U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended June 30, 2000
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[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the
Transition Period from ________ to ___________
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Commission File Number: 0-29087
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NUTEK, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0374623
------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
15722 Chemical Lane, Huntington Beach, CA 92649
------------------------------------------------ -------------
(Address of principal executive offices) (zip code)
714-799-7266 (Telephone) 714-799-5466 (Fax)
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Issuer's Telephone Number
----------------------------------------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
1
<PAGE>
The Registrant has 42,774,159 shares of Common stock issued and outstanding,
par value $.001 per share as of June 30, 2000. The Registrant has 793,500
Preferred Stock issued and outstanding as of June 30, 2000.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 4
Balance Sheet (unaudited)............................ 5-6
Statements of Operations (unaudited)................. 7
Statements of Cash Flows (unaudited)................. 8
Notes to Financial Statements........................ 9-13
Item 2. Management's Discussion and Analysis of Plan
of Operation........................................ 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 18
Item 2. Changes in Securities and Use of Proceeds............ 18
Item 3. Defaults upon Senior Securities...................... 18
Item 4. Submission of Matters to a Vote
of Security Holders................................. 18
Item 5. Other Information..................................... 18
Item 6. Exhibits and Reports on Form 8-K...................... 18
Signatures...................................................... 19
3
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) The unaudited financial statements of registrant for the six
months ended June 30, 2000, follow. The financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented.
4
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Nutek, Inc.
CONSOLIDATED
BALANCE SHEET
AS AT
December 31, 1999 and June 30, 2000
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
Unaudited Audited
--------------------------------
June 30, December 31,
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash 71,433.00 81,404.00
Accounts Receivable 113,961.00 75,706.00
Inventory 125,751.00 40,463.00
Prepaid Expenses 2,829.00 0.00
------------- ------------
Total Current Assets 313,974.00 197,573.00
PROPERTY AND EQUIPMENT
Property and Equipment
(net of depreciation) 3,108,742.00 1,368,035.00
------------ -----------
Total Property and Equipment 3,108,742.00 1,368,035.00
OTHER ASSETS
Patent Rights Acquired
(net of amortization) 1,238,169.00 1,259,692.00
Long Term Investments 234,000.00 234,000.00
Goodwill (net of amortization) 0.00 0.00
Rent Deposit 3,310.00 3,310.00
------------- -------------
Total Other Assets 1,475,479.00 1,497,002.00
-------------- ------------
TOTAL ASSETS 4,898,195.00 $3,062,610.00
============= =============
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
Nutek, Inc.
CONSOLIDATED
BALANCE SHEET
AS AT
December 31, 1999 and June 30, 2000
BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES & EQUITY
June 30, December 31,
2000 1999
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 22,972.00 $ 30,392.00
Short Term Notes Payable 478,144.00 464,511.00
-------------- -------------
Total Current Liabilities 501,116.00 494,903.00
OTHER LIABILITIES
Long Term Notes Payable 97,605.00 262,000.00
Unamortized Interest Payable 13,424.00 13,424.00
Accrued Bond Interest 28,000.00 28,000.00
Bonds Payable 142,000.00 142,000.00
Deposits received 0.00 15,000.00
Patent Rights Acquired Liability 670,000.00 770,000.00
Clipper Asset Purchase Liability 639,948.00 0.00
Equipment Lease 19,166.00 0.00
----------- ------------
Total Other Liabilities 1,610,143.00 1,230,424.00
----------- -------------
Total Liabilities 2,111,259.00 1,725,327.00
EQUITY
Common Stock, $0.001 par value,
authorized 50,000,000 shares; 42,774.00 36,328.00
issued and outstanding at
June 30, 2000, 42,774,159
common shares; issued and
outstanding at December 31, 1999,
36,328,044 common shares.
Additional Paid in Capital 7,608,468.00 6,149,638.00
Preferred Stock, $.001 par
value, authorized
5,000,000 shares 794.00 794.00
issued and outstanding at
June 30, 2000 and December 31
1999, 793,500 preferred shares
Royalty Investors 55,000.00 55,000.00
Treasury Stock (310,448.00) (45,448.00)
Retained (Deficit) (4,609,652.00) (4,759,029.00)
Common Stock Subscribed 0.00 (100,000.00)
-------------- -------------
Total Stockholders' Equity 2,786,936.00 1,337,283.00
TOTAL LIABILITIES &
OWNER'S EQUITY 4,898,195.00 $3,062,610.00
============= =============
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Nutek, Inc.
CONSOLIDATED
STATEMENT OF OPERATIONS
FOR 3 AND 6 MONTHS ENDED
June 30, 1999 and June 30, 2000
Unaudited Audited
--------- --------
Three months ended Six months ended Jan 1
June 30 June 30 1999,
to Dec. 31
2000 1999 2000 1999 1999
------- ------ ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Revenues 489,310 86,683 687,122 86,683 238,039
COSTS AND EXPENSES
Cost of Goods Sold 146,380 11,925 180,171 11,925 30,267
Selling, General and
Administrative 153,612 102,642 248,534 199,315 306,498
Depreciation Expense 60,454 24,639 83,582 28,151 135,706
Interest Expense 3,460 593 3,618 593 2,667
Amortization of
Intangibles 15,990 4,692 21,840 6,061 62,367
--------- ------- ------- ------ -------
Total Costs and Expenses 379,896 144,491 537,745 246,045 537,505
--------- ------- ------- ------ -------
Net Ordinary Income
or (Loss) 109,414 (57,808) 149,377 (159,362) (299,466)
========= ======== ======= ========= =========
Basic weighted average
number of common
shares outstanding 39,987,987 25,731,485 41,161,167 27,435,688 30,214,222
Basic Net Loss
Per Share 0.003 (0.002) 0.004 (0.006) (0.01)
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
Nutek, Inc.
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR 6 MONTHS ENDED
June 30, 1999 and June 30, 2000
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
January 1, 2000 January 1, 1999
to June 30, to June 30,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) from operations 149,377.00 (159,362.00)
Adjustments to reconcile net
income to net cash provided
Items not requiring cash
Depreciation Expense 83,582.00 28,151.00
Amortized Interest Expense 3,618.00 593.00
Amortization of Intangibles 21,840.00 6,061.00
(Increase)/Decrease in
accounts receivable (38,255.00) 14,250.00
(Increase)/Decrease in
inventory (85,288.00) (7,177.00)
(Increase)/Decrease in Deposits 0.00 0.00
Increase/(Decrease) in Accounts
Payable (7,420.00) (13,660.00)
Net cash flow provided by operating
activities 127,454.00 (131,144.00)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Century Clock Molds 0.00 43,000.00
Net cash used by investing
activities 0.00 (43,000.00)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 13,337.00 366,237.00
Increase/(Decrease) in Notes
payable (150,762.00) (172,983.00)
Treasury Stock 0.00 0.00
Net cash provided by financing
activities (137,425.00) 193,254.00
Balance at beginning of
period 81,404.00 11,250.00
Net increase (decrease) in cash (9,971.00) 19,110.00
Balance as at end of
period 71,433.00 30,360.00
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated in August of 1991 (Date of Inception) under
the laws of the State of Nevada, as Nutek, Inc. (The Company) and is engaged
primarily in the oil and gas industry.
SRC International, Inc. was incorporated in Illinois in June 1997. SRC
International, Inc. manufactures "Super Glide" a rail covering made of an
extremely durable, super-slick, space age polymer designed to reduce friction
between rails and hangers in the dry cleaning and garment industries.
Vac-U-Lift Production Company was incorporated in the state of Texas in March
of 1995 and is in the oil extracting industry on leases in Texas. The Company
remained inactive until it was acquired in June of 1996 by Nutek.
Century Clocks Inc. with its joint venture with the Department of Veterans
Industries, produces clocks assembled and packaged by U.S. veterans. It was
incorporated in 1999 in the State of Nevada.
Elite Fitness Systems Inc. markets a proven fitness system that has kept
the world's finest fighting force in supreme physical condition, was
incorporated in 1997 in the State of Nevada.
Kristi & Co. Inc., designs and markets woman's resort wear clothing, was
incorporated in 1999 in the State of Nevada.
Nutek Oil Inc., was incorporated in the State of Texas in 2000 and acquired
some of the assets of Clipper Operating Company and is involved in oil
production.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
The accompanying consolidated financial statements include the accounts of
Nutek, Inc., and its wholly-owned subsidiaries, SRC International, Inc.,
Vac-U-Lift Production Company, Inc., Kristi & Co., Inc., Nutek Oil Inc.,
Century Clocks Inc., and Elite Fitness Systems Inc. All significant
intercompany balances and transactions have been eliminated.
Accounting polices and procedures have not been determined except as follows:
1. The Company uses the accrual method of accounting.
2. Inventories are stated at the lower of cost or market, cost being
determined on the first in, first out (FIFO) basis.
3. Basic earnings per share is computed using the weighted average
number of shares of common stock outstanding. Diluted earnings per share
were not included as the inclusion of convertible notes, convertible
preferred stock and warrants would be anti-dilutive and all contingencies
for conversion have not occurred.
4. The Company has not yet adopted any policy regarding payment of
dividends. The Company has authorized 5,000,000 shares of Series B
preferred stock with a par value of $0.001 (one tenth of one cent).
All of the shares which have been issued were issued for cash at $1.00
a share. Series B shares have the same voting rights as the common
shares but have priority in the event of Company liquidation. All of
the shares outstanding were to be redeemed at $1.00 a share plus all
accrued dividends prior to December 31, 1993. This has been extended
by mutual agreement. Series B shares have annual dividends of $.15 a
share payable quarterly. They are convertible to common shares on a
one for one basis at the holders' option.
9
<PAGE>
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
5. The Company experienced losses during its the past two fiscal tax years
reported. The Company will review its need for a provision for federal
income tax after each operating quarter.
6. The preparation of financial statements in conformity with
generally accepted accounting principles requires that management make
estimates and assumptions which affect the reported amounts of assets
and liabilities as at the date of the financial statements and revenues
and expenses for the period reported. Actual results may differ from
these estimates.
7. The cost of equipment is depreciated over the estimated useful
life of the equipment utilizing the straight line method of deprecation.
Depreciation recorded during 1998 was $116,837.00. Depreciation recorded
during 1999 was $135,706.00.
8. The Company has adopted December 31 as its fiscal year end.
9. The Company expenses its research and development in the period
it is incurred.
10. All exchanges of stock for services rendered were recorded at
the market value of the stock exchanged.
11. The Company's Statement of Cash Flows is reported utilizing cash
(currency on hand and demand deposits) and cash equivalents (short-term,
highly liquid investments).
12. The Company is reporting business combinations using the consolidated
method of accounting.
13. Start-up costs and reorganization costs are being amortized using
the straight-line method over a period of 5 years.
14. Oil well leases are depleted over the units of production, or
12 years, whichever is shorter.
15. Identifiable intangibles including patents are amortized over
five years. The amount of amortization recorded in 1998 was $10,175.
The amount of amortization record in 1999 was $62,367.00
16. Investments are recorded at the lower of cost or market. Any
reductions in market value below cost are shown as unrealized losses in
the consolidated statement of operations.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of manufacturing equipment, oil well
equipment, clock molds, furniture and fixtures.
10
<PAGE>
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 4 - OTHER ASSETS
Other assets consists patents and design and artwork. These assets were
valued at the existing market value of Nutek stock at the time of purchase.
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
Note payable to Dudley Frank, due on demand, $40,000.00
secured by 100,000 shares of Nutek common
stock.
Notes payable to John L. Rainaldi, a stockholder, $57,605.00
payments based upon the terms of the related
Loan agreements, secured by certain
stockholders of the Company
-------------
$ 97,605.00
=============
Principal payments over the next three years approximate the following:
Year ending December 31,
2000 $ 15,365
2001 37,625
2002 44,615
----------
$ 97,605
==========
NOTE 6 - INCOME TAXES
Nutek, Inc. and its subsidiaries available net operating loss carry
forwards to offset future federal taxable income of approximately
$4,609,652.00. The carry forwards expire through 2014. The Company
has deemed it less than likely that this benefits will be utilized.
The Company has adopted the Statement of Financial Accounting Standards
No. 109 - "Accounting for Income Taxes."
11
<PAGE>
Nutek, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 7 - CONTINGENCIES AND COMMITMENTS
1. Office Lease
The Company leases office space in California on a month-to-month basis
with aggregate monthly rent of approximately $2,856.00. Rent recorded
during 1998 and 1998 respectfully was $22,643.50 and $21,218.25.
2. Handi-Plate royalty
As part of acquiring the patents for this product, Nutek Inc. to provide
the inventor a 2.5% royalty interest on the gross sales of this product.
3. Clock royalty
As part of the acquisition of Century Clocks SA clock molds, a 7.5% royalty
interest was given. The royalty owners advanced $55,000.00 to Nutek, Inc.
Murray Conradie has the option of converting the loan which he made to Nutek,
Inc. in the amount of $57,000.00 to a royalty interest and becoming a
participant in the 7.5% royalty interest.
4. Subscriptions receivable
The Company has received common stock subscriptions in the amount of
$100,000.00. The Company reported this as part of shareholder's equity.
The Company received the payment for the subscriptions in the year 2000.
NOTE 8 - ACQUISITIONS
Vac-U-Lift Production Company, Inc.
In June of 1996, the company exchanged 100,000 shares of its common stock
and a certain amount of cash to acquire all of the outstanding common shares
of Vac-U-Lift Production Company, Inc., a Texas corporation. The business
combination has been accounted for under the purchase method of accounting.
NOTE 9 - RELATED PARTY TRANSACTIONS
As of June 30, 2000, Murray Conradie, President of Nutek, Inc., has
loaned the Company $82,000.
As discussed in note 5, the Company has notes payable to certain
stockholders.
NOTE 10 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company has a minimal
source of revenue. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. It is
management's plan to seek additional capital through a private placement
memorandum.
12
<PAGE>
Nutek, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE 11 - YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue may be
experienced before on, or after January 1, 2000 and if not addressed, the
impact on operations and financial reporting may range from minor errors
to significant systems failure which could affect an entity's ability to
conduct normal business operations. It is not possible to be certain that
all aspects of the Year 2000 issue affecting the entity, including those
related to the efforts of customers, suppliers, or other third parties will
be fully resolved.
13
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
The Company was incorporated under the laws of the State of Nevada, on
August 23, 1991, under the name Swiss Technique, Inc. The original
Articles of the Company authorized the issuance of fifty million
(50,000,000) shares of common stock with a par value of $0.001. On or
about August 23, 1991, pursuant to Section 78.486, Nevada Revised
Statutes as amended, the Company filed with the Nevada Secretary of
State Articles of Merger, whereby the Company merged with Sun
Investments, Inc., a Utah corporation. On or about April 10, 1992, the
Issuer, with majority shareholder vote filed Articles of Amendment to
the Articles of Incorporation with the Secretary of State of Nevada,
authorizing five million (5,000,000) shares of Preferred Stock each have
a par value of $0.001, with such rights, preferences and designations
and to be issued in such series as determined by the Board of Directors
of the Corporation. The Company in accordance with Section 78.250 of
the Nevada Revised Statues and as a result of the majority consent of
shareholders executed on or about March 3, 1995 changed the name of the
Company from Swiss Technique, Inc., to NuTek, Inc. The Company filed
a Certificate of Amendment of Articles of Incorporation with the
Secretary of State of Nevada to change its name. On or about September
20, 1997, the Company filed with the Nevada Secretary of State a Plan
of Reorganization and Agreement between itself and International
Licensing Group, Inc., a Delaware Corporation.
The Company is engaged multiple business activities, which include but
are not limited to:
a) Elite Fitness Systems which markets video "fitness program" tapes
through infomercials;
b) BuyNetPlaza.com, Internet marketing;
c) Century Clocks, which plans to produce wall clocks;
d) Vac-U-Lift Production, which owns the rights to oil leases in Texas;
e) Kristi & Co. Inc., designs and markets woman's resort wear clothing.
f) Nutek Oil Inc., was incorporated in the State of Texas in 2000 and acquired
some of the assets of Clipper Operating Company and is involved in oil
production.
g) Other consumer/industrial products which include: a plastic buffet
plate, producing "light switch" covers plates; and, plastic coverings for
metal rails,.
The Company's website can be found at: www.nutk.com.
14
<PAGE>
The Company achieved $109,414 profit for the Second Quarter ended, June 30,
2000, based on revenues of $489,310. This compares to a net loss of $57,808
for the Second Quarter last year, against revenues of $89,683. For the first
six months of this fiscal year, ending June 30, 2000, the Company achieved a
profit of $149,377, based on 6 months revenues of $687,122. This compares to
a net loss of $159,362 for the same period last year against revenues of
$86,683. The Company has an accumulated retained deficit of $4,609,652 as of
June 30, 2000. The Company expects that its operating expenses will increase
significantly during the next several months, especially in the areas of sales
and marketing, and brand promotion. Thus, the Company will need to generate
increased revenues to achieve sustained profitability. To the extent that
increases in its operating expenses precede or are not subsequently followed
by commensurate increases in revenues, or that the Company is unable to adjust
operating expense levels accordingly, the Company's business, results of
operations and financial condition would be materially and adversely affected.
There can be no assurances that the Company can achieve or sustain
profitability or that the Company's operating losses will not increase in the
future.
Going Concern - The Company accumulated a retained deficit of $4,609,652.
For the six month period ended June 30, 2000 and had a profit of $149,377.
This represents a basic profit per share of $0.004. The financial statements
have been prepared assuming the Company will continue to operate as a going
concern which contemplates the realization of assets and the settlement of
liabilities in the normal course of business. No adjustment has been made to
the recorded amount of assets or the recorded amount or classification of
liabilities which would be required if the Company were unable to continue its
operations. As discussed in Note 10, management believes it has enough funds
to operate for the next twelve (12) months without the need to raise additional
capital to meet its obligations in the normal course of business.
Unclassified Balance Sheet - In accordance with the provisions of SFAS No.
53, the Company has elected to present an unclassified balance sheet.
Loss Per Share - The Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" that
established standards for the computation, presentation and disclosure of
earnings per share ("EPS"), replacing the presentation of Primary EPS with
a presentation of Basic EPS. It also requires dual presentation of Basic
EPS and Diluted EPS on the face of the income statement for entities with
complex capital structures. The Company did not present Diluted EPS since
it has a simple capital structure.
The Company has not pursued or explored any opportunities for an acquisition
or merger. This does not preclude that the Company may not explore any
opportunities in the future.
Results of Operations
For the Second Quarter, ended June 30, 2000, the Company has generated
$489,310 in revenues and generated a profit of $109,414 for the same
period. This compares to $86,683 in revenues and a net loss of $57,808
for the same period last year. Through January 1, 2000 to June 30, 2000, the
Company has a negative cash flow of $9,971.
During the Second Quarter, the Company continued to run tests with a number
of its products. The Company is still in the process of developing its
Website. The majority of the Company's expenses for the Quarter included
selling, general administrative costs ($153,612) followed by cost of goods
sold ($146,380).
Plan of Operation
1) For the Second Quarter, ended June 30, 2000, the Company has generated
$489,310 in revenues and generated a profit of $109,414 for the same
period. This compares to $86,683 in revenues and a net loss of $57,808
for the same period last year. The Company's selling, general and
administration costs increased from $102,642 for the same period last year
to $153,612 for the Second Quarter this year. Based on the increase in
revenues cost of goods for the Second Quarter this year were $146,380 as
compared to $11,925 for the period last year. Depreciation costs for the
Second Quarter this year were $60,454, as compared to $24,639 for the same
period last year.
15
<PAGE>
As of June 30, 2000, the Company has forty two million seven hundred seventy-
four thousand one hundred fifty-nine (42,774,159) shares of its $0.001 par
value common voting stock issued and outstanding which are held by
approximately four hundred thirty-seven (437) shareholders of record.
The Company also has seven hundred ninety-three thousand five hundred
(793,500) shares of its $0.001 par value Preferred Stock issued and
outstanding, as of December 31, 1999. All Preferred shares which have
been issued were issued for cash at $1.00 a share. Series B Preferred
shares have the same voting rights as the common shares but have priority
in the event of Company liquidation. All of the shares outstanding were
to be redeemed at $1.00 a share plus all accrued dividends prior to
December 31, 1993. This has been extended by mutual agreement. Series B
shares have annual dividends of $.15 a share payable quarterly. They are
convertible to common shares on a one for one basis at the holders' option.
Liquidity and Capital Resources
In December, 1999, a stock offering was made in reliance upon an exemption
from registration provisions 4(2) of the Securities Act of 1933, as amended,
pursuant to Regulation D, Rule 504 of the Act. The Company raised one
hundred thousand ($100,000) dollars through this Offering purchased by one
individual. The Company received the proceeds from this Offering in January,
2000. ("See Financial Statements, Statement of Changes in Shareholders'
Equity, Subscription Receivable.")
Between April, 1999 through October, 1999, the Company sold 2,040,000
Shares of unregistered common stock in exchange for Clock Molds, Patent
# 5833350, and certain "rights" to videos. These issuances were deemed
exempt from registration under the Securities Act in reliance on
either (a) Section 4(2) of the Securities Act, as transaction not
involving a public offering, or (b) Rule 701 promulgated under the
Securities Act. No commissions were paid to any placement agent or
underwriter for any of these issuances.
The Company signed a Letter of Intent with Clipper Operating Co., Inc.
in November, 1999. The terms of the Agreement include cash and Company
stock for oil mineral rights including some fixed assets of Clipper Operating
Co. This deal was finalized on February 22, 2000. (See "Letter of Intent,"
Exhibit 10.9, filed in the Company's Registration Statement 10SB12G)
The Company currently anticipates that it has enough available funds to
meet its anticipated needs for working capital, capital expenditures and
business expansion for the next 12 months. The Company expects that it will
continue to experience a small operating cash flow for the foreseeable future
as a result of significant new product development, advertising and
infrastructure.
As an On Going concern, if the Company needs to raise additional funds in
order to fund expansion, develop new or enhanced services or products,
respond to competitive pressures or acquire complementary products,
businesses or technologies, any additional funds raised through the issuance
of equity or convertible debt securities, the percentage ownership of the
stockholders of the Company will be reduced, stockholders may experience
additional dilution and such securities may have rights, preferences or
privileges senior to those of the Company's Common Stock. The Company
does not currently have any contractual restrictions on its ability to
incur debt and, accordingly, the Company could incur significant amounts
of indebtedness to finance its operations. Any such indebtedness could
contain covenants which would restrict the Company's operations. There
can be no assurance that additional financing will be available on terms
favorable to the Company, or at all. If adequate funds are not available
or are not available on acceptable terms, the Company may not be able to
continue in business, or to a lessor extent not be able to take advantage
of acquisition opportunities, develop or enhance services or products or
respond to competitive pressures.
The Company has determined that Vac-U-Lift Production Company
is not a viable concern and will implement steps to close this corporation
down. Vac-U- Lift utlizes the swabbing method of oil extraction and not the
regular pump jack method which is utilized in Nutek Oil Inc. This is a very
labor intensive and expensive method and the company has determined that the
funds needed to get this business back into any type of reasonable production
could be utilized to better effect elsewhere within the Company.
The Company currently has thirteen (13) employees of which three (3) are
Officers of the Company. As the Company begins to develop its other
product lines it will need to add employees.
The Company has no material commitments for capital expenditures nor does
it foresee the need for such expenditures over the next year.
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Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), finding
suitable merger or acquisition candidates, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
This Form10-QSB contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar
terms. These statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current expectations of
the Company, its directors or its officers with respect to, among other
things: (i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; (iii) the Internet and Internet commerce; and, (iv) the Company's
financing plans. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. Factors that could adversely affect actual results and performance
include, among others, the Company's limited operating history, dependence
on continued growth in the use of the Internet, the Company's inexperience
with the Internet, potential fluctuations in quarterly operating results and
expenses, security risks of transmitting information over the Internet,
government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB
are qualified by these cautionary statements and there can be no assurance that
the actual results or developments anticipated by the Company will be realized
or, even if substantially realized, that they will have the expected consequence
to or effects on the Company or its business or operations. The Company assumes
no obligations to update any such forward-looking statements.
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PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is from time to time involved in litigation incident to the
conduct of its business. Certain litigation with third parties and
present and former employees of the Company is routine and incidental, such
litigation can result in large monetary awards for compensatory or punitive
damages.
The Company is currently in litigation with two separate lawsuits. They
are:
A former employee at Vac-u-lift, herein referred to as the Plaintiff,
slipped and fell on wet grass outside the offices, in Jourdanton, TX, and
subsequently alleged that she twisted her knee. She file a complaint against
the company for various health conditions, and $500,000. Their attorney filed
two separate suits, of which the company was unable to properly Respond to the
first suit, and subsequently the Plaintiff received Summary judgment against
NuTek. Since Plaintiff did not follow specific legal procedures against NuTek,
which is considered a foreign corporation where the suit was filed in Texas,
the Company has initiated a restricted appeal to have the ruling reversed.
The second suit was answered, in July, 1999, and since it is tied to the
first suit, nothing has happened since. The Company plans to concurrently
file a counter suit for $150,000 in damages. The Company has been successful in
the appeal of this judgement and the Texas Courts have overturned the judgement
issued against the company.
The other case pending in the court system involves an individual who
represented himself to the company to be an attorney. It was later
discovered that this individual misrepresented himself and was not an
attorney. This individual offered to find purchasers of the Company's common
stock, in order to enhance the capitalization for the Company, so that it
could pursue other projects. The Company issued the transfer company, which
is controlled by this individual 1,000,000 shares of common stock to sell
for the Company in order to enable this individual to raise money for the
company. No sales took place, nor was any of these shares sold for NUTK. The
individual in question, has refused to return these common shares to the
Company. The company has initiated a lawsuit to recover the stock, and under
court Jurisdiction, this block of stock was interpleaded with the Court. The
Company is scheduled to go to trial in September 2000.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 2000, no matters were submitted to the
Company's security holders.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Nutek, Inc.
------------
(Registrant)
/s/ Murray N. Conradie
-------------------
Murray N. Conradie,
President and Chairman
Date: August 14, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Nutek, Inc.
------------
(Registrant)
/s/ Pamela Horick
-----------------------------------
Pamela Horick, Corporate Secretary
Date: August 14, 2000
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