FORM 10-KSB - ANNUAL REPORT
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to _____
Commission file number 0-18184
SK TECHNOLOGIES CORPORATION
(Name of small business issuer in its charter)
Delaware 52-1507455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Fairway Drive, Suite 104, Deerfield Beach, FL 33441
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (954) 418-0101
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None _________________________________________
___________________ _________________________________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes _X_ No ___
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will
be 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 other
amendment to this Form 10-KSB. __X__
State the Issuer's revenues for its most recent fiscal year.
$781,137
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within 60 days.
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at June 21, 2000 was $396,237.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
As of June 21, 2000, 18,277,827 shares of Common Stock, par value
$.001 per share, were issued and outstanding.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS:
SK Technologies Corporation, a publicly-held Delaware
corporation (the "Company") was incorporated in September 1986.
In January 1989 the Company acquired SK Technologies Corp. which
was incorporated under the laws of the State of Florida in March
1985, and the Company changed its name to SK Technologies
Corporation. Prior to this acquisition, the Company had limited
operations.
BUSINESS OF ISSUER
The Company's Products
The Company is a developer of retail store management
software for the specialty retail industry. The Company's
StoreKare product family is a modular system of information
technology products, which offer retailers an affordable,
scalable, feature rich application that runs in both Windows NT
and DOS environments. The Company's business strategy is to
continue to enhance our StoreKare product with additional
customer requested modifications and continue the integration of
StoreKare with new Windows products.
The Company is also developing and marketing application
specific business intelligence solutions that turn existing
enterprise transaction data into business summary and trend
information. The Company currently markets Loss Prevention MAX
and Sales and Profit MAX business intelligence solutions to the
retail industry. Other transaction oriented business
intelligence solutions are being considered for insurance and
government sectors.
StoreKare
The StoreKare Retail Management System Version 3.4 operates
with Windows 9X, NT and 2000 as well as PC-DOS and MS-DOS
operating systems on PC platforms. StoreKare provides a single
screen user interface which guides the user with high-lighted
prompts and pop-up selections. The Point-Of-Sale module is the
foundation of the StoreKare system and features bar-code
scanning, scale interface, multiple tender types, major credit
and debit card support, discounts, mark-downs and mix and match
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pricing. StoreKare data can be accessed by Windows based
application packages, such as Crystal Report Writer, Microsoft
Access and Microsoft Excel, by using the StoreKare Open Data
Base Connectivity Interface module, for Windows.
Other StoreKare modules available are, Purchasing and
Receiving, Sales and Profit Analysis, Layaways/Work
Orders/Special Orders, Deal Pricing, Dated Discounts, Time and
Attendance, In-House Accounts, Extended Payment Services, Third-
Party Interface, Report Generator and Store Administrator. The
StoreKare Point-Of-Sale module for two registers currently has a
suggested retail price of $1,195 and the Store Administrator
module for three stores has a suggested retail price of $1,995.
Optional modules, additional workstations, registers and stores
are offered at suggested retail prices ranging from $100 to
$715.
Business Intelligence Solutions
Business intelligence solutions can facilitate cost
reduction, customer satisfaction, revenue growth and profit
improvement through a decision process that turns existing data
into information in the context of the business. With SK's
interactive data mining techniques, users intuitively explore
trends, patterns, comparisons and exceptions using summary data,
then drill down through the summary data to discover where the
business is being impacted and finally drill through to
transaction level details to formulate their business decisions.
This solution and methodology is designed to provide the
information content, quality, completeness and timeliness that
results in high impact business decisions.
Business applications involving detail transactions
(receipts, orders, invoices, etc.) about goods and services for
money that involve customers, associates or vendors at multiple
locations are candidates for an SK application specific business
intelligence solution. Businesses with numerous detail
transactions such as retail, insurance, banking, medical and
government are potential customers for SK Technologies. The
Company plans to release the initial version of Loss Prevention
MAX and Sales and Profit MAX this fiscal year.
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Business Ventures
Management believes that aligning the Company with one or
more strategic partners will assist in the marketing of its
StoreKare products. The Company has entered into formal
agreements and/or business alliances with such major companies
as ScanSource, International Business Machines Corp. ("IBM"),
NCR, and CompuRegister, which management believes will increase
the Company's visibility in the point-of-sale industry and
expand its market share.
ScanSource
ScanSource is the principal distributor for the IBM SureOne
and other IBM point-of-sale platforms and provides sales
development services on behalf of IBM, on the SureOne. The
Company is an authorized independent software vendor ("ISV") and
reseller of the SureOne product and is an invited participant in
all ScanSource sponsored trade shows and lead development
activities.
IBM
The Company is an IBM Business Partner. The Company is
also a participant in the IBM retail solutions program which
provides the Company with access to IBM technical information
and new IBM hardware products prior to their release. The
Company is a participant in an ongoing IBM lead generation
program. The leads are distributed to IBM authorized resellers
nationwide, that are partnered with the Company and other
software vendors.
CompuRegister (A Division of NewBold Corporation)
In April 1994, the Company entered into a Software Partner
Program with CompuRegister. Through mailings and other
CompuRegister literature the Company expects that the StoreKare
products will be exposed to expanded markets.
NCR
In April 1999, the Company was approved as an NCR Solution
Provider. In fiscal year 2000 SK was approved as an NCR Retail
Partner to resell NCR registers. These alliances provide the
Company with listings in the NCR Alliance Reference Guide.
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Also, the Company receives discounts on NCR products and
services.
Loss Prevention Solutions
In February 1999 the Company entered into an agreement with
Loss Prevention Solutions for consulting services relating to
Loss Prevention MAX and other business intelligence solutions.
Research and Development
The Company continues to develop enhancements and add-on
features for its existing StoreKare product line and performs
maintenance work when necessary to maintain the high quality of
the product. The Company also performs customized product
development and product enhancements on a customer funded
contract basis for chain store projects and resellers
requirements.
The Company continues to develop and enhance the Loss
Prevention MAX and Sales and Profit MAX business intelligence
solutions for the retail industry.
Research and development costs expensed in fiscal 2000 and
1999 were approximately $27,000 and $102,000, respectively. The
Company capitalized development costs of approximately $208,000,
and $135,000 during fiscal 2000 and 1999, respectively.
Typically, development cycles of software products are
lengthy, which results in an extended period of time between the
initiation of a development project for a product and its
production of revenue. During the development cycle of our
software products, features of the product are finalized,
specifications are developed, software code and support
documentation are written, and the product (software and
documentation) is tested in the Company's test lab and then at
selected customer test sites. Subsequently, the product goes
through the manufacturing process, resellers and the Company's
sales representatives receive product training, and the
marketing process then commences.
Inventory and Hardware
The Company manufactures its software products on an "as
needed" basis and has never experienced any major difficulty in
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its software manufacturing process. Due to the nature of the
Company's software products, orders are taken for currently
available products and reproduced to satisfy customer's orders.
There is no backlog of orders since all orders are fulfilled as
they are received.
The Company does not manufacture hardware. The Company
maintains a capital equipment inventory of terminals
manufactured by the major point-of-sale equipment manufacturers
for testing its products. The Company obtains NCR,
CompuRegister and IBM register products and IBM PCs on a "just
in time" basis for resale to direct customers.
Marketing
The Company markets its StoreKare products directly to
retail store chains using the NCR, CompuRegister and IBM
terminals, as well as through a reseller network. Resellers
handle specific geographic regions and provide technical
expertise and training to their customers. The Company requires
all resellers to attend a three day intensive training class
which is offered to resellers at the Company's offices or at the
reseller's locations. Additional programs for marketing and
technical support are offered to resellers.
The Company has also aligned itself with several major
corporations. Management believes that alliance agreements that
the Company has with such corporations as ScanSource, IBM, NCR,
and CompuRegister will assist in the marketing of its products.
Service and Maintenance
The Company's ability to provide technical support services
to its resellers and users at a high level of quality, quick
response and at reasonable rates is required for the Company to
effectively market its software.
The Company warrants that the media on which software
programs are sold will be free from defects in materials and
workmanship under normal usage for 30 days from the date of
delivery. A comprehensive user manual is provided with complete
instructions for operation of the StoreKare system. The Company
provides 5 day 9 hour standard and 7 day 12 hour extended
telephone support for its software.
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Competition
Management believes that the principal competitive factors
in its market are product performance, functionality and
reliability, price, user friendliness, product availability,
service and support, marketing and promotion. Management of the
Company believes it competes favorably in all of these areas.
In addition, management believes that, due to the rapid
technological changes and advances in the computer industry
generally, and the segment thereof in which the Company
operates, another major competitive factor in its market is the
ability to achieve technological advances and enhancements
comparable to and competitive with those made by others in such
industry segment. While the Company believes that it presently
competes favorably in this area and intends to continue to do
so, no assurances are given that the Company will be able to
adequately respond to product obsolescence or effect advances in
technology in a manner as to be commercially feasible. The
Company's plan for addressing this competitive factor is to
utilize industry standard personal computer compatible hardware,
and to continue to modify the Company's products to function on
revised and/or replacement hardware of manufacturers who are
viewed as industry leaders and who command the greatest market
share in the point of sale industry. Additionally, the Company
has estimated a three year life cycle for each version of a
product to be released by the Company. The Company's plan also
includes developing on-going upgrades and enhancements (new
versions) to its products and releasing such upgrades and
enhancements to the market place on an ongoing basis.
Since the Company's strategy is to provide software
products that function on industry standard operating systems
(DOS and Windows), standard hardware (including but not limited
to IBM, CompuRegister and NCR manufactured hardware) and operate
in a generic point-of-sale environment, the Company is not
dependent upon any one hardware manufacturer. However, the
Company is dependent upon certain external applications. First
is the operating systems (DOS and Windows) which are owned by
Microsoft Corporation ("Microsoft") and sold directly by
Microsoft, as well as, licensed by Microsoft to nearly all
hardware manufacturers of IBM compatible computers. In view of
the perceived stability of Microsoft, as well as, the license
rights provided to multiple hardware manufacturers, management
of the Company does not view this dependency on Microsoft as a
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material factor to the continued success of the Company's
products. Also the Company is dependent upon the continued
distribution and support of the Faircom Corporation's c-tree
database manager, r-tree report generator and the ODBC drivers.
These products are embedded in certain StoreKare modules.
The Company's principal competitors in the point-of-sale
market include, but are not limited to, ARS, CAM Data, Infocorp,
MicroBiz Corp., PSI, RTI, Salepoint, STS, Synchronics and
Virtual Systems. Some of these competitors do not sell fully
featured point-of-sale systems. While some of the Company's
competitors have substantially greater financial, personnel and
technological resources than the Company, management believes
that its point-of-sale products have several advantages over
competing products, including distributed communications
capabilities and the support of a wide variety of point-of-sale
hardware products from various manufacturers. Additionally, in
management's opinion the Company's agreements and relationships
with IBM, NCR, and CompuRegister, as well as its other
relationships give the Company a competitive edge in its market.
Copyrights and Licenses
The Company has not sought patent protection for its
products but seeks to maintain its proprietary rights by a
combination of copyright and trade secret protection. The
Company has obtained statutory copyright protection for its
StoreKare software, as well as federal trademark registration
for its SK Technologies and StoreKare names.
Personnel
The Company currently employs 16 persons as follows:
executive officers (three persons), customer service (two
persons), sales and marketing (three persons), programming and
quality assurance (five persons), administration and finance
(two persons), and operations (one person). The Company also
engages the services of two technical writers as needed, on an
independent contractor basis. The Company retains additional
sales, technical and customer support persons as it deems
necessary.
The Company is not a party to any collective bargaining
agreements and believes it has achieved harmonious employee
relations.
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ITEM 2. DESCRIPTION OF PROPERTY:
The Company's principal executive offices are located at
500 Fairway Drive, Suite 104, Deerfield Beach, Florida 33441
where the Company occupies 7,029 square feet of office space
which is leased from an unrelated entity, for $9,884 per month
through January 2001, pursuant to a lease which expires January
31, 2002. This amount includes rent of $6,016 per month which
will increase 4.5% for the final year and additional charges for
the Company's allocated share of expenses for 2000. The expense
allocation is adjusted annually. This office space is suitable
for the Company's current needs.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS:
Market Information
The Company's Common Stock is traded on the OTC Bulletin
Board under the symbol SKTC. The following table sets forth the
high and low bid quotations for the Common Stock for the periods
indicated. These quotations reflect prices between resellers
and do not include retail mark-ups, mark-downs or commissions
and may not necessarily represent actual transactions.
Common Stock
High Low
April 1, 1998 -
June 30, 1998 $ 0.09375 $ 0.0625
July 1, 1998 -
September 30, 1998 $ 0.0625 $ 0.046875
October 1, 1998 -
December 31, 1998 $ 0.046875 $ 0.03125
January 1, 1999 -
March 31, 1999 $ 0.03125 $ 0.03125
April 1, 1999 -
June 30, 1999 $ 0.28125 $ 0.O3125
July 1, 1999 -
September 30, 1999 $ 0.1875 $ 0.09375
October 1, 1999 -
December 31, 1999 $ 0.25 $ 0.16
January 1, 2000 -
March 31, 2000 $ 0.40 $ 0.16
April 1, 2000 -
June 21, 2000 $ 0.45 $ 0.14
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On June 21, 2000, the closing bid price on the OTC Bulletin
Board of the Common Stock was $.14.
As of June 21, 2000, Common Stock was held by approximately
500 shareholders of record. The Company, however, believes that
the number of beneficial owners of its securities to be in
excess of such number.
As of the date hereof, the Company has never declared or
paid cash dividends on its Common Stock. As management of the
Company seeks growth and expansion of the Company's business
through the reinvestment of profits, if any, management does not
anticipate the Company will pay dividends in the foreseeable
future.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
General
The Company is a developer of retail store management
software for the specialty retail industry. The Company's
StoreKare product family is a modular system of information
technology products, which offers retailers an affordable,
scalable, feature rich application that runs in both Windows NT
and DOS environments. The goal of the Company has been to offer
such a product that a retail store owner with limited computer
experience could learn and use without extensive training and
support. With the advancement of the hardware technology
(computers and cash registers) and extensive reduction in cost,
the small retailer can now afford a complete business management
system.
The Company is also developing and marketing application
specific business intelligence solutions software using
interactive data mining techniques to explore transaction
trends, patterns, comparisons and exceptions. The Company
currently markets Loss Prevention MAX and Sales and Profit MAX
business intelligence solutions for the retail industry.
Except for historical information contained herein, certain
matters set forth in this Form 10-KSB are forward looking and
involve a number of risks and uncertainties that could cause
future results to differ materially from these statements and
trends. Such factors include but are not limited to,
significant changes in economic conditions, competition in the
Company's markets, changes in technology and the continued
availability of funding from third parties.
Liquidity and Capital Resources
The Company had a net loss before income taxes and
extraordinary items, of $868,015 for the fiscal year ended March
31, 2000. During fiscal 2000, the Company had an extraordinary
gain of $5,491,355 from restructuring debt, which resulted in
net income of $4,623,340 for the year then ended. The debt
restructuring was due to two shareholders/directors of the
Company and their related entities converting short term loans
totaling $4,789,500 to Common and Preferred Stock. Interest on
these loans in the amount of $1,234,789 was forgiven.
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Accordingly, the Company's working capital deficiency decreased
from $(6,762,102) at March 31, 1999 to ($906,219) at March 31,
2000.
During fiscal 2000, one shareholder/director of the Company
provided funding to the Company in the amount of $794,000. This
shareholder/director received shares of Common Stock for this
funding as follows:
3,240,000 shares at $.125 per share,
1,326,666 shares at $.15 per share and
633,334 shares at $.30 per share.
On June 13, 2000, one shareholder/director of the Company
committed to provide funding to the Company in the amount of
$400,000, based on the Company's projected cash deficiencies for
the remainder of fiscal 2001, for shares of the Company's Common
Stock at $.30 per share. If actual cash deficiencies exceed the
projected amount, this shareholder/director agreed to fund any
additional cash deficiencies through March 31, 2001, with the
terms of the additional funding to be determined at such time.
At March 31, 2000 and 1999, the Company's capitalized
expenditures for development were $567,859 and $1,062,820,
respectively; accumulated amortization was $185,956 and $759,123
at March 31, 2000 and 1999, respectively. Due to feature
enhancements, during fiscal 2000 the Company discontinued sales
of the 3.1 and 3.2 versions of the StoreKare products and
accordingly wrote off the capitalized expenditures in the amount
of $703,147 and the related accumulated amortization of the same
amount. The Company capitalized development costs of $208,185
and $134,919 during fiscal 2000 and 1999, respectively. The
Company anticipates incurring a comparable amount of development
costs for fiscal 2001 as compared to fiscal 2000 as the Company
continues its efforts for Loss Prevention MAX, Sales and Profit
MAX and possibly other business intelligence solutions.
Results of Operations
For the years ended March 31, 2000 and 1999, the Company
reported a net loss, before income taxes and extraordinary items
of $868,015 and $1,233,965. During fiscal 2000, the Company had
an extraordinary gain of $5,491,355 from restructuring debt,
which resulted in net income of $4,623,340 for the year then
ended. Revenues from equipment and software sales and support
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were $781,137 and $806,759 for fiscal 2000 and 1999,
respectively. The Company plans to release the initial version
of Loss Prevention MAX and Sales and Profit MAX this fiscal
year.
Amortization of software development costs was $129,976 and
$206,657, for fiscal 2000 and 1999. In addition, the Company
incurred and expensed, research and development costs of $26,679
and $102,409, to maintain and improve the existing versions of
StoreKare products.
Total selling, general and administrative expenses for
fiscal 2000 decreased about 5% from fiscal 1999. This decrease
was due to a slight reduction in payroll and the related
reduction in certain administrative expenses. The Company
anticipates that total selling, general and administrative
expenses will remain about the same.
The Company incurred interest expense of $149,799 and
$486,614, during fiscal 2000 and 1999 respectively. Interest
expense was incurred on loans from shareholders/directors and
their related entities of $113,167 and $438,398 during fiscal
2000 and 1999 respectively. Since these loans were converted to
Common and Preferred Stock in June 1999, interest was accrued
through June 21, 1999 only.
Seasonality
The Company believes that seasonality has not historically
had any material impact on its business. However, during the
winter holiday season, retail businesses typically delay the
installation and/or purchase of any capital assets such as our
StoreKare products.
Inflation
The Company believes the impact of inflation has
historically been and will continue to be minimal.
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ITEM 7. FINANCIAL STATEMENTS
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants -
Berkovits & Company, P.A. F-1
Consolidated Balance Sheet
March 31, 2000 F-2-3
Consolidated Statements of Operations
Years Ended March 31, 2000 and 1999 F-4-5
Consolidated Statements of Capital Deficiency
Years Ended March 31, 2000 and 1999 F-6
Consolidated Statements of Cash Flows
Years Ended March 31, 2000 and 1999 F-7-8
Notes to Consolidated Financial Statements
March 31, 2000 and 1999 F-9-24
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REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Directors
SK Technologies Corporation and its Subsidiaries
We have audited the accompanying consolidated balance sheet of
SK Technologies Corporation and its Subsidiaries ("the Company")
as of March 31, 2000, and the related consolidated statements of
operations, capital deficiency, and cash flows for the year
then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audit. The consolidated financial
statements of SK Technologies Corporation and its Subsidiaries
for the year ended March 31, 1999, were audited by other
auditors whose report dated June 25, 1999, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of SK Technologies
Corporation and its Subsidiaries at March 31, 2000, and the
consolidated results of its operations and its cash flows for
the year then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company has
suffered recurring losses from operations and has a net capital
deficiency that raise substantial doubt as to the ability of the
Company to continue as a going concern. Management's plans with
regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Berkovits & Company, P.A.
June 23, 2000
F-1
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SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
ASSETS
Current Assets:
Cash $ 47,531
Trade accounts receivable, net of
allowance for doubtful accounts
of approximately $39,000 8,267
Inventories 21,527
----------
Total Current Assets 77,325
Property and Equipment, Net 58,177
Other Assets:
Software development costs, net
of accumulated amortization
of $185,956 381,903
Other, net 20,340
----------
Total Other Assets 402,243
----------
$ 537,745
==========
(Continued on following page.)
F-2
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SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONT'D)
MARCH 31, 2000
LIABILITIES AND CAPITAL DEFICIENCY
Current Liabilities:
Accounts payable $ 28,406
Accrued expenses 103,860
Due to shareholders/officers/directors 793,400
Current portion of capital lease obligations 9,709
Current portion of notes payable to shareholder 12,000
Deferred income 36,169
----------
Total Current Liabilities 983,544
Notes payable to shareholder, less current portion 376,000
Capital lease obligations, less current portion 10,631
Capital Deficiency:
Preferred Stock, $.001 par
value, 5,000,000 shares authorized:
1,000,000 shares designated as
convertible Series B Preferred Stock,
396,066 shares issued and
outstanding 396
3,000 shares designated as Series D
Preferred Stock, 793 shares issued
and outstanding 1
Common Stock, $.001 par value, 25,000,000
shares authorized, 18,277,827 shares
issued and outstanding 18,278
Additional paid-in capital 13,432,103
Accumulated deficit (14,283,208)
----------
Capital Deficiency (832,430)
----------
$ 537,745
==========
See accompanying notes.
F-3
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SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2000 AND 1999
2000 1999
Revenues:
Equipment, software sales and
support $ 781,137 $ 806,759
Cost of Revenues:
Cost of equipment sold 68,940 134,354
Amortization of software
development costs 129,976 206,657
Research and development expense 26,679 102,409
----------- -----------
225,595 443,420
----------- -----------
555,542 363,339
Selling, General and Administrative
Expenses:
Compensation and payroll taxes 920,459 957,357
Other selling, general and
administrative expenses 366,976 392,521
----------- ---------
1,287,435 1,349,878
----------- -----------
Operating Loss (731,893) (986,539)
Other (Expenses) Income:
Gross profit on installment sale 16,045 40,111
Interest expense (149,799) (486,614)
Other, net (2,368) 199,077
----------- -----------
Total Other Expenses (136,122) (247,426)
----------- -----------
Loss Before Income Taxes and
Extraordinary Item (868,015) (1,233,965)
Income tax benefit 347,206 -
---------- ----------
Loss Before Extraordinary Item (520,809) (1,233,965)
(Continued on following page)
F-4
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SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONT'D)
YEARS ENDED MARCH 31, 2000 AND 1999
2000 1999
Extraordinary Item: Gain from
restructuring of debt (net of
income taxes of $2,196,542) 3,294,813 -
Benefit from utilization of net
operating loss carryforwards 1,849,336 -
---------- ----------
Net Income (Loss) $4,623,340 $(1,233,965)
========== ==========
Basic Earnings (Loss) Per
Common Share
Loss before extraordinary item $ (.04) $ (.19)
Extraordinary income (net, plus
tax benefit) .37 -
---------- ----------
Net Income (Loss) Per Common
Share $ .33 $ (.19)
========== ==========
Diluted Earnings (Loss) Per
Common Share
Loss before extraordinary item $ (.04) $ (.19)
Extraordinary income (net, plus
tax benefit) .37 -
---------- ----------
Net Income (Loss) Per Common
Share $ .33 $ (.19)
========== ==========
Weighted Average Number of
Common Shares Outstanding 13,775,054 6,357,828
========== ==========
See accompanying notes.
F-5
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SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL DEFICIENCY
YEARS ENDED MARCH 31, 2000 AND 1999
TABLE A Note: This is Part 1 of Table A.
Numbers will add up across in Part 1 and Part 2 (Part 2 to follow).
Series D Series B
Preferred Stock Preferred Stock Common Stock
Shares Amount Shares Amount Shares Amount
Balance at
March 31, 1998 - $ - 454,399 $454 6,357,828 $6,358
Net loss - - - - - -
_____ _____ _______ _____ _______ ______
Balance at
March 31, 1999 - - 454,399 454 6,357,828 6,358
Conversion of
Preferred Stock
to Common Stock - - (58,333) (58) 58,333 58
Issuance of Series
D Preferred Stock
pursuant to
conversion of loans
from shareholders/
directors 793 1 - - - -
Issuance of
Common Stock
pursuant to
conversion of loans
from shareholders/
directors - - - - 6,661,666 6,662
Issuance of
Common Stock - - - - 5,200,000 5,200
Net income - Includes
extraordinary gain of
$5,491,355 from
conversion of loans
to Preferred and
Common Stock and
forgiveness of debt - - - - - -
____ _____ ________ _____ __________ _______
Balance at
March 31, 2000 793 $ 1 396,066 $396 18,277,827 $18,278
==== ==== ======= ===== ========== =======
TABLE A Note: This is Part 2 of Table A.
Numbers add up across in Part 1 and Part 2 (Part 1 on previous page).
Additional
Paid-In Accumulated Capital
Capital Deficit Deficiency
Balance at
March 31, 1998 $12,117,031 $(17,672,583) $(5,548,740)
Net loss - (1,233,965) (1,233,965)
__________ ____________ ___________
Balance at
March 31, 1999 12,117,031 (18,906,548) (6,782,705)
Conversion of
Preferred Stock
to Common Stock - - -
Issuance of Series
D Preferred Stock
pursuant to
conversion of loans
from shareholders/
directors - - 1
Issuance of
Common Stock
pursuant to
conversion of loans
from shareholders/
directors 526,272 - 532,934
Issuance of
Common Stock 788,800 - 794,000
Net income - Includes
extraordinary gains of
$5,491,355 from
conversion of loans
to Preferred and
Common Stock and
forgiveness of debt - 4,623,340 4,623,340
___________ __________ _________
Balance at
March 31, 2000 $13,432,103 $(14,283,208) $(832,430)
=========== =========== ==========
See accompanying notes.
F-6
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000 AND 1999
2000 1999
Cash Flows From Operating Activities:
Net income (loss) $4,623,340 $(1,233,965)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Extraordinary gain (5,491,355) -
Depreciation 26,052 29,659
Amortization 129,976 206,657
Disposal of fixed assets 6,707 288
Changes in operating assets and liabilities:
Trade accounts receivable (2,202) 73,771
Inventories 3,873 (5,449)
Installment accounts receivable 20,000 50,000
Accounts payable (16,171) (42,344)
Accrued expenses 1,606 (17,106)
Due to shareholders/directors 107,226 435,272
Deferred income 3,808 (89,761)
Deferred gross profit on installment sale (16,045) (40,112)
--------- ---------
Net cash used in operating activities (603,185) (633,090)
Cash Flows From Investing Activities:
Purchases of property and equipment (7,622) (3,368)
Additions to software development costs (208,186) (134,919)
Net (increase) decrease in other assets (116) 2,768
--------- ---------
Net cash used in investing activities (215,924) (135,519)
Cash Flows from Financing Activities:
Proceeds from loans from shareholders/directors 66,000 782,000
Principal payments on capital lease obligations (10,548) (23,101)
Principal payments on note payable to shareholder (12,000) -
Proceeds from issuance of Common Stock 794,000 -
-------- --------
Net cash provided by financing activities 837,452 758,899
------- --------
Increase (decrease) in cash 18,343 (9,710)
Cash at beginning of year 29,188 38,898
-------- --------
Cash at end of year $47,531 $29,188
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $42,572 $43,069
======== ========
(Continued on following page.)
F-7
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
YEARS ENDED MARCH 31, 2000 AND 1999
Supplemental Schedule of Non-Cash Investing and Financing
Activities
During fiscal 2000 and 1999, the Company entered into
capitalized lease obligations amounting to $21,454 and $7,940,
respectively.
During fiscal 2000, short term loans in the amounts of
$3,997,000 and $792,500, were converted to Common Stock and
Preferred Stock, respectively.
See accompanying notes.
F-8
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
SK Technologies Corporation (the "Parent"), and its wholly
owned subsidiaries (collectively "the Company"), is engaged in
developing and marketing retail store management software for
the specialty retail industry. The Company's StoreKare product
family is a modular system of information technology products.
The Company is also developing and marketing application
specific business intelligence solutions software using
interactive data mining techniques to explore trends, patterns,
comparisons and exceptions. The Company currently markets Loss
Prevention MAX and Sales and Profit MAX business intelligence
solutions for the retail industry.
Principles of Consolidation
The consolidated financial statements include the accounts
of SK Technologies Corporation and its two wholly-owned
subsidiaries, SK Technologies Corp. and SK Credit Corporation.
All significant intercompany transactions and balances have been
eliminated in consolidation.
Revenues and Expense Recognition
In accordance with Statement of Position 97-2, "Software
Revenue Recognition" ("SOP 97-2"), the Company recognizes
revenue from software sales upon delivery, when the fees are
fixed and determinable and collectibility of the proceeds is
probable. For arrangements with multiple elements, revenues are
allocated to the various elements based on the separate prices
as stated in the contract. Revenue is recognized for each
element when the above requirements for revenue recognition
exist. Equipment sales revenue is recognized upon shipment.
Additionally, the Company performs various enhancements to
their basic software, which are retained by the Company, for
which they receive compensation from unrelated parties. Such
revenues and costs are recorded using the percentage of
completion method.
F-9
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Maintenance and support revenues are recognized ratably
over the term of the contract.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less at the date of acquisition to
be cash equivalents. The concentration of credit risk
associated with cash and cash equivalents is considered low due
to the credit quality of the issuers of the financial
instruments.
Trade Accounts Receivable
Trade accounts receivable are primarily from direct sales
to retail stores and store chains. The Company performs ongoing
evaluations of its significant customers and generally does not
require collateral. The Company maintains an allowance for
doubtful accounts at a level which management believes is
sufficient to cover potential credit losses.
Inventories
Inventories consist of component parts and support
materials used in the delivery of Company designed computer
systems. Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property and Equipment
Property and equipment are recorded at cost and depreciated
using the straight-line method over their estimated useful
lives.
Long-Lived Assets
Management periodically evaluates the Company's property
and equipment to determine if there has been any impairment
other-than-temporary in the carrying value of the assets. In
March 1995, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived
F-10
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Assets and for Long-Lived Assets to Be Disposed of" ("Statement
121"), which requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying
amount. Statement 121 also addresses the accounting for long-
lived assets that are expected to be disposed of.
Software Development Costs
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 86, "Accounting for Costs of Computer
Software to be Sold, Leased or Otherwise Marketed," all direct
software production costs incurred to generate Production
Masters after technological feasibility has been established are
capitalized and subsequently amortized over the estimated
product life cycles. Prior to technological feasibility,
software development costs are charged to operations as
incurred.
The amortization of capitalized computer software costs
commences when the Company's software development reaches a
point where its technology is economically feasible for
effective market distribution of the developed product.
Deferred Income and Revenue Recognition
Deferred income consists of $36,169 from support contracts
to be recognized ratably over the terms of the contracts.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
Advertising Costs
The Company expenses all advertising costs as incurred.
F-11
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Earnings (Loss) Per Common Share
In 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings
per Share. Statement 128 replaced the previously reported
primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of
options, warrants, and convertible securities. Diluted earnings
per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for
all periods presented were restated to conform to the Statement
128 requirements. Basic and diluted earnings (loss) per Common
Share is calculated by dividing net income (loss) by the
weighted average Common Shares outstanding. The exercise of
options and warrants or conversion of convertible securities
have been excluded from the calculation of diluted earnings
(loss) per share since the Company has a loss from continuing
operations and the effect of these potential shares on loss per
Common Share is anti-dilutive.
Accounting for Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation," the adoption of which was
required for fiscal years beginning after December 15, 1995.
The new standard encourages companies to use the fair value
method of accounting for issuance of stock options and other
equity instruments. Under the fair value method, compensation
cost is measured at the grant date based on the fair value of
the award and is recognized over the service period, which is
usually the vesting period. Pursuant to SFAS No. 123, companies
are also permitted to continue to account for such transactions
under Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," but are required to
disclose in a note to the financial statements pro forma net
income and per share amounts as if the Company had applied the
new method of accounting. Additionally, SFAS No. 123 requires
increased disclosure for stock-based compensation arrangements
regardless of the method chosen to measure and recognize
compensation for employee stock-based arrangements.
F-12
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
The Company currently accounts for such transactions under
APB Opinion No. 25 and has elected not to change its method of
accounting for the issuance of stock options and other equity
instruments to the fair value method.
Income Taxes
Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets
and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to
reverse.
NOTE 2 - GOING CONCERN CONSIDERATION
The Company had a net loss before income taxes and
extraordinary item of $868,015 for the fiscal year ended March
31, 2000 and has a net capital deficiency of $832,430 as of
March 31, 2000. The Company has experienced losses from
operations in the past and continues to experience losses. Based
on these conditions, doubt exists about the ability of the
Company to continue as a going concern.
The financial statements for the year ended March 31, 2000
do not include adjustments relating to the recoverability and
classification of the recorded carrying value of the assets or
the amounts or classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern.
During fiscal 2000 a majority shareholder/director provided
funding to the Company in the amount of $794,000 based on the
Company's cash deficiencies from operations. In order to
continue operations this majority shareholder/director of the
Company has committed to provide funding to the Company in the
amount of $400,000, based on the Company's projected cash
deficiencies for the remainder of fiscal 2001, for shares of the
Company's Common Stock. If actual cash deficiencies exceed the
projected amount, this shareholder/director agreed to fund any
additional cash deficiencies through March 31, 2001, with the
terms of the additional funding to be determined at such time.
F-13
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 3 - PROPERTY AND EQUIPMENT
At March 31, 2000, property and equipment consists of the
following:
Useful
Life (years)
Furniture and equipment $214,204 5-10
Leasehold improvements 3,669 5
----------
217,873
Less accumulated depreciation
and amortization 159,696
----------
$ 58,177
==========
During fiscal 2000, the Company entered into capitalized
lease obligations amounting to $21,454. Included in furniture
and equipment at March 31, 2000 is $29,428 under capital leases,
which is net of accumulated amortization of $11,309.
During fiscal 2000 the Company examined the schedule of
furniture and equipment as compared to the assets still used by
the Company and determined that a total of $2,342, which are net
of accumulated depreciation, are no longer in use by the Company
and accordingly losses of $2,342 on disposal of fixed assets are
included in other expenses for fiscal 2000.
The Company leases 7,029 square feet of office space from
an unrelated entity for $9,884 per month through January 2001,
pursuant to a lease which expires January 31, 2002. This amount
includes rent of $6,016 per month which will increase 4.5% next
year and additional charges for the Company's allocated share of
expenses for 2000. The expense allocation is adjusted annually.
Rental expenses were $113,922 and $107,898 in fiscal 2000 and
1999, respectively.
F-14
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Future minimum lease payments under noncancellable
operating leases at March 31, 2000 are as follows:
Fiscal Year Minimum Payment
2001 $ 118,815
2002 $ 108,946
---------
$ 227,761
=========
NOTE 4 - SOFTWARE DEVELOPMENT COSTS
The Company released version 3.4 of its retail product,
during the third quarter of fiscal 2000 and continues to develop
its business intelligence solutions applications.
The Company capitalized approximately $208,000, and
$135,000 of software development costs during fiscal 2000 and
1999, respectively.
Amortization of StoreKare software development costs was
approximately $130,000 and $207,000 during fiscal 2000 and 1999,
respectively.
Due to feature enhancements, during fiscal 2000 the Company
discontinued sales of the 3.1 and 3.2 versions of the StoreKare
products.
F-15
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 5 - CAPITALIZED LEASE OBLIGATIONS
Certain equipment is leased under capital lease agreements
expiring through fiscal 2004 and are included in furniture and
equipment. Future minimum commitments by year under
noncancellable capital leases at March 31, 2000 are as follows:
Year Ended
March 31 Amount
2001 $ 11,789
2002 6,845
2003 5,158
2004 1,176
------
Total minimum lease payments 24,968
Less: Amount representing
interest (12%) (4,628)
------
Present value of net minimum
lease payments 20,340
Less: current portion 9,709
------
Long-term portion of capital
lease obligations $ 10,631
======
NOTE 6 - CAPITAL DEFICIENCY
Preferred Stock
In July 1999, the Company filed a Certificate of
Designation with the State of Delaware authorizing the issuance
of 3,000 shares of Series D Redeemable Preferred Stock $.001 par
value at $1,000 per share with cumulative dividends payable
annually at the rate of 8% per annum.
Conversion of Short Term Loans
In June 1999 two shareholders/directors of the Company and
their related entities agreed to convert short term loans
F-16
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
totaling $3,997,000 to 6,661,666 shares of the Company's Common
Stock at a conversion rate of $.60 per share. One
shareholder/director agreed to convert loans totaling $792,500
to shares of the Series D 8% Cumulative Preferred Stock.
Common Stock
During fiscal 2000 one shareholder/director of the Company
provided funding to the Company in the amount of $794,000. This
shareholder/director received 3,240,000 shares of Common Stock
for funding of $405,000 at $.125 per share, 1,326,666 shares of
Common Stock for funding of $199,000 at $.15 per share, and
633,334 shares of Common Stock for funding of $190,000 at $.30
per share.
The number of shares of Common Stock reserved for future
issuance at March 31, 2000 and 1999 is summarized as follows:
2000 1999
Common Stock Purchase Warrants 490,073 490,073
Stock Options 3,775,000 1,475,000
Convertible Preferred Stock 399,066 454,399
--------- --------
4,664,139 2,419,472
========= =========
At March 31, 2000 there were 490,073 private warrants
outstanding, which were issued pursuant to a private offering in
1993. Such warrants are convertible into 490,073 shares of
Common Stock at a conversion price of $1.00 per share and were
extended to expire in March 2002.
NOTE 7 - RELATED PARTY TRANSACTIONS
Pursuant to a May 1993 agreement between the Company and
Fundamental Management Corp. ("Fundamental"), a fee of $25,000
was approved to be paid in installments to Fundamental based
on the amount of proceeds received from the 1993
Preferred Stock offering. The first installment of $8,333
was paid in May 1993 and $16,667 is included in accounts payable
due to shareholders/officers/directors, at March 31, 2000.
F-17
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Pursuant to a May 1993 Consulting agreement between the
Company and Capital Hill Group Inc. ("CHG"), the Company
incurred consulting fees to CHG of $5,550 per month, for a total
of $236,500 through December 1996 when the agreement terminated.
Of this amount $225,500 has been accrued to date and is included
in accounts payable due to shareholders/officers/directors at
March 31, 2000.
In connection with the Finder's agreement between the
Company and CHG the Company accrued finders fees of $493,000
through December 1996 which is included in accounts payable due
to shareholders/officers/directors at March 31, 2000
Note 8 - EXTRAORDINARY INCOME
In June 1999, two shareholders/directors of the Company and
their related entities agreed to extinguish short term loans and
the related interest that was accrued by the Company. These
transactions meet the criteria for early extinguishment of debt
and accordingly the gain, in the amount of $5,491,355, is
recorded as extraordinary income in the Statement of Operations,
for fiscal 2000 and consists of the following:
Debt outstanding at date of forgiveness $4,789,500
Accrued interest at date of forgiveness 1,234,789
----------
6,024,289
Shares issued in connection with
extinguishment of debt - 6,661,666
Market value of shares at date of
issuance - $.08 532,934
----------
Gain on extinguishment $5,491,355
==========
The related deferred tax on these gains, for federal and
state taxes, at a combined rate of 40% would be $2,196,542 and
is offset by the Company's deferred tax assets for the
unrecognized benefit of net operating losses.
F-18
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 9 - INCOME TAXES
For the year ended March 31, 2000 no provision or (credit)
for income taxes has been provided for in the accompanying
consolidated financial statements because realization of such
income tax benefits cannot be reasonably assured. The Company
will recognize the benefit from such carryforward losses in the
future, if and when they are realized, in accordance with
applicable provisions of accounting principles for income taxes.
At March 31, 2000 the Company has net operating loss
carryforwards of approximately $13 million that can be used to
offset future taxable income, that expire in the years 2004
through 2014. In fiscal 1995, the Company had ownership changes
as defined under Internal Revenue Code Section 382 (Section
382). As such, the availability to utilize the net operating
losses that existed as of this ownership change is limited.
NOTE 10- STOCK OPTIONS
1990 Company Stock Option Plan
On April 3, 1990, the Company adopted a Stock Option Plan
(the "1990 Option Plan") for its directors and employees, which
provides for the grant of options to purchase an aggregate
50,000 shares of the Company's Common Stock. Of this amount,
45,000 shares may be granted as incentive stock options
("ISOs").
The 1990 Option Plan is intended to qualify as an
"Incentive Stock Option Plan" under Section 422A of the Internal
Revenue Code. Under the 1990 Option Plan, ISOs may be granted
at not less than 100 percent of the fair market value of the
Company's Common Stock as determined by the Board of Directors
on the date of grant (110% of fair market value for 10% or
greater shareholder) and options granted to any one participant
may not exceed $100,000 in aggregate fair market value
(determined at the time the option is granted), per year.
Options must be granted within ten (10) years from the adoption
of the 1990 Option Plan and exercised within ten (10) years from
the date of grant.
F-19
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
As of March 31, 2000, there were 1,600 options outstanding
pursuant to the 1990 Option Plan which were exercisable at
$30.00 per share.
1995 Company Stock Option Plan
In November 1995, the Company adopted the 1995 Option Plan,
reserving 1,400,000 shares of Common Stock which may be
purchased pursuant to the exercise of options granted under this
plan. This plan was amended in June 1999, as approved by the
Board of Directors and a majority vote of the shareholders of
the Company, to increase the number of shares which may be
purchased pursuant to the exercise of options granted under this
plan to 3,700,000.
The 1995 Option Plan is also intended to qualify as an
"Incentive Stock Option Plan" under Section 422A of the Internal
Revenue Code. Under the 1995 Option Plan, ISOs may be granted
at not less than 100 percent of the fair market value of the
Company's Common Stock as determined by the Board of Directors
on the date of grant (110% of fair market value for 10% or
greater shareholders) and options granted to any one participant
may not exceed $100,000 in aggregate fair market value
(determined at the time the ISO is granted), per year. Options
must be granted within ten (10) years from the adoption of the
1995 Option Plan and exercised within five (5) years from the
date of grant. The options issued pursuant to the 1995 Option
Plan may be ISOs, options which are not ISOs ("NSOs"), or reload
options, (as defined). On October 31, 1996 the 1995 Option Plan
was approved by a majority of the shareholders of the Company.
In July 1997 and February 2000, the Company filed registration
statements on Form S-8, with the Securities Exchange Commission,
to register 1,400,000 and 2,300,000 shares of Common Stock which
may be purchased pursuant to the exercise of options under the
1995 Option Plan. As of March 31, 2000, 2,230,500 options
granted pursuant to this plan are ISOs and 225,000 options
granted pursuant to the plan are NSOs.
During fiscal 2000 and 1999 options for 201,500 and 50,000
shares of Common Stock were granted to employees and 1,240,000
and 0 were issued to officers and directors, respectively. Such
F-20
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
options are exercisable at $.32 per share and expire through
January 2005, five years from the date of grant. As of March
31, 2000, there are options for 2,455,500 shares of Common Stock
outstanding of which 975,671 are exercisable.
Other Stock Options
As of March 31, 2000 other stock options of 25,000 were
outstanding. Such options expire through 2002. As of March 31,
2000, 25,000 of the other stock options are fully vested.
Stock Based Compensation
As required by Statement No. 123, pro forma information
regarding net loss and loss per share has been determined as if
the Company had accounted for its employee stock options under
the fair value method of that statement. The fair value for
these options was estimated at the date of grant using a Black-
Scholes option pricing model with the following weighted-average
assumptions for 2000; risk-free rate of return of 6.00%;
dividend yield of 0.000%; volatility factor of the expected
market price of the Company's Common Stock of 2.16% and a
weighted-average expected life of the options of two to five
years.
The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics
significantly different from traded options, and because changes
in the subjective input assumptions can materially affect the
fair value estimate, the existing models, in management's
opinion, do not necessarily provide a reliable single measure of
the fair value of its stock options.
F-21
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
Information regarding stock options for the years ended March
31, 2000 and March 31, 1999 is summarized as follows:
Weighted Average
Number of Exercise Price
Shares Per Share
Outstanding at March 31, 1998 1,201,519 $ .45
Exercised - $ -
Expired (168,669) $ .16
Forfeited - $ -
Cancelled (37,250) $ .01
Granted 50,000 $ .02
----------
Outstanding at March 31, 1999 1,045,600 $ .37
Exercised - $ -
Expired - $ -
Forfeited - $ -
Cancelled (5,000) $ -
Granted 1,441,500 $ .19
----------
Outstanding at March 31, 2000 2,482,100 $ .34
==========
Exercisable at March 31, 2000 1,002,271 $ .15
==========
Reserved for future option
grants at March 31, 2000 1,292,900
==========
For the purposes of pro forma disclosures, the estimated
fair value of the options is amortized to expense over the
options' vesting period. The Company's 2000 and 1999 pro forma
information follows:
2000 1999
Net Income (Loss) $4,504,596 $(1,261,305)
========== ============
Net Income (Loss) Per
Common Share $ .33 $ (.20)
========== ============
F-22
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
The 2000 and 1999 pro forma effect on net loss is not
necessarily representative of the effect in the future years
because it does not take into consideration pro forma
compensation expense related to grants made prior to 1995.
The exercise price of options outstanding at March 31, 2000
ranged between $.32 and $30.00.
NOTE 11 - 401(K) PROFIT SHARING PLAN
The Company adopted a 401(K) Profit Sharing Plan (the
"401(K) Plan") effective January 1, 1995. All employees are
eligible to participate in the 401(K) Plan once they have
satisfied the eligibility requirements which are as follows:
employees must be 21 years of age and have completed 3 months of
service with the Company. The 401(K) Plan is currently funded
by employee contributions plus effective 1/1/00 the Company
contributes 1/2 of 1% of gross wages, for participating
employees. Employees may elect to contribute up to, the lesser
of, 15% of their salary or $10,500 for 2000, as adjusted to
reflect annual federal cost of living increases, or such lesser
amount as determined by discrimination tests for the plan.
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the
Company in estimating its fair value disclosure for financial
instruments:
Cash and Cash Equivalents: The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents and
restricted cash approximate their fair values.
Borrowings/Bank Mortgages: The fair value for borrowings/bank
mortgages is generally estimated using discounted cash flow
analyses, based on the Company's current incremental borrowing
rates for similar types of borrowing arrangements.
F-23
<PAGE>
SK TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
The carrying amounts and fair values of the Company's
significant financial instruments at March 31, 2000 are as
follows:
Carrying
Amount Fair Value
Cash and cash $ 47,531 $ 47,531
equivalents
Note payable to shareholder 388,000 388,000
F-24
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Pursuant to a written consent dated April 26, 2000, the
Board of Directors of the Company approved the engagement of
Berkovits & Company, P.A. as its independent auditors for the
fiscal year ending March 31, 2000 to replace the firm of
Infante, Lago & Company, who were dismissed as auditors of the
Company effective immediately.
The report of Infante, Lago & Company on the Company's
financial statements for the fiscal year did not contain an
adverse opinion or a disclaimer of opinion and was not qualified
or modified as to uncertainty, audit scope or accounting
principles.
In connection with the audit of the Company's financial
statements for the fiscal year ended March 31, 1999, and in the
subsequent interim period, there were no disagreements with
Infante, Lago & Company on any matters of accounting principles
or practices, financial statement disclosure, or auditing scope
and procedures which, if not resolved to the satisfaction of
Infante, Lago & Company would have caused Infante, Lago &
Company to make reference to the matter in their report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT
The following persons are the directors and executive
officers of the Company as of March 31, 2000. All directors are
elected by the shareholders to serve until the next meeting of
shareholders or until their successors are duly elected and
qualified. Officers are elected by the Board of Directors to
serve at the pleasure of the Board.
Name Age Position
Calvin S. Shoemaker 59 President/Chief Executive
Officer/Director
16
<PAGE>
Melvin T. Goldberger 80 Treasurer/Director
Roger N. Oesterling 57 Executive Vice President
Douglas A. Beard 68 Executive Vice President
Susan L. Fedderman 47 Executive Vice President/
Secretary
Gary S. Spirer 55 Director
David H. Peipers 43 Director
C. Shelton James 60 Director
Calvin S. Shoemaker - Mr. Shoemaker has been an officer and
director of the Company since May 1993. Mr. Shoemaker was a
founder and President of Flashpoint Computer Corp. from 1986
through 1993. Mr. Shoemaker was with Northridge Corp. from 1984
through 1986; Vice President of Sales and Marketing of Timeplex
from 1983 through 1984 and Vice President of Sales and Marketing
for Gould Inc/SEL Computer Systems from 1971 through 1983. Mr.
Shoemaker earned a Bachelor of Science degree from Randolph
Macon College.
Melvin T. Goldberger - Mr. Goldberger has been an officer
of the Company since July 1993 and a director since January
1994. Mr. Goldberger has been President of Seventh Investment
Bancing Corp. since 1972 to date and is also the President of
MTG Development Inc. From 1968 through 1971 he was Chairman of
the Board of Vector Company. Mr. Goldberger serves as a member
of the Board of Directors of Mae Volen Senior Citizen Center.
He is also a member of the Board of Governors of the Florida
Philharmonic Orchestra. Mr. Goldberger earned a Bachelor of
Science degree from Ohio State University.
Roger N. Oesterling - Mr. Oesterling has been an officer of
the Company since May 1993. Mr. Oesterling was Senior
Engineering Director of Racal Milgo Inc. from 1989 through 1991
and Senior Director of Network Management from 1985 through
1989. He was a business manager of Timeplex Inc. from 1984
through 1985 and held various positions as director and manager
of Gould Inc./SEL Computer Systems from 1973 through 1984. Mr.
17
<PAGE>
Oesterling earned a Bachelor of Science degree from Grove City
College.
Douglas A. Beard - Mr. Beard has been an officer of the
Company since November 1993. From 1990 through 1991 Mr. Beard
was a Director of Atlantix Corporation. Mr. Beard was a Senior
Director of Gould Inc./SEL Computer Systems from 1985 through
1990 and held various positions including Director of World-Wide
Support Services, Director of Systems Engineering and Director
of Sales Support from 1972 through 1981. He was a Director of
World-Wide Customer Service for Modcomp from 1981 through 1985.
Mr. Beard attended Plymouth and Devonport College of Technology
in the United Kingdom and earned a Bachelor of Science degree.
Susan L. Fedderman - Ms. Fedderman has been an officer of
the Company since December 1993. She has worked with the
Company in various financial positions since August 1988. From
1979 until joining the Company Ms. Fedderman worked in public
accounting. Ms. Fedderman earned an M.B.A. from Baruch College
in New York and is a certified public accountant, licensed in
Florida and New York.
Gary S. Spirer - Mr. Spirer was elected as a director of
the Company on May 13, 1993. Prior to that date, he served as a
member of the Company's Advisory Board. Mr. Spirer is President
of Capital Hill Group, Inc. since 1981 which provides consulting
services to the Company. Mr. Spirer holds a B.A. from New York
University where he graduated Magna Cum Laude and Phi Beta
Kappa, and he holds an M.B.A. from Columbia University.
David H. Peipers - Mr. Peipers was elected as a director of
the Company on May 13, 1993. Among other activities, Mr.
Peipers is President of Peipers & Co. Inc., an investment firm
dealing with securities and venture capital, since 1982. He
also has been a general partner of the Winsome Limited
Partnership and Cornerhouse Limited Partnership, which make long
term investments in the securities of both public and private
companies, since 1989. He is a founder and Chairman of
Bedminster Bioconversion Corporation, an environmental company
based in Cherry Hill, New Jersey. Mr. Peipers holds an A.B. from
Harvard University (1978) and a J.D. from Harvard Law School
(1981).
C. Shelton James - Mr. James was elected as a director of
the Company on May 13, 1993. Prior to that date he served as a
18
<PAGE>
member of the Company's Advisory Board. Mr. James was President
of Fundamental Management Corp. from April 1994 through June
1999 and Chairman and Chief Executive Officer of Elcotel Inc.
from 1991 through February 2000 and October 1999, respectively.
He was President of the Computer Systems Division of Gould, Inc.
from 1980 through 1989 and Executive Vice President of Gould's
Information System Business Section from 1985 through 1989. Mr.
James has been a director of DRS Inc. since 1999, Technisource
Inc. since 1998, Concurrent Computer Corporation since September
1994 and CSPI since December 1994. He earned a Bachelors of
Business Administration degree from Clarkson University and a
Masters of Business Administration from New York University.
Compliance with Section 16(A) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's
outstanding Common Stock, to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock. Such persons
are required by SEC regulation to furnish the Company with
copies of all such reports they file.
To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representation that no other reports were required, all Section
16(a) filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners have been
complied with.
19
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION:
The following tables set forth executive compensation for
the last three fiscal years, stock awards and stock option
values for the fiscal 2000.
Annual Compensation
Other Annual
Name and Fiscal Salary Bonus Compensa-
Position Year ($) ($) tion ($)
Calvin Shoemaker 1998 75,000 13,245 0
President/Chief 1999 75,000 12,636 0
Executive Officer 2000 75,000 13,072 0
All executive
Officers as a 1998 262,500 39,734 0
Group (four 1999 273,115 39,258 0
persons) 2000 275,750 40,670 0
Long Term Compensation
Awards Payouts
Restricted All
Stock Options/ LTIP Other
Name and Awards SARs Payouts Compensa-
Position (# Shares)(1) (#) (2) ($) tion $)
Calvin Shoemaker 0 0 0 0
President/Chief 0 0 0 0
Executive Officer 0 600,000 0 0
All Executive
Officers as a (730,000) 760,000 0 0
Group (four 0 0 0 0
Persons) 0 1,240,000 0 0
(1) In July 1997, the Company filed a registration
statement on Form S-8, with the Securities and
Exchange Commission, to register 1,400,000 shares of
Common Stock which may be purchased pursuant to the
exercise of options under the 1995 Option Plan.
Accordingly restricted stock awards were reclassified
as options in fiscal 1998.
20
<PAGE>
(2) In December 1999, shareholders owning a majority in
interest of the Company's stock approved an amendment
to the Company's 1995 Stock Option Plan to increase
the number of shares of Common Stock which may be
issued upon the exercise of options granted through
the Plan from 1,400,000 to 3,700,000.
In February 2000, the Company filed a registration
statement on Form S-8 with the Securities and Exchange
Commission, to register the additional 2,300,000
shares of Common Stock which may be purchased pursuant
to the exercise of options under the 1995 Option Plan.
<TABLE>
Option/SAR Grants in Fiscal 2000
Individual Grants
<CAPTION>
% of Total Options/
Number of Securities SARs Granted to
Underlying Options/ Employees in Fiscal Exercise or Base Price Expiration
Name SARs Granted (#) (1) Year ($/SH) Date
<S> <C> <C> <C> <C>
Calvin Shoemaker
President/Chief
Executive Officer 600,000 42% $.32/share 6/18/04
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Fiscal 2000
And March 31, 2000 Option/SAR Values
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/
Options/SARs at SARs at March 31,
March 31, 2000(#) 2000 ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Calvin Shoemaker
President/Chief
Executive Officer 0 0 400,000/600,000 0/0
</TABLE>
21
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT:
The following table sets forth, as of June 21, 2000,
certain information regarding the amount and percentage of
Common and Preferred Stock beneficially owned by each person
known by the Company to own more than five percent of its
outstanding Common and Preferred Stock, each director of the
Company and all officers and directors as a group.
Amount of
Name and Address Beneficial Percentage
Beneficial Owner of Ownership of of Voting
Identity of Group Common Stock Securities
Calvin S. Shoemaker(4) 80,091 0.41%
500 Fairway Drive, Suite 104
Deerfield Beach, FL 33441
Gary S. Spirer(1) 106,300 0.54%
50 Main Street
White Plains, NY 10606
Capital Hill Group 3,945 0.02%
Gary Spirer, President
50 Main Street
White Plains, NY 10606
David H. Peipers(1)(3) 2,196,064 11.28%
888 Seventh Avenue
New York, NY 10106
Cornerhouse Ltd. Ptshp.(3) 3,734,508 19.18%
David Peipers, G.P.
888 Seventh Avenue
New York, NY 10106
Winsome Ltd. Ptshp(3) 5,832,131 29.96%
David Peipers, G.P.
888 Seventh Avenue
New York, NY 10106
C. Shelton James(1) 19,973 0.10%
310 E. Royal Palm Road
Boca Raton, FL 33432
22
<PAGE>
Fundamental Management Corp. 93 0.00%
Carl Singer, President
8567 Coral Way, #138
Miami, FL 33155
Fundamental Active
Investors Ltd. II 3,316,026 17.03%
Fundamental Mgmt. Corp., G.P.
8567 Coral Way, #138
Miami, FL 33155
Melvin Goldberger(1)(2) 20,333 0.10%
1761 W. Hillsboro Blvd.
Deerfield Beach, FL 33442
Seventh Investment
Bancing Corp.(2) 93,760 0.48%
Melvin Goldberger, President
1761 W. Hillsboro Blvd.
Deerfield Beach, FL 33442
All Directors and
Executive Officers as
a Group (6 persons) (5) 12,131,445 62.32%
____________________________
(1) Stock options were granted to four directors of the Company
from August 1996 through June 1999. Each director received
options for 50,000 shares of Common Stock at an exercise
price of $.32 per share. These are not included above.
(2) Includes 103,060 shares of Common Stock and 11,033 shares
of Preferred Stock (held by Melvin Goldberger, trustee for
the Grace Goldberger Trust).
(3) Includes 5,446,464 shares of Common Stock and 183,334
shares of Series B Preferred Stock with one vote per share.
Also includes 793 shares of Series D stock with 1000 votes
per share and therefore is included as 793,000.
(4) Includes 63,424 shares of Common Stock and 16,667 shares of
Preferred Stock.
23
<PAGE>
(5) As part of the units sold in a September 1993 offering,
warrants for 447,140 shares of Common Stock at an exercise
price of $1.00 per share are held by certain of these
executive officers and directors.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Pursuant to a May 1993 agreement between the Company and
Fundamental Management Corp. ("Fundamental"), a fee of $25,000
was approved to be paid in installments to Fundamental based
on the amount of proceeds received from the 1993
Preferred Stock offering. The first installment of $8,333
was paid in May 1993 and $16,667 is included in accounts payable
due to shareholders/officers/directors, at March 31, 2000.
Two shareholder/directors of the Company and their related
entities have provided short term loans to the Company totalling
$4,789,500, through April 30, 1999, of which $4,723,500 was
received from March 1995 through March 31, 1999, and $66,000 was
received during fiscal 2000. These loans accrued interest at
10% per annum, $1,234,789 through June 21, 1999. Short term
loans to the Company through April 30, 1999, totalling
$4,789,500, were converted to Common and Preferred Stock and
these two shareholder/directors of the Company and their related
entities have forgiven all interest accrued on these loans (See
Note 8).
Pursuant to a May 1993 Consulting agreement between the
Company and Capital Hill Group Inc. ("CHG"), the Company
incurred consulting fees to CHG of $5,550 per month, for a total
of $236,500 through December 1996 when the agreement terminated.
Of this amount $225,500 has been accrued to date and is included
in accounts payable due to shareholders/officers/directors at
March 31, 2000.
In connection with the Finder's agreement between the
Company and CHG the Company accrued finders fees of $493,000
through December 1996 which is included in accounts payable due
to shareholders/officers/directors at March 31, 2000.
During the period May 1, 1999 through March 31, 2000 one
shareholder/director of the Company and related entities
provided funding to the Company in the amount of $794,000. This
shareholder/director of the Company received 3,240,000 shares of
Common Stock for funding of $405,000 at $.125 per share,
24
<PAGE>
1,326,666 shares of Common Stock for funding of $199,000 at $.15
per share and 633,334 shares of Common Stock for funding of
$190,000 at $.30 per share.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K:
The following documents are filed as part of this report:
(a) Exhibits
Exhibit # Description of Exhibit
3.1 Certificate of Incorporation, as amended, through
September 19, 1992, is incorporated herein by
reference to the Registration Statement on Form
S-18, File No. 33-27977-A, as declared effective
on July 10, 1989, as amended by Post-Effective
Amendment No. 1 declared effective on September
12, 1990, as amended by Post-Effective Amendment
No. 2 declared effective on November 15, 1991
(collectively, the "Registration Statement"), the
Annual Report on Form 10-K for the fiscal year
ended March 31, 1990, File No. 0-18184 filed June
29, 1990 2("1990 10-K"), and the Annual Report on
Form 10-K for the fiscal year ended March 31,
1991, File No. 0-18184 filed July 13, 1991 ("1991
10-K").
3.2 Amended Certificate of Designation of Preferences
Right and Limitations dated November 1, 1991 is
incorporated herein by reference to the
Registration Statement on Form S-1, as amended,
File No. 33-44402, declared effective by the
Commission on May 15, 1992 ("Form S-1").
3.3 The Bylaws are incorporated herein by reference
to the Registration Statement.
3.4 Certificate of Amendment of the Certificate Of
Incorporation dated November 4, 1996 is
incorporated herein by reference to schedule 14C
filed on November 5, 1996.
25
<PAGE>
4.1 Warrant Agreement between the Registrant and
Interwest Transfer Company is incorporated herein
by reference to the 1990 10-K.
4.2 Certificates of Designations, Preferences Rights
and Limitations - Series B Convertible Redeemable
Preferred Stock dated February 17, 1993 and
amended April 14, 1993 is incorporated herein by
reference to the 1993 10-KSB.
4.3 Amended Certificate of Designation of Preferences
Rights and Limitations Series B Convertible
Redeemable Preferred Stock dated March 23, 1993
is incorporated by reference to the 1993 10-KSB.
4.4 Certificate of Designation of Preferences Rights
and Limitations Series D Redeemable Preferred
Stock.
10.1 May 13, 1993 Financial Consulting Agreement
between the Registrant and Capital Hill Group,
Inc. ("Financial Consulting Agreement") is
incorporated herein by reference to the 1991 10-
K.
10.2 Amendment to Financial Consulting Agreement dated
May 13, 1993 is incorporated herein by reference
to the 1993 10-KSB.
10.4 Finder's Agreement between the Registrant and
Capital Hill Group, Inc. ("Finder's Agreement")
is incorporated by reference to the 1991 10-K.
10.5 Amendment to Finder's Agreement, dated May 13,
1993 is incorporated by reference to the 1993 10-
KSB.
10.9 Solution Provider agreement between NCR
Corporation and the Registrant dated February 7,
1994 is incorporated herein by reference to the
1994 10-KSB.
10.11 Consulting Agreement between the Company and C.
Shelton James and Fundamental Management
26
<PAGE>
Corporation, dated May 13, 1993 is incorporated
herein by reference to the 1993 10-KSB.
10.12 Promissory Note dated November 7, 1992, as
amended March 9, 1993 and April 7, 1993, with
Baron Coleman as Holder and the Company as Maker
is incorporated herein by reference to the 1993
10-KSB.
10.16 SK Technologies Corporation Amended 1995 Stock
Option Plan is incorporated herein by reference
to the Form S-8 filed on February 14, 2000.
21. Subsidiaries of the Registrant is incorporated by
reference to the 1991 10-K.
22. Information Statement sent on December 16, 2000
to notify shareholders of the Company's intention
to amend its 1995 Stock Option Plan, to increase
the number of shares of Common Stock which may be
issued upon the exercise of options granted
through the Plan, from 1,400,000 to 3,700,000 is
herein incorporated by reference to Schedule 14c
filed on December 17, 1999.
27. Financial Data Schedule for the Year Ended March
31, 2000
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during
the three months ended March 31, 2000.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, SK Technologies Corporation has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SK TECHNOLOGIES CORPORATION,
a Delaware corporation
Date: June 29, 2000 By: /s/ Calvin S. Shoemaker
Calvin S. Shoemaker, President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/ Calvin S. Shoemaker President/Chief June 29, 2000
Calvin S. Shoemaker Executive Officer/
Director
/s/ Melvin T. Goldberger Treasurer/Director/ June 29, 2000
Melvin T. Goldberger Principal Accounting
Officer
/s/ C. Shelton James Director June 29, 2000
C. Shelton James
/s/ David H. Peipers Director June 29, 2000
David H. Peipers
Gary Spirer Director
28
