UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A-1
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended May 31, 1990.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (no fee required) for the transition period from
____________________ to _______________________.
Commission file number: 0-17371
HYTK INDUSTRIES, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 88-0182808
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2133 East 9400 South, Suite 151 - Sandy, Utah 84093
(Address of Principal Executive Offices)
(801) 944-0701
(Issuer's Telephone Number, Including Area Code)
Securities Registered Under Section 12(g) of the Exchange Act:
Title of Class: Common Stock, $0.001 Par Value
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 __ No XX
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer had no revenues for the year ended May 31, 1992.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average bid and asked prices of such stock, as of August 31,
1997 was $0.00, because the Company's Common Stock was not traded on a stock
market or quotation system.
The number of shares outstanding of the issuer's common stock as of August 31,
1997 was 52,266.
<PAGE>
EXPLANATORY NOTE
The following audited financial statements are hereby provided in
response to a February 23, 1994 Order Instituting Public Administrative
Proceeding Pursuant to Section 21C of the Securities Exchange Act (the "Order").
The Order was the result of the Security Exchange Commission's determination
that the Company had improperly recorded a real estate transaction as a purchase
and leaseback instead of a financing transaction. The Order required the Company
to file audited financial statements which properly account for the transaction
within 90 days of commencing operations.
<PAGE>
Sellers & Associates
CERTIFIED PUBLIC ACCOUNTANT Fax (801) 627-1639
378 Harrison Blvd. Suite 101, Ogden, Utah 84403 (801) 621-8128
INDEPENDENT PUBLIC ACCOUNTANT'S REPORT
Board of Directors
HYTK Industries, Inc. and Subsidiaries
Salt Lake City, Utah
We have audited the accompanying balance sheets of HYTK Industries, Inc. and
Subsidiaries as of May 31, 1990 and 1989 and the related statements of
operations, stockholders' equity, and cash flows for the years ended May 31,
1990, 1989 and 1988. These financial statements are the responsibilities of the
Company's Management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 audits provide a reasonable basis for our opinion.
As discussed in Note 6 to the financial statements, the Company transferred its
assets in a bulk sale May 20, 1992. An officer of the Company owned 40% of the
acquiring corporation. The acquiring corporation assumed the Company debts
without additional consideration as the debts were equal to or exceeded the
value of the assets transferred. The financial records of the Company were also
transferred to the acquiring corporation. Since that time, the acquiring
corporation has changed ownership and management and the financial records of
the Company through May 31, 1992 have become lost, destroyed, or otherwise made
unavailable by the corporation. Because of this, we have relied primarily on the
prior audits unaudited financial statements of the Company as previously
provided in reports filed with the Securities and Exchange Commission. Although
we have generally satisfied ourselves as to the overall reasonableness of such
financial data, we were unable to satisfy ourselves as the correctness and
accuracy of the statements of cash flows as provided in these financial
statements.
In our opinion, except as explained paragraph, the financial statements referred
to above present fairly, in all material respects, the financial position of
HYTK Industries, Inc. and Subsidiaries as of May 31, 1990 and 1989 and the
results of its operations and its cash flows for the years ended May 31, 1990
and 1989, and 1988 in conformity with generally accepted accounting principles.
The accompanying financial statements have been presented assuming the Company
will continue as a going concern. As discussed in Noted 5 and 6 to the financial
statements, the Company disposed of all its assets May 20, 1992 and has not
generated revenue since. This raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
May 20, 1997
<PAGE>
<TABLE>
<CAPTION>
HYTK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
May 31, 1990 and 1989
May 31, 1990 May 31, 1989
------------- ------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents ................ $ 15,950 $ 2,180
Accounts receivable, other ............... 46,568 505
Notes receivable, related parties ........ -- 200,000
Income tax receivable .................... 15,100 --
---------- ----------
77,618 202,685
---------- ----------
Property, plant and equipment ............... 4,768 4,768
Less accumulated depreciation
and amortization ........................ 477 477
---------- ----------
4,291 4,291
---------- ----------
Other Assets:
Investment in marketable securities ...... 118,541 118,541
Notes receivable, net of allowance
for loss of $75,000 ..................... -- 25,000
Deposits ................................. 2,500 --
Deferred registration cost ............... 171,464 70,996
Other assets, discontinued operations,
net of associated liabilities ......... 759,478 675,748
---------- ----------
1,051,983 890,285
---------- ----------
TOTAL ASSETS ................................ $1,133,892 $1,097,261
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ......................... $ 45,685 $ 18,751
Income taxes payable ..................... -- 28,500
---------- ----------
45,685 47,251
---------- ----------
Noncurrent Liabilities:
Deferred income taxes .................... 14,300 14,300
Commitments and contingencies ............... -- --
Stockholders' Equity
Preferred stock, par value $.001,
50,000,000 shares authorized,
no share issued and outstanding ..... -- --
Common stock, par value $.001
950,000,000 shares authorized,
issued and outstanding shares
of 17,860 for 1990 and 17,141 for 1989 18 17
Additional paid-in-capital ............... 890,044 849,345
Retained earnings (deficit) .............. 183,845 186,348
---------- ----------
1,073,907 1,035,710
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY .. $1,133,892 $1,097,261
========== ==========
See notes to financial statements.
F-1
</TABLE>
<PAGE>
<TABLE>
HYTK INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Operations
For the Years Ended May 31, 1990, 1989, and 1988
May 31, May 31, May 31,
1990 1989 1988
-------------- -------------- --------------
<S> <C> <C> <C>
Revenues .......................................... $ -- $ -- $ 1,798,848
Cost of Goods Sold ................................ -- -- 1,164,382
----------- ------------- -------------
Gross Profit ...................................... $ -- $ -- 634,466
Operating Expenses
Salaries and payroll taxes ................... 73,608 59,465 237,573
Advertising .................................. -- -- 30,592
Professional fees ............................ 20,490 14,247 74,088
General and administrative ................... 13,907 17,356 27,307
Bad debt ..................................... 14,740 50,000 34,365
Rent and utilities ........................... 10,800 11,160 26,362
Insurance .................................... 930 691 29,251
Depreciation and amortization ................ -- 477 48,374
Profit sharing contribution .................. -- -- 30,712
Office ....................................... -- -- 24,171
Other ........................................ 24,642 -- --
---------- ---------- ------------
159,117 153,396 562,795
---------- ------------- ------------
Operating Income (Loss) ........................... $ (159,117) $ (153,396) $ 71,671
Non-Operating Income (Expense)
Consulting income ............................ -- 118,541 --
Write-off deferred registration costs ........ (109,331) -- --
Interest income .............................. 672 22,253 42,195
Interest expense ............................. -- -- (15,844)
Miscellaneous ................................ -- -- 816
Settlement of disputed payable ............... -- -- 2,496
Loss on disposition of equipment
and leasehold improvements .................. -- -- (3,652)
----------- ----------- ------------
(108,659) 140,794 26,011
----------- ----------- -------------
Income (Loss) from continuing operations
before income taxes and extraordinary item ... (267,776) (12,602) 97,682
Provision for income taxes ........................ (3,900) 4,000 21,700
Gain from discontinued operations,
net of income tax benefit ...................... 266,770 167,226 --
Gain on disposal of discontinued operations ....... 2,403 -- --
--------- --------- ------------
Income (loss) before extraordinary item ........... (2,503) 158,624 75,982
Extraordinary item, reduction of income tax
arising from carryforward
of prior year operating loss ................. -- 28,100 21,700
----------- ---------- ------------
Net Income (loss) ................................. $ (2,503) $ 186,724 $ 97,682
========== ============= ===========
Earnings (loss) per share:
Loss for continuing operations ............... $ (15.05) $ (0.87) $ 6.83
=========== ============= ============
Income (loss) before extraordinary item ...... $ (0.14) $ 11.00 $ 5.31
=========== ============= =============
Net income (loss) ............................ $ (0.14) $ 12.95 $ 6.83
=========== ============= ============
Weighted-average shares outstanding ............... 17,796 14,422 14,304
See notes to financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HYTK INDUSTRIES AND SUBSIDIARIES
Statements of Stockholders' Equity
Years Ended May 31, 1990, 1989 and 1988
Common Stock Treasury Stock
---------------------------------- ----------------------------------
Retained
Additional Earnings Total
Number of Paid In Number of (Deficit) Stockholders'
Shares Par Value Capital Shares Par value Accumulated Equity
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, May 31, 1987 ............. 14,284 $ 14 $ 818,028 67 $ (375) $ (98,058) $ 719,609
Issuance of common stock under
stock bonus plan .............. 17 -- 495 -- -- -- 495
Issuance of common stock for sales
performance ................... 2 -- 271 -- -- -- 271
Issuance of common stock for warrant 1 -- 35 -- -- -- 35
Net Income ......................... -- -- -- -- -- 97,682 97,682
----------- ----------- ----------- ----------- ----------- ----------- ---------
Balances, May 31, 1988 ............. 14,304 $ 14 $ 818,829 67 $ (375) $ (376) $ 818,092
Issuance of common stock
under stock bonus plan ........ 6 -- 182 -- -- -- 182
Issuance of common stock ........... 2,679 3 (3) -- -- -- 0
Issuance of common stock
to profit sharing plan ........ 152 -- 30,336 (67) 375 -- 30,711
Issuance of common stock
for cash ...................... -- -- 1 -- -- -- 1
Net Income ......................... -- -- -- -- -- 186,724 186,724
----------- ----------- ----------- ----------- ----------- ----------- --------
Balances, May 31, 1989 ............. 17,141 $ 17 $ 849,345 -- $ -- $ 186,348 $ 1,035,710
Issuance of common stock
under stock bonus plan ........ 5 -- 700 -- -- -- 700
Issuance of common stock
to profit sharing plan ........ 714 1 39,999 -- -- -- 40000
Net Loss ........................... -- -- -- -- -- (2,503) (2,503)
----------- ----------- ----------- ----------- ----------- ----------- -------
Balances, May 31, 1990 ............. 17,860 $ 18 $ 890,044 -- $ -- $ 183,845 $ 1,073,907
=========== =========== =========== =========== =========== =========== ========
See notes to financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HYTK INDUSTRIES, INC. AND SUBSIDIARIES
Statements of Cash Flows
For the Years Ended May 31, 1990, 1989 and 1988
May 31, May 31, May 31,
1990 1989 1988
-------------- -------------- ---------------
Cash Flows From Operating Activities
<S> <C> <C> <C>
Net income (loss) $ (2,503) $ 186,724 $ 97,682
Noncash items included in net income (loss):
Depreciation and amortization - 477 48,374
Loss on disposition of property - - 3,652
Equipment provision for loss on note receivable 14,740 - 25,000
Issuance of common stock for services 700 182 766
Acquisition of Marketable securities for consulting services - (118,541)
Issuance of stock to profit-sharing and stock bonus plan 40,000 30,711 -
Change in assets and liabilities:
(Increase) decrease in accounts receivable, trade - - (59,233)
(Increase) decrease in inventories - - (10,944)
(Increase) decrease in accounts receivable, other (46,063) (505) -
(Increase) decrease in income tax receivable (15,100) - -
Decrease in other current assets - 40,100 -
(Increase) decrease in other assets, discontinued operations $ (83,730) 126,092
(Increase) decrease in other assets (2,500) - -
Increase (decrease) in accounts payable and accrued expenses 26,934 (6,249) 53,824
Increase (decrease) in income taxes payable (28,500) 42,800 (11,139)
Other prepaids, deferrals and accruals, net - - (48,081)
-------------- -------------- ---------------
Net cash provided by (used for) operating activities (96,022) 301,791 99,901
-------------- -------------- ---------------
Cash Flows From Investing Activities
Proceeds from sale of equipment - - 300
Purchase of equipment and leasehold improvements - - (22,178)
Change in deposits and other assets - - 2,744
Repayment (payment) of note receivable, related party 200,000 (200,000) -
Purchase of equipment - (4,768) -
-------------- -------------- ---------------
Net cash provided by (used for) investing activities 200,000 (204,768) (19,134)
-------------- -------------- ---------------
Cash Flows From Financing Activities
Proceeds from issuance of common stock - - 35
Proceeds from revolving line of crdit, short and long term borrowings - - 455,854
Principal payment on revolving line of credit and leasehold improvements - - (534,702)
Payment received on notes receivable 10,260 - -
Increase in deferred registration costs (100,468) (70,995) -
Payment of note payable, related party - (25,000) -
-------------- -------------- ---------------
Net cash provided by (used for) financing activities (90,208) (95,995) (78,813)
-------------- -------------- ---------------
Increase (decrease) in cash and cash equivalents 13,770 1,028 1,954
Cash and cash equivalents, beginning of year 2,180 1,152 104,902
-------------- -------------- ---------------
Cash and cash equivalents, end of year $ 15,950 $ 2,180 $ 106,856
============== ============== ===============
Supplement Disclosures Of Cash Flow Information
Cash payments for Interest $ 104,231 $ 8,576 $ 15,844
Cash payment for Income Taxes $ $- 3,000 $ 9,910
Supplemental Disclosures of Noncash Information
(Decrease) in other assets, discontinued operations, net of associated $ (167,226) $ (167,226) -
liabilities $ 70,995 $ 70,995 -
</TABLE>
See notes to financial statments.
F-4
<PAGE>
HYTK INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years ended May 31, 1990, 1989 and 1988
Note 1. Nature of Business and Significant Accounting Policies
The Company's operations were in the telecommunications industry
specializing in the sales, installations and maintenance of telephone systems.
A summary of the Company's significant accounting policies follows:
Principles of consolidation:
HYTK Industries, Inc. was formerly known as Digitel of Las
Vegas, Inc. As of June 1, 1987, the Company's interconnect
operations were transferred to a wholly-owned subsidiary
formed by the Company, Digitel, Inc. , and the Company
operated under the Digitel, Inc. name. HYTK Industries Inc.
acted only as a holding company for its subsidiary.
The consolidated financial statements include the accounts of
HYTK Industries Inc. and its wholly-owned subsidiary, Digitel,
Inc. and US Voice Corporation. All significant intercompany
accounts and transactions have been eliminated.
US Voice Corporation, a wholly-owned subsidiary of the
Company, was incorporated on January 12, 1989 to sell voice
mail equipment and to lease voice mail boxes on a monthly
basis. On October 1, 1989, operations of US Voice Corporation
were discontinued.
Ditigel, Inc. operated in the telecommunications industry,
specializing in the sales, installation and maintenance of
telephone and voice mail systems. On June 30, 1992, operations
of Ditigel, Inc. were discontinued.
Inventories:
Inventories consisting of supplies, telephone equipment and
parts are stated at lower of cost (first-in, first-out method)
or market.
Equipment and leasehold improvements:
Equipment and leasehold improvements, including assets
acquired under capital leases, are recorded at cost, and
depreciation and amortization are computed primarily using
accelerated methods over the following estimated useful lives
of the assets: Years Equipment 5-10 Vehicles 5 Leasehold
improvement 5 Furniture and fixtures 7
Recognition of revenue:
The Company recognizes sale and installation revenue upon the
completion of the installation. Maintenance revenue is
recognized ratably over the term of the maintenance contract.
<PAGE>
Note 1. Nature of Business and Significant Accounting Policies (continued)
Earnings per share data:
Earnings per share have been computed on the basis of the
weighted average number of shares of common stock outstanding
during the year.
Outstanding warrants have not been included in the computation
of income per share as the effect of such would be
anti-dilutive.
Reclassifications:
Certain items in the financial statements have been
reclassified to be consistent with the classifications adopted
for prior years. This reclassification has no effect on net
income or stockholders' equity.
Deferred registration costs:
Deferred registration costs have been incurred in connection
with a proposed public offering of preferred stock and warrant
offering. Costs incurred in connection with the warrant
offering were offset against the proceeds of that offering.
The preferred stock offering has been abandoned and, as a
result, the deferred registration costs associated with that
offering have been expensed.
Cash equivalents:
The Company considers all certificates of deposits with
maturities of three months or less as of year end to be cash
equivalents.
Note 2. Notes Receivable
On December 31, 1986 the Company entered into a Stock Purchase and
Exchange Agreement with Environmental Communications, Incorporated
(Environmental). This agreement contemplated the issuance of 4,205
shares of the Company's common stock to the shareholders of
Environmental in exchange for all of the issued and outstanding
capital stock of Environmental. As a result, the businesses of the
two entities would be combined and control of the Company would be
transferred to Environmental's shareholders. The Company advanced
$100,000 to Environmental's shareholders on February 13, 1987.
The promissory note evidencing the advance accrues interest at the
prime rate and is personally guaranteed by Environmental's major
shareholder and president. The accrued interest is due and payable
quarterly beginning May 31, 1987, and the entire principal is due May
31, 1989. This contemplated business combination has since been
abrogated. For fiscal 1988, an allowance for possible loss was
recorded for 25% of the principal balance on the promissory note. The
note was in default as of May 31, 1989 and management increased the
allowance for possible loss to 75% of the principal balance. In
fiscal 1990, the note was written off as uncollectible.
<PAGE>
Note 3. Notes receivable, related party and Investments in marketable securities
During the year ended May 31, 1987 the Company advanced funds to
Olson Glass Co. of Nevada (Olson) pursuant to various promissory
notes, with interest rate at 14% per annum and due on demand. As of
May 31, 1988, $270,000 principal remained outstanding plus accrued
interest of $42,986. The notes are guaranteed by Century
Manufacturing, Inc. (Century), the parent company of Olson, and are
secured by a deed of trust of real property located in Las Vegas,
Nevada. Prior to April 1, 1988, Olson and Century were both related
to the Company through common ownership and management. The note and
accrued interest were repaid during December 1988.
The May 31, 1989 note receivable was the result of $200,000 advanced
to Joseph Kowal, an unrelated third party, and Beckstead Family
Investment Limited Partnership, in which an officer/director of the
Company was a general partner. Subsequent to May 31, 1989, the
officer/director of the Company divested himself of his entire
interest in the Beckstead Family Investment Limited Partnership. The
$200,000 was used to provide capital in connection with the
acquisition of Above Software, Inc. by Los Angeles Securities Group (
LASG) (subsequently known as Above Technologies, Inc.).
As consideration for advancing Above Technologies, Inc. working
capital funding, and as consideration for consulting services
rendered to Above Technologies, Inc. by the Company, the Company
received a total of 480,588 shares of Above Technologies, Inc. common
stock valued at $118,541. The market value of the stock as of May 31,
1990 and 1989 was $148,177 and $118,541, respectively.
The $200,000 note was non-interest bearing and was originally due the
later of December 31, 1989 or the effective date of a registration
statement of LASG. However, in fiscal 1990, upon approval by the
Company, Joseph Kowal and Beckstead Family Investment Limited
Partnership, as borrowers, assigned their interest in the note
receivable to Dale Lyon Living Trust, an unrelated entity. Upon
transfer of their interest to the purchaser, the purchaser paid
$25,000 to the Company and paid the remaining balance of $175,000 in
monthly installments of $25,000 with interest at eight percent per
annum.
Note 4. Lease Commitments and Related Party Transaction
Ditigel, a subsidiary of the Company, leased office space from
Century Manufacturing, Inc., who was formerly a related party. The
lease provided that the lessee pay all property taxes, insurance and
maintenance plus a current monthly rental of $1,532. The lease
expired September 30, 1991.
The Company leased office space from a related party on a
month-to-month basis. The lease required monthly rentals starting at
$750, with a $15 increase in March of each year until February 1990.
As of May 31, 1989, the monthly rental was $810. During the years
ended May 31, 1988 and 1987, the Company reduced rent expense by
$2,750 and $2,393 through collection of sublease rentals.
Note 5. Going Concern
The Company has ceased operations and disposed of most of its assets
and is now inactive. Consequently, it is not a going concern. Unless
additional funds and business activity come into the Company, it will
remain inactive.
<PAGE>
Note 6. Explanation of Financial Statement Presentation
Pursuant to a May 20, 1992 Asset Purchase Agreement, the Company
transferred nearly all of the assets then owned by Digitel to
Southwestern Communications, Inc., a Nevada corporation f/k/a Western
Communications, Inc. ("Southwestern"). By means of this Agreement,
the Company sold all of Digitel's machinery, equipment, tangible
personal property, inventory, and accounts receivable to
Southwestern. The only asset not transferred to Southwestern was a
Honda automobile encumbered by a lease contract with Honda Leasing.
As consideration for the transfer, Southwestern assumed approximately
$675,000 worth of Digitel's debts. No additional consideration was
paid because the debts to be assumed were equal to or exceeded the
value of the assets transferred. Southwestern provided notice of this
bulk sale pursuant to the provisions of Article 6 of the Uniform
Commercial Code. Prior management indicated that the decision to sell
Digitel was based on the fact that Digitel had experienced net losses
in the prior two years and Digitel's liabilities exceeded its assets
at the time of the transfer. Gordon Beckstead, then the Company's
president and director, was a 40% owner of Southwestern at the time
of this transaction.
During fiscal year 1994, Digitel's articles of incorporation were
suspended by the State of Colorado for failure to file its 1993
annual report. The Company has no current intentions to revive
Digitel's charter and will likely seek to voluntarily dissolve
Digitel in the near future. Accordingly, the Company has not included
Digitel as a consolidated subsidiary on the attached financial
statements. Rather, such activity is reported as "other assets,
discontinued operations, net of associated liabilities " or "other
liabilities, discontinued operations, net of associated assets."
Since the baulk sale occurred just prior to the May 31, 1992 year
end, the response to notifications of assumption of debt of
Southwestern extended into the year ended May 31, 1993. Accordingly,
the final disposal of "Other assets, discontinued operations, net of
associated liabilities " and "other liabilities, discontinued
operations, net of associated assets" also extended into the year
ended May 31, 1993. Consequently, there are no liabilities dealing
with the bulk transfer subsequent to May 31, 1993.
Prior to the transfer of Digitel, the Company also had made transfers
of its other subsidiaries and interests in U.S. Voice and Cactus
Club. As with Digitel, these activities are also reported as
"discontinued operations" in the financial statements through May 31,
1991.
<PAGE>
Note 7. Income Taxes
Deferred income tax provision, resulting from differences between
accounting for financial statement purposes and accounting for tax
purposes were as follows:
1989
----
Consulting income $ 32,200
Allowance for
uncollectible receivables (22,800)
Deferred salaries 10,000
Warranty reserve (5,100)
$ 14,300
===========
The provision for income taxes included in the accompanying
consolidated statements of operations differs form the statutory
amount for the following:
<PAGE>
Years Ended May 31,
1990 1989 1988
---- ---- ----
Income tax expense
at statutory federal tax rate $ 10,300 $ 79,100 $ 34,189
Graduated tax rates (6,400) (5,200) (12,489)
$ 3,900 $ 73,900 $ 27,100
The credits arising from the utilization of net operating loss carry
forwards have been reflected, in the accompanying consolidated
statement of operations, as an extraordinary item
Note 8. Stock Option Plan
The Company adopted a qualified stock option plan under which 179
shares of its $0.001 par value common stock were reserved for options
to employees. Option price would be the fair market value (110% of
fair market value if the optionee had more than 10% voting control)
of the common stock on the date the options are granted. The term of
an option shall be for a period of no longer than ten years from the
date of the grant of the option. No options were granted and the Plan
expired May 20, 1995.
Note 9. Stockholders' Equity
On September 1, 1991 the Company effected a 1-for-140 reverse stock
split of its common stock and on November 1, 1995 the Company
effected a 1-for-40 reverse stock split of its common stock. All
reference to quantities of common stock have been adjusted to reflect
both the 1991 and 1995 reverse stock splits.
In February 1986, the Company had a public offering of its
securities, selling 3,130 units, each unit consisting of one share of
common stock and one common stock purchase warrant. Each of these
warrants entitled the holder to purchase one share of common stock
commencing October 17, 1986 through October 17, 1988 at an exercise
price of $.05 per share. These warrants are redeemable in whole or in
part by the Company at a price of $.01 per share ($.005 per warrant)
subject to 30 days prior notice. In connection with the public
offering, the Company sold to the underwriter common stock purchase
warrants which entitled the warrant holder to purchase one share of
the company's common stock for each ten units sold in the public
offering (underwriters warrants totaled 313). Underwriter warrants
are exercisable January 17, 1987 through January 17, 1990 at an
exercise price of $.06 per share.
On May 4, 1987, the shareholders amended the articles of
incorporation to increase the number of authorized shares from
100,000,000 to 950,000,000 and authorized the creation of 50,000,000
shares of $.001 par value preferred stock. The shares of preferred
stock may be divided into one or more series, with such rights,
preferences, qualifications, limitations and restrictions as may be
determined by the board of Directors. Subsequent to the year end, the
Company's Board of Directors established a Class A Convertible
Preferred Stock (Class A Preferred) and a Class B Convertible
Preferred Stock (Class B Preferred). The shares of Class B Preferred
were nonvoting, carried no dividend rights, were not redeemable, and
were not entitled to share in any assets of the Company if it is
liquidated and each share of Class B Preferred was convertible into
16.667 shares of Class A Preferred.
During the year ended May 31, 1988 the Company approved a stock bonus
plan for its employees. The plan approved 90 shares to be set aside,
20% to be issued in the current year, and 10% yearly for eight years.
During the years ended May 31, 1990, 1989 and 1988, the Company
distributed under this plan, 5, 6 and 17 shares, respectively
amounting to $700, $182 and $495 each.
<PAGE>
On May 26, 1989, the Company issued 2,679 restricted shares of common
stock to the Workman Family Partnership (WFP), a general partnership
controlled by William Workman, then a director of the Company, in
exchange for its interest in an office and warehouse complex.
Note 10. Profit-Sharing Trust
During the year ended May 31, 1988, the Company established a
profit-sharing trust for its employees who meet eligibility
requirements set forth in the Plan. The annual contributions to the
Plan are to be determined by the board of Directors, with a maximum
amount equal to 15 percent of gross salaries. The amount of the
contribution for the years ended May 31, 1989 and 1988 are $$40,000
and $30,712, respectively.
During the year ended May 31, 1989, the Plan settled the May 31, 1988
accrued profit sharing contribution of $30,711 by issuing 152 shares
of the Company's $.001 par value common stock and 67 shares of its
treasury stock.
During the year ended May 31, 1990, the Plan settled the May 31, 1989
accrued profit sharing contribution of $40,000 by issuing 714 shares
of the Company's $.001 par value common stock.
Note 11. Supplemental data to consolidated statement of cash flows
Excluded from the consolidated statement of cash flows for the years
ended May 31, 1990 and 1989 were the effects of certain noncash
investing and financing activities as follows: (1990) Issuance of
common stock for compensation for $700; (1989) Acquisition of
marketable securities for consulting services for $118,541.
Note 12. Discontinued operations
During the year ended May 31, 1989, the Company commenced operations
of one of its wholly-owned subsidiaries, US Voice Corporation, which
provided voice mail equipment and leasing of voice mail boxes. US
Voice Corporation incurred a considerable loss during its start-up,
and on October 1, 1989, management decided to discontinue its
operations. The company disposed of its net assets relating to the
operations of US Voice Corporation, resulting in a gain of $2,403.
The Company incurred a loss from discontinued operations of US Voice
Corporation of $50,511 net of an income tax benefit of $22,704 for
the year ended May 31, 1990.
Note 13. Subsequent Events
On September 1, 1991 the Company effected a 1-for-140 reverse stock
split of its common stock and on November 1, 1995 the Company
effected a 1-for-40 reverse stock split of its common stock. All
reference to quantities of common stock have been adjusted to reflect
both the 1991 and 1995 reverse stock splits.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 5TH day of September 1997.
HYTK Industries, Inc.
/s/Ken Kurtz
------------
Ken Kurtz, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Signature Title Date
President and Director September 5, 1997
/s/Ken Kurtz
------------
Ken Kurtz
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
AUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MAY 31, 1990
ANNUAL REPORT ON FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000775351
<NAME> HYTK INDUSTRIES INC.
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<CURRENCY> U.S.DOLLAR
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1990
<PERIOD-START> JUN-01-1989
<PERIOD-END> MAY-31-1990
<EXCHANGE-RATE> 1
<CASH> 15,950
<SECURITIES> 118,541
<RECEIVABLES> 61,668
<ALLOWANCES> 0
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<CURRENT-ASSETS> 77,618
<PP&E> 4,768
<DEPRECIATION> 477
<TOTAL-ASSETS> 1,133,892
<CURRENT-LIABILITIES> 45,685
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0
0
<COMMON> 18
<OTHER-SE> 1,073,889
<TOTAL-LIABILITY-AND-EQUITY> 1,133,892
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<TOTAL-COSTS> 159,117
<OTHER-EXPENSES> 108,659
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<INCOME-PRETAX> (267,776)
<INCOME-TAX> (3,900)
<INCOME-CONTINUING> (271,676)
<DISCONTINUED> 269,173
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