- ------- -------
Total 21,844 21,844 21,844
Less Accumulated
Depreciation 21,844 21,844 21,844
------- ------- -------
Net Property and
Equipment $ -0- $ -0- $ -0-
======= ======= =======
</TABLE>
F-8
<PAGE> 26
NOTE 3 - SUBSCRIPTION RECEIVABLE
During March, 1995 the Company issued 400,000 shares of its
common stock to Malcom Campbell, president of the Company, in
exchange for a subscription receivable in the amount of $
5,500. The subscription receivable bears interest at 8% and
both principal and interest are due and payable March 31, 1997.
Accordingly, the subscribed stock is reflected in the
accompanying financial statements as a separate component of
stockholder's equity, net of any subscriptions receivable.
NOTE 4 - INCOME TAXES
The provision for income taxes for the years ended June 30,
1995, 1994, and 1993 consists solely of the $800 minimum
California franchise tax.
Provisions for income taxes is summarized as follows:
<TABLE>
<CAPTION>
Year Ended
------------------------------
June 30, June 30, June 30,
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Current income taxes $800 $800 $800
Deferred income taxes -- -- --
---- ---- ----
Provision for income taxes $800 $800 $800
==== ==== ====
</TABLE>
The Company's total deferred tax asset as of June 30, 1995 as
follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Deferred tax assets $ 520
Valuation allowance (520)
-------
Net deferred tax asset $ -
=======
</TABLE>
The net change in valuation allowance was an increase of
$138,400, and was related to the Company's net operating loss
for the year ended December 31, 1995.
The Company has a net operating loss carryforward as of June
30, 1995 of approximately $ 1,303 which is available to offset
future taxable income. The carryforwards expire as follows:
<TABLE>
<CAPTION>
Amount Expiration Date
------ ---------------
<S> <C> <C>
$ 1,303 2007
</TABLE>
F-9
<PAGE> 27
NOTE 4 - INCOME TAXES (continued)
In addition to the operating loss carryforward, the Company
also has a capital loss carryforward of approximately $ 52,750
which can be used to offset future capital gains.
NOTE 5 - CAPITAL STOCK
In April 1995 the Company amended its Articles of Incorporation
and increased its total number of shares of common stock
authorized to 50,000,000 and changed the par value per share to
$0.001.
NOTE 6 - LEASE COMMITMENTS
The Company has no lease commitments for offices as of June 30,
1995. The Company rents its offices under a month to month
rental agreement.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1995 AUDIT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 3,542
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,542
<PP&E> 21,844
<DEPRECIATION> (21,844)
<TOTAL-ASSETS> 3,542
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 7,592
<OTHER-SE> (4,050)
<TOTAL-LIABILITY-AND-EQUITY> 3,542
<SALES> 31,562
<TOTAL-REVENUES> 31,562
<CGS> 26,505
<TOTAL-COSTS> 1,169
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,888
<INCOME-TAX> 800
<INCOME-CONTINUING> 3,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,088
<EPS-PRIMARY> .00
<EPS-DILUTED> 0
</TABLE>
