U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0-27853
HYATON ORGANICS INC.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0913555
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1500 West Georgia Street, 13th Floor
Vancouver, British Columbia
Canada V6G 2Z6
(Address of principal executive offices)
(604) 623-3300
(Issuer's telephone number)
(Former address if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No o
Number of shares of common stock outstanding as of March 31, 2000: 27,556,000
<PAGE>2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HYATON ORGANICS INC.
(a development stage enterprise)
Consolidated Balance Sheets
(expressed in U.S. dollars)
(Unaudited and Prepared Internally by Management)
March 31, 2000, with comparative figures for 1999
<TABLE>
<CAPTION>
2000 1999
------------ ----------
<S> <C> <C>
Assets
Current assets:
Cash $ 57,148 $ 65,026
Accounts receivable and other 15,814 11,506
------------ ----------
Total current assets 72,962 76,532
Computer equipment, net of accumulated depreciation
of $1,038 2,946 1,482
------------ ----------
Total assets $ 75,908 $ 78,014
============ ==========
Liabilities and Shareholders' Deficiency
Current liability:
Accounts payable and accrued liabilities $ 10,665 $ 2,648
Loans from related parties 1,194,311 568,607
------------ ----------
Total liabilities 1,204,976 571,255
Shareholders' deficiency:
Capital stock:
Authorized:
100,000,000 common shares with a par value of $0.01
25,000,000 preference shares with a par value of $0.01
Issued:
27,556,000 common shares (1999 - 27,559,000) 275,560 276,247
Additional paid-in capital 223,187 -
Deficit accumulated during the development stage (1,607,207) (792,401)
Other comprehensive income:
Cumulative translation adjustment (20,608) 22,913
------------ ----------
Total shareholders' deficiency (1,129,068) (493,241)
------------ ----------
Total liabilities and shareholders' deficiency $ 75,908 $ 78,014
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>3
HYATON ORGANICS INC.
(a development stage enterprise)
Consolidated Statements of Operations and Deficit
(expressed in U.S. dollars)
(Unaudited and Prepared Internally by Management)
<TABLE>
<CAPTION>
For the period
Three month Three month November 24,
period ended period ended 1994 to
March 31, March 31, March 31,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
Revenue $ - $ 4,066 $ 87,666
Expenses:
Consulting and other professional fees 138,880 67,631 680,213
Product research and development costs 26,405 27,072 351,491
Travel 755 3,195 42,735
Administrative and other expenses 10,205 6,799 127,344
Employee equity compensation - - 222,500
------------ ------------ ------------
176,245 104,697 1,424,283
------------ ------------ ------------
Net loss 176,245 100,631 1,336,617
Deficit accumulated during the development stage,
beginning of period 1,430,962 691,770 -
Charge to deficit - - 270,590
------------ ------------ ------------
Deficit accumulated during the development stage,
end of period $ 1,607,207 $ 792,401 $ 1,607,207
============ ============ ============
Basic and diluted loss per share $ 0.01 $ 0.01 $ 0.06
Weighted average number of
shares outstanding 27,556,000 27,559,000 21,960,502
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>4
HYATON ORGANICS INC.
(a development stage enterprise)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
(Unaudited and Prepared Internally by Management)
<TABLE>
<CAPTION>
For the period
Three month Three month November 24,
period ended period ended 1994 to
March 31, March 31, March 31,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from (used in) operating activities:
Net loss $ (176,245) $ (100,631) $ (1,336,617)
Items not involving the use of cash:
Depreciation 153 - 1,019
Employee equity compensation - - 222,500
Shares issued as a financing fee - - 5,000
Changes in non-cash operating working capital:
Accounts receivable (3,969) 29,602 (6,512)
Accounts payable and accrued liabilities (19,439) (35,651) 1,820
------------ ------------ ------------
(199,500) (106,680) (1,112,790)
Cash flows used in investing activities:
Capital expenditures (2,015) - (3,883)
Cash flows from financing activities:
Issuance of common shares - - 657
Loans from related parties:
Kafus Industries Ltd. 227,704 136,933 800,581
Cameron Strategic Planning Ltd. 27,640 17,992 332,857
Mr. Robert L. Novitsky - 871 39,744
Kafus Bio-Composites, Inc. - - 1,107
------------ ------------ ------------
255,344 155,796 1,174,946
Effect of exchange rate changes on
foreign currency cash balances 101 6,700 (1,125)
------------ ------------ ------------
Increase (decrease) in cash 53,930 55,816 57,148
Cash, beginning of period 3,218 9,210 -
------------ ------------ ------------
Cash, end of period $ 57,148 $ 65,026 $ 57,148
============ ============ ============
Supplementary information:
Interest paid $ - $ - $ -
Income taxes paid - - -
Non-cash transactions:
Issuance of common shares:
For investment in Camden
Agro-Systems Inc. - - 270,590
As a financing fee - - 5,000
Options issued as employee
equity compensation - - 222,500
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>5
HYATON ORGANICS INC.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited and Prepared Internally by Management)
March 31, 2000
1. Basis of presentation:
The consolidated unaudited financial statements do not include all
information and footnote disclosures required under generally accepted
accounting principles in the United States. In the opinion of management,
all adjustments (consisting solely of normal recurring accruals) considered
necessary for a fair presentation of the financial position, results of
operations and cash flows as at March 31, 2000 and for all periods
presented, have been included.
The unaudited consolidated balance sheets, statements of operations and
deficit and statements of cash flows have been prepared in accordance with
generally accepted accounting principles for interim financial information
in the United States.
Interim results of the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year as a
whole. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual
report on Form 10-SB for the fiscal year ended December 31, 1999.
2. Segmented information:
At March 31, 2000, the Company's operations were primarily situated in
Canada or related to operations that are situated in Canada. Through CASI,
the Company's primary focus is on the manufacturing of organic fertilizer
from animal waste. Accordingly, the Company is considered to operate in a
single reportable and geographic segment.
<PAGE>6
Item 2. Management's Discussion and Analysis or Plan of Operation
Hyaton Organics Inc. ("Hyaton" or the "Company") was incorporated in Nevada
on August 20, 1996, under the name Hayoton Company Incorporated as a management
company for resorts and hotel properties. On September 24, 1996, the Company
changed its name from Hayoton Company Incorporated to Hyaton Company
Incorporated and then to Hyaton Organics Inc. on October 21, 1999. The Company
was dormant until June 1997, when the Board reevaluated its business plan and
decided to focus the Company's business on commodity production and/or purchase
and resale of same through strategic alliances with leading environmental
corporations. Effective November 2, 1998, the Company completed a reorganization
with Kafus Industries Ltd. ("Kafus") whereby the Company issued 20,000,000
shares of its Common Stock in exchange for Kafus' 9,000 common shares of Camden
Agro- Systems, Inc. ("Camden"), an Ontario corporation, owned by Kafus. Through
Camden, the Company is in the business of management consulting and product
development, and the Company's efforts have focused primarily on the development
of organic fertilizers from animal waste.
Results of Operations
Three Months Ended March 31, 2000 Compared to March 31, 1999
Revenues. The Company had no revenues for the three months ended March 31,
2000, compared to nominal revenues of $4,066 for the three months ended March
31, 1999.
Expenses. Total expenses for the three months ended March 31, 2000, were
$176,245 compared to total expenses of $104,697 for the three months ended March
31, 1999. Expenses primarily increased in the area in consulting and other
professional fees related to the development of the Company's organic
fertilizers and for product development and research costs.
Net Loss. The Company incurred a net loss of $176,245 for the three months
ended March 31, 2000, as compared to a loss of $100,631 for three months ended
March 31, 1999.
Liquidity and Capital Resources
The Company is a development stage company that intends to develop and
market fertilizer derived from animal residues. At this time, the Company has no
revenues, and does not anticipate any substantial revenues until it is able to
develop and sell its products. Accordingly, the Company does not have sufficient
revenues to fund its operations. Currently, the Company receives loans from its
largest shareholder, Kafus Industries Ltd., to fund its operations and provide
working capital. It is anticipated that the Company will continue to receive
financing through loans from Kafus. No assurance can be given, however, that
Kafus will continue to finance the Company's operations. As of March 31, 2000
and March 31, 1999, the Company's working capital was $62,297 and $73,884,
respectively.
PART II. OTHER INFORMATION
Items 1, 2, 3, 4 and 5
Not Applicable.
<PAGE>7
Item 6.
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on 8-K
None.
<PAGE>8
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
HYATON ORGANICS INC.
(Registrant)
Dated: May 22, 2000 ROBERT NOVITSKY
Robert Novitsky, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 57,148
<SECURITIES> 0
<RECEIVABLES> 15,814
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 72,962
<PP&E> 3,984
<DEPRECIATION> 1,038
<TOTAL-ASSETS> 75,908
<CURRENT-LIABILITIES> 10,665
<BONDS> 0
0
0
<COMMON> 275,560
<OTHER-SE> (1,404,628)
<TOTAL-LIABILITY-AND-EQUITY> 75,908
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 176,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (176,245)
<INCOME-TAX> 0
<INCOME-CONTINUING> (176,245)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (176,245)
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
