NUTEK INC
Filing Type: 10SB12G
Description: Registration Statement
Filing Date: Jan 24, 2000
Period End: N/A
Primary Exchange: N/A
Ticker: N/A
Table of Contents
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10SB12G
Table1 17
Table2 18
Table3 30
Table4 37
Table5 39
Table6 43
Balance Sheet Assets 45
Balance Sheet Liabilities 46
Income Statement 47
Table10 48
Cash Flow Statement 49
Table12 52
Table13 54
Table14 55
Table15 55
EX-2.(I)
EX-2.(I) 59
EX-2.(II)
EX-2.(II) 61
EX-3.(I)
EX-3.(I) 67
EX-3.(II)
EX-3.(II) 70
EX-3.(III)
EX-3.(III) 72
EX-3.(IIII)
EX-3.(IIII) 74
EX-4.1
EX-4.1 81
EX-4.2
EX-4.2 83
EX-10.(I)
EX-10.(I) 84
EX-10.(II)
EX-10.(II) 86
EX-10.(V)
EX-10.(V) 96
EX-10.(VII)
EX-10.(VII) 107
EX-10.(VIII)
EX-10.(VIII) 113
EX-10.(VIX)
EX-10.(VIX) 138
EX-10.(X)
Table16 150
EX-10.(XI)
EX-10.(XI) 155
EX-23
EX-23 157
EX-27
Exhibit 27 Table 158
10SB12G
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SEURITIES OF
SMALL BUSINESS ISSUERS Under Section 12(b) or
(g) of the Securities Exchange Act of 1934
NuTek, Inc.
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(Name of Small Business Issuer in its charter)
Nevada 87-0374623
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
15722 Chemical Lane, Huntington Beach, CA 92649
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(Address of principal executive offices) (zip code)
714-799-7266 (Telephone) 714-799-5466 (Fax)
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Issuer's Telephone Number
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
-------------------------- --------------------------------
-------------------------- --------------------------------
Securities to be registered under section 12(g) of the Act:
Common Stock, $.001 par value per share, 50,000,000 shares authorized,
36,328,044 issued and outstanding as of December 31, 1999. Preferred
Stock, $.001 par value per share, 5,000,000 shares authorized, 793,500
issued and outstanding as of December 31, 1999.
1
FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
NuTek, Inc., ("NuTek, Inc.," or "NUTK" or the "Company" or the "Registrant")
cautions readers that certain important factors may affect the Company's
actual results and could cause such results to differ materially from any
forward-looking statements that may be deemed to have been made in this
Document or that are otherwise made by or on behalf of the Company. For
this purpose, any statements contained in the Document that are not statements
of historical fact may be deemed to be forward-looking statements. This
Registration 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.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" identifies important additional factors
that could materially adversely affect actual results and performance. All
of these factors should be carefully considered and evaluated. All forward-
looking statements attributable to the Company are expressly qualified in
their entirety by the foregoing cautionary statement. Any forward-looking
statements in this report should be evaluated in light of these important
risk factors. The Company is also subject to other risks detailed herein
or set forth from time to time in the Company's filings with the Securities
and Exchange Commission.
2
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ......................................................... 4
Item 1. Description of Business.................................. 4
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 29
Item 3. Description of Property.................................. 30
Item 4. Security Ownership of Management and Others and Certain
Security Holders......................................... 31
Item 5. Directors, Executives, Officers and Significant
Employees................................................ 32
Item 6. Remuneration of Directors and Executive
Officers................................................. 36
Item 7. Certain Relationships and Related Transactions........... 37
Part II ......................................................... 38
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters.............. 38
Item 2. Legal Proceedings........................................ 40
Item 3. Recent Sales of Unregistered Securities.................. 41
Item 4. Description of Securities................................ 41
Item 5. Indemnification of Directors and Officers................ 42
Part F/S ......................................................... 45
Item 1. Financial Statements..................................... 45
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..................... 45
Part III ........................................................ 46
Item 1. Index to Exhibits....................................... 46
Item 2. Description of Exhibits................................. 46
The following Registration Statement is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and the
Financial Statements and Notes related thereto appearing elsewhere in this
Registration. Except where the context otherwise requires, all references
in this Registration to (a) the "Registrant" or the "Company" or "NUTK"
refer to NuTek, Inc., a Nevada corporation, (b) the "Web" refer to the
World Wide Web and (c) the "site" refer to the Company's Web site.
3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. Business Development, Organization and Acquisition Activities
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) Other consumer/industrial products which include: a plastic buffet
plate, producing "light switch" covers plates; and, plastic coverings for
metal rails,.
The Company's mailing address is: 15722 Chemical Lane, Huntington Beach,
CA 92649, phone number: 714-799-7266. The Company website can be found
at: www.nutk.com.
4
B. Business of Issuer
1) Principal Products, Services and Principal Markets.
a) Elite Fitness Systems
Elite Fitness Systems was responsible for the Company generating its
first profit during calendar 1999. The Company has identified a
product which can be mass marketed through radio, television and print
media. Elite Fitness Systems mission is to provide quality media and
distribution of its products in an efficient, profitable manner. The
Company has developed a series of exercise videos originally produced by
Mr. Scott Helvenston, a former Navy Seal. These videos are marketed
through three (3) different series of exercise videos. They are:
"Ultimate Aerobic Workout," "Total Body Workout" and "Ab Blast."
The second series consists of an 11 minute Lower Body Workout and 11
minute Upper Body Workout; the third series consists of ISO Workouts,
Stamina and Strength videos. These video tapes generated approximately,
$197,000 in revenues last year, with approximately $135,000 in profit.
These exercise video tapes are promoted through infomercials, and print
media, include the "Sky Mall" magazine, found on many commercial airline
flights and various mail order catalogs. The Company spent approximately
$40,000 this past year on advertising this product.
The infomercials discuss the product attributes, and through testimonials
encourage the consumer to purchase these products, by calling an 800
number. The company contracts with "phone rooms" to take orders for these
products. The company also hires the services of Maximum Coverage Media,
Inc., in San Diego, who purchases block quantities of air time with television
and radio stations. Product fulfillment and order processing is handled
through the offices of Mr. Scott Helvenston.
The highlights of the terms of the agreement which the company has
entered into with Mr. Scott Helvenston includes (See Exhibit 10.3
Purchase Agreement):
i) Mr. Scott Helvenston guarantees to the Company a minimum sales revenue
of Two Hundred Thousand ($200,000.00) per year from existing catalogs and
clients, failing which the "Royalty Payments" will be reduced by Two and
One half (2.5%) percent, effective from date of signing of contract.
ii) NuTek agrees to place an additional Twenty Thousand ($20,000.00)
dollars into the current business as a loan account from NuTek to fund
operations. This will include a minimum of Three Thousand Five Hundred
($3,500.00) dollars per month to fund print media advertising. The revenue
sharing is to be increased by five (5%) percent until loan is paid back from
this additional five (5%) Percent. In addition to this, if media roll out
of exercise video campaign returns a rate greater then 2:1, NuTek will
forward additional funding, a minimum of One Hundred Thousand ($100,000)
Dollars to Elite Fitness Systems to continue promoting commercial.
iii) NuTek will also assist in raising additional funding for the
construction of an outdoor rock climbing gym and sports area.
iv) NuTek to receive from fifty (50%) of all net monthly proceeds after
deduction of salary and royalty payments.
5
Risks Associated with Infomercials. The Company is not experienced
with other infomercial projects or ventures. The average industry cost
to produce an infomercial can cost as much as $100,000. If a project is
successful, that is, it generates more sales than the cost of the product
and media time, the company can expect to recoup its cost and make a profit.
According to industry standards, the average infomercial produces nine (9)
percent in profits, after all expenses. When a product is advertised via
mass media, where the consumer orders the product by calling an 800 number,
the industry standards set the retail price of the product eight (8) times
higher than the cost of the product. This spread is needed to justify the
cost of mass advertising, research, development, production, order takers,
warehousing, shipping, invoicing, etc. If the project is not successful, a
company loses its entire investment in the project it undertakes. Generally
speaking, successful companies will have one successful project for every
five projects they bring to the market via infomercials.
The company must subcontract the purchase of media time. NuTek reimburses
their media up-front for the purchase of air-time, therefore, their company
does not keep any of the profits.
The Company does not have the capabilities, and infrastructure to produce
its own quality infomercials. Therefore, the Company must subcontract
services, an experience the cost of maintaining heavy overhead as where
competitive companies, with broader experienced, larger budgets and production
studios can produce a similar product at a lessor cost. If the Company can
identify other infomercials to undertake, they can expect competitive
pressures to produce similar products, which would adversely affect any
potential profits and results. There is a great deal of competition to
market a variety of products through infomercials. Additionally, the
Company does not have the resources to test new product ideas, as compared
to companies that focus all of their resources in identifying products and
producing infomercials to sell these products.
b) BuyNetPlaza.com
The Company plans to seek outside suppliers who would be willing to allow
the Company's e-commerce site, www.BuyNetPlaza.com to merchandise, market
and sell their products through the Company's Internet Web site, whereby the
Company receives a fifteen (15%) percent fee, for products sold through it
Website. These suppliers would be responsible for inventory, billing and
shipping their products to the potential customers generated through the
Company's e-commerce Web site. The company plans to focus, but not limit
itself to retail-type products, e.g., books, videos, health care products,
etc. Additionally, the Company plans to seek advertisers, to advertise
their product(s) on the Company's Web site. For any advertisers on the
Company's Web site, the Company will provide a link to the advertisers' Web
site and charge a customary/nominal fee, for each customer who links to
their advertisers Web site.
Evaluation of the Company, its current business and its prospects can be
based, each of which must be considered in light of the risks, expenses and
problems frequently encountered by all companies engaged in new business
activities, such as e-commerce and particularly by such companies entering
new and rapidly developing markets like the Internet. Such risks include,
without limitation, the lack of broad acceptance of the company's products
and the possibility that the Internet will fail to achieve broad acceptance,
the inability of the Company to generate significant based revenues
from its customers, the company's inability to anticipate and adapt to a
developing market, the failure of the company's network infrastructure
(including its server, hardware and software) to efficiently handle its
Internet traffic, production capabilities, changes in laws that adversely
affect the company's business, the ability of the Company to manage its
operations, including the amount and timing of capital expenditures and
other costs relating to the expansion of the company's operations, the
introduction and development of different or more extensive communities by
direct and indirect competitors of the Company, including those with greater
financial, technical and marketing resources, the inability of the Company
to maintain and increase levels of traffic on its marketing Web site, the
inability of the Company to attract, retain and motivate qualified personnel
and general economic conditions. The Company's prospects must be considered
in light of the risks, uncertainties, expenses and difficulties frequently
encountered by companies in their early stages of new product development,
particularly companies in new and rapidly evolving markets such as online
commerce.
6
(i) Anticipated Revenues for the Foreseeable Future
The Company's website has achieved approximately $29,000 in revenues to date,
and the Company anticipates that its e-commerce website will generate minimal
profits in the foreseeable future. The extent of these profits will depend,
in part, on the amount of growth in the Company's revenues from sales of its
products, and possibility advertising revenues on its Web site. The Company
expects that its operating expenses will increase significantly during the next
several years, especially in the areas of sales and marketing, and brand
promotion. Thus, the Company will need to generate increased revenues to
achieve 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.
(ii) Dependence on Continued Growth and Viability of the Internet
The Company's e-commerce success is substantially dependent upon continued
growth in the use of the Internet. To generate product sales, advertising
sales, e-Commerce service fees for NuTek, Inc., the Internet's recent and
rapid growth must continue, and e-Commerce on the Internet must become
widespread. None of these can be assured. The Internet may prove not to be a
viable commercial marketplace. Additionally, due to the ability of
consumers to easily compare prices of similar products or services on competing
Web sites, gross margins for e-Commerce transactions may narrow in the future
and, accordingly, the Company's revenues from e-Commerce arrangements may be
materially negatively impacted. If use of the Internet does not continue
to grow, the Company's business, results of operations and financial condition
would be materially and adversely affected. Additionally, to the extent
that the Internet continues to experience significant growth in the number of
users and the level of use, there can be no assurance that its technical
infrastructure will continue to be able to support the demands placed upon
it. The necessary technical infrastructure for significant increases in
e-Commerce, such as a reliable network backbone, may not be timely and
adequately developed. In addition, performance improvements, such as
high-speed modems, may not be introduced in a timely fashion. Furthermore,
security and authentication concerns with respect to transmission over the
Internet of confidential information, such as credit cared numbers, may
remain. Issues like these could lead to resistance against the acceptance
of the Internet as a viable commercial marketplace. Also, the Internet could
lose its viability due to delays in the development or adoption of new
standards and protocols required to handle increased levels of activity, or
due to increased governmental regulation. Changes in or insufficient
availability of telecommunications services could result in slower response
times and adversely affect usage of the Internet. Demand and market
acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty, and there exist few
proven services and products.
7
The Internet may not be commercially viable in the long term for a number
Of reasons, including potentially inadequate development of the necessary
network infrastructure or delayed development of enabling technologies,
performance improvements and security measures. To the extent that the
Internet continues to experience significant growth in the number of users,
their frequency of use or their band width requirement, there can be no
assurance that the infrastructure for the Internet and other online
services will be able to support the demands placed upon them. In addition,
the Internet or other online services could lose their viability due to
delays in the development or adoption of new standards and protocols required
to handle increased levels of Internet or other online service activity, or
due to increased governmental regulation. Changes in or insufficient
availability of telecommunications services to support the Internet or other
online services also could result in slower response times and adversely
affect usage of the Internet and other online services generally and NuTek,
Inc. in particular. If use of the Internet and other online services does
not continue to grow or grows more slowly than expected, if the
infrastructure for the Internet and other online services does not
effectively support growth that may occur, or if the Internet and other
online services do not become a viable commercial marketplace, the
Company's business, results of operations and financial condition would
be adversely affected.
(iii) Risk of System Failures
The Company's ability to facilitate e-commerce trade successfully and provide
high quality customer service, depends on the efficient and uninterrupted
operation of its computer and communications through its designated Internet
Service Provider (ISP). These systems and operations are vulnerable to damage
or interruption from earthquakes, floods, fires, power loss, telecommunication
failures, break-ins, sabotage, intentional acts of vandalism and similar
events. The Company does not have fully redundant systems, a formal disaster
recovery plan or alternative providers of hosting services and does not carry
business interruption insurance to compensate it for losses that may occur.
Despite any precautions taken by, and planned to be taken by the Company, the
occurrence of a natural disaster or other unanticipated problems with its ISP
could result in interruptions in the services provided by the Company.
In addition, the failure by the ISP to provide the data communications
capacity required by the Company, as a result of human error, natural
disasters other operational disruption, could result in interruptions in the
Company's service. Any damage to or failure of the systems of the Company
could result in reductions in, or terminations of, Company service, which
could have a material adverse effect on the Company's business, results of
operations and financial condition. In the case of frequent or frequent or
persistent system failures, the Company's reputation and name brand could be
materially adversely affected. Although the Company has implemented certain
network security measures, the Company and its IPS are also vulnerable to
computer viruses, physical or electronic break-ins and similar disruptions,
which could lead to interruptions, delays, loss of data or the inability to
complete customer auctions. In addition, although the Company works to
prevent unauthorized access to Company data, it is impossible to eliminate
this risk completely. The occurrence of any and all of these events could
have a material adverse effect on the Company's business, results of
operations and financial condition.
8
(iv) e-Commerce Competition
The market for consumer products over the Internet is relatively new,
rapidly evolving and intensely competitive, and the Company expects
competition to intensify further in the future. Barriers to entry are
relatively low, and current and new competitors can launch new sites at a
relatively low cost using commercially-available software. The Company
potentially competes with a number of other companies marketing similar
health care products over the Internet. Competitive pressures created by
any of the Company's competitors, could have a material adverse effect on
the Company's business, results of operations and financial condition.
The Company believes that the principal competitive factors in its market
are volume and selection of goods, population of buyers and sellers,
community cohesion and interaction, customer service, reliability of delivery
and payment by users, brand recognition, WEB site convenience and
accessibility, price, quality of search tools and system reliability. Some
of the Company's potential competitors have longer operating histories,
larger customer bases, greater brand recognition and significantly greater
financial, marketing, technical and other resources than the Company. In
addition, other online trading services may be acquired by, receive
investments from or enter into other commercial relationships with larger,
well-established and well-financed companies as use of the Internet and other
online services increases.
Therefore, certain of the Company's competitors with other revenue sources
may be able to devote greater resources to marketing and promotional
campaigns, adopt more aggressive pricing policies and devote substantially
more resources to Web site and systems development than the Company or may
try to attract traffic by offering services for free. Increased competition
may result in reduced operating margins, loss of market share and diminished
value in the Company's brands. There can be no assurance that the Company
will be able to compete successfully against current and future competitors.
Further, as a strategic response to changes in the competitive environment,
the Company may, from time to time, make certain pricing, service or
marketing decisions or acquisitions that could have a material adverse effect
on its business, results of operations and financial condition. New
technologies and the expansion of existing technologies may increase the
competitive pressures on the Company by enabling the Company's competitors to
offer a lower-cost service. Certain Web-based applications that direct
Internet traffic to certain Web sites may channel users to trading services
that compete with the Company. Although the Company plans to establish
arrangements with online services and search engine companies, there can be
no assurance that these arrangements will be renewed on commercially
reasonable terms or that they will otherwise bring traffic to the
the Company's WEB site. In a |
