UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(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,
1998.
[ ] 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)(Zip Code)
(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 XX No
<PAGE>
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, 1998.
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, 1998 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, 1998 was 2,052,266.
Total of Sequentially Numbered Pages: 16
Exhibit Index on Page: 16
2
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TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS...............................4
ITEM 2. DESCRIPTION OF PROPERTY...............................7
ITEM 3. LEGAL PROCEEDINGS.....................................7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...7
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS...............................................7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.............................................8
ITEM 7. FINANCIAL STATEMENTS..................................9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS........10
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
THE EXCHANGE ACT.....................................10
ITEM 10. EXECUTIVE COMPENSATION...............................11
ITEM 11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS..............12
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......13
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................14
SIGNATURES...........................................15
INDEX TO EXHIBITS....................................16
3
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Unless the context indicates otherwise, the term "Company"
shall hereinafter refer to HYTK Industries, Inc., a Nevada
corporation and its predecessors and subsidiaries.
The Company was originally incorporated on July 12, 1982 under
the name of Digitel of Las Vegas, Inc. as a telephone equipment
servicing and maintenance company. On May 15, 1987, the Company
changed its name to HYTK Industries, Inc.
Since 1992 the Company's only asset was a minor interest in an
office complex in Las Vegas which was sold on July 23, 1996. Since
this date, the Company has had no operations other than to seek a
business combination with a viable business entity (For more
information about the Company's past business developments
including its interest in the Las Vegas property, please refer to
previous reports filed by the Company with the Securities and
Exchange Commission which are incorporated herein by reference).
Over the past three fiscal years, the Company has undergone
changes in control in management and has hired various consultants
to assist with its revival and in its plan to combine with an
operating entity. However, to date, the Company has been
unsuccessful. The Company has lacked resources and cash flow to
attract quality personnel for assistance (For more information
about the Company's past consultants and actions taken therewith,
please refer to previous reports filed by the Company with the
Securities and Exchange Commission which are incorporated herein by
reference).
On March 5, 1998, in an effort to facilitate a business
combination in light of the Company's lack of resources, the
Company executed a Financial Consulting Agreement ("Agreement")
with Park Street Investments, Inc. ("Park Street"). Park Street is
a Utah Corporation 100% owned by Ken Kurtz, the Company's
President, majority shareholder and director. This agreement was
filed as an exhibit to the Company's report on form 10-QSB dated
November 30, 1997 with the Securities and Exchange Commission and
is incorporated herein by reference.
According to the Agreement, Park Street has agreed to assist
the Company with its corporate maintenance, administration,
financial statement preparation and securities filings. In
addition, Park Street is to actively pursue, negotiate and
structure a merger or business combination with a third party on
behalf of the Company. Park Street has also agreed to pay for the
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costs associated with these responsibilities until the Company
effects a business combination with another entity. As
consideration for its services and payment of the Company's costs,
the Company's board agreed to immediately issue 2,000,000
restricted shares of its Common Stock to Park Street at par value
of $.001, or $2,000. See Item (12) "Certain Relationships and
Related Transactions" for more information on this Agreement.
On August 3, 1998 Park Street received a deposit of $20,000
from representatives of an oil and gas concern towards a finder fee
which would be payable to Park Street in the event an ultimate
business combination involving the Company and the oil and gas
concern can be effected. See Item (12) "Certain Relationships and
Related Transactions" for more information on this Agreement.
Currently, the Company and the oil and gas concern are in
negotiations with regards to a possible business combination.
However, because of the Company's lack of resources, no assurances
can be given that the Company will consummate this transaction or
ever successfully engage in any profitable endeavor.
Business of Issuer
For many years, the Company has remained dormant without any
operations or significant assets. The last operational activity of
any significance was the sale of the Las Vegas Property in 1996,
for which the Company only had a minor interest. See Item (1)
"Business Development" for more information.
The Company's current business plan involves finding a
suitable merger or acquisition candidate that can provide the
Company with a basis for successful operations. The Company's
management -- through Park Street, its consultant, is in the
process of prospecting for, interviewing and performing the
necessary due diligence to structure a successful merger or
acquisition. However, there can be no assurances that the Company
will be able to negotiate a business combination or if such a
business combination is achieved, that it will be profitable,
worthwhile or sustainable. The Company does not currently produce
any goods or provide any services. Nor does the Company have any
full or part time employees, aside from its officer and director.
To operate, the Company is currently relying solely on the
resources provided by Park Street in accordance with its consulting
agreement with Park Street. For more information about this
agreement, see Item (1) "Description of Business Business
Development" and Item (12) "Certain Relationships and Related
Transactions".
The environment for the Company's current activities of
searching for a suitable candidate with which to combine is highly
5
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competitive. There are thousands of companies seeking to merge
with or acquire viable operating entities. It can be assumed that
most, if not all of these companies have substantially more
resources than the Company. The Company competes based on its
large base of existing shareholders and its status as a reporting
Company under the 1934 Securities and Exchange Act, as amended.
However, the Company has no other resources to offer a potential
target other than its stock. Additional issuance of its common
stock would result in substantial dilution to the Company's
existing shareholders.
While the Company's current primary business focus is its
search for a suitable candidate with which to combine, its business
focus could ultimately change. To the extent that the Company is
successful in combining with a viable operating entity, its
business would likely become that of the target company.
Currently, the Company is in negotiations with an oil and gas
concern with regards to a possible business combination.
The Company believes that a business combination with the oil
and gas concern could provide substantial long term growth and
stability to the Company, although no such assurances can be given.
To the extent the Company is successful with a business
combination with an oil and gas concern, the Company's business
focus would be in the oil and gas industry.
While an agreement on exact terms has not been reached, it is
likely that such a business combination would result in issuance of
a large number of shares of the Company's common stock which would
result in substantial dilution to the Company's current
shareholders.
Any business combination would be subject to, among other
things, a definitive agreement; board approval from various
entities involved, and shareholder approval from the shareholders
of the oil and gas concern. The Company anticipates forming a
wholly owned subsidiary for the purpose of combining with the oil
and gas concern. Because the transaction would be structured
through this subsidiary, the Company does not anticipate needing
approval from the Company's shareholders.
While the Company is in late stages of negotiations for the
business combination, there are no assurances that such combination
will ultimately occur or that if it does, that it will result in an
increase in shareholder value. More information about any business
combination and details will be reported by the Company on Form 8-K
pending completion of any such business combination.
6
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ITEM 2. DESCRIPTION OF PROPERTY
The Company does not currently own any real property. The
Company currently operates from the offices of its President who
pays for all administrative expenses of the Company through his
consulting Company, Park Street, in accordance with the consulting
agreement between the Company and Park Street dated March 5, 1998.
For more information about this agreement, see Item (12) "Certain
Relationships and Related Transactions".
In the event of a business combination by the Company with an
operating entity, the Company might own property in the future.
ITEM 3. LEGAL PROCEEDINGS
Management is not aware of any pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company's Common Stock is not traded or quoted over-the-
counter or on any exchange, nor has it for many years. However,
the Company intends to attempt to have the Company's securities
listed on the NASD OTC Bulletin Board pending a combination with a
viable business entity.
Record Holders
There are 950,000,000 shares of the Company's $.001 par value
Common Stock authorized for issuance and 50,000,000 shares of the
Company's $.001 par value Preferred Stock authorized for issuance.
As of August 31, 1998, there were 2,052,266 shares of the Company's
$.001 par value Common Stock issued and outstanding, held by
approximately 2,008 record holders. There were no shares of the
Company's $.001 par value Preferred Stock issued or outstanding.
Dividends
The Company has not declared any cash dividends for the last
three years and does not anticipate paying any dividends in the
foreseeable future. The payment of dividends is within the
7
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discretion of the board of directors and will depend on the
Company's earnings, capital requirements, financial condition and
other relevant factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
For many years, the Company has remained dormant without any
operations or significant assets. The last operational activity of
any significance was the sale of the Las Vegas Property in 1996,
for which the Company only had a minor interest (For more
information about the Company's past business developments, please
refer to previous reports filed by the Company with the Securities
and Exchange Commission which are incorporated herein by
reference).
The Company's current business plan involves finding a
suitable merger or acquisition candidate that can provide the
Company with a basis for successful operations. The Company does
not currently produce any goods or provide any services. Nor does
the Company have any full or part time employees, aside from its
officer and director. The Company has no assets or resources to
support itself. However, the Company recently signed a consulting
agreement with Park Street - a company controlled by the Company's
current president and director. Under the agreement, Park Street
has agreed to pay the Company's expenses and support the Company's
administrative needs until it is able to combine with another
entity. For more information about this agreement, see Item (1)
"Description of Business Business Development" and Item (12)
"Certain Relationships and Related Transactions".
The Company is currently negotiating potential mergers or
acquisitions. However, as of the date of this filing, no
definitive agreements have been reached. The Company has not
realized any cash inflow/ or revenue in the past five years,
excepting the cash realized from the July 23, 1996 sale of the
Company's minor interest in the Las Vegas property. The Company
hopes that it can engage in an acquisition or merger with an entity
that will provide the Company with revenue from operations. Since
the Company no longer has any significant assets, any merger or
acquisition that the Company ultimately effects will involve the
issuance of the Company's Common Stock. Such an exchange of the
Company's Common Stock would substantially dilute the existing
ownership position of the Company's current shareholders. If the
Company effects a future merger or acquisition, it may need
financing to satisfy the cash requirements of its
merger/acquisition partner. The nature and extent of these
requirements will depend upon the kind of business acquired by the
Company. Given the Company's limited cash flow and history of
operating losses, there is a substantial risk that the Company will
not be able to raise the capital necessary to make a subsequent
merger or acquisition successful. A merger or acquisition will also
8
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likely result in the Company's recruitment of additional employees
(For more information on these developments see Item (1)
"Description of Business").
ITEM 7. FINANCIAL STATEMENTS
Please see the accompanying financial statements attached as
pages F-1 through F-10.
[This space was intentionally left blank]
9
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Sellers & Associates
CERTIFIED PUBLIC ACCOUNTANT Fax (801) 627-1639
378 Harrison Blvd., Suite 101 Ph (801) 621-8128
Ogden, Utah 84403
INDEPENDENT PUBLIC ACCOUNTANT'S REPORT
Board of Directors
HYTK Industries, Inc.
Sandy, Utah
We have audited the accompanying balance sheets of HYTK Industries,
Inc. as of May 31, 1998 and the related statements of operations,
stockholders' equity, and cash flows for the years ended May 31,
1998 and 1997. 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 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 he overall
financial statement presentation. We believe that our audits
provide 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 HYTK
Industries, Inc. as of May 31,1998 and the results of its
operations and its cash flows for the years ended May 31,1998 and
1997 in conformity with generally accepted accounting principles.
The accompanying financial statement have been presented assuming
the Company were a going concern. The Company disposed of
substantially all of its assets. As discussed in Note 5 to the
financial statements, the Company is not generating revenue and is
not a going concern. The financial statements do not include any
adjustments that might otherwise be required.
September 10, 1998
<PAGE>
HYTK INDUSTRIES, INC.
Balance Sheet
May 31, 1998
ASSETS
Current Assets ...................... $ --
Other Assets ........................ --
-----------
TOTAL ASSETS ........................ $ --
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and
accrued expenses ............... $ 15,013
-----------
Commitments and contingencies ....... --
-----------
Stockholders' Equity (Deficit)
Preferred stock, par value $.001,
50,000,000 shares authorized,
no shares issued and
outstanding .................... --
Common stock, par value $.001
950,000,000 shares authorized,
2,052,266 issued and outstanding 2,052
Additional paid-in-capital ..... 1,108,846
Retained earnings (deficit) .... (1,125,911)
-----------
Net Stockholders' equity (Deficit) (15,013)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................ $ --
===========
See notes to financial statements.
F-2
<PAGE>
HYTK INDUSTRIES, INC.
Statements of Operations
For the Years Ended May 31, 1998 and 1997
May 31, May 31,
1998 1997
---------- --------
Revenues....................................$ -- $ --
---------- --------
General and administrative expenses......... (2,000) (20,900)
---------- --------
-- (20,900)
---------- --------
Non-Operating Income (Expense)
Gain on sale of interest in property... -- 83,606
Interest (Expense)..................... (29) --
---------- --------
Total non-operating Income/Expenses)... (29) 83,606
---------- --------
Net Income (Loss)........................... (2,029) $62,706
========== ========
Earnings (Loss) per share:
Net income (Loss) .......................... (0.00) 1.20
========== ========
Weighted-average shares outstanding ........ 528,978 52,266
========== ========
See notes to financial statements.
F-3
<PAGE>
HYTK INDUSTRIES, Inc.
Statements of Stockholders' Equity
Years Ended May 31, 1998 and 1997
Common Stock
---------------- Stock-
Total Additional Retained holders
Number Par Paid In Earnings Equity
of Shares Value Capital (Deficit) (Deficit)
---------- ----- ---------- ----------- ----------
Balance,
May 31,
1996 ........ 52,266 $ 52 $1,108,846 $(1,186,588) $(77,690)
Net Income .. -- -- -- 62,706 62,706
---------- ----- ----------- ----------- ---------
Balance,
May 31,
1997 ........ 52,266 52 1,108,846 (1,123,882) (14,984)
Issuance of
Stock for
Services..... 2,000,000 2,000 -- -- 2,000
Net (Loss)... -- -- -- (2,029) (2,029)
---------- ----- ------------ ----------- --------
Balance,
May 31
1998......... 2,052,266 $2,052 $1,108,846 $(1,125,911) $(15,013)
========== ===== ============ =========== ========
See notes to financial statements.
F-4
<PAGE>
HYTK INDUSTRIES, INC.
Statements of Cash Flows
For the Years Ended May 31, 1998 and 1997
May 31, May 31,
1998 1997
----------- -----------
Cash Flows From Operating Activities
Net income (Loss) ............. $ (2,029) $ 62,706
Noncash expenses included in
net income (Loss):
Services paid with
common stock ............... 2,000 --
Increase (Decrease)
in accounts payable
and accrued expenses ....... 29 (35,206)
------------ -----------
Net cash provided by (used for)
Operating Activities ............. -- 27,500
------------ -----------
Cash Flows From Investing Activities
Net cash provided by (used for)
Investing Activities ............. -- --
------------ -----------
Cash Flows From Financing Activities
Repayment of note payable,
related party ................. -- (27,500)
------------ -----------
Net cash provided by (used for)
Financing Activities ............. -- (27,500)
------------ -----------
Increase (decrease) in cash and
cash equivalents ................... -- --
Cash and cash equivalents,
Beginning of year .................. -- --
------------ ------------
Cash and cash equivalents,
End of year ........................ $ -- $ --
============ ============
Supplemental Disclosures of
Cash Flow Information
Cash payments for Interest .... $ -- $ --
Cash payment for Income Taxes . $ -- $ --
See notes to financial statements.
F-5
<PAGE>
HYTK INDUSTRIES, INC.
Notes to Consolidated Financial Statements
Years ended May 31, 1998 and 1997
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. On May 15, 1987, the Company
changed its name to HYTK Industries, Inc. On June
1, 1987, the Company's interconnect operations
were transferred to a wholly-owned subsidiary
formed by the Company, Digitel, Inc. HYTK
Industries, Inc. acted only as a holding company
for its subsidiaries.
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.
As a result of discontinued operations in both
subsidiaries, the financial statements for the year
ended May 31, 1998 and 1997 include only those of
the parent Company, HYTK Industries, Inc.
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.
F-6
<PAGE>
HYTK INDUSTRIES, INC.
Notes to Consolidated Financial Statements
Years ended May 31, 1998 and 1997
Note 2. Notes Payable, Related Party
During the year ended May 31, 1991, an officer/director
of the Company advanced the Company $25,000. The advance
accrued interest at the rate of 10 percent per annum and
principal and interest were due November 30, 1992;
however, due to lack of funds, the Company was not able
to repay the loan as scheduled. The Company accrued
interest at 10 percent per annum until the note was paid
in August 1996.
Note 3. Income Taxes
The provision for income taxes included in the
accompanying consolidated statements of operations
differs from the statutory amount for the following:
Years Ended May 31,
1998 1997
Income tax expense at
statutory federal tax rate $ - $ -
Graduated tax rates - -
-------------------------
$ - $ -
=========================
As of May 31, 1998, the Company had a net operating loss
carryforward of approximately $35,960 potentially
available to offset future taxable income. However, the
Company's ability to utilize such losses to offset future
taxable income was subject to various limitations imposed
by the rules and regulations of the Internal Revenue
Service.
Note 4. Stockholders' Equity (Deficit)
The Company has had virtually no revenues, income or cash
flow for over six years. Currently, the Company has no
assets or resources with which to operate. Without
assistance, it would have been highly probable that the
Company would have remained dormant and been eventually
dissolved by state corporate proceedings.
The Company's current president believed that the
Company, if revived and restructured, could be a
potential candidate with which a viable operating entity
F-7
<PAGE>
HYTK INDUSTRIES, INC.
Notes to Consolidated Financial Statements
Years ended May 31, 1998 and 1997
could combine. The Company has a base of shareholders
and is a reporting Company under the Securities and
Exchange Act of 1934, as amended. As such, the Company
has some characteristics attractive to a potential
candidate.
Because the Company had no assets or resources to
compensate or induce personnel to assist it with such a
program, the Company entered into a Financial Consulting
Agreement ("Agreement") with Park Street Investments,
Inc. ("Park Street") on March 5, 1998. Park Street is a
Utah Corporation 100% owned by Ken Kurtz, the Company's
President, majority shareholder and director.
According to the Agreement, Park Street has agreed to
assist the Company with its corporate maintenance,
administration, financial statement preparation and
securities filings. In addition, Park Street is to
actively pursue, negotiate and structure a merger or
business combination with a third party on behalf of the
Company. Park Street has also agreed to pay for the
costs associated with these responsibilities until the
Company effects a combination with another entity.
As consideration for its services and payment of the
Company's costs therewith, the Company's board agreed to
immediately issue 2,000,000 restricted shares of its
common stock to Park Street at par value of $.001, or
$2,000. Also according to the Agreement, Park Street
shall be entitled to as much as 10% of the total issued
and outstanding shares of the Company after a business
combination. Park Street shall also be entitled to any
cash consideration it can negotiate from a potential
business entity.
Because the exact number of shares to be outstanding
after a business combination is currently unknown and
because the exact percentage of ownership that Park
Street is entitled to will be subject to negotiations
between the Company, Park Street, and a potential target
Company, the actual number of shares to be owned by Park
Street will be modified by mutual agreement by the
parties involved. Moreover, the amount of cash that Park
Street is to receive is also subject to negotiations and
is currently unknown. In no event, shall Park Street's
ownership percentage exceed more than 10% of the total
F-8
<PAGE>
HYTK INDUSTRIES, INC.
Notes to Consolidated Financial Statements
Years ended May 31, 1998 and 1997
outstanding shares of the Company after a business
combination.
This agreement resulted in a change in control of the
Company giving Park Street 97% control of the Company's
common stock. This stock issuance is not deemed to be at
arms length.
Note 5. Going Concern
The Company has ceased operations and disposed of all 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.
Note 6. Gain on Sale of Interest in Real Estate Property
For many years, the Company had retained a minor interest
in certain real property located in Las Vegas, Nevada.
This asset was not recognized on the books of the Company
until the final sale, since it was questionable as to its
value. During early 1996, the City of Las Vegas condemned
the frontage of the property by paying $57,900. The
Company's share of the payment, amounting to $10,000, was
received by Beckwork & Co. a company controlled by the
Company's previous President. Beckwork paid off $10,000
of debts directly on behalf of the Company before May
31,1996. In July 1996, the property that the company held
an interest in was sold. The Company received $83,606 in
proceeds from this sale. Of this, $40,000 was paid to
Gordon Beckstead - the Company's previous President in
full payment of a note; $17,883 was paid to Gordon E.
Beckstead Associates, Inc., as repayment for advancements
made on behalf to the Company including the repayment of
legal fees; $12,962 was paid to the Law Offices of Fay M.
Matsukage in settlement of legal services performed on
behalf of the Company. Gordon Beckstead was the
Company's previous President and director. Ms. Matsukage
served as the Company's corporate counsel for over 10
years and is the wife of Gordon Beckstead. The Company's
current board of directors, none of whom were interested
parties to these transactions, ratified the Company's
payment of these debts. The balance of $12,761 was paid
to a previous consulting firm of the Company's for
services rendered in connection with Company
administration. Mr. Kurtz, the Company's President,
F-9
<PAGE>
HYTK INDUSTRIES, INC.
Notes to Consolidated Financial Statements
Years ended May 31, 1998 and 1997
ultimately received approximately $1,276 of this amount
as an employee of one of the Company's previous
consultants at the time.
Note 7. Related Party Transactions
Related party transactions are discussed in Note 2 "Notes
Payable, Related Party", Note 4 "Stockholders Equity" and
Note 6 "Gain on Sale of Interest in Real Estate
Property".
Note 8. Subsequent events
On August 3, 1998 Park Street received a deposit of
$20,000 from representatives of an oil and gas concern
towards a finder fee which would be paid in the event of
an ultimate business combination involving the Company
and the oil and gas concern. Currently, the Company and
the oil and gas concern are in negotiations with regards
to a possible business combination.
The Company believes that a business combination with the
oil and gas concern could provide substantial long term
growth and stability to the Company.
While an agreement on exact terms has not been reached,
it is likely that such a business combination could
result in issuance of a large number of shares of the
Company's common stock which could result in substantial
dilution to the Company's current shareholders.
A business combination would be subject to, among other
things, a definitive agreement, board approval from
various entities involved, and shareholder approval from
the companies being combined. The Company anticipates
forming a wholly owned subsidiary for the purpose of a
business combination with the oil and gas concern.
While the Company is in the late stages of negotiations
for a business combination, there are no assurances that
such business combination will ultimately occur or that
if it did occur, there are no assurances that it will
result in an increase in shareholder value. More
information about any plan of business combination will
be reported by the Company on Form 8-K which would be
filed with the Securities and Exchange Commission pending
completion of any such business combination.
F-10
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
During the fiscal years 1989 to 1991, Mitchell, Londer &
Company served as the Company's principal auditors. In September
1995, the Company's principal offices moved from Denver, Colorado
to Salt Lake City, Utah. In conjunction with this move, the
Company terminated its relationship with Mitchell, Londer &
Company. This decision was based on the Company's relocation and
the Company had no disagreements with its former accountant with
respect to accounting principles or practices, financial statement
disclosure, or auditing scope and procedures at the time of the
dismissal. More information about Mitchell, Londer & Company can
be found in the Company's 1997 report on Form 10-KSB, which is
incorporated herein by reference.
On June 27, 1996, the Company retained Sellers & Company as
its principal accountant to facilitate its move to Utah. The
Company did not consult with Sellers & Company regarding the
application of accounting principles, type of audit opinion, or any
other matters outlined in Item 304(a)(2) of Regulation S-B under
the Securities Exchange Act of 1934. Sellers & Company has audited
the Company's financial statements for the fiscal years 1989-1998.
None of the auditor's reports prepared by Sellers & Company
contained an adverse opinion or disclaimer of opinion, nor were
modified as to uncertainty, audit scope or accounting principles.
The report did, however, contain an explanatory paragraph stating
that due to recurring losses there was "substantial doubt about
[the Company's] ability to continue as a going concern."
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
Directors and Executive Officers:
Ken Kurtz, age 31, was appointed as the Company's president
and director on September 5, 1995. Mr. Kurtz is currently the only
officer and director of the Company. Mr. Kurtz has over twelve
years experience in the securities industry. Over the past five
years, most of his activities have been involved in consulting
with public and private companies on mergers, recapitalizations and
other business combinations. Mr. Kurtz is, and has been since
February 1992, the president, sole director and sole shareholder of
Park Street Investments, Inc., a Utah corporation and the Company's
largest shareholder. Additionally, Mr. Kurtz has served on the
board of directors and as an officer of several publicly held
companies including Hamilton Exploration Co., Inc. in 1995.
10
<PAGE>
Currently Mr. Kurtz holds no other directorships with other
reporting companies.
Compliance with Section 16(a) of the Exchange Act
Based solely upon the Company's review of Forms 3, 4 and 5 and
amendments thereto furnished to the registrant under Rule 16a-3(e)
during the fiscal year preceding the filing of this Form 10-KSB,
the Company is not aware of any person who was a director, officer,
or beneficial owner of more than ten percent of the Company's
Common Stock and who failed to file reports required by Section
16(a) of the Securities Exchange Act of 1934 in a timely manner
except those listed in this subsection.
On March 5, 1998 the Company authorized the issuance of
2,000,000 restricted shares of its common stock to Park Street.
For more information about this agreement, see Item (12) "Certain
Relationships and Related Transactions". This issuance obligated
Park Street to file a Form 4 pursuant to the Securities Exchange
Act of 1934, as amended ("Form 4") within 10 days following the end
of the month in which the issuance occurred. As such, the Form was
to be filed on April 10, 1988. It was filed April 14, 1998 and was
therefore not filed in a timely manner.
ITEM 10. EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned
by, or paid to any executive officer of the Company during the
fiscal years 1998, 1997 and 1996. The following table provides
summary information for the years 1998, 1997 and 1996 concerning
cash and noncash compensation paid or accrued by the Company to or
on behalf of Ken Kurtz, the Company's current president and
director and Gordon Beckstead, the Company's previous president and
director.
Long Term
Compensation
------------------
Annual Compensation Awards Payouts Other
------------------- --------- -------- -----
Securities
Name and Restricted Underlying
Principal/ Year Salary Bonus Other Stock Options All
Position 199- ($) ($) ($) Awards ($)SAR ($)Other
- ----------------- ------ ------ ---- --------- -------- -----
Ken W.(1) 8 -0- -0- -0- -0- -0- -0-
Kurtz 7 -0- -0- -0- -0- -0- -0-
President, 6 -0- -0- -0- -0- -0- -0-
Secretary
& Director
11
<PAGE>
Gordon 6 -0- -0- -0- -0- -0- -0-
Beckstead
Previous
President,
& Director
(1) On March 5, 1998 the Company authorized the issuance of
2,000,000 restricted shares of its common stock to Park
Streets. Mr. Kurtz, the Company's President and director
is the sole shareholder of Park Street. As such, Mr.
Kurtz may be deemed to have received indirect
compensation of $2,000 from the Company as a result of
this transaction. For accounting purposes, the shares
were valued at par value or ($.001). For more
information about this agreement, see Item (12) "Certain
Relationships and Related Transactions".
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Current control percentages are detailed in the table below:
Amount and
Nature of
Title of Name and Address of Beneficial % of
Class Beneficial Owner Ownership Class
-------- ----------------------- ------------ -----
Common Park Street Investments 2,002,565 97%
Stock, 2133 East 9400 South
Par Value Suite 151
$0.001 Sandy, Utah 84093
Common Ken Kurtz (1) 2,002,565 97%
Stock, 2133 East 9400 South
Par Value Suite 151
$0.001 Sandy, Utah 84093
Common Officers and Directors 2,002,565 97%
Stock, as a Group
Par Value
$0.001
(1) These shares are owned by Park Street Investments, Inc.
a Utah corporation of which Ken Kurtz, the Company's
President is the only officer, director and shareholder.
12
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sale of property
On July 23, 1996, an entity controlled by the Company's
previous President sold certain property that the Company had a
minor interest in to an unrelated third party (For more information
about this property, please see the Company's previous reports
filed with the Securities and Exchange Commission which are
incorporated herein by reference). The Company's interest entitled
the Company to $83,606 in proceeds from the sale. Of this, $40,000
was paid to Gordon Beckstead in full payment of a note; $17,883 was
paid to Gordon E. Beckstead Associates, Inc., as repayment for
advancements made on behalf to the Company including the repayment
of legal fees; $12,962 was paid to the Law Offices of Fay M.
Matsukage in settlement of legal services performed on behalf of
the Company. Gordon Beckstead was the Company's previous President
and director. Ms. Matsukage served as the Company's corporate
counsel for over 10 years and is the wife of Gordon Beckstead. The
Company's current board of directors, none of whom were interested
parties to these transactions, ratified the Company's payment of
these debts. The balance of $12,761 was paid to a previous
consulting firm of the Company's for services rendered in
connection with Company administration. Mr. Kurtz, the Company's
President, ultimately received approximately $1,276 of this amount
as an employee of one of the Company's previous consultants at the
time. For more information, please see the Company's previous
report on Form 10-KSB for the Company's fiscal year ending May 31,
1997 filed with the Securities and Exchange Commission and
incorporate herein by reference.
Consulting Agreement
The Company has had virtually no revenues, income or cash flow
for over six years. Currently, the Company has no assets or
resources with which to operate. Without assistance, it would have
been highly probable that the Company would have remained dormant
and been eventually dissolved by state corporate proceedings.
The Company's current president believed that the Company, if
revived and restructured, could be a potential candidate with which
a viable operating entity could combine. The Company has a base of
shareholders and is a reporting Company under the Securities and
Exchange Act of 1934, as amended. As such, the Company has some
characteristics attractive to a potential candidate.
Because the Company had no assets or resources to compensate
or induce personnel to assist it with such a program, the Company
entered into a Financial Consulting Agreement ("Agreement") with
Park Street Investments, Inc. ("Park Street") on March 5, 1998.
13
<PAGE>
Park Street is a Utah Corporation 100% owned by Ken Kurtz, the
Company's President, majority shareholder and director.
According to the Agreement, Park Street has agreed to assist
the Company with its corporate maintenance, administration,
financial statement preparation and securities filings. In
addition, Park Street is to actively pursue, negotiate and
structure a merger or business combination with a third party on
behalf of the Company. Park Street has also agreed to pay for the
costs associated with these responsibilities until the Company
effects a combination with another entity.
As consideration for its services and payment of the Company's
costs therewith, the Company's board agreed to immediately issue
2,000,000 restricted shares of its common stock to Park Street at
par value of $.001, or $2,000. Also according to the Agreement,
Park Street shall be entitled to as much as 10% of the total issued
and outstanding shares of the Company after a business combination.
Park Street shall also be entitled to any cash consideration it can
negotiate from a potential business entity.
Because the exact number of shares to be outstanding after a
business combination is currently unknown and because the exact
percentage of ownership that Park Street is entitled to will be
subject to negotiations between the Company, Park Street, and a
potential target Company, the actual number of shares to be owned
by Park Street will be modified by mutual agreement by the parties
involved. Moreover, the amount of cash that Park Street is to
receive is also subject to negotiations and is currently unknown.
In no event, shall Park Street's ownership percentage exceed more
than 10% of the total outstanding shares of the Company after a
business combination.
This agreement resulted in a change in control of the Company
giving Park Street 97% control of the Company's common stock. This
stock issuance is not deemed to be at arms length.
More information about this consulting agreement can be found
in the Company's report on form 10-QSB for the period ending
November 30, 1997 and is incorporated herein by reference.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits. Exhibits required to be attached by Item
601 of Regulation S-B are listed in the Index to Exhibits beginning
on page 16 of this Form 10-KSB, which is incorporated herein by
reference.
(b) Reports on Form 8-K. The Company did not make any filings on
Form 8-K during the fourth quarter of the fiscal year ending May
31, 1998.
14
<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 11TH day of September
1998.
HYTK Industries, Inc.
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
Ken Kurtz President/Director September 11,1998
Ken Kurtz
15
<PAGE>
INDEX TO EXHIBITS
Exhibit Page Description
No. No.
3(i) * The Company's Articles of Incorporation
(incorporated herein by reference to the Exhibits
to the Company's Registration Statement on Form S-
18, Registration No. 2-99737-LA ).
3(ii) * The Company's Bylaws, as amended (incorporated
herein by reference to the Exhibits to the
Company's Registration Statement on Form S-18,
Registration No. 2-99737-LA).
MATERIAL CONTRACTS
10(i)(a) * March 5, 1998 Consulting Agreement executed by and
between the Company and Park Street Investments,
Inc.(incorporated herein by reference from
the Company's Form 10-QSB for quarter ended
November 30, 1997).
27(i) 17 Financial Data Schedule
16
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<PERIOD-START> JUN-1-1997
<PERIOD-END> MAY-31-1998
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0
0
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